The Washington Post - 02.11.2019

SATURDAY, NOVEMBER 2 , 2019. THE WASHINGTON POST EZ RE A

Economy & Business

ENERGY

ExxonMobil, Chevron

hurt by lower prices

ExxonMobil and Chevron on
Friday posted sharply lower
quarterly results despite
increases in oil and gas
production as lower energy
prices soured earnings for most
oil majors.
The two U.S. oil majors
credited higher production in
the top U.S. shale field for
similar 3 percent volume
increases, while warning that
sizable cost overruns at a giant
oil field in Kazakhstan, where
both are partners, would affect
future earnings.
Results mirrored weaker
quarterly earnings at BP and
Royal Dutch Shell, which
indicated they might delay
dividend increases or a buyback
program if current low prices

continue. In the third quarter, global benchmark Brent crude fell 8.7 percent, the worst quarterly drop since the fourth quarter of 2018, while U.S. crude dropped 7.5 percent as concerns about the trade war between the United States and China plunged global economic growth to its lowest levels in a decade. Investors have fled the energy sector in recent years because of returns that significantly lag market indexes. Exxon’s profit was nearly halved to $3.17 billion, or 75 cents per share, beating analysts’ recently reduced estimate of 67 cents a share, according to Refinitiv IBES. Chevron’s earnings fell 36 percent to $2.58 billion, or $1.36 per share, in the quarter. — Reuters

PHARMACEUTICALS

FDA tests Zantac following recall

The U.S. Food and Drug Administration said on Friday that tests it ran to simulate what happens to the commonly used heartburn drug Zantac in users’ stomachs suggest it does not cause cancer-causing chemicals to form. The regulator said it still plans to test the drugs in human patients to fully understand whether it causes levels of the probable carcinogen N- nitrosodimethylamine (NDMA) to form in patients. Zantac, sold over-the-counter in the United States by French drugmaker Sanofi, and some of its generic versions, have been recalled because of possible NDMA contamination of pills that had not yet been consumed.

The FDA said earlier this month it found unacceptable levels of NDMA in drugs containing ranitidine. — Reuters

FINANCIAL REGULATION

Supreme Court to consider SEC case

The U.S. Supreme Court agreed to consider stripping the Securities and Exchange Commission of its power to recoup illegal profits from wrongdoers, taking up a challenge to one of the agency’s most potent legal weapons. The appeal by Charles Liu and Xin Wang contends that “disgorgement” isn’t one of the remedies Congress has authorized the SEC to seek against people who violate the nation’s securities fraud laws. The California couple is fighting

a $27 million disgorgement order. The SEC won disgorgement orders totaling $2.5 billion in fiscal 2018, compared with $1.4 billion in other types of penalties. Disgorgement is designed to return ill-gotten gains to people who were harmed. Courts have traditionally viewed it as an “equitable” measure, which means judges make awards based on fairness rather than strict legal rules. The 2002 Sarbanes-Oxley Act says judges hearing SEC enforcement actions can award “any equitable relief.” — Bloomberg News

ALSO IN BUSINESS Apple is seeking exclusions from President Trump’s tariffs that went into effect Sept. 1 on the Apple Watch, iMac, parts for the iPhone and other components imported from

China. The company filed requests for exclusions from 15 percent duties on 11 products or components Thursday, the first day U.S. firms could seek relief from the tariffs. It had mixed results on its requests for exclusions from the previous round of duties.

The Trump administration intends to review the proposed merger of Fiat Chrysler and France’s PSA Group because the deal would give a Chinese carmaker a stake in the combined company, U.S. economic adviser Larry Kudlow said. China’s Dongfeng Motor owns 12 percent of Peugeot parent PSA, which this week agreed to a tie-up with Italian- American automaker Fiat. The merger would create the world’s fourth-largest car company. — From news services

DIGEST

BY RACHEL SIEGEL AND TONY ROMM

Fitbit on Friday announced that
it will be acquired by Google in a
deal that values the smartwatch
maker at roughly $2.1 billion.
The deal puts Alphabet,
Google’s parent company, in a race
against Apple when it comes to
tracking fitness and health data.
Fitbit’s stock had surged as much
as 30 percent earlier this week on
reports that Alphabet had put in
an offer. The deal is expected to
close in 2020.
Google will pay $7.35 a share for
the fitness tracker, helping it ad-
vance its ambitions for wearable
technology. The company does not
make its own smartwatch.
Fitbit stock surged 16 percent
after the announcement. Like

comparable products manufac- tured by Garmin, Apple and Sam- sung, the Fitbit gives consumers immediate access to ever-more- specific slices of fitness data — from their daily step count to their heart rate to how well they sleep. Yet the data has also become a treasure trove for employers and insurance companies, complicat- ing the relationships between workers and their bosses. “Fitbit has been a true pioneer in the industry and has created terrific products, experiences and a vibrant community of users,” said Rick Osterloh, senior vice president of devices and services at Google. “We’re looking forward to working with the incredible tal- ent at Fitbit, and bringing togeth- er the best hardware, software and AI, to build wearables to help even

more people around the world.” Even though the deal could grant Google a big boost in a market where it has long lagged, it could also raise regulatory head- aches for the tech giant. The companies indicated in their securities filings that they would prob- ably need to obtain approval from antitrust watchdogs to consum- mate the merger — a process that arrives precisely as all of Silicon Valley is under the political micro- scope in Washington for being too big and powerful. Google in particular is the sub- ject of competition investigations by federal and state officials, which are focused in large part on its advertising business. As part of its merger terms, Google has agreed to pay $250 million to Fit- bit if it can’t secure regulators’

blessings, a move that some analysts saw as a critical warning sign. “This deal is going to get a bright spotlight from regulators in the Beltway, which speaks to such a high termination fee,” Daniel Ives, managing director for equity research at Wedbush Securities, wrote in an email. “Google knows politicians and regulators have the company in their sights with another battle now on the horizon in this Big Tech vs. Beltway theme.” Regulators could be particularly interested in privacy: Google collects a trove of data about the users of its services — including its search and email systems — and smartphones and smart-home devices. In doing so, the company often has found itself in the crosshairs of Congress and a slew of government agencies around

the world for failing to protect that personal information. Fitbit, however, stressed that health and wellness data will not be used for Google ads. “Strong privacy and security guidelines have been part of Fit- bit’s DNA since day one, and this will not change,” the company said in its Friday release. “Fitbit will continue to put users in control of their data and will remain trans- parent about the data it collects and why.” Antitrust regulators have been “slow to the game” when it comes to looking at how data plays into fortifying monopoly power, said Sally Hubbard, the director of enforcement strategy at Open Mar- kets Institute, which has advocat- ed for tougher competition enforcement against tech giants.

“That’s a source of their domi- nance,” Hubbard said. “The reason no one else can really challenge Google in targeted advertising is because no one has the surveil- lance network Google has.... So I think antitrust enforcers need to take a really hard look at whether they should allow Google to ac- quire another unique data set.” Apple has posed serious competition for Fitbit. At the end of last year, Apple owned roughly half the world’s smartwatch market in terms of units shipped. When reporting company earnings in July, Fitbit lowered its guid- ance for the year, citing lagging sales of the new lightweight mod- el, Versa Lite. Fitbit has more than 28 million active users worldwide. [email protected] [email protected]

In direct challenge to Apple, Google will purchase Fitbit for $2.1 billion

BY NITASHA TIKU

palo alto, calif. — There are
certain predictable outcomes
when you live in a neighborhood
with a bunch of billionaires. The
real estate prices have gone up, of
course. Prices in nice restaurants
have doubled, too.
But Palo Alto resident Bill
Glazier did not expect to lose
trick-or-treaters to the annual
Halloween production staged
outside the home of his neighbor,
the late Apple co-founder Steve
Jobs. “The Jobs used to give out
this organic chocolate that no-
body really likes. It’s not like
they’re handing out iPhones,”
Glazier says. “People go because
they want to see the show.”
The show on Thursday night,
put on by Emerson Collective
founder Laurene Powell Jobs,
who was married to Steve Jobs,
was a series of professional-grade
set pieces featuring a lighthouse,
a metal shop and a lunch counter.
It involved actors and props and
lighting and stagehands, some of
whom handed out bags of gour-
met candy at the end of the
display. The zombie cheerleader,
zombie gym teacher, zombie
lunch person and zombie friends
zombie-danced to pop hits like
Beyoncé and “Whip It.”
The show required permits
from the city of Palo Alto for
noise exemption, special events
and road closure to shut down
traffic for six blocks. In recent
years, the show attracted roughly
3,000 people, according to a
spokesperson for the Palo Alto
police.
The tradition started with the
former Apple CEO, a Halloween
aficionado, who famously
dressed up as Jesus Christ for
Apple’s first Halloween party in
1979, “an act of semi-ironic self-
awareness that he considered
funny but that caused a lot of eye
rolling,” Walter Isaacson wrote in
the 2011 biography “Steve Jobs.”
In addition to the organic choco-
late, the Jobs house also used to
hand out boxes of carrot juice, a
favorite beverage of Steve Jobs,
the inveterate health nut and
vegetarian, according to the
2005 book “iCon Steve Jobs.”
But more recently, much like
the tech industry itself, the Hal-
loween festivities have rapidly
scaled from an organic attempt
at connection into something
unrecognizable. In Palo Alto, the
suburban home to some of the
richest billionaires on the planet,
lines form hours before the show
starts and curve around two
blocks.
At times, the setup felt like a
suburban Burning Man, the an-

nual “commerce-free” desert fes- tival where Bay Area techies, who might otherwise not interact with people outside their social circle, build elaborate stages and structures and delight in the communal ritual of gifting other Burners with free things — revel- ing in the freedom and safety of bounded generosity. Like Burn- ing Man, the Palo Alto displays are ephemeral, often going up Halloween morning and vanish- ing 24 hours later. In recent years, flashy new entrants have joined the race. Marissa Mayer, the former CEO of Yahoo and employee No. 20 at Google, waged her own competing Halloween bonanza in near- by Professorville on Thursday night. Trick-or-treaters lined up for a stupefying selection of movie-size candy: bags of Haribo

Goldbears and Sour Patch Kids, full bars of Nestle Crunch, and boxes of Hot Tamales, Jujyfruits, Goobers, Milk Duds and Nerds. Plush stuffed animals — swans, zebras, sloths, elephants, pink giraffes, narwhals with sequins — were constantly restocked by a adults behind the scenes. Kids were allowed to grab one candy and one toy, according to the adult restocking bars of Toble- rone. The density and decadence were dizzying, at any age. “Palo Alto is so spirited at Halloween — I just love it!” Mayer said in a statement. “Trick-or-treating in Professor- ville is a fun activity that really brings the neighborhood togeth- er.” One of Mayer’s neighbors, Kim Blanding, who works in product marketing at Facebook and who

brought her three boys to trick- or-treat at Mayer’s house, was dressed in all black with red lipstick as disgraced Theranos founder Elizabeth Holmes, a costume she chose because Thera- nos was “the epitome of Silicon Valley and VC demise,” Blanding said. “It’s such a chauvinistic world and yet this woman was able to capture it, but she was a fraud.” A mile away in Old Palo Alto, in the empty lot across the street from the Jobs house, Yasmin Lukatz, the stepdaughter of bil- lionaire casino magnate and Re- publican megadonor Sheldon Adelson, threw a carnival- themed show. Circus performers took turns on a makeshift stage near a blowup funhouse maze, while a witch perched on a tall bendy pole and bobbed in the air.

“It feels like because of where it is, you have to be part of the party,” said Lukatz, who bought the property that was listed for $11.4 million in 2014. An invite-only section of Lu- katz’s carnival had banners for ICON, or the Israel Collaboration Network, a group founded by Lukatz to connect tech commu- nities in Silicon Valley and Israel. In past years, the show outside Google co-founder Larry Page’s house, 500 feet away from Powell Jobs’s Tudor mansion, has been epic, as repeat visitors will attest. There was the UFO theme and the carnival theme. Dennis, a Palo Alto resident who works in fire protection and who spoke on the condition that only his first name be used, said the best was the Gotham show. “It looked like some Disney Hollywood people

came up and spent $1 million,” he said. But this year, there was only a table with Christmas lights and plastic cauldrons filled with nor- mal fun-size candy. Andy, who also spoke on the condition that only his first name be used and who works in logistics for one of the families on Page’s private cul-de-sac, said the families were “calming things down” this year and have been very busy, so decided to keep it low-key. Some regular visitors were dis- appointed, peering past the ro- tating cast of women in costume handing out candy to make sure they didn’t miss anything. But across the street, the party went on, with a nine-person band blasting Motown classics and the fog machine next door at the Jobs house beckoning. Meghan Horrigan-Taylor, chief communications officer for the city of Palo Alto, said the “neighbors reimburse the city for city- related costs.” But Old Palo Alto resident Lynn Brown, who lives down the block from Jobs, said she doesn’t have to chip in because the “nice neighbors” foot the bill, which she believes means it’s taken care of by Powell Jobs and Page. Powell Jobs de- clined to answer questions through a spokesperson for Em- erson Collective. Page did not respond to questions. Longtime residents may miss the old days, but the event has expanded far beyond them, judg- ing by the crowds Thursday night. Particularly in the early hours, they were mostly multi- generational East Asian families who came from Mountain View, San Jose, Fremont, Milpitas or just a few blocks away in other Palo Alto neighborhoods to see the show and to let their kids trick-or-treat safely on closed-off streets. Practical information about the Old Palo Alto Halloween event spreads by word of mouth, social media and private messag- ing apps. Kiki Wei, a Taiwanese event planner from Newark, Calif., organized a group by send- ing messages on the Korean mes- saging app Line and WhatsApp, which is owned by Facebook, whose CEO Mark Zuckerberg owns four homes a five-minute drive away. Wei first heard about the event years ago from a friend’s Facebook, which did not specify the exact location. “You need to Google ‘Steven Jobs ad- dress,’ ” she said. [email protected]

More at washingtonpost.com/ technology

Tech billionaires have turned

Halloween into a circus

In Palo Alto, Laurene Powell Jobs and Marissa Mayer put on competing shows unlike any other

BRIAN L. FRANK FOR THE WASHINGTON POST People came from across Silicon Valley to celebrate Halloween in Palo Alto, where residents have increasingly elaborate festivities.

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The Washington Post - 02.11.2019

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