Philippa Kaur

In 1999 timemagazine put three heavyweights from America’s Federal Reserve and Treasury Department on its cover, calling them “The Committee to Save the World”. They were Alan Greenspan, Robert Rubin and Lawrence Summers. Their accomplishment was stopping economic upheavals from Russia to Brazil causing mayhem in the global financial system. Big stuff, for sure. But nothing compared with the task facing those who today could be called “The Committee to Save the Planet”. They are Mark Carney, former governor of the Bank of England, Larry Fink, boss of BlackRock, the world’s largest investment firm, and Jamie Dimon, ceo of JPMorgan Chase, America’s biggest bank.Their aims are no less than to stop global warming and create a fairer, more enlightened form of capitalism. In just a few years they have marshalled to the cause more than 100 central banks, tens of trillions of dollars of investors’ cash and bank finance, and the bosses of America’s biggest firms. Their ambitions are not just big. They are epochal. So why are they suddenly figures of mockery in the war on “woke” capitalism?Mr Carney was the first global policy wonk to raise his cufflinked fist. In 2015 he focused attention on the systemic risks to banks and insurance companies as a result of climate change. In doing so, he set in motion a blitzkrieg of regulatory activity to press companies and their lenders to disclose their exposure to the risks of global warming. But he has also stirred a backlash. During a polemical presentation last month Stuart Kirk, hsbc Asset Management’s head of responsible investment, attacked the “unsubstantiated, shrill, partisan, self-serving, apocalyptic warnings” about the risks a changing climate pose to financial markets. There was no mistaking the target of the dig: it was Mr Carney. Conservatives, including the Wall Street Journal, smelled red meat. They ridiculed central bankers’ focus on the long-term effects of climate change while missing more immediate risks such as inflation. Mr Fink has brought big money to Mr Carney’s climate crusade—and done well out of it, too. BlackRock, with $9trn of client assets, is a big force behind a surge in environmental, social and governance (esg) investing in recent years, with which it has wooed investors. For asset managers esg has been a high-fee gravy train. But it is an unholy muddle for investors. Returns have been shrivelling as tech stocks, a favourite of esg funds, swoon, and oil stocks soar. Since the war in Ukraine, the sustainability mantra has switched from shunning oil and defence stocks to embracing them. There is an emerging whiff of scandal. Last month dws, Deutsche Bank’s asset-management arm, was raided by German police over esg “greenwashing” allegations, which it has denied. And esg finds itself in the trenches of America’s culture wars. Ted Cruz, a senator, talks of a “Larry Fink surcharge” when people fill up their petrol tanks. Texas, which he represents, threatens to keep state money from funds that boycott oil and gas. No wonder Mr Fink now says: “I don’t want to be the environmental police.” Mr Dimon is the architect of the corporate corollary to this financial do-goodery. As chair in 2019 of the Business Roundtable, a ceo lobby group, he led efforts to change its creed from prioritising the interests of shareholders to putting them alongside those of customers, employees and others. Stakeholder capitalism has given rise to the activist ceo, speaking out on issues ranging from voting laws to education on sexual orientation. Questions about whether such concerns are relevant to a company’s bottom line, or agreed upon by all stakeholders, are mostly brushed aside. It may be tested if rising interest rates choke off the economic recovery, leading firms to fire some of the stakeholders whose interests they claim to serve. It is already costly. JPMorgan has been largely excluded from the Texas municipal-bond market since last September, when a law was passed stopping the state from doing business with companies that have anti-gun policies. And it is widely misunderstood. “I am a red-blooded free-market capitalist and I’m not woke,” Mr Dimon said in a defiant outburst this month.For all the pushback, the triumvirate can point to a few genuine reasons for using the bully pulpit. Governments are abjectly failing to take steps, such as high and co-ordinated carbon taxes, to tackle climate change. Companies have got away for too long without taking account of—or paying for—their externalities, especially their impact on the natural world. Consumers, employees and investors are increasingly motivated by threats to the environment, as well as to social welfare, and gravitate towards firms that want to make a difference.Missionary creep Yet there is a ring of truth to some of the criticisms, too. Take the accusations of mission creep. In tackling climate change, Mr Carney has urged central banks out of their comfort zones, though so far with little evidence that financial systems are being destabilised by the costs of the energy transition. Though Messrs Fink and Dimon are bound by fiduciary constraints to serve the interests of their asset-owners and shareholders, esg and stakeholder capitalism make such duties harder to define. The second valid criticism concerns the tendency towards sanctimony. Until recently the private sector was a sanctuary from political partisanship and moral crusades. Bosses should speak out when events occur that materially impact their businesses, rather than pontificate about all manner of extra-curricular concerns. Third, critics have a point when they note that it is governments’ responsibility to solve societal problems. This may be a world bereft of inspiring political leadership. But that is something voters must fix at the ballot box, not billionaires smuggling in their political views via the backdoor at annual general meetings. Saving the planet is one thing. Saving it by committee smacks of plutocratic overreach. Sadly, that appears to be part of the future Messrs Carney, Fink and Dimon have in mind. ■ More

“Can i keep the monitor and mouse?” a fired tech worker recently asked on Blind, an anonymous social-media platform where techies go to compare notes on employers. The questions used to be about how much Meta was paying or what perks Apple offered. As America’s technology giants contend with supply-chain uncertainties, a looming recession and sliding share prices, many users are instead asking if the sizzling market for tech jobs is cooling. The first sign of trouble came on April 28th. In a quarterly earnings call Brian Olsavsky, Amazon’s chief financial officer, said that the e-commerce titan’s warehouses were overstaffed, costing about $2bn (9% of operating profit) in the past year. A memo leaked a week later from Meta, Facebook’s parent company, said the firm was putting a freeze on new hires in most teams. Other big tech names, including Microsoft, Nvidia, Snap and Uber, have made similar noises. So far this year listed tech firms worth a combined $3.4trn have announced hiring freezes or firings. The commotion comes after a prolonged boom in tech jobs. During the 2010s the number of positions in America’s tech industry increased by 4.4% a year on average, triple the rate of the overall economy, according to a study by the Brookings Institution, a think-tank. The pandemic turbocharged the trend. Work, leisure and shopping shifted online, boosting demand for digital services. Last year listings for tech jobs increased by over 80% compared with 2020, observes Amit Bhatia, co-founder of datapeople.io, a research firm. Demand for tech skills also surged outside the sector as companies uploaded their operations to the cloud and boosted cyber-security, making the market even tighter. The number of applications for each tech-industry opening fell by a quarter in 2021. Much of the jobs growth came from startups and newly listed companies. But the tech giants, too, were adding plenty of employees. Between 2020 and 2021 Amazon, Meta and Netflix all increased their full-time staff by over a fifth. The ranks at Microsoft and Alphabet swelled by 11% and 16%, respectively. That compares with a median of 3% for firms in the s&p 500 index of America’s largest companies.So far redundancies, rather than just hiring freezes, have been largely confined to startups, such as Getir, a Turkish grocery-delivery app, and newly public firms such as Peloton, a maker of web-connected exercise bikes. Sackings at established tech companies have been modest. On May 17th Netflix, a video-streamer, laid off 150 staff. The following week news broke that PayPal, a payments firm, was cutting 80 or so jobs. In both cases that was roughly 1% of their respective workforces.Strategically important teams are protected from the measures. Microsoft’s hiring slowdown applies to its software units, such as Windows and Teams, but not its fast-growing cloud business. PayPal’s lay-offs affected staff researching emerging technologies, such as quantum computing, while sparing core functions. Many of the sacked Netflixers worked in marketing rather than on shows. Demand for the most prized skills, such as understanding of advanced data science, is so high that people who possess them will be sought out even in a downturn. At the big tech companies talented employees who hint that they want to jump ship are still receiving generous counter-offers, says Greg Selker of Stanton Chase, an executive-search firm. On May 16th Microsoft said it was raising its budget for salary increases for certain workers, in an attempt to stop talent from fleeing. Amazon did something similar a few months earlier. Tech-focused recruiters say business is perky. Indeed, the number of listings for technology-industry jobs in May and April was far higher than at the same time last year, notes Mr Bhatia. Some analysts argue the tech industry is bigger, more mature and stable than in the go-go 1990s, which may shield its workers from the pain of previous busts. Others note that after the dot-com bubble burst in 2000, tech work began disappearing only a year after the stockmarket crash. One thing is certain: the anxiety level of posts on Blind will stay high for a while. ■For exclusive insight and reading recommendations from our correspondents in America, sign up to Checks and Balance, our weekly newsletter. More

“Your kind is headed for extinction!” barks a senior officer to Tom Cruise’s hero in “Top Gun: Maverick”, a supersonic action flick released by Paramount last week. “Maybe so, sir,” replies Maverick. “But not today.”Cinema owners are feeling similarly defiant. Worldwide box-office receipts fell by 72% in 2020, when the pandemic forced film buffs to say goodbye to the silver screen and hello to their sofa. After ticket sales recovered only partially in 2021, many predicted curtains for theatres. Yet “Top Gun”, a sequel to a classic of the genre from 1986, raked in $248m on its opening weekend, the biggest-ever debut for a film starring Mr Cruise. Its domestic haul of $156m over the long weekend broke the Memorial Day record set by one of Disney’s “Pirates of the Caribbean” films in 2007.Theatre owners hope that “Top Gun” heralds the beginning of a broader recovery. It is only the fourth-biggest opener of the pandemic era (see chart 2). However, the other big hits—Sony’s “Spider-Man: No Way Home” last December, Marvel’s “Dr Strange in the Multiverse of Madness” in May, and Warner Bros’ “The Batman” in March—have all been superhero flicks, with young fans. “Top Gun”, by contrast, sold 55% of tickets to over-35s. This suggests that viewers old enough to harbour fond memories of Mr Cruise’s original turn as Maverick 36 years ago are now ready to come back to the movies, too.The recovery is far from complete. This year’s worldwide box office will be only about three-quarters of 2019’s, forecasts Gower Street Analytics, a research firm. China, which these days rivals America as the biggest cinema market, is still locked down and in any case increasingly hostile to Hollywood (“Top Gun” has no Chinese release date). Russia is also off-limits since its invasion of Ukraine. Above all, studios are focusing attention and resources on their streaming platforms, releasing fewer films in cinemas, for shorter runs.The summer release slate is promising: June will see “Jurassic World: Dominion” from Universal and “Lightyear”, the latest in Disney’s “Toy Story” series. “Thor: Love and Thunder”, the next Marvel movie, is out in July. Yet there will be strong reasons to stay at home, too. On the day that “Top Gun” was released, Netflix unveiled its latest season of “Stranger Things” and Disney+ launched a “Star Wars” spin-off, “Obi-Wan Kenobi”. In August Warner Bros Discovery will start a new “Game of Thrones” saga, before Amazon releases a “Lord of the Rings” series in September. This latest adaptation of J.R.R. Tolkien’s fantasy epic is the most expensive piece of television ever made, with a budget around three times that of “Top Gun”. ■For exclusive insight and reading recommendations from our correspondents in America, sign up to Checks and Balance, our weekly newsletter. More

Annual general meetings (agms) of shareholders used to be dull affairs. A company’s owners would gather to elect board members or, after the global financial crisis of 2007-09 exposed the gulf between fat-cat bosses and their workers, cast (mostly non-binding) votes on executive compensation. In the past few years, though, they have turned into corporate confessionals, with nothing short of a company’s soul at stake. Motions are proliferating on decarbonisation and diversity targets, political donations, workers’ rights and much else besides. A record 592 environmental and social proposals were filed in America ahead of this year’s agm season, which spans May and June. In the 20 years from Amazon’s initial public offering in 1997, the e-empire’s shareholders voted on 22 resolutions brought by fellow investors. At the latest agm on May 25th they were asked to weigh in on 14. How can the harried fund manager keep track? Enter proxy-advisory firms, hired by investors to sift through the resolutions and make recommendations on which boxes to cross. There may be no monopoly in the market for ideas, but when it comes to proxy advice the market is a cosy duopoly. Institutional Shareholder Services (iss) and Glass Lewis meet more than 90% of the demand for such counsel in America. The pronouncements of these corporate philosopher-kings grew in prominence after 2003, when new rules required American institutional investors to disclose their voting polices. For most investors it is cheaper instead to outsource the task to iss or Glass Lewis. The work is lucrative. In 2021 iss, which has annual revenues in excess of $250m, was bought by Deutsche Börse, a German exchange operator, for $2.3bn. The same year two Canadian public pension funds sold Glass Lewis to a private-equity firm.The duo’s recommendations carry weight. One study identified 114 institutional investors, representing more than $5trn in assets under management, who “robovoted” in lockstep with either iss or Glass Lewis during the 2020 proxy season, mechanically deferring to their recommendations. It is difficult to tell how a shareholder would have voted but for a proxy recommendation. Still, the advisers have almost certainly moved the needle in some important shareholder votes (and in plenty of unimportant ones, too). They have also wielded a softer power, moulding the ever-changing norms of corporate governance through changes in their voting policies and other public displays of wisdom. No press coverage of an important agm is nowadays complete without a nod to their stance, as when the media leapt on iss’s recommendations that dissented from Amazon management’s guidance on nine issues, from executive pay to human-rights due diligence, plastic use and gender and racial pay gaps. As shareholders’ concerns expand from narrow profits to broader “purpose”, you would expect the advisers to be enjoying a golden age. In fact, their proxy power may start to decline, for three reasons. The first is structural. In the past decade share ownership in America has become ever more concentrated in the hands of giant asset managers such as BlackRock, State Street and Vanguard. These behemoths run their own departments of corporate-governance consigliere and so have little need for the proxy advisers’ services. In 2008 the trio between them owned 13.5% of the average company in the s&p 500 index of big American firms, according to Bloomberg, a data firm. They now hold nearly a quarter. In May BlackRock struck a cautionary note on environmental and social resolutions, noting that these were becoming prescriptive to the point of micro-management. Smaller institutional investors may prefer to side with their bigger peers rather than the proxy firms in such matters, especially if the concentration of ownership continues to rise. Second, managements are putting up a fight. This year’s votes are still being tallied, but environmental and social resolutions have not had the knock-out run their backers expected, in part because companies that were caught off guard last year got their act together. On May 27th Twitter went further, announcing in a regulatory filing that it would ignore a shareholder vote which booted Egon Durban, a billionaire tech dealmaker, off the social-media firm’s board, citing the influence of proxy advisers on the result. iss had recommended evicting Mr Durban because he sits on six other public-company boards. That makes him “overboarded” in iss’s eyes. Twitter retorted that Mr Durban is a “highly effective member” with “unparalleled operational knowledge”. Merely sitting on more boards than the iss likes should not automatically disqualify him, the company implied.In 2019, 319 companies signed a letter chastising a lack of transparency and accuracy in proxy advisers’ recommendations and calling for regulatory action. Soon afterwards the Securities and Exchange Commission (sec), which had dithered for years, finally began to rein in the proxy firms—the third challenge to their role. In 2020 the sec adopted new rules requiring increased disclosure of potential conflicts and open channels of communication between proxy advisers and companies. Last November the agency’s current head, Gary Gensler, watered down some of those amended rules, for example removing the requirement that proxy advice be sent to the management allowing it to respond. But they remain less proxy-friendly than in the past.Annual general mayhemClashes pitting the proxy advisers against big investors, management and regulators look poised to intensify—all the more so if, as seems likely, agms continue to be a venue for some investors to push their politics. Asking two opaque firms, supposedly in the name of transparency, in effect to nominate America Inc’s boards of directors was dubious enough. Trusting them to resolve the complex trade-offs at the heart of 21st-century capitalism would be a travesty. ■Read more from Schumpeter, our columnist on global business:BASF’s plan to wean itself off cheap Russian gas comes with pitfalls (May 28th)Why America’s clean-energy industry is stuck (May 21st)Activist investors are becoming tamer (May 14th)For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More

A phrase that first became fashionable a decade ago is everywhere. “Bring your whole self” is one of four values that British Land, a property developer, trumpets on its website. Quartz, a publisher, ran a workshop last year called “How to navigate the whole-self workplace”. “Your whole self is welcome here,” pledges ing, a bank, to prospective employees. (Whole Foods uses the phrase on its global careers site, too, but it has a decent excuse.) There are spin-off selves. Workday, an enterprise-software firm, wants its employees to be their “best selves” at work. Finn, a classified-ads site in Norway, is hiring for a compensation and benefits specialist who loves to bring their “full self” to the office. Key, an American bank, prefers to use the term “authentic self”. The idea that unites these phrases is that employees need not pretend to be someone they aren’t. Instead of having a workplace persona and a non-workplace persona, people can just relax and always be themselves. Behind this thought lies a good intention—or rather lots of good intentions. The notion of the whole self variously captures the idea that people are more engaged in work if they believe in a firm’s purpose; that teams are more effective if colleagues understand each other; that people with different identities should feel comfortable in their own skins; that firms should care about and respond to issues that affect their staff’s well-being, from mental health to child care; and that leaders need to show some of their personal side to be connected with their staff. None of these things is silly. Many are in fact actively desirable. However, any idea that covers so much ground is bound to have holes in it, and this one would make a colander blush.Most obviously, no one should actually bring their whole selves to work. People are a melange of traits, some good and some bad. Many of them should be kept well away from the workplace. Your professional self displays commitment to the job and eats lunch at a desk. Your whole self is planning the next holiday and binges ice cream on the sofa. Your professional self makes presentations to the board and says things like: “Let’s get the analytics team to kick the tyres on this.” Your whole self cannot operate a toaster and says things like: “Has anyone seen my socks?” Pretending to be someone you are not is not a problem; it’s essential. For the same reasons, your employer may say it wants you to bring your whole self to work but doesn’t really mean it. A company is a hierarchy, in which even the most understanding bosses expect people to follow orders rather than their hearts. Say something that causes your firm embarrassment, as a senior hsbc executive did last month by making fun of apocalyptic warnings about climate change, and you will end up being disowned rather than lauded for authenticity. This column is named for a short story by Herman Melville, in which the eponymous character speaks his own truth by saying “I would prefer not to” to every single request made of him by his manager. He ends up dead. Any job that involves a uniform is by definition asking employees to subsume their personalities, not express them. When times are tough or performance is shoddy, an employee is an individual second and a line item in the budget first. If the circumstances require it, he will be asked to leave and take his whole self with him. As a result, the bringing of whole selves is carefully circumscribed. Candidates for jobs typically feel obliged to tell interviewers a few things about themselves in order to show that they are rounded human beings. Without fail those things are along the lines of “I have a dog called Casaubon, run a local food bank and love to go sea kayaking.” They are never “I hate animals, exercise and my fellow humans.” Lots of executives, too, deal in whole-selfery of a very synthetic kind. As a rule of thumb, if you are taking advice on how to be authentic, you are not being authentic. And if you are scheduling meetings in order to display vulnerability, you are mainly showing controlled cunning. One of the attractions of the workplace is that it is a place where there is a shared endeavour. That endeavour is called “work”. You need to be friendly to be a good colleague, but you don’t need to be friends. You need to be capable of empathy, but you don’t need to constantly emote. You have to turn up, try hard and play your part. You have to bring your role self. Read more from Bartleby, our columnist on management and work:The power of small gestures (May 28th)Making brainstorming better (May 21st)The woolliest words in business (May 14th) More

“When i took this job in 2008, I hoped I would be in this role for five years,” wrote Sheryl Sandberg on her Facebook page on June 1st. With that the chief operating officer of Meta, the social network’s parent company, announced her resignation. The year she joined Facebook made $272m in revenue. Last year turnover reached $118bn. Aside from Mark Zuckerberg, Meta’s boss, no one has done more to build the tech behemoth, which boasts more than 2bn users around the world. In 2008 Facebook was in its infancy. Mr Zuckerberg, then 23 years-old, had no concrete plans to make it a viable business. Ms Sandberg had been running Google’s advertising operation, after stints at McKinsey, a consultancy, and America’s Treasury. A compulsive organiser, she was brought on to provide adult supervision. She “handles things I don’t want to”, Mr Zuckerberg once said. That included commercial strategy and staffing, as well as politics.Ms Sandberg flourished in the role. She masterminded the firm’s growth as an ad platform. By 2010 Facebook was profitable. Last year only Alphabet, Google’s parent, earned more advertising revenue. One of her books, “Lean In”, became synonymous with female empowerment in the boardroom. All this helped cement her place as Mr Zuckerberg’s second-in-command.But over the past few years speculation grew that the relationship was fraying. Mr Zuckerberg apparently blamed Ms Sandberg for a scandal which involved the sharing of Facebook users’ private More

For espionage of the cloak-and-dagger variety, it is hard to beat the pages of John le Carré or Ian Fleming. But the world of corporate spying has plenty of drama of its own. Take the alleged skulduggery in a recent court case involving two American software firms. In May a jury awarded Appian, whose headquarters are in McLean, Virginia, a whopping $2bn in damages after it had accused Massachusetts-based Pegasystems of illegally snooping on it to gain a competitive edge. The trial revealed that Pegasystems executives had referred to a contractor hired to obtain some of the ingredients of Appian’s secret sauce as “our spy” in internal documents, and had dubbed the overall spying effort “Project Crush”. Pegasystems, whose stock plummeted after the ruling, and which is set to face a barrage of class-action suits from disgruntled investors, has vowed to appeal against the “unjust” decision.The episode illustrates how interest in business espionage, and learning how to foil it, has broadened. Snooping is no longer mostly centred on a few “sensitive” industries that have long been vulnerable, such as defence and pharmaceuticals. It is increasingly used to target smaller companies in surprising sectors, including education and agriculture. It has, in short, become more of a general business risk. Just as the cold war may have been the heyday of great-power spookery, at least in the popular imagination, corporate espionage may now be entering its golden age. There are two, closely intertwined reasons for this. The first is the inexorable growth of the intangible economy; intellectual property (ip) is increasingly the currency of business. The second is the growing sophistication of online hackers. ceos should be worried when they see their firms’ secrets being hawked on the dark web: one new marketplace, Industrial Spy, flogs stolen data and documents to “legitimate” businesses. Information is sold in packets ranging from a few dollars to millions. Keeping ip safely locked in the digital vault can be devilishly difficult.When they hear about ip, most people think of patents. Securing patents can reduce the risk, but this has become more difficult, in America at least, since a pair of Supreme Court rulings in the past decade chipped away at, respectively, protection for “business methods” and “abstract ideas” (which many software-based inventions are). This has left companies more reliant on developing and safeguarding an equally valuable type of ip: trade secrets. These can be anything from algorithms and client lists to chemical processes and marketing plans. Among the most famous trade secrets are Coca-Cola’s recipe and the formulation for wd-40. Most are more mundane: recent legal battles have involved industrial-baking agents and floor-resin formulas. Patents offer stronger protections, but trade secrets last for ever—if they are well kept. Snoopers’ grand adventureChristine Streatfeild of Baker McKenzie, a law firm, talks of a “pivot” in the past five years, as more companies in more industries wake up to the need to protect their secrets. She points to stepped-up efforts in consumer goods, steel and even cannabis. Baker McKenzie has advised legal marijuana-growers in America on steps they can take to curb rivals’ access to information about their cultivation techniques, soil recipes, extract flavouring and so on. Digitisation is making the problem thornier. As more established industries, from carmaking to education, increase investment in software-related technologies, they have more bits and bytes worth stealing. Industries with lots of startups are particularly vulnerable, says Sidhardha Kamaraju of Pryor Cashman, another law firm, because they combine lots of new tech with mobile employees who hop between up-and-coming firms. In 2018 Alphabet’s Waymo self-driving unit won a $245m settlement from Uber after alleging that one of Waymo’s former engineers took trade secrets along with his office bric-a-brac when he left for the ride-hailing firm.The good news for firms is that legislative protections for trade secrets have grown stronger. A turning point in America was the Defend Trade Secrets Act, passed in 2016, which greatly expanded the type and number of secrets covered by federal law—and whose passage led to a 30% jump in cases filed, says Tim Londergan of Tangibly, an ip-management firm.The bad news is that many firms are surprisingly poor managers of such secrets. It is not enough to make reasonable efforts to keep the information confidential. The secret also has to be clearly articulated. Failure to do this has been exposed in a number of cases that have gone to trial in recent years. In one, Mallet, a baking-products firm, failed to block an upstart rival from using release agents (which allow loaves and buns to be more easily removed from pans) similar to its own, after an American appeals court ruled, in effect, that Mallet hadn’t adequately described and documented its secret formula. Such rulings have encouraged more corporate leaders to demand “ip audits” and use the results to improve their safeguarding of valuable secrets. This, in turn, has fuelled the growth of a cottage industry of trade-secrets consultants and software-solutions firms. Lawyers, too, are in demand. “There are plenty of patent lawyers, but not enough who really understand trade secrets, and they tend to focus on litigation, once the problem has already arisen,” says Mr Londergan. “Companies need help earlier.” They also need to focus more on risks emanating from corporate partners, for instance in joint ventures. This is often “an afterthought” even among multinationals, Mr Londergan suggests. He points to tsmc, a Taiwanese chipmaker, as one of the few globally active companies that come close to best practice in how they articulate and manage their trade secrets.tsmc has good reason to want to get it right. It operates in a highly sensitive industry chock-full of proprietary information that rivals would love to get hold of. On its doorstep is China, which bears Taiwan ill will and is widely acknowledged as the world leader in ip theft (having been its victim in the 18th century, when Jesuit priests were sent from Europe to nick Chinese trade secrets in porcelain-making). Taiwanese authorities say that in recent months they have uncovered several attempts by China to poach semiconductor engineers using Chinese firms that registered on the island unlawfully by obfuscating their origins. In May Taiwan’s parliament passed a law that punishes anyone who obtains or uses designated “core” technologies for the benefit of “external entities” with up to 12 years in prison. America, too, has cracked down with China in mind. According to America’s Department of Justice, roughly four-fifths of all economic-spying cases it brings “allege conduct that would benefit the Chinese state”. The best-known case of suspected espionage by China, involving Huawei, a telecoms-gear maker, is the tip of a large iceberg.As big a threat as China is, it is not alone. Ostensibly friendly states spy, too. Israel has been known to snoop on American firms for the benefit of its tech and military industries. And it is not always helpful to think of the threats posed by different kinds of actors—company insiders, corporate rivals or governments—as discrete. Sometimes several of them are at work simultaneously. Take the recent sentencing of You Xiaorong, a former chemist at Coca-Cola, to 14 years at Uncle Sam’s pleasure. Ms You was convicted of stealing trade secrets relating to coatings on the inside of beverage cans. She used the filched formula to set up her own company in China, with backing from a local partner. Their venture was backed with grants from the Chinese government. Whether or not Chinese officials were aware of the theft is unclear.The case highlights another challenge for companies trying to keep a lid on secrets. They can spend as much as they like on beefing up their it systems, but they still need to watch out for older, more analogue forms of exfiltration. Operatives for Procter & Gamble (p&g) were once caught diving in dumpsters outside a Unilever office in Chicago in search of information about its consumer-goods rival’s marketing strategy. Ms You apparently used her phone to take pictures of sensitive documents to bypass Coke’s security measures. People use smartphones in offices all the time. How to tell if it is for nefarious reasons?Moreover, much corporate spying can be—from the point of view of those being spied on—frustratingly fuzzy. Some snooping is perfectly legal. Many hedge funds specialise in watching activity in factories, using foot-soldiers or satellite imagery, to gauge output and bet accordingly on stocks. At the other extreme is stuff that no ceo in their right mind would countenance: p&g’s top brass were so appalled when they learned of their lower-downs’ trash-rummaging at Unilever that they shopped their own company, resulting in a $10m fine.Corporate BondsIn between is a large grey area in which operatives “ride the ragged edge” of morality and the law, according to Eamon Javers in his book on corporate spying, “Broker, Trader, Lawyer, Spy”. Many of these work for outfits hired by companies to do their dirty work, sometimes to give them plausible deniability. The corporate-intelligence industry came of age in the vicious takeover battles of the 1980s and has since grown at breakneck speed. Its well-known names, such as Kroll and Control Risks, are at the top of a pyramid containing thousands of mostly small firms. Most such work is legal and quite dull—for instance, performing due diligence on clients’ prospective business partners. But there are cases of firms undertaking dubious activity, from wiretapping to impersonation. In the 19th century, the grandfather of the industry, Allan Pinkerton, laid out (and largely followed) a strict code of conduct. Mr Javers worries that some of Pinkerton’s modern day counterparts routinely violate many of his gentlemanly commandments.None of this is going away. Employee mobility is at or near an all-time high. Companies, and the tactics they use, get more desperate in downturns. And the geopolitical backdrop is growing frostier, increasing incentives for underhand activity by states or their proxies. “Casino Royale” it may not be, but the spectre of surging economic espionage is real. ■ More

A market downturn is a good time for buyers. Look at the tech industry. The Nasdaq, a tech-heavy index, has fallen by 30% from its peak in November and a flurry of deals are under way. Microsoft is working on the $69bn purchase of Activision Blizzard, a videogame maker. Since March, Thoma Bravo, a private-equity firm, has spent $18bn on two enterprise-software firms. Elon Musk is—perhaps—about to purchase Twitter, a social network. The latest big tie-up looks unusual. On May 22nd Bloomberg reported that Broadcom, predominantly a semiconductor maker, worth $214bn, is planning to buy vmware, an enterprise-software firm. If the deal goes through, it could be worth $60bn. A chipmaker buying a software firm may seem strange. But Broadcom has done the same thing in the past with striking success. Can it repeat the trick?Broadcom is an odd beast. It started life as Avago Technologies, a chipmaker based in Singapore. That firm bought a number of other chipmakers, including Broadcom, from which it took its name. In 2018 it tried to buy Qualcomm, a rival semiconductor firm, for $130bn. That would have been the biggest tech acquisition of all time. Donald Trump, then America’s president, eventually quashed the deal on national-security grounds because Broadcom was a foreign firm (even though it was in the process of moving its headquarters to America). After that, Broadcom changed tack. Later in 2018 it surprised the industry by buying ca Technologies, a software firm, for $19bn. The following year it snapped up Symantec, a cyber-security outfit, for $11bn. The motivation was not to link its semiconductors to its new acquisitions, but to run the software firms more profitably. Cost-cutting at both firms hurt future growth prospects but helped profits. Operating margins at Broadcom’s software units ballooned from about 30% before the takeovers to around 70% today.This private-equity-style approach has transformed Broadcom into a tech conglomerate. Today 26% of its revenue comes from software. With vmware that figure could grow to 45%. The shift into software has also boosted Broadcom’s overall operating margins, which have grown from 15% in 2016 to 32% today, among the best in the semiconductor industry. Investors seem pleased. Broadcom’s share price has nearly doubled over the past two years, compared with a 60% increase for the phlx, an index of chip manufacturers. In many ways Broadcom’s most recent target resembles its previous success stories. Like ca and Symantec, vmware sells infrastructure software and controls a large share of that market. According to Gartner, a research firm, the company holds about 72% of the server-virtualisation market, a technology that it helped to pioneer. Another similarity is that its services are “sticky”, notes Stacy Rasgon of Bernstein, a broker. It is hard for existing customers to switch away because they are reliant on vmware’s software to run their server infrastructure.But Broadcom may struggle to repeat its past successes. Antitrust regulators are ever more wary of big tech mergers. And even though the two firms do not compete directly, America’s Federal Trade Commission is already investigating whether Broadcom forced customers into exclusive agreements that make it difficult for them to shop around. Another risk is a cultural clash. Last year sas Institute, another enterprise firm, rejected Broadcom’s takeover bid. Part of the reason was that employees worried that its cost-cutting strategy would put an end to their office perks.And some worry that Broadcom’s pursuit of profits will mean that vmware misses out on a bigger prize. It is in the middle of its own pivot, planning to grow its subscription and cloud arms from 25% of sales today to around 40% by 2025. In doing so, vmware “has a shot at being the layer on which most companies use the cloud”, argues Patrick Moorhead, a chip-industry analyst. Cutting investment and marketing would stifle such efforts just as cloud computing is booming. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More