12 ★ FINANCIAL TIMES Friday21 February 2020

COMPANIES

I

t is ten years to the week since Brussels began its first

competition investigation aimed at restraining the

burgeoning online power ofGoogle. If you wonder

what the EU trustbusters have achieved in all the

cases and the years that followed, you aren’t alone.

The search company’s rivals in that first case — into

online comparison shopping — still complain about the

ineffectiveness of the supposed “remedies” the EU

ordered, and Google’s appeal against a €2.4bn fine was

only heard this month. In the meantime, the company’s

revenues have grown seven-fold and its influence on

online activity continues to grow, seemingly unrestrained.

That makes the new data-sharing principles laid out by

the EU this week all the more important. European regula-

tors have set their sights on cracking open the data silos

that have helped to reinforce the power of the dominant

tech companies. But while forcing more sharing of infor-

mation to open up digital markets may sound like a good

thing, it will be extremely difficult to break the hold of the

dominant tech platforms.

What Brussels has sketched out is a two-pronged attack.

One targets classes of data that can be unlocked to ensure

competition in very specific, high-value markets that

might otherwise fall under the sway of Big Tech. There is a

direct parallel here with personal banking information,

which must already be shared under European rules.

The clearest example concerns the many different types

of health and wellness data. Someone with a hoard of per-

sonal information generated by a fitness tracker, for

instance, might want to make that information available

to another health app. With the right level of user control,

this could open the way for innovative companies to build

new services on top of the digital economy’s most impor-

tant raw material.

This is all well and good, and a Data Act planned for next

year will lay the ground rules. But it doesn’t deal with a

more fundamental problem of Big Tech’s data power, and

one which will require action on a different front.

As the EU described it this week, the largest online plat-

forms derive huge benefits

from the “richness and vari-

ety of the data they hold”.

Their power comes from the

range itself, rather than any

single class of data, with dif-

ferent types of information

being combined to yield

insights. Volume also mat-

ters: the power of big data

lies in being able to discern patterns and train machine

learning models.

Opening this kind of data up to promote greater compe-

tition would be neither easy, nor particularly desirable.

Much of the data collected by Big Tech concerns how indi-

viduals interact with their services, or other information

gleaned from observing online behaviour. It will be legally

challenging to force companies to hand over data like this

that they generate themselves, and rightly consider a valu-

able corporate asset. The same goes for the insights they

derive from their observations.

Trying to free up this kind of information to promote

greater competition also risks running headlong into the

rival goals of privacy regulators. Europe is less than two

years into its GDPR crackdown on the permissive data-

sharing economy — something that risks hampering freer

competition.

This is clearest in the limits that have been put on the use

of third-party data, or information that a company hasn’t

collected itself. Such rules play into the hands of a com-

pany such as Google that has no shortage of first-party

data, thanks to its ownership of several services that each

reach more than 1bn people. The search company said

recently it plans to outlaw third-party cookies in its

Chrome browser within two years. That may give users

more confidence they aren’t being tracked, but it will

make life much harder for Google’s rivals.

Even if it was possible to force Big Tech to share the

troves of data required to yield deeper insights, there are

other reasons that consumers might not see it as welcome.

The only thing more sinister than a giant tech company

that knows everything about you is the thought that half a

dozen giant tech companies will know everything about

you — and they will all be fighting for your attention.

Brussels says it will deal with this wider data issue in the

context of its broader review of the dominant online plat-

forms. That is a looming battle that is starting to assume

titanic proportions — though past experience suggests

that, when it comes to limiting the power of Big Tech, it

might be best not to expect too much.

[email protected]

INSIDE BUSINESS

TECHNOLOGY

Richard

Waters

EU faces an uphill

struggle to loosen

Big Tech’s grip on data

Volume matters:

the power of big

data lies in being

able to discern

patterns

SA R A H P R OVA N A N D ST E FA N WAG ST Y L
LONDON

Julius Baer has been banned from car-
rying out large acquisitions in a set of
sanctions imposed by Swiss regulators
for falling “significantly short” in the
fight against money laundering.

The Financial Market Supervisory
Authority said yesterday the private
bank’s shortcomings had arisen in con-
nection with alleged cases of corruption
between 2009 and 2018, linked to
Petróleos de Venezuela, the state-owned
oil and gas group, and Fifa, international
football’s governing body.
“The proceedings, now concluded,
found that Julius Baer was in breach of
obligations to combat money launder-

ing and its duty to put in place an appro-

priate risk management policy, repre-

senting a serious infringement of finan-

cial market law,” Finma said.

The Zurich-headquartered group

must “undertake effective measures to

comply with its legal obligations in com-

bating money laundering”, speed up

existing efforts in this area and adjust its

recruitment, remuneration and disci-

plinary policies for client advisers.

Its board of directors “must also give

greater attention to its [anti-money

laundering] responsibilities” and the

bank was “prohibited from conducting

large and complex acquisitions until it

once again fully complies with the law”.

Julius Baer said it acknowledged “in

principle the conclusions regarding

shortcomings in the fight against money

laundering in its Latin American busi-

ness” and said it would “rapidly and res-

olutely enforce implementation of the

measures initiated and decreed”.

The reprimand from Finma, which

will appoint an independent auditor to

ensure its demands are met, was widely

expected after the conviction in the US

of a former Julius Baer banker forlaun-

dering funds mbezzled from PDVSA.e

Julius Baer was not charged in the

case.The judgment came shortly after

further job cuts were unveiled under

plans byPhilipp Rickenbacher, chief

executivesince September, to focus on

higher-margin products at the bank,

which reported an almost 40 per cent

drop in annual net profit for 2019.

Financials

Watchdog bars Julius Baer from large deals

O L I V E R R A L P H

INSURANCE CORRESPONDENT

Big payouts in the US and a string of

expensivenatural catastrophes aveh

hit profits atSwiss Re, the reinsurance

group.

The company, which sells insurance to

other insurance companies, said so-

calledsocial inflation —the trend of US

juries becoming increasingly generous

in awarding compensation payments

for everything from motor accidents to

medical malpractice — hadreduced its

earnings in the country.

Swiss Re was also hit by payouts for

natural disasters, including storms in

the US, Japan and the Bahamas, as well

as wildfires in Australia.

“[There was a] relatively heavy bur-

den for us,” Christian Mumenthaler,

chief executive, said yesterday, as the

group reported annual results. “The

natural catastrophes last year were in

areas where we have a higher market

share.”

Net income for the year was $727m,

up 73 per cent year on year but still well

short of analysts’ forecasts of $1.3bn.

Between 2011 and 2016 the company

regularly reported annual net income of

more than $3bn, but a series of bad

years for natural catastrophes has

pushed profits down since then.

Shares in Swiss Re fell 4 per cent in

early trading.

The group’s combined ratio — a meas-

ure of claims and costs as a proportion of

premium income — came in worse than

expected, according to analysts at RBC

Capital Markets, as Swiss Re strength-

ened its reserves in both the property

and casualty reinsurance division and in

corporate solutions, which sells insur-

ance to big businesses.

“We are pleased Swiss Re has taken

action to tackle the issue, but until the

claims environment changes materially,

we expect [it] will cloud the outlook for

the company,” said Kamran Hossain,

RBC analyst.

The corporate solutions business,

which is in the midst of a turnround

effort, reported a net loss of $647m and

a combined ratio of 127 per cent which

John Dacey, chief financial officer,

described as “unacceptable”.

Insurance

Swiss Re profits hit by storms and wildfires

A N N A N I C O L AO U — NEW YORK

ViacomCBS hares plunged after thes
newly recombined television and film
company swung to a loss in its first earn-
ings report after along-awaited merger.
Viacom — whose brands include the
MTV music TV channel and the Para-
mount film studio — closed a merger
with broadcaster CBS in the final quar-
ter of last year, as smaller media groups
huddle together to compete in a
crowded, cut-throat entertainment
business that has been upended by
streaming serviceNetflix.
But the newly remarried ViacomCBS
appeared to face the same troubles, as

revealed by its income statement in the

fourth quarter. The group swung to a

$258m loss in the final three months of

2019, or minus 42 cents a share, well off

from consensus forecasts for positive

earnings of $1.32 a share.

On an adjusted basis, earnings were

97 cents a share, also below the $1.

analysts were looking for.

Shares in ViacomCBS dropped 15 per

cent yesterday morning.

The company said merger expenses

weighed on its results, as it recorded

$468m in restructuring costs in the

quarter, but it forecast that the deal

would allow it to save $750m this year.

Total revenue in the quarter dropped

3 per cent from a year ago to $6.9bn,

which was below analyst expectations

for $7.3bn.

Consolidation in the entertainment

business has left smaller media groups

seeking safety in scale. ViacomCBS,

with a market capitalisation of about

$18bn, is still a relative minnow in the

industry after the historic consolidation

of Disney with Fox, and AT&T with

Time Warner.

These media giants are now fighting

back against Netflix with their own

online video services, as the entire

entertainment industry seeks to adapt

itself to a digital future.

ViacomCBS for the first time reported

precisely how much money it is mak-

ing from streaming video: $1.6bn in US

revenues last year, thanks to 11m US

subscribers.

Bob Bakish, the former chief execu-

tive of Viacom who now leads Viacom-

CBS, laid out plans for the coming year,

extolling the environment in which

“demand for content has never been

higher”. In particular, the company is

hoping to grow its subscriber numbers

by folding CBS All Access, the broad-

caster’s existing streaming service,

together with programming from

Viacom cable channels, including

MTV, Nickelodeon, Comedy Central

and BET. The new product is set to

debut later this year.

Analysts, however, have been uncon-

vinced that recombining Viacom

with CBS will be enough to revive the

group’s fortunes.

“Nothing has happened since the for-

mal recombination to change our view,”

said Bernstein’s Todd Juenger last

month. “What has happened in the time

since we last updated and opined on CBS

and [Viacom]? Nothing good,” he said,

noting that cord-cutting and traditional

TV viewership trends have worsened

while competition from streaming

rivals has increased.

Media

ViacomCBS shares plunge after loss

Recombined group’s debut

results reflect struggles of

mid-tier in age of Netflix

AT T R AC TA M O O N E Y — LONDON
B I L LY N AU M A N — NEW YORK

“BlackRock —murderer.” “Greenwash-
ing kills.” “Our planet. Your crime.”
These were the wordsgraffitied n theo
walls of BlackRock’s Paris office after
climate activists barricaded themselves
inside earlier this month.
“It was scary and traumatic. It is only
hitting us now,” said a BlackRock
employee about the protest, which was
organised by Youth for Climate.
After years focusing on oil, gas and
mining companies, campaigners con-
cerned about global warming are turn-
ing their attention to the world of
finance. They hope public pressure on
banks, asset managers and insurers will
make them think twice about investing
in some of the most carbon-intensive
and polluting industries.
“If you get banks to change their cli-
mate policies, you hit multiple sectors at

once,” said Wolfgang Kuhn, director of
investor engagement at ShareAction, a
UK-based campaign group.
In the US, JPMorgan Chase has
become atarget. “There is nowhere to
start but at the top. AndJPMorgan
Chase s the largest financier to the fossili
fuel industry and to companies expand-
ing fossil fuels,” said Eli Kasargod-Staub,
executive director of Majority Action, a
US-based shareholder advocacy group.
The public campaign against JPMor-
gan Chase has included a full-page
advert in the Financial Times, a
YouTubevideo eaturing Jane Fondaf
and a series of protests, including the
occupation of a Washington DC branch
of Chase bank. Majority Action has also
called for investors tooppose het
renomination of JPMorgan director Lee
Raymond, a former ExxonMobil boss.
Activists do not expect JPMorgan
Chase to abandon fossil fuel investment
overnight but want it to set out a path to
align the bank with the Paris climate
goals, said Patrick McCully, climate and
energy director at the Rainforest Action
Network. In the immediate term, they
are calling for the bank to stop investing
in the most polluting fossil fuels. “You
are going to see people cutting up their

credit cards, you are going to see pro-

tests, and you are going to see share-

holder pressure. And it’s not going to

stop with JPMorgan,” said Ellen Dorsey,

executive director of the Wallace Global

Fund, a philanthropic organisation

backing the campaign.

Investors are also putting pressure on

the industry, proposing climate-related

resolutions at shareholder meetings of

banks andasset managers ncludingi

JPMorgan,Goldman Sachs, BlackRock,

Bank of AmericaandBarclays.

The number of climate resolutions

that went to a vote at a financial com-

pany’s annual meeting has risen from

four in 2015 to 19 last year, according to

data provider Proxy Insight.

As scrutiny has grown, the industry

has been forced to respond. In October,

more than 50 financial institutions, with

$2.9tn in assets, said they woulddisclose

the carbon emissions of their loans and

investments, while 1,000 organisations

have signed up to the Task Force on Cli-

mate-related Financial Disclosures, an

initiative led by Mark Carney, outgoing

governor of the Bank of England.

Some companies, such asBNP Pari-

bas, havestopped financing certain busi-

nesses in industries that are among the

biggest contributors to climate change,

such as coal mining. BNP Paribas has also

set deadlines for ending its funding of

certain energy companies if they do not

shift to lower-carbon operations, said

Hervé Duteil, chief sustainability officer.

Other financial companies are plan-

ning to invest in cleaner energy. “We

should not just be looking at the risk,”

said Nigel Wilson, chief executive of UK

insurer Legal & General. “Now these

[low-carbon] technologies are becoming

cheaper our job is to back this up with

money and make these things happen.”

According to the World Resources

Institute, campaigners still have some

way to go in persuading the financial

industry to change its habits. Areport

last year found global banks had poured

$1.9tn into fossil fuel financing since the

Paris agreement was adopted and only

half f the world’s largest private sectoro

banks have a sustainable finance target.

But there is evidence that action by

shareholders and campaigners s havingi

an impact on access to capital for some

fossil fuel producers, said Ben Nelson,

analyst at Moody’s.Peabody Energy, a

US coal company, recently failed to

secure a refinancing to facilitate a joint

venture with ArchCoal. Mr Nelson

believes this was at least partly because

banks’ attitudes are starting to change.

JPMorgan declined to comment on

the shareholder resolutions targeting

Mr Raymond, but said it is doing a “sig-

nificant amount of work” to account for

“climate-related risk and opportunity”.

BlackRock condemned the protest at

its Paris office but pointed to an open

letter from Larry Fink to fellow chief

executives in January, which set out

changes aimed at putting sustainability

at the centre of investment strategy.

“We believe we have a significant

responsibility — as a provider of index

funds, as a fiduciary, and as a member of

society — to play a constructive role in

the [energy] transition,” he wrote.

However, somewarn the pressure on

banks and asset managerscould have

negative consequences. “If you want

investors to divest or banks to stop

financing [fossil fuel companies], you

could end up with ownership moving to

private people or people who don’t care

[about global warming],” said Simon

Gergel, chief investment officer for UK

equities at Allianz Global Investors.

“If you force the fossil fuel industry

away from the public eye, it might lead

to the worst practices.”

Financials. nvironmental campaignE

limate activists turn their fire on Wall StreetC

Banks and asset managers

under rising pressure to stop

backing polluting industries

Environmental

protesters

picket a branch

of Chase bank in

New York in

November

Erik McGregor/LightRocket/

Getty

‘Now these [cleaner]

technologies are becoming

cheaper, our job is to back

this up with money’

‘What has

happened

since we

last updated

and opined

on CBS and

Viacom?

Nothing

good’

FEBRUARY 21 2020 Section:Companies Time: 2/202020/ - 18:32 User:sanjay.gohil Page Name:CONEWS1, Part,Page,Edition:USA, 12, 1