Philippa Kaur

SOME READERS will have come to this article through The Economist’s app; others will have heard about it in a newsletter or podcast. The largest number, however, are likely to have arrived here via a link on Facebook. Except, that is, in Australia, where on February 18th the world’s largest social network blocked the sharing of all news articles, Australian or otherwise, as well as banning the sharing worldwide of any articles that originated in Australia.
The news blackout was Facebook’s last resort in a long-running battle over who should pay for news online. Rather than pay media companies in return for linking to their stories, as a forthcoming Australian law would require, the company opted to block all such links on its platform. The decision came hours after Google, the other big tech firm targeted by the new law, made the opposite decision, signing a deal with Rupert Murdoch’s News Corp to carry on linking to stories from that publisher.

The dust-up, which is far from over, pits the new media barons of Silicon Valley against the old ones of television and the press. What so far looks like a one-all draw in Australia is likely to be played out around the world in the months ahead.
Australia’s “news media bargaining code” has been in development for three years, but the argument is older. A decade ago offline media controlled more than 80% of the advertising market in Australia. Yet there, as in the rest of the world, advertisers have found that digital media are better at reaching their audiences. In the past ten years offline media’s share of the market has fallen by half. The lion’s share has gone to Facebook, which dominates display ads, and Google, which has cornered the search market.
Media companies claim that, by showing ads alongside links to their articles—sometimes including short summaries and photos—the tech platforms are in effect monetising content that is not theirs. The platforms retort that, on the contrary, the media firms do better out of the exchange. Facebook says that in Australia last year it sent 5.1bn clicks to Australian publishers, which it claims were worth A$407m ($317m). If publishers feel they are getting a bad deal, it asks, why don’t they simply stop publishing on Facebook?
Under the Australian government’s proposed solution, currently before the Senate, tech platforms would be expected to negotiate payments to publishers. In the event that the two parties could not agree, an official arbiter would decide whose suggested payment was fairer (splitting the difference would not be an option). The new rules would also require tech firms to advise publishers in advance of any changes to their ranking algorithm that would affect them.

Both tech giants are aghast. Paying publishers for news is not without precedent: last month Google agreed to compensate French ones for linking to their stories. Both companies have recently launched “curated” news products—Google News Showcase and Facebook News—in which payments are made to the creators of content (including, in the case of Facebook News, The Economist). But Australia’s winner-takes-all arbitration regime is a more alarming prospect than the system in France, where disputes are expected to be settled by the courts. The French deal, the details of which are private, probably involves payments for displaying snippets of news, not just links. And the requirement to publicise changes to their secret and ever-changing algorithms unsettles them further.
Whereas Facebook walked away, Google blinked. Its three-year deal with News Corp will see it hand over an unspecified amount of money to include content from the publisher’s titles, including in America the Wall Street Journal and the New York Post, and in Britain the Times and the Sun, in its News Showcase. Earlier in the week it had announced similar deals with smaller outfits, including Seven West Media and Nine Entertainment. Blocking links to news would have rendered its search engine much less useful, sending customers to rivals such as Bing, run by Microsoft (which has cheered on Australia’s plans). For Facebook, news matters less, representing less than 4% of what users see in their feed. And though Australia is one of Facebook’s biggest foreign markets, it represents only a sliver of its global revenues. So walking away was better than setting a precedent by coughing up, it calculated.
Public reaction in Australia is testing that assumption. Facebook botched the blackout, accidentally banning not just news sites but links to health departments, fire services, a women’s shelter and a project for children with cancer, among others. Although most of these mistakes were quickly corrected, it was a disconcerting demonstration of the power wielded by the company. Australian media—concentrated in the hands of News Corp—has no doubt who is to blame. “No likes as unsocial network blocks millions”, read a headline in the Murdoch-owned the Australian.
Scott Morrison, the prime minister, wrote in a post on Facebook that the company’s actions to “unfriend Australia” would “only confirm the concerns that an increasing number of countries are expressing about the behaviour of BigTech companies who think they are bigger than governments and that the rules should not apply to them”. He may be right. David Chavern, head of the US News Media Alliance, an industry body, tweeted that “we are expecting a big push in the US in the new Congress.” Julian Knight, the chairman of Britain’s House of Commons committee on media, accused Facebook of “bullying”. “These platforms make enormous sums of money from other people’s work, and they aren’t returning any equitable value to them,” he told the BBC.
The European Union, which is debating a bumper package of new tech regulations, is pondering something similar. Earlier this month Robert Thomson, News Corp’s chief executive, declared that “there is not a single serious digital regulator anywhere in the world who is not examining the opacity of algorithms, the integrity of personal data, the social value of professional journalism and the dysfunctional digital ad market.”
If those regulators copy the Australian model, more stand-offs between the new and old media barons are in store. And whoever wins those confrontations, it looks as if the main losers may be small news organisations. Too small to fall within the scope of Australia’s new code, they stand to see their bigger rivals become mightier still if tech firms agree to cough up. Meanwhile, if the tech firms decide to walk away, the tiddlers stand to lose by far their most important means of distribution. The Australian code has succeeded in shaking some money out of Silicon Valley. It is not clear that it will do a lot to help journalism. More

“WE INVEST A lot of money here in China,” proclaimed Travis Kalanick, founder and then boss of Uber, at a confab in Tianjin in June 2016. But, he added with foreboding, “we have a competitor who is investing even more.” Two months later the American ride-hailing giant threw in the towel, selling its Chinese operations to its Beijing-based rival, Didi. Uber lost some $2bn over two years in China. Its retreat paved the way for Didi to grow into China’s undisputed ride-hailing champion, which today processes over four-fifths of all domestic orders. The Chinese titan is widely expected to go public in the next few months, eight years after its launch. It could fetch a valuation of $60bn.
That Uber was willing to burn through so much cash, at least for a time, is a testament to the size of the prize. China boasts the world’s biggest ride-hailing market. According to its transport ministry, 21m trips were booked on ride-hailing platforms each day, on average, last October. That is double the figure in pre-pandemic America, when travel was safer. Until it sold its Chinese business, Uber received more orders in China than in any other country, including its home market. The gross transaction value of China’s ride-hailers reached 221bn yuan ($32bn) last year, up by more than half since 2017, reckons Frost and Sullivan, a consultancy.

America may have invented ride-hailing. But it is in China where the conditions are most fertile for it to flourish. The reasons go deeper than the size of the market. Didi has the most to gain. But its dominance will increasingly be contested.

Ride-hailing firms depend disproportionately on customers in big cities, where population density is highest. Around a quarter of Uber’s gross bookings by value in 2019 came from just five metropolises: Chicago, Los Angeles, New York, San Francisco and London. China has 14 metropolitan areas with a population of over 10m (see map), more than any other country.
Most of these cities, keen to reduce rage-inducing congestion, discourage private car ownership by restricting the supply of licence plates. In Beijing’s most recent bi-monthly licence-plate lottery 3.6m applicants competed for 6,370 number plates. Shanghai, China’s most populous city, puts a small number of licence plates up for auction each month. The average winning bid at the auction in January was 91,863 yuan, more than double what it was a decade ago and costlier than many mid-range cars (see chart). The southern boomtowns of Guangzhou and Shenzhen have hybrid models whereby some plates are allocated via lottery and the rest sold to bidders. All that leaves millions of disappointed wannabe motorists for ride-hailing firms to cater to.
Moreover, high urban density and the absence of American-style suburban sprawl turn parking space into a prized (and pricey) commodity. The number of public parking spaces per car in Beijing, China’s second-most populous city, is a fifth that in its American opposite number, Los Angeles. China’s extensive high-speed rail network, the world’s longest, blunts the benefits of car ownership for long-distance travel. And cheaper labour means rides can be offered at low prices, making them accessible to a wider group of customers. More than 340m Chinese booked a ride-hailing service at least once in the first half of 2020, notes the Ministry of Industry and Information Technology.

In 2019 Didi disclosed that it was losing an average of just 2% of the total fare on each ride. The company now says its “core ride-hailing business in China is already profitable”. It is coy about the details; Uber also insists it makes money from ride-hailing but continues to report vast operating losses, of $4.9bn last year. Yet most analysts in China take Didi at its word. The question for Didi, they say, is not whether it can break even but rather how well it can sustain profits, maintain its near-monopoly in China and expand abroad.
In recent years the firm has expanded into new business lines, from bike-sharing and food delivery to financial services. The aim is to build up a convenient “ecosystem” to make it costlier for customers to switch to a rival platform. Those rival platforms are not standing still, however. Jack Wei, boss of Shouqi Yueche, its closest Chinese competitor, is sanguine about the challengers’ prospects. He sees room for “multiple firms”, perhaps three or four, to thrive in China in the long term.
One way to carve out a bigger slice of the market is through differentiation, Mr Wei suggests. Shouqi prides itself on premium customer service (as Lyft, Uber’s domestic rival, tries to in America). Its ambition is to become the “leader” in upscale rides while “keeping up” with Didi in the mass market. China’s market is big enough that serving such a niche is a big business. Shouqi expects to turn a net profit this year on revenues of 8bn yuan.
Another way to capture market share is to build strategic alliances. Shouqi has a special arrangement with Meituan, a rising Chinese e-commerce star that offers, among other things, food-delivery and bike-sharing services. The agreement allows Meituan’s 477m annual active users to book Shouqi rides directly in its super-app. In return Shouqi pays Meituan a small commission on each booking. Crucially, Meituan excludes Didi, which it views as a threat, from its platform.

Despite its advantages, the Chinese market presents some obstacles. As in the West, the authorities are concerned about big tech. In December the markets regulator summoned six online giants, including Didi, and lectured them on how not to abuse their dominant positions. At the local level, more than a hundred municipalities have drafted stricter rules on who can drive for ride-hailing firms over the past four years. The aim appears to be to appease embattled local taxi industries. The rules typically set a high bar, such as requiring existing residency status in the city where a driver wants to work. Yet most drivers are migrant workers who lack the proper papers. In 2016 Didi complained that only 3% of its 410,000 drivers in Shanghai would have passed the test.

The arrival of self-driving cars, which Didi has been developing since 2016, may one day solve this problem, though probably not soon (last year Uber called it quits and spun off its autonomous-vehicle arm). In the meantime, Didi is hedging its bets by diversifying. It set up an international division in 2017. A chunk of the $4.5bn it raised a year later was earmarked for foreign expansion. Today it operates in 13 overseas markets, mainly in Latin America. Three years ago it acquired a controlling stake in 99 Taxi, which competes with Uber in Brazil, in a deal that valued the Brazilian startup at around $1bn.
But China remains the biggest opportunity, which explains why Shouqi has chosen to lock in on its home market for the time being. It helps that local authorities have, for the most part, turned a blind eye to rule-bending by the ride-hailing firms. Perhaps they calculate that unemployment resulting from tougher enforcement imperils social stability, not least as economic growth slows and good manufacturing jobs are harder to come by. One in eight drivers for Didi in China are military veterans, a group known for staging small-scale protests when their interests are harmed. Given Beijing’s harmony-obsessed leaders, it is a good bet that ride-hailing in China has plenty of road left to run.■ More

“SUCCESS BREEDS complacency. Complacency breeds failure. Only the paranoid survive.” So said Andy Grove, the Hungarian emigré who helped build Intel from a scrappy startup in the 1960s into the firm that did more than perhaps any other to put the “silicon” in Silicon Valley. They will be ringing in the ears of Pat Gelsinger, the firm’s new boss, who began his job on February 15th.
Mr Gelsinger is taking the helm of a company that looks, from some angles, to be in rude health. With $78bn in revenue in 2020, it is the world’s biggest chipmaker by sales. It has a 93% share of the market for powerful—and lucrative—chips that go into data-centre computers, an 81% share in desktop PCs, and operating margins of around 30%.

Yet Intel’s share price has underperformed those of rivals. Nvidia, a firm with one-seventh of Intel’s revenues, has a market capitalisation, at $370bn, that is half as high again (see chart). The manufacturing technology on which much of Intel’s success was built has fallen behind. It has missed the smartphone revolution. Some of its big customers, such as Apple and Amazon, are turning into competitors. Mr Gelsinger inherits quite the in-tray, then.

Start with manufacturing. Chipmaking is propelled by the quest for smallness. Shrinking the components in integrated circuits, these days to tens of nanometres (billionths of a metre), improves the performance of both the components themselves and the microchip as a whole. For decades Intel led the way, with its “tick-tock” strategy promising a manufacturing revolution every other year. Now “it has lost its mojo,” says Alan Priestley of Gartner, a research firm, who worked at Intel for many years. The firm’s “ten nanometre” chips were originally pencilled in for 2015 or 2016 but did not start trickling out until 2019—an unprecedented delay. The technology is still not mature. Worse, the next generation of “seven nanometre” chips are also late. In July Intel said they would not start arriving until 2022, a delay of at least six months.
Those manufacturing stumbles have cost the company some business. AMD, Intel’s most direct rival, outsources production to the Taiwan Semiconductor Manufacturing Company (TSMC), whose technology is now ahead of Intel’s. That means AMD’s chips are generally faster, and consume less power; its market share has more than doubled since 2019.
A second problem is the industry’s growing specialisation—a problem for Intel’s traditional business of making general-purpose chips, especially as desktop PCs continue to stagnate. Technology giants, flush with cash and keen to extract every drop of performance for their specific purposes, are increasingly designing their own semiconductors. In 2020 Apple announced it would drop Intel from its laptops and desktops in favour of custom-designed chips. Amazon is rolling out its “Graviton” cloud-computing processors, also designed in-house and made by TSMC. Microsoft, whose cloud business is second only to Amazon’s, is rumoured to be working on something similar.
Intel has also failed to make any headway in smartphones, the most popular computers ever made. An effort in the late 1990s to build graphics chips, which have also proved handy for artificial intelligence (AI) and to which Nvidia owes its enviable valuation, petered out. Attempts to diversify into clever new sorts of programmable or memory chips—in 2015 it paid $16.7bn for Altera, which makes them—have yet to pay off in a big way.

Mr Gelsinger has not yet said how he plans to deal with these challenges. But he does not look like a revolutionary. He began working at Intel aged 18, before leaving to run EMC, a data-storage firm, in 2009, before heading heading VMWare, a software firm, for the past nine years. In an email to Intel’s staff shortly after his appointment was announced, he invoked the firm’s glory days, describing how he was “mentored at the feet of Grove, [Robert] Noyce and [Gordon] Moore”, the last two being the firm’s founders. Like them but in contrast to his predecessor, Bob Swan, Mr Gelsinger is an engineer by training, who in 1989 led the design of one of its flagship chips.
His first job will be to try to turn the firm’s ailing manufacturing division around. Intel already outsources the manufacturing of some lower-end chips to TSMC. Its production woes will force it, at least temporarily, to send more business to Taiwan, perhaps including some of its pricier desktop and graphics chips. Daniel Loeb, an activist investor with a sizeable stake in Intel, sent a letter to the firm’s management in December urging it to abandon factories entirely and restrict itself to designing chips that other firms, such as TSMC, would make. On paper, that looks attractive: Intel spent $14.2bn on capital expenditure in 2020, almost all of it on its chip factories. AMD, meanwhile, spun out its manufacturing business in 2009, and is thriving today. Nvidia has been “fabless” since its founding in 1993.

Finding a buyer could be tricky, says Linley Gwennap, a veteran chip-industry watcher, precisely because Intel’s factories are now behind the cutting edge. Most of the world’s chipmakers, which might be tempted by the fabs, are in Asia. Since chips are a front in America’s tech war with China, politicians may veto a sale to a non-American bidder.
In any case, Mr Gelsinger has said that he will ignore Mr Loeb’s suggestion. In an earnings call in January the new boss said that, although the firm may expand its use of outsourcing for some products, he intends to pursue the expensive and difficult task of restoring Intel to its customary position at the leading edge of chipmaking. He also seems minded to pursue his predecessor’s strategy of diversifying into new products, including graphics-and-AI chips. “Our opportunity as a world-leading semiconductor manufacturer is greater than it’s ever been,” he wrote. The direction of travel, in other words, is not going to change. Intel’s shareholders will have to hope that Mr Gelsinger can at least get his firm back on the pace. More

THE HINDU pantheon of gods has no shortage of deities with multiple arms. India’s government, with a hand in industries from energy and steel to finance and travel, would fit right in. A long infatuation with central planning transformed state-run business into a sprawling industrial empire encompassing 5% of the economy. But acquiring appendages is easier than managing them. Profits as a percentage of revenues are just over 1% at state-run companies, compared with 7-9% for the private sector. Many are a loss-making burden on the public purse—more family lead than family silver.
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In 2016 the Indian government under the then newish administration of Narendra Modi reviewed the 331 firms under central-government control. It prepared a list of 28 that it believed could be sold without controversy. The most prominent were Air India, the flag carrier, steel- and cement-makers, big energy companies, a hotel operator and an assortment of entities whose time had passed, such as Scooters India (which last produced a scooter in 1997).

Five years later the number of companies controlled by the state, far from shrinking, has swelled to 348. In January Scooters India did fall off the list—by finally shutting down. The value of most survivors has shrivelled. State banks are saddled with bad loans. State energy companies have fallen victim to the shale and renewables revolutions. Air India’s rotten service has turned off customers. A note buried in the government’s 816-page survey of its holdings disclosed that production at the state-run condom-maker fell from 1.85bn units in 2018 to 820m in 2019.
This month India’s finance minister, Nirmala Sitharaman, has pledged to start offloading the leaden assets—in earnest this time. The initial list to be put on the block contains 13 companies, including two unnamed state banks. The biggest are Air India, Life Insurance Company of India (LIC, often seen as the government’s emergency bail-out provider) and Bharat Petroleum, a large refiner. Unviable companies that cannot be sold, Ms Sitharaman promised, will be shut down.
Such commitments make longtime India-watchers roll their eyes. Trade unions and bureaucrats have little to gain from transactions which undermine their jobs and authority. On the rare occasions where a past sale actually generated returns for the buyers, the bankers and officials involved were hauled before the authorities and grilled about selling too cheaply. Ms Sitharaman’s announcement has already led to an outcry from Mr Modi’s political opponents, for whom state ownership of the economy’s commanding heights is a point of pride—never mind that those heights look distinctly unHimalayan.
Government officials have been meeting business groups to say this time is different. People close to those encounters say the effort could be charitably described as sloppy. But that it is being done at all suggests a degree of sincerity on the part of Mr Modi’s administration that previous efforts lacked. The reason is India’s covid-battered finances. Without the $24bn Ms Sitharaman hopes to raise from the asset sales, the central government’s fiscal gap would expand from about 9.5% to 12% of GDP, putting India’s sovereign rating at greater risk of a downgrade.

Between LIC and Bharat Petroleum, which has a market capitalisation of $12bn and is half-owned by the state, the government could be two-thirds of the way towards its goal, bankers in Mumbai report. An accounting firm has been engaged to prepare LIC’s books, a necessary first step for a planned initial public offering. Tata Sons, a big conglomerate, is said to be interested in Air India, which it used to own before nationalisation in the 1950s. Three bidders have their eyes on Bharat, including two big global private-equity funds.
The first buyer in the new era of privatisation could be inadvertent. There is some speculation that the cash-strapped government may grant Cairn Energy, a British firm, a state-owned oilfield as part of a settlement over retroactive taxes. ■
This article appeared in the Business section of the print edition under the headline “Flogging the family lead” More

FOR DECADES America’s labour movement has been losing steam. Trade unions represent only 7% of private-sector workers. No significant piece of pro-union legislation has passed in recent years. Right-to-work laws, which undermine the clout of organised labour, have spread to 27 states. Now the union movement has been showing signs of life in, of all places, the technology industry.
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Last month software engineers and other workers at Alphabet, Google’s parent company, announced a new Alphabet Workers Union (AWU), to “protect…workers, our global society, and our world”. The union has not sought official status but charges 1% of total compensation and has just collected the first round of dues from its 800 or so members—given their plush salaries, a good-size pot to spend on lawyers. And on February 8th union-eligible workers at an Amazon warehouse in Alabama were mailed 5,800 ballots. If a majority back the creation of a union by late March, the facility will become the e-commerce giant’s first unionised one in America.

Amazon’s and Alphabet’s unions seem worlds away. The warehouse staff hark back to labour’s blue-collar roots. The AWU looks to some as a vehicle for wokeness; it is certainly a rarity in computing (see chart). But the two strands of unionisation are interwoven. Google’s coddled coders are intent on improving conditions for lower-paid data-centre workers and other TVCs (temps, vendors and contractors). “No lone wolf should howl alone without a pack,” declares a developer on AWU’s website. On February 5th the union filed a labour complaint against Modis, an outsourcing unit of Adecco. AWU alleges that Modis illegally suspended a data-centre worker for questioning a ban on discussing pay.

Alphabet can afford to improve the lot of TVCs if it has to. It can also, up to a point, humour its progressive software engineers; no serious financial harm has come of having to abandon bidding for contracts such as one to provide cloud-computing services to the Pentagon, to which some peacenik Googlers objected.
Amazon has more to lose. A good deal for Alabaman workers may inspire others to clamour for the same rights. Collective-bargaining demands, on the timing of shifts, expanding capacity or automating jobs, may dent Amazon’s flexibility and speed, says Mark Shmulik of Bernstein, a broker. That could eat away at its already-thin profit margins on retail operations, possibly forcing it to pass extra costs onto customers, who could shop elsewhere.
AWU and the Alabaman workers are spurring others. “Workers across the digital economy are feeling the moment,” says Tom Smith, national organising director for Communications Workers of America (CWA), an 83-year-old union. The CWA recently formed the Campaign to Organise Digital Employees. CODE-CWA, as it is known for short, is targeting all of tech, including notoriously harsh conditions in the video-game industry, where 60-hour “crunch” weeks ahead of big releases are common. Mr Smith says more tech workers will unveil union labour efforts shortly. Geeks of the world are, it seems, uniting. ■

This article appeared in the Business section of the print edition under the headline “Labour coders” More

IT HAS BEEN a year since the pandemic started to affect Western societies. Here is how one columnist coped as the months unfolded.
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February/March: In the beginning, all was confusion. In the early stages a “last days of Saigon” feel pervaded the city centre. The trains and offices became steadily less crowded; more and more shops closed for lack of staff. Parents turned into hunter-gatherers, desperately foraging in the supermarket aisles for the last supplies of pasta. Successful scavengers’ trolleys overflowed with rolls of toilet paper. People were braced for dystopia.

Office workers hastily caught up on the disaster-recovery plans they had previously ignored and were grateful if they were able to get a good broadband connection. Bartleby remembered that he had left all his research back at the office and made a sheepish return to a near-empty building. Heading back out with a rucksack of books and papers, he felt like a very nerdish barbarian participating in the sack of Rome.
April: Some individuals were still struggling to master Zoom etiquette. Faced with an editorial meeting on a bank holiday, Bartleby combined it with a soothing river walk. At some point, his phone (while still in his pocket) became unmuted, meaning that his heavy trudge, and heavy breathing, was audible to every other participant on the call. In blissful ignorance, he returned home to a blizzard of emails, tweets and WhatsApp messages telling him to shut up. Sure enough, “you’re on mute” and “please mute yourself” became the breakout phrases of 2020.
May: Perhaps the best month of the lockdown. The British weather was good, with the sunniest spring on record, making it possible to work in the garden. The novelty of working from home had yet to wear off, and the absence of the daily commute was still a blessing.
June: A “Groundhog Day” syndrome had set in. Every day seemed the same; weekends lost their meaning. The main dilemma for the month was whether to cancel the summer holiday, or to hold on in the hope that the decline in covid-19 cases was permanent. The prospect of any break in routine seemed absurdly alluring.

July: Foreign holiday cancelled. Start to fantasise about ways of shortening Zoom meetings. How about a countdown clock, like the ones on television game shows, as speakers approach the one-minute mark, with a loud buzzer at the end? Hint to all participants: when the person chairing the meeting asks, “Does anyone else have any comments?”, the correct answer is invariably “No”.
August: Rain ruins short domestic holiday. Restaurants reopen and Britons recreate the feasts of Bacchanalia. “Eat, drink and be merry for tomorrow we get locked down” seems to be the (prescient) motto. Meetings no shorter on return to work. More extreme measures clearly required: a mild electric shock for those who speak for more than two minutes? Or the “raise hand” button could be converted into a “thumbs down” function. If more than half the participants press it, the speaker is cut off.
September: Just as The Economist organises weekly in-person gatherings so staff can start the process of returning to work, cases begin to rise. Tip for readers: if Bartleby is invited to a summer party in 2021, it is a sign of the impending apocalypse.
October: Head back to now-empty office to pick up more books. Feel like archaeologist analysing ancient civilisation. In this era, humans sat in glass booths so they could be observed at all times. They also gathered in “meeting rooms” to take part in religious ceremonies conducted by a priest known as the “manager”, who recited a long list of meaningless tasks penitents must undertake.
November: British government imposes new national lockdown on November 5th. From this year on, the date will no longer be commemorated as “Guy Fawkes night” but as “Boris Johnson day”. All citizens will celebrate by wearing masks, washing their hands obsessively and avoiding their neighbours.
December: The house has lights, and a tree. But the real meaning of Christmas now becomes clear: no more Zoom meetings for at least a week. Not just silent nights, but silent days as well.
January: The vaccines are on their way to save us. Perhaps at some point in 2021 Bartleby will be back on the London underground, crammed in like a sardine while waiting for the platform to clear at Earl’s Court. Suddenly, social isolation doesn’t seem so bad after all.
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This article appeared in the Business section of the print edition under the headline “Diary of a plague year” More

“WE FEEL BETRAYED,” laments Petra Braun, a southern German who with her partner, Peter Wengerodt, runs Hansel & Pretzel, a German deli and bakery in Richmond, a suburb of London. Since leaving the European Union just over a month ago, Britain’s once-welcoming government has made it hair-raisingly complicated and costly to import sausages, marzipan, quark cheese, apple sauce and other authentic staples. This year she has yet to receive any of the weekly deliveries of goods from her homeland.
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The flipside of headaches for the likes of Ms Braun, whose small business employs 15 people, is a migraine for big German exporters, some of which furnish the ingredients for her fare. Deutschland AG was never a huge fan of Brexit. But the trade deal rushed through before the transition period ended at midnight on December 31st put German bosses’ minds at ease. A month into the new regime, “supply-chain problems are hitting German companies very hard”, says Joachim Lang of the BDI, the main association of German industry.

And it will get worse. Trade has slowed because of covid-19. As soon as it picks up again, commercial ties are in for a “massive stress test”, warns Mr Lang. In April British customs will introduce new rules (such as pre-notification and health paperwork for products of animal origin), followed in July by physical checks.
On February 9th the Association of German Chambers of Industry and Commerce said that 60% of the 1,200 German companies trading with Britain it surveyed consider their current business situation in Britain to be bad. Nearly as many expect further deterioration this year. One in six have either already shifted investments away from Britain or are planning to do so. They see the bureaucracy related to customs as their biggest business risk, followed by logistics and legal uncertainty.
Were it not for the pandemic these problems would make headlines in Germany, says Ulrich Hoppe, head of the German-British Chamber of Industry and Commerce in London. In January DB Schenker, a German logistics giant, stopped shipping consignments to Britain for a week. About 90% of them had incomplete or inaccurate customs forms, explains Maximilian Floegel of DB Schenker. The main stumbling block has been the proof of origin from the EU required under the trade agreement between the bloc and Britain. This is finicky to get for, say, a shoe made in Italy with a sole imported from China. DB Schenker set up a Brexit task-force to help clients with the customs bureaucracy. But, says Mr Floegel, “the problem remains acute.”
In December BMW, which pre-emptively moved engine production from Britain to Germany in 2019, warned that a no-deal Brexit would cost hundreds of millions of euros, which the carmaker would pass on to clients in Britain and on the continent. At least BMW had the resources to prepare for January’s customs checks and to stockpile car parts in Britain. The pocket multinationals of Germany’s Mittelstand face an even bigger cross-channel struggle.

Take Schott, a 250-year-old maker of sheet music for which Britain is the second-biggest market. The family company started to get anxious at the end of last year about tariffs levied on each classical piece. Delays at the border could leave British orchestras that rent its sheet music unable to get the scores in time for rehearsals, once these resume. This won’t be the last of Brexit’s unintended consequences. ■
This article appeared in the Business section of the print edition under the headline “From bad to wurst” More

“I AM BECOME meme, Destroyer of shorts.” This recent tweet by Elon Musk struck a messianic tone that his disciples lap up. The past month has boosted the cult status of the uber-entrepreneur. The GameStop saga gave him ammunition in his long-running battle with short-sellers, while also positioning him as a champion of the little guy taking on Wall Street. This week fans were spellbound by the announcement that Mr Musk’s electric-car maker, Tesla, had invested $1.5bn in bitcoin and would start accepting the cryptocurrency as a form of payment. Earlier, a barrage of cheeky tweets from Mr Musk about dogecoin (“the people’s crypto”) had sent serious investors scrambling to learn more about a digital currency that started as a joke.
Impish humour is a Musk hallmark, but the impact of his missives is no joke. They can set herds stampeding. His bitcoin announcement propelled it to new heights. Tesla’s market value briefly climbed back towards $830bn, near its peak. The history of business is littered with Pied Pipers but, as Peter Atwater, a social psychologist, points out, none has matched Mr Musk for the number of things he has helped turn red-hot, from cars and crypto to space travel and Clubhouse, a live-podcasting app he appeared on. That invites two questions. What makes the Musk scent so intoxicating to so many? And what are the pros and cons of being a cult CEO?

Larger-than-life business figures enjoy various degrees of celebrity. One category includes bosses of big firms who, while charismatic, fail to inspire feverish devotion. Jeff Bezos, Amazon’s outgoing boss, commands admiration on Wall Street and envy in other corner offices, but is too restrained to attract drooling groupies. Similarly, in his 20 years running GE, Jack Welch earned a reputation (since disputed) for red-toothed success, but was too cold-blooded to mesmerise the masses.
The second group comprises tycoons who achieve cultlike status but whose businesses scarcely warrant the adulation. Their trademark is often shameless self-promotion. Richard Branson has spent decades cultivating an image as a corporate hippy-cum-pirate who takes on complacent incumbents in industries from aviation to finance. Donald Trump touted himself as the arch-dealmaker. Both have hordes of wide-eyed fans. Neither has built a business that comes close to $10bn in value or is built for stability.
The third category is more exclusive: those who build both cults of personality and huge businesses. Joining Mr Musk in this club is Jack Ma, the founder of Alibaba, China’s tech titan. Millions of Chinese college students and other wannabe entrepreneurs bought into the image he cultivated, of a humble teacher turned philanthropic tech titan with a splash of cultural cool (he once appeared as a tai chi master in a martial-arts film). Admiration of Mr Ma has often verged on religious fervour. In 2015 a group of online merchants created a shrine to him, to bring them good luck on “singles day”, an e-shopping festival.
Messrs Musk and Ma walk a trail blazed by an Indian business legend: Dhirubhai Ambani, who founded Reliance Industries, a petrochemicals-to-telecoms conglomerate. The son of a village schoolteacher who cut his teeth trading polyester yarn, Ambani pioneered the equity cult. His trick, in a country where companies had long relied mostly on banks for funding, was to see the untapped potential lower down the pyramid. He toured India, convincing middle-class savers that they, too, could join the capitalist class. When Reliance went public in 1977 it attracted 58,000 punters. The shareholders he drew in have done well: the share price has gained 275,000% since the flotation. When 30,000 of them turned up to pay homage at one general meeting, it had to be moved to a park. These days only Warren Buffett attracts zealots in such numbers (or did before covid-19).

Cult status confers perks. Equity is cheaper when those buying it are devout retail investors, not hard-headed institutions. Small investors are also more patient, heeding calls to “keep the faith” during profitless investment splurges. Marketing costs are low; Mr Musk can use social media to burnish his (and Tesla’s) brand for nothing. Fans are willing to overlook flaws that more dispassionate consumers won’t. Tesla’s build quality is hardly world-class and regulators, most recently China’s, frequently flag up concerns. Yet it is hard to see that reflected in the firm’s sales or share price. Lastly, mass appeal means political clout. Ambani’s popularity helped him bend India’s trade policy to his advantage. Mr Musk’s helps explain soft treatment by governments and regulators, over rogue tweets or reopening factories in the pandemic.
But combining star power and scale is not risk-free. Mr Musk forged his reputation as a David, fomenting rebellions against Detroit and Wall Street elites. But now he is a Goliath: the world’s richest man who runs its most valuable carmaker. Playing both roles is a dangerous game. This is made more so by being a cultural icon, which leaves him more vulnerable to changing social taste—and taste can change in a trice online.
Ye shall fund you no idols
Sentiment could turn if his devotees start to doubt he has their interests at heart. Ambani was able to bat away repeated allegations of financial manipulation; he beat back short-sellers with help from a group of brokers known as “Friends of Reliance”. Mr Musk may not be so lucky. Acolytes who piled into GameStop stock after his “Gamestonk!!” rallying cry on January 26th were buying near the top. His recent crypto-talk looks self-serving in light of Tesla’s bitcoin move.
Finally, political advantage can turn into a bane. Just ask Mr Ma, who, overestimating his power, publicly chided Chinese regulators last year. Irked, Beijing scuppered the planned listing of Ant, Alibaba’s financial affiliate, and is forcing it to restructure. Joining the ranks of cult CEOs may lower your cost of funding. But it raises the cost of miscalculation. More