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    How the pandemic is forcing managers to work harder

    BUSINESSES ARE still struggling to understand which of the pandemic’s effects will be temporary and which will turn out to be permanent. Three new reports attempt to analyse these longer-term trends. One is from Glassdoor, a website that allows workers to rank their employers. Another is from the Boston Consulting Group (BCG), a management consultancy. The third is from the Chartered Management Institute (CMI), a British professional body. Read together, they imply that firms stand to benefit—but that managers’ lives are about to get more difficult.
    One change that is all but certain to last is employees spending more of their time working at home. The Glassdoor report finds that less commuting has improved employee health and morale. Splitting the week between the home and the office is also overwhelmingly popular with workers: 70% of those surveyed wanted such a combination, 26% wanted to stay at home and just 4% desired a full-time return to the office. Perhaps as a consequence, remote work has not dented productivity—and indeed improved it in some areas. Flexible work schedules can be a cheap way to retain employees who have child-care and other home responsibilities.

    Telecommuting offers other potential cost savings, and not just the reduced need for office space. Remote workers do not need to live in big cities where property is expensive. If they live in cheaper towns and suburbs, companies need not pay them as much. Glassdoor estimates that software engineers and developers who leave San Francisco could eventually face salary cuts of 21-25%; those quitting New York could expect reductions of 10-12%. As the report points out, remote employees are, in essence, competing with a global workforce and are thus in a much weaker bargaining position.
    This point is reinforced by the BCG report, which finds that the pandemic has increased the willingness of companies to work with freelancers. Previously, many managers worried that legal and compliance issues prevented them from using outside staff. The pandemic forced firms to adjust their business models rapidly, and simultaneously led to growth in the pool of talented freelancers, as full-time employees had to be laid off. BCG says that “by embracing flexibility in whom they hire, internally or externally, [companies] can finally speed up operations and deliver faster on strategy.”
    Despite its advantages, a remote workforce, or one consisting of more outsiders, brings challenges for managers, as the third report demonstrates. The CMI surveyed 2,300 managers and employees. The results highlight just how important effective communication, and concern for workers’ well-being, is to good management. They also unearthed an interesting difference of perspective: nearly half of senior executives thought they were engaging employees more in decision-making since the pandemic, but only 27% of employees agreed.
    The survey also shows that the experience of remote working has not been uniform. Of those working virtually, 69% of women with children want to work at least one day from home when the pandemic ends, compared with 56% of men with kids. These women have had less contact with managers during the lockdown than their male peers have had, suggesting they have been neglected.

    Strikingly, 48% of British staff from minority ethnic backgrounds thought that workplace culture had got better during the crisis, against 34% of all employees. This suggests something was wrong with office culture beforehand: the CMI survey found that black employees were more likely than any other ethnic group to feel their manager did not trust them to undertake their role.
    So managers have a lot more work to do in responding to the pandemic. Executives need to tailor their behaviour to individual employees’ needs. Ironically, though managers may have feared that remote working would allow employees to slack, it may be that managers have not been up to the challenge. Bosses may have spent too much time videoconferencing and not enough speaking directly with subordinates.
    Ask someone what it is like to work at a firm and they may respond by saying what the offices are like—whether they are cramped, in a nice location and so on. In a world of remote working, employees may stress instead how the employer communicates with them. Not so much “management by walking around” as management by phoning—or Zooming—around. Time to get dialling.
    Editor’s note: Some of our covid-19 coverage is free for readers of The Economist Today, our daily newsletter. For more stories and our pandemic tracker, see our hub
    This article appeared in the Business section of the print edition under the headline “Managing by Zooming around” More

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    How China’s Jin Jiang and Huazhu put Marriott and Hilton to shame

    COVID-19 HAS, received wisdom has it, been terrible for hotels. The share prices of the eight biggest listed Western groups by room count have slipped by 14%, on average, this year. The glum consensus is, though, being challenged by two big Chinese chains. Both are enjoying resurgent demand for domestic travel as China has tamed its epidemic. And strength at home is fuelling ambitions abroad.
    Jin Jiang, the world’s second-biggest hotel firm by capacity, boasted an occupancy rate of 74% in the third quarter, in line with last year and more than double that of its bigger rival, Marriott International. Its market value has soared by three-quarters this year, to $6.4bn, above better-known Asian brands such as Shangri-La and Mandarin Oriental. Huazhu, which like Jin Jiang is based in Shanghai, saw revenue per available room recover by 40% from the second quarter, to 179 yuan ($27). The group is now worth $16bn, behind only Marriott and Hilton Worldwide among the world’s listed hoteliers.

    Similarly to their big Western rivals, Jin Jiang and Huazhu each owns a portfolio of brands that cater to different customers. Jin Jiang, which is controlled by Shanghai’s local government, operates everything from budget digs (think Marriott’s Fairfield Inn) to the upper end of the mass market (like Sheraton). Huazhu is a more all-encompassing group, which also competes in the luxury segment. Both companies prefer to offload the costs of hotel construction to franchisees in exchange for lower franchise fees, which enables them to expand much more rapidly.
    The pair indeed look poised to capture a greater market share at home, reckons Yulin Zhong of 86Research. In America chain hotels accounted for 72% of all hotel rooms at the end of 2019. In China the equivalent figure was just 27%.
    As incomes rise and Chinese travellers become more discerning, the standardised, dependable amenities and good service that big chains guarantee begin to look more appealing. Domestic providers of such things enjoy a substantial first-mover advantage. The number of hotel rooms in China held by Wyndham, the biggest foreign operator, is merely a third that of Huazhu and a fifth that of Jin Jiang. And their advantage is growing—the two firms have more than 7,300 hotels under development between them, mostly in China, equivalent to 47% of their existing stock.
    In a bid to break into the global market, two years ago Jin Jiang purchased a majority stake in Radisson, the world’s 11th-biggest hotel operator by capacity, for $332m. In January Huazhu paid $868m for Deutsche Hospitality, a posh German group. Such tie-ups allow the new owners to study the nuances of serving a sophisticated foreign clientele without spending millions on marketing their unfamiliar brands in the West (or raising the sort of hackles that Chinese acquisitions often do in more sensitive industries such as technology or finance). As American and European hoteliers continue to reel amid the pandemic’s second wave, more last-minute deals may be on offer for the Shanghai duo. ■
    This article appeared in the Business section of the print edition under the headline “Hospitable climate” More

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    Congress wants to boot Chinese firms from American exchanges

    FOR 18 YEARS American regulators have implored Beijing to let them inspect the China-based auditors of Chinese companies listed on America’s stock exchanges. Dream on, China’s Communist regime responded, citing sovereignty and national security. On December 2nd Congress had had enough. The House of Representatives passed a bill that would boot offending firms off American bourses if their auditors fail to comply with regulators’ information requests for three years running. Since it had earlier sailed through the Senate by 100 votes to nil, it can expect a presidential signature.

    This would put Chinese businesses worth a combined $2trn at eventual risk of expulsion, including Alibaba, a New York-listed internet titan (see chart). It would make it harder for Americans to get exposure to China through American exchanges. Those hungry for juicy Chinese stocks might end up buying them abroad instead, through channels over which Washington exerts no control.

    This article appeared in the Business section of the print edition under the headline “Boiling point” More

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    Volkswagen’s boss takes on the unions

    FIVE YEARS ago the Porsche and Piëch families, who control just over half of Volkswagen’s voting rights, poached Herbert Diess from BMW, a posh Bavarian carmaker. He was hired to run VW, the biggest by far of the the group’s 12 marques, because of his reputation as a cost-cutter and hard-nosed manager who would not shy away from taking on the unions. Untainted by VW’s “Dieselgate” emissions scandal, he made a good start by improving its poor profit margins. In 2018 he was rewarded with the job of running the entire group.
    Only two years later the dynamic Bavarian’s job is on the line after a series of clashes with organised labour. In June Mr Diess almost got the boot because of a dust-up with the supervisory board over a leak of confidential information about the group’s software failings. He alleged it might have come from the board’s union representatives. After that he was relieved of his job as boss of vw (which he had kept).

    This time the clash is more serious still. On December 1st the executive committee of the group’s 20-member supervisory board, the non-executive conclave that holds management to account, met to discuss his request for an extension of his contract. The current one runs to 2023, so extending it now would constitute a vote of confidence. No decision has been made public. The whole board will convene on December 10th.
    Mr Diess demands unequivocal backing from the board so that he can fulfil his mission to cut vw’s bloated workforce and boost profitability (which is lagging far behind Audi and Porsche, the stars of the group). He wants to fill the soon-to-be-vacant job of chief financial officer with an ally, perhaps Arno Antlitz, Audi’s finance chief. He also intends to make his confidant the group’s head of procurement. The two roles are central to his drive to boost efficiency at VW, which recently approved a €150bn ($181bn) investment plan.
    Bernd Osterloh, who heads the works council and also sits on the supervisory board’s executive committee, voted down Mr Antlitz and other candidates for the two jobs suggested by Mr Diess. That provoked Mr Diess to ask the board for support. Stefan Weil is the state premier of Lower Saxony, which, as the owner of 20% of VW shares, is entitled to two seats on the supervisory board. The Volkswagen law from 1960, which limits the voting rights of any shareholder to 20%, gives Lower Saxony a veto on any major decision. To protect investment and jobs in the region, representatives of the Land invariably back the board’s ten labour representatives, which means that organised labour tends to call the shots on VW’s board.
    “Osterloh and Weil will try to bring down Diess,” predicts Ferdinand Dudenhöffer of the Centre for Automotive Research, a think-tank. Mr Diess, who can be gruff, clashed with Mr Osterloh soon after he arrived from BMW—and regularly since then. On November 28th he published a manifesto on how to transform VW into a digital company focused on electric vehicles. “When I started in Wolfsburg, I was determined to change the Volkswagen system,” he wrote of his early days at VW’s headquarters. Mr Diess wanted to “break down antiquated structures, and make the company more agile and modern”. He succeeded in some areas, he said, but not everywhere.

    “Lower Saxony should give up its voting rights,” thinks Mr Dudenhöffer. Otherwise VW will remain constrained by its “provincial corset”. Mr Dudenhöffer believes that Dieselgate would not have happened without VW’s skewed corporate governance. With unions refusing to allow lay-offs, he explains, cheating may have seemed the only way to increase its profit margins. Toyota sells almost the same number of cars worldwide as VW with roughly two-fifths of the workforce.
    Bernstein, a research firm, published an open letter to board members in November urging them either to back Mr Diess or to sack him. Corporate Germany’s traditional model of co-determination has gone too far at vw, the letter says. It is supposed to help bosses and labour to work together rather than fight each other at every turn. Even if the board backs Mr Diess this time, the infighting will soon resume. It may be time to consider repealing the counterproductive Volkswagen law.■
    This article appeared in the Business section of the print edition under the headline “In the hot seat” More

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    The surprising resilience of American restaurant chains

    COVID-19 HAS been brutal for big tenants of American shopping centres, such as clothing stores and cinemas. Not so for the casual eateries that surround these outlets. Many of America’s sit-down dining chains are on track to emerge stronger after two quarters of pandemic-driven innovation. The final hurdle is the winter.
    Independent restaurants were early victims of lockdowns. Chewing, chatter and low air-flow made their busy floors prime candidates for super-spreader events. As early as March, state and local regulations shut down dining halls and began to whittle down the ranks of sit-down eateries. Yelp, a popular review website, reported more than 32,000 restaurant closures between March and September; 61% of these were predicted to be permanent.

    Larger chains fared better. With the credit lines and corporate infrastructure to roll out new delivery methods and safety measures, they steadily stemmed losses. Plenty have now recovered or exceeded their pre-pandemic valuations.
    New off-premises business has helped. Texas Roadhouse, a steakhouse chain, introduced to-go “family packs” and an online butcher selling meat to grill at home. This tided it over as it installed protective equipment and slowly reopened dining rooms. In October it reported a year-on-year increase in same-store sales.
    Other chains dealt with a fall-off in diners by propping up profit margins. Darden Restaurants, the parent company of Olive Garden, slashed promotional spending and simplified menus to reduce waste and costs. Olive Garden’s margins improved even as a lack of clients in flagship locations depressed overall sales. The company felt sufficiently self-assured after the second quarter to reinstate its dividend.

    America’s restaurant chains are outperforming international rivals, says Dennis Geiger of UBS, a bank. American consumers have steadily returned to fill seats as officials lift restrictions (see chart). In other markets stricter regulations and shyer consumers are holding back recovery. Hong Kong’s dining sector has yet to turn around from its spring collapse; receipts fell to an all-time low in the third quarter and even fast-food purchases fell by 23% relative to last year. The share price of Vapiano, a big German chain, stands at less than a tenth of its pre-pandemic level. Darden’s is back to where it was in January. Texas Roadhouse’s is up by a third.
    Winter will test the strength of American chains once more, as lockdowns loom to staunch the flood of new covid cases. At least chains with a national presence think that even as northern locations grow frosty, southern states will be opening patios. And data from Yelp show that interest in outdoor dining is breaking records: it was up tenfold in early October, year on year.■
    Editor’s note: Some of our covid-19 coverage is free for readers of The Economist Today, our daily newsletter. For more stories and our pandemic tracker, see our hub

    This article appeared in the Business section of the print edition under the headline “Malls’ last stand” More

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    The dawn of digital medicine

    IN JANUARY Stephen Klasko, chief executive of Jefferson Health, which runs hospitals in Philadelphia, chatted to a bank boss. The financier told him that 20 years ago health care and banking were the only industries yet to embrace the consumer and digital revolution. “Now”, Mr Klasko recalls him adding, “you are alone.”
    The banker had a point. The McKinsey Global Institute, the in-house think-tank of the eponymous consultancy, reckons that when it comes to digitisation, health care has lagged behind not just banking but travel, retail, carmaking and even packaged goods. Some 70% of American hospitals still fax and post patient records. The CEO of a big hospital in Madrid reports virtually no electronic record-sharing across Spain’s regions when the first wave of covid-19 washed over the country this spring.

    By exposing such digital deficiencies, the pandemic is at last spurring change. Confronted with shutdowns and chaos, doctors have embraced digital communication and analytics of the sort that has for years been common in other industries. Patients are growing more comfortable with remote and computer-assisted diagnosis and treatment. And enterprising firms, from health-app startups and hospitals to insurers, pharmacies and tech giants such as Amazon, Apple and Google, are scrambling to provide such services.

    McKinsey estimates that global digital-health revenues—from telemedicine, online pharmacies, wearable devices and so on—will rise from $350bn last year to $600bn in 2024 (see chart 1). Swathes of America’s $3.6trn health-care market are in for a digital makeover. The same is happening in China, Europe and most other places where doctors ply their trade.
    The groundwork for what looks poised to be the next trillion-dollar business has been accelerated by the pandemic. Money is pouring in. According to CB Insights, a research firm, a record $8.4bn of equity funding flowed into privately held digital-health darlings in the third quarter of 2020, more than double the amount a year ago (see chart 2). The industry’s “unicorns”, worth $1bn or more apiece, have a combined value of over $110bn, according to HolonIQ, a research firm. In September AmWell, a telemedic in which Google has invested $100m, raised $742m in an initial public offering; its market capitalisation is $6bn. On December 2nd JD Health, a digital pharmacy affiliated with JD.com, a Chinese online emporium, raked in $3.5bn in Hong Kong’s second-biggest IPO this year.

    No wonder investors are giddy. Demand for digital medicine is surging. Doctolib, a French firm, says its video consultations in Europe have shot up this year from 1,000 to 100,000 a day. Ping An Good Doctor, a Chinese online health portal viewed by some as the choicest part of its insurer parent, is expanding to South-East Asia in a joint venture with Grab, a Singaporean ride-hailing giant.
    As with many technology fads, some of this will turn out to be hype. Sober analysts at Gartner, a research firm, pour cold water on exaggerated claims made by proponents of individualised “precision medicine” and medical artificial intelligence (AI). But even they admit there are reasons to think that not all the excitement is overblown.
    Technologies such as sensors, cloud-computing and data analytics are becoming medical-grade just as the risk of contracting covid-19 in hospitals and clinics makes their adoption look more enticing than ever. Specialist firms like Livongo and Onduo make devices to monitor diabetes and other ailments continuously. A study by Stanford University found that nearly half of American doctors surveyed used such devices. Of that group, 71% regarded the data as medically useful. In June the Mayo Clinic, a prestigious non-profit hospital group, teamed up with a startup called Medically Home to provide “hospital-level care”, from infusions and imaging to rehabilitation, in patients’ bedrooms. Even the Apple Watch has been shown to predict a medical problem known as atrial fibrillation in a clinical trial.
    An Apple a day
    Patients are keen. A study of some 16m American ones just reported in JAMA Internal Medicine, a journal, found that their use of telemedicine surged 30-fold between January and June. American consumers surveyed in May by Gartner were increasingly using internet and mobile apps for a variety of medical needs (see chart 3).

    Critically, regulators around the world are pressing health-care providers to open up their siloed systems—a precondition for digital health to flourish. The EU is promoting an electronic standard for medical records. In August the Indian government unveiled a plan for a digital health identity with interoperability at its core. Kuantai Yeh of Qiming, a VC firm, says that China’s government, too, is trying to overcome resistance to electronic records from hospitals fearful of losing patients to rivals. Yidu Cloud, a big-data platform for hospitals, may already be the world’s largest health data set, thinks Kai-Fu Lee of Sinovation Ventures, a venture-capital fund in Beijing.
    Apple, with its reputation for protecting users’ privacy, is also championing a common standard. A combination of such efforts and regulatory pressure heralds “a new era” for digital medicine, thinks Aneesh Chopra, a former White House technology chief. Judy Faulkner, boss of Epic, a leading maker of software to manage electronic health records that Mr Chopra has long urged to be more open, declares she is all for it; 40% of the data managed by her firm are already shared with non-customers, she says. Kris Joshi, who runs Change, which handles over $1.5trn in American medical-insurance claims a year, sees more interoperability, at least between businesses.
    All this is helping medicine evolve from “a clinical science supported by data to a data science supported by clinicians”, argues Pamela Spence of EY, a consultancy. Does this make health care big tech’s for the taking? Amazon wants Alexa, its digital assistant, to be able (with your permission) to analyse your cough and tell you if it is croupy or covidy. In November the online giant, which already sells just about everything else, launched a digital pharmacy to take on America’s drug-distribution coterie of pharma firms, middlemen and retailers. AliHealth, a division of Alibaba, China’s e-commerce champion, is disrupting its home pharmacy market. Its revenues leapt by 74% in the six months to September, year on year, to $1.1bn. Apple has its watch and nearly 50,000 iPhone health apps. Google’s parent company, Alphabet, has Verily, a life-sciences division.
    Tech giants’ earlier forays into health care flopped, argues Shubham Singhal of McKinsey, because they had gone it alone. Medicine is a regulatory minefield with powerful incumbents where big tech’s business models, particularly the ad-supported sort, are not a natural fit. But the pandemic has also highlighted that existing providers’ snazzy hardware and pricey services too seldom genuinely improve health outcomes. If the new generation of digital technologies is to thrive it must “improve health, not increase costs”, thinks Vivian Lee of Verily. Her firm is moving away from fee-for-service to risk-based contracts that pay out when outcomes improve (eg, if diabetics get blood sugar under control or more people get eye exams).

    That points to a hybrid future where Silicon Valley works more closely with traditional health-care firms. Epic is using voice-recognition software from Nuance, a startup, to enable doctors to send notes to outside specialists; it has also teamed up with Lyft, a ride-hailing firm, to ferry patients to hospitals. Siemens Healthineers, a big German health-tech firm, is working with Geisinger, an American hospital chain, to expand remote patient monitoring. Patients of India’s Apollo Hospitals can use an app to get drug refills, tele-consultations and remote diagnoses—and even secure a medical loan through Apollo’s partnership with HDFC Bank.
    Dr Klasko, keen to prove the banker wrong, is embracing the hybrid approach with gusto. “You must have partnerships with providers, not just hundreds of unconnected apps.” He has brought bright sparks from General Catalyst, a VC firm that made early bets on many digital-health startups including Livongo, to work alongside his innovation team in Philadelphia. “Moving fast and breaking things does not work well in health care,” observes Hemant Taneja of General Catalyst. But nor does standing still. More

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    Social unrest has fuelled a boom for the diversity industry

    AS PROTESTS AGAINST police violence and racism convulsed America’s streets this summer after the killing by a policeman of George Floyd, a black man, the heat could be felt in the air-conditioned corner offices above. America Inc rushed to announce plans to tackle racial inequality. Walmart said it would set up a $100m initiative to fight racism. Pepsi vowed to double spending with black-owned suppliers. Facebook and Estée Lauder pledged to hire more non-white candidates. JPMorgan Chase promised to extend $30bn in loans over five years to minority households and businesses. Even NASCAR, which runs a motor-racing series for a mostly rural and white fan base, prohibited the display of confederate flags at its events. Diversity, many said, is not just the right thing to do. It is good for business.
    For one breed of firms it has been very good indeed. Consultancies and recruiters are enjoying a mini-boom as companies look for advice on how to become more inclusive. The newly created diversity, equity and inclusion (DEI) practice at Bain, a consultancy, now has two dozen staff, and another two dozen want to be part of it at least some of the time, says Julie Coffman, who heads it. She calls diversity “the next digital”. A partner at another consultancy says DEI is the “fastest growing business line we have right now”. Lyndon Taylor, who leads DEI at Heidrick and Struggles, an executive-search firm, discerns a “quantum” jump in demand for such services.

    Lots of companies promised to do things during the protests. Now, Mr Taylor says, they must work out what those are and how they are going to do them. The priority is hiring black senior executives or board members. Before 2020 diversity meant women, Latino, Asian and LGBTQ, says Dale Jones, boss of the Diversified Search Group, a 46-year-old recruitment firm originally set up to promote women. Now Mr Jones sees “a hyper focus around black leadership”, with board placements up by half and C-suite recruiting by around a third over the past year.
    Julie Hembrock Daum, who recruits board members at Spencer Stuart, another search firm, says she has to temper clients’ expectations about what is possible. She tells them to think long and hard about what qualities they need on their board rather than “a knee-jerk reaction like ‘we need a CEO who is black’”.
    Recruiters remind clients that boardrooms and C-suites are not overly blessed with other ethnic minorities, LGBTQ people or women. They also highlight other underrepresented groups, such as veterans, migrants and refugees, the “differently abled” and the all-encompassing “cognitively diverse” (consultant-speak for people who think differently).
    The diversity industry has expanded beyond finding new hires. Consultancies’ and recruiters’ services include training staff on bias, advice for diversifying supply chains and coaching senior executives on how to run more inclusive firms. Some offer broad-ranging strategies for organisational and managerial changes. As one recruiter puts it, “hiring can be a quick fix, but you can’t just add a couple of diverse fish. You actually need to change the water in the pond.”

    Demand for such services is unlikely to abate any time soon. A survey by Edelman, a public-relations firm, conducted soon after news of Floyd’s death, found that 60% of respondents said a brand’s reaction to the protests “will influence whether I buy or boycott them in the future”. Younger customers and employees are likelier to hold strong views: 53% of those aged 18-34 said they would not work for a firm that failed to speak out during the protests, compared with 42% for all ages.
    The change is driven by the drive and passion of younger employees, says Pamela Warren, who in July was appointed co-leader of the DEI council at Egon Zehnder, a big executive-search firm. As more of them enter the workforce, pressure on employers to be more representative of the population will grow—and with it demand for the diversity industry’s services. ■
    This article appeared in the Business section of the print edition under the headline “All inclusive” More

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    Is the attention economy being captured by virtual eyeballs?

    IT WAS A spectacular bit of timing. On November 16th Baidu, a Chinese online-search giant, said it would buy YY Live, a China-focused video-streaming service with 40m monthly users, for $3.6bn. Two days later Muddy Waters, an American short-seller, published a report claiming YY Live was “an ecosystem of mirages” and “almost entirely fake”. The share price of JOYY, YY Live’s parent company, slid by 26%.
    Muddy Waters alleges that JOYY’s platforms, including YY Live, are infested with “bots”—computers that log on to “watch” streams, pretending to be human. Many, it says, appear to sit in JOYY’s internal networks. The upshot, it alleges, is that somewhere between 73% and 84% of JOYY’s revenue is suspect.

    JOYY responded by saying the report contained “numerous errors, unsubstantiated statements and misleading conclusions and interpretations”. It said it would be open to “cash verification and diligence” conducted by “competent third-party advisers”. (JOYY and Baidu did not respond to requests for comment.)
    The allegations are unusual in accusing the platform of creating its own fake users. Technological complexity and minimal human oversight means the “attention economy” is full of virtual eyeballs. But such mischief tends to be the work of outsiders. Last year America’s Federal Trade Commission fined the boss of a firm called Devumi $2.5m for selling fake YouTube views, the first time such a complaint had been brought. Digital advertisers pay to have their ads shown to users. It is an open secret that many end up served to fake viewers, generated by computers infected with malware written for this purpose.
    A new report by the University of Baltimore and CHEQ, an anti-fraud firm, estimates that $35bn is lost annually to such scams, from a total market worth $333bn. South-East Asian fraudsters employ humans to scoot between racks of smartphones, tapping ads and installing apps, says Gary Danks of Machine, a firm that offers ad-fraud detection. Those in places with higher labour costs simulate phones on computers.
    Companies are fighting back. Last year Uber sued more than 100 ad agencies, accusing them of buying fake views on its behalf. Facebook launched a lawsuit against firms it says create malware that hijacks users phones, forcing them to generate fake ad clicks. Neither suit is likely to stem the fraudsters’ rise.
    This article appeared in the Business section of the print edition under the headline “You’ve been botted” More