The Morning Download: ‘Brexit’ Vote Stirs Technology Business Fears

Good morning. Technology companies fear that regulatory battles in the European Union on issues ranging from privacy to taxes to antitrust law could intensify should the U.K. vote on Thursday to leave the bloc. A 'Brexit' could complicate ongoing trans-Atlantic discussions concerning the transfer of personal information, meaning that all firms doing business in the EU could face new obstacles.

"At issue is a delicate political balance in the EU over tech policy between countries, including the U.K. and Nordic and Baltic countries, that favor lighter regulation and others, led by France and Germany, that argue the rise of big global technology firms necessitates new rules to help level the playing field," the Journal's Sam Schechner and Matthias Verbergt report. Minus London's moderating influence, there is the fear that the EU could push through tougher regulations.

Taking into consideration the Snowden revelations on U.S. spying as well as more existential concerns, such as the perceived dominance of U.S. tech firms, the EU's ongoing regulatory efforts make sense…to a point. But a report released this week by the Organization for Economic Cooperation and Development as it prepares for a three-day summit in Cancun, Mexico (more on that below), puts a number on what's at stake: Some $2.8 trillion of global GDP was generated in 2014 by cross-border data flows.

Fed Chief Yellen says cybercrime 'very significant threat' for banks. "We do have standards that we expect financial institutions to meet and what's expected depends on the complexity and importance of the firm," Federal Reserve Chair Janet Yellen said at a Senate Banking Committee hearing, the first of two days of testimony to Congress on the economy and monetary policy. Ms. Yellen said the central bank is "certainly supervising financial institutions' ability to address cyber threats." Her remarks come a day after an internal watchdog unveiled plans to review the effectiveness of the Fed's cybersecurity oversight of U.S. banks.

Open Internet under threat, OECD report warns. Worldwide efforts to clamp down on cybercrime, terrorism and free speech itself are on the rise and are putting the economic and societal benefits of the open internet at risk, according to a report released Tuesday at a meeting of the Organization for Economic Cooperation and Development. These strains can result in policies and practices that restrict online activity at a time when "companies increasingly rely on the Internet to interact with their foreign operations, suppliers and customers," researchers said.

The capital of Silicon Valley has a new head of IT. The city of San Jose, Calif. on Tuesday appointed Rob Lloyd as its next chief information officer, starting mid-July. The nation's 10th-largest city is working to implement a "Smart City Vision" which aims to use technology to improve safety, broaden access to digital infrastructure, expand civic engagement, manage energy use and drive innovation. Mr. Lloyd most recently was CIO for the city of Avondale, Ariz., where he directed all technology projects and operations.

TECHNOLOGY NEWS

Apple unlikely to make big changes for next iPhone. But big design changes are set for 2017, the 10th anniversary of the original iPhone, the WSJ's Daisuke Wakabayashi and Eva Dou report. Those changes could include an edge-to-edge organic light-emitting diode, or OLED, screen and eliminating the home button by building the fingerprint sensor into the display, according to people familiar with the matter.

Biometrics target the bank password. Bank of America Corp., J.P. Morgan Chase and Co. and more of the world's largest banks now acknowledge that traditional passwords are too cumbersome or no longer secure. They are increasingly using fingerprints, facial scans and other biometrics to keep accounts safe, the New York Times reports. Insurer USAA, for example, identifies some of its customers through their facial contours.

Samsung to invest $1.2 billion in 'Internet of Things' startups and research in U.S. Samsung Electronics Co. said t it will split the investment between internal research and development and startups, as the company looks to make inroads into the technology and the applications surrounding internet-connected devices, the WSJ's Christopher Mims reports. In a related move Samsung last week said it would acquire Joyent Inc., a San Francisco company that rents the use of computer servers and data centers to other companies.

Apple iPhone code: Savvy strategy or security screwup? When Apple Inc. last week shared with developers a preview version of its new mobile operating system, the company left iOS 10′s kernel unencrypted. Security experts tell MIT Technology Review that the company may have left the heart of its OS open for people to play around and report bugs. Or perhaps Apple made a mistake.

Hyperloop One explores building high-speed transport system in Moscow. Hyperloop One signed an agreement with the city of Moscow and a Russian infrastructure company to study transporting passengers at high-speed via low-pressure tubes. The startup, and rival Hyperloop Transportation Technologies, is aiming to commercialize an idea dreamed up by billionaire inventor Elon Musk, the Journal's Georgia Wells reports.

Long-awaited FAA drone rules fail to address pressing safety issues. The rules, which take effect in August, limits approval to drones weighing less than 55 pounds, operating in daylight under 400 feet and not exceeding  speeds of 100 miles an hour. But the Federal Aviation Administration's decision not to address some of the biggest safety issues, such as flying them safely over people or beyond the visual sight of designated pilots, could mean that the most promising applications of unmanned aircraft remain years away, industry officials tell the WSJ's Andy Pasztor and Georgia Wells.

Tesla tries to go solar. Elon Musk's electric-car company Tesla Motors Inc. on Tuesday offered to acquire SolarCity Corp. in an all-stock deal valuing it at up to $2.8 billion, the WSJ reports. Mr. Musk is the chairman and largest shareholder of both companies. Tesla shares fell 12% in after-hours trading following Mr. Musk's announcement, while SolarCity shares rose 15%. Mr. Musk said the timing seemed right because Tesla is ramping up production of batteries used in conjunction with solar panels.

Job security in the robot age. What skills pair well with the growing intelligence and functionality of machines? "It is the ability not only to understand how [technology] works and thinks, but also to communicate about it," Thomas Davenport, a management professor at Babson College and co-author of the book "Only Humans Need Apply," tells the Journal. "Some people call this 'purple people,' half red and half blue, one side being technical, the other side being able to communicate effectively.

EVERYTHING ELSE YOU NEED TO KNOW

Yellen doesn't see recession likely. Federal Reserve Chairwoman Janet Yellen said the chances of recession this year are "quite low" despite mounting worries that the U.S. could be heading toward a downturn after seven years of tepid economic expansion. "The U.S. economy is doing well," she said Tuesday, kicking off two days of testimony to Congress on the economic outlook and monetary policy. "My expectation is that the U.S. economy will continue to grow." Still, output growth, hiring, business investment and corporate profits have stumbled or slowed in recent months, leaving the Fed unsure when it will raise short-term interest rates again.

Boeing's inks tentative Iran deal. Boeing Co. Tuesday said it had signed a tentative agreement to sell jetliners to Iran, in what would be one of the Islamic Republic's biggest deals with a U.S. manufacturer since trade sanctions on Tehran were eased. The proposed agreement, which drew swift opposition from those concerned about business dealings with Iran, comes after months of talks between Boeing and Iran Air. Iran's airlines have indicated a dire need for both medium-haul jets such as Boeing's single-aisle 737 and long-haul aircraft like its 777 and 787 Dreamliner.

The rise of the empathic manager. Corporate empathy may sound like an oxymoron, but more businesses are emphasizing the trait in developing managers and products, Joann S. Lublin writes. Cisco Systems Inc., Breakthru Beverage Group and Ford Motor Co., have invested in empathy training to improve management, retain employees, or guide design decisions. Individuals who master listening and responding to others are the most successful leaders, and this skill outranks all others, concluded a study released this year by human-resources consultancy Development Dimensions International.

Steven Norton contributed to this article. The Morning Download comes from the editors of CIO Journal and cues up the most important news in business technology every weekday morning. Send us your tips, compliments and complaints. You can get The Morning Download emailed to you each weekday morning by clicking http://on.wsj.com/TheMorningDownloadSignup


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