The daily business briefing: June 6, 2018
Facebook admits giving Chinese tech companies data access, Mexico imposes tariffs to retaliate against Trump levies, and more
Facebook admits giving Chinese companies data access
Facebook announced Tuesday that it has data-partnership agreements with at least four Chinese electronics companies, including Huawei, a telecommunications equipment company flagged as a security threat due to its close ties with the Chinese government. In addition to Huawei, the companies Lenovo, Oppo, and TCL have private access to Facebook user data like work and education history, relationship status, and likes. In 2007, before its app worked well on phones, Facebook wanted to get more people to use the social network, and the company made agreements with these Chinese device makers so they could offer select Facebook features, like status updates, on their phones. Facebook told The New York Times that it is ending its partnership with Huawei by the end of the week.
Mexico follows through on threat to retaliate with tariffs
Mexico imposed tariffs Tuesday on about $3 billion worth of U.S. goods including pork, whiskey, and cheese, in retaliation for President Trump's levies on imported steel and aluminum. Trump's tariffs escalated tensions between the U.S. and numerous allies just as the U.S., Mexico, and Canada were making a push to revise the North American Free Trade Agreement, which Trump has called a bad deal for America. Trump's chief economic adviser, Larry Kudlow, said that Trump's "preference now, and he asked me to convey this, is to actually negotiate with Mexico and Canada separately." Kudlow said on Fox & Friends that handling the negotiations that way would speed things up. "You know," he said, "NAFTA has kind of dragged on."
China's ZTE reaches tentative deal to end U.S. ban
Chinese telecom company ZTE has signed a preliminary deal that would lift a U.S. ban on buying from U.S. suppliers, which would let the company resume operations, Reuters reported Tuesday, citing sources familiar with the matter. ZTE ceased most of its operations after the Commerce Department imposed the seven-year ban in April to punish the smartphone maker for breaking a 2017 settlement after it was caught illegally shipping goods to Iran and North Korea. ZTE would pay a $1 billion fine under the tentative deal, with another $400 million placed into escrow to cover any future violations, Reuters explained. ZTE already paid $361 million under the original agreement. The company did not immediately comment.
U.S. services sector makes May gains
The U.S. services sector saw an increase in activity in May, ending three months of declines and telegraphing healthy economic growth in the second quarter. The Institute for Supply Management said Tuesday that its non-manufacturing activity index jumped by 1.8 points to 58.6. Any reading above 50 indicates growth. Other data showed job openings outpacing hiring and reaching a record high in April. The shortage of workers and looming battles over tariffs threatened to weigh down trade at some point, however. "Whatever speed the economy is growing at, it isn't going to keep moving down the road much longer if there is no one to work the economy's factories and stores and warehouse floors," MUFG chief economist Chris Rupkey said.
Fashion designer Kate Spade dies in apparent suicide
Fashion designer Kate Spade was found dead in her Manhattan apartment Tuesday, hanged with a scarf in her bedroom in an apparent suicide. She was 55. Police said Spade left a note but they would not discuss what it said. TMZ reported that the note was addressed to her 13-year-old daughter. Spade's handbags became a symbol of status and good taste when she emerged in the 1990s, and became the foundation of an accessories empire. "Kate Spade had an enviable gift for understanding exactly what women the world over wanted to carry," said Anna Wintour, the editor-in-chief of Vogue and artistic director of Condé Nast. "There was a moment when you couldn't walk a block in New York without seeing one of her bags, which were just like her; colorful and unpretentious."