The Wall Street Journal - 22.02.2020 - 23.02.2020

A10| Saturday/Sunday, February 22 - 23, 2020 **** THE WALL STREET JOURNAL.

FROM PAGE ONE

Nick Hanna, U.S. attorney in Los Angeles, said Wells Fargo

‘traded its hard-earned reputation for short-term profits.’

STEFANIE DAZIO/ASSOCIATED PRESS

tomer to their winter formal,”

says Giant’s Ms. Flower. “Marty

was working that night so he

couldn’t make the event, but

sent his regards.”

Kristen Flanagan, a deli

manager and union steward at

a Stop & Shop in Somerset,

Mass., says Marty could cost

human jobs, adding: “Super-

markets were meant for people

to interact with people and

serve people.”

Stop & Shop spokeswoman

Jennifer Brogan says Marty

isn’t taking away jobs from

workers and is designed to help

them spend more time aiding

customers.

Guy Hoffman, an assistant

professor at Cornell Univer-

sity’s Sibley School of Mechani-

cal and Aerospace Engineering,

has studied human-robot inter-

action for 16 years and says

technology isn’t close to replac-

Marty the robot looks for spills at a grocery store. Many kids love

it, but one shopper calls it a ‘weird gray cylinder roaming around.’

MATT ROURKE/ASSOCIATED PRESS

leave their money there. It

also has unsettled customers

who have long thought of re-

tail banking as a service that

takes deposits and makes

loans, not a sales-driven in-

dustry hawking as many prod-

ucts as possible.

Regulators first fined Wells

Fargo over the sales practices

in 2016, alleging that execu-

tives created a pressure-

cooker environment in

branches where low-level em-

ployees were so beset by high

sales goals that they opened

up fake and unauthorized bank

accounts.

Afterward, regulators and

lawmakers were outraged not

just by the allegations but by

what they perceived as the

bank’s slow response to them.

What’s more, with the bank

under increasing scrutiny, ad-

ditional legal and regulatory

problems sprang up across

other business units, including

founder Martin Hitch. “We’ve

watched a person swing a full

bag of groceries and hit it,” he

says, but most ignore it.

Marty’s eyes and name help

customers feel more comfort-

able around the 140-pound ro-

bot as it circles stores report-

ing spills and other potential

hazards for cleanup, says Bad-

ger Technologies Chief Execu-

tive Tim Rowland.

Still, some shoppers have

complained Marty was follow-

ing them. Badger engineers had

designed the robot to halt

when a shopper got too close

and start again when the per-

son moved away. That made

sense in the lab; in the store, a

slowly browsing customer

might feel tailed by the stop-

ping-and-starting robot.

The company developed

“anti-creep” software that lets

Marty pass people who are

stopped or moving short dis-

tances, thereby respecting per-

sonal space.

Engineers changed the ro-

bot’s voice—“Caution! Hazard

detected!” it says—to female

from male, which was deemed

too harsh. The robot’s soft whir

was hard to hear over the gro-

cery-store din, so they added a

“boop, boop” sound similar to a

checkout-line scanner’s.

“The last thing you want,”

says Mr. Rowland, “is this 6-foot

mechanical thing sneaking up

on someone buying cat food.”

Marty developed a following,

with people posting videos and

children dragging parents over

to look. “We recently had a re-

quest for Marty to escort a cus-

ing human contact. Understand-

ing how a person is feeling in-

volves social context and body

language, he says, and artificial

intelligence isn’t there yet.

One person browsing a su-

permarket aisle might feel hur-

ried by a slow-moving robot, he

says, while a hurried shopper

might deem the robot to be in

the way.

Simbe Robotics engineers

built Tally to be as unobtrusive

as possible, says CEO Brad Bo-

golea. Tally’s spinning base lets

it take up little space in

crowded stores, he says, and its

digital panels with eyes look in

its direction of travel.

Most shoppers aren’t ex-

pecting to see robots, and engi-

neers wanted to make the in-

teraction easy, Mr. Bogolea

says: “Tally is really designed

as this sort of shy robot.”

Then there is the problem of

“uncanny valley,” the observa-

tion in robotics that humans

find robots more appealing as

they get more humanlike—up

to a point, after which they

seem creepy.

“For the retail robots, we

were more concerned about

them not looking smarter than

reality,” says Sarjoun Skaff,

chief technology officer at

Bossa Nova. “Anthropomorphic

features such as eyes may proj-

ect a higher level of intelligence

and draw attention.”

The goal is for retail robots

to be accepted and eventually

overlooked, he says: “The ro-

bot’s job is to take pictures of

products on shelves, and it’s

not to sit around and chit-chat.”

Marty a personality and en-
dear him to shoppers’ chil-
dren, says Ashley Flower, a
spokeswoman for Giant Food
Stores LLC, part of Ahold Del-
haize USA. Badger Technolo-
gies sells the robot to other
retailers, too, with each free to
pick its own robot name.
Warehouse and factory em-
ployees have worked alongside
robots for decades. Home-
owners unleash Roomba auto-
mated vacuums on dust bun-
nies. Robots and drones have
started rolling down sidewalks
and buzzing backyards as tech
companies experiment with us-
ing them for delivery.
Robots are also starting to
cruise retail-store aisles, and
they’ve had to learn to make
way for humans.
Badger Technologies says it
has deployed 506 robots to gro-
cers in nine states over the last
year, including at Giant and
Stop & Shop Supermarket Co.
stores. “Overall people really
like Marty and understand it,”
says President Gordon Reid of
Stop & Shop, another Ahold
chain that uses the Marty name.
Bossa Nova Robotics Inc. of
San Francisco has a similar ro-
bot in 350 Walmart Inc. stores

ContinuedfromPageOne

Robots Hit

Grocery

Aisles

and plans to roll out 650 more

by summer. Its robot scans

shelves to see which products

are missing but doesn’t have

arms, so humans do restocking.

Simbe Robotics Inc. in San

Francisco says its robot named

Tally—it looks like a white

Roomba topped with a tall,

slender rectangular platform—

is in more than 100 retail stores

world-wide, including Midwest-

ern grocer Schnuck Markets

Inc. and the global sporting-

goods brand Decathlon.

A Walmart spokesman de-

clined to comment. Schnuck

and Decathlon representatives

say Tally takes over the task of

inventorying store shelves so

employees can spend more

time helping customers.

Maya Kaczor, 23, says she

was taken aback when she first

encountered Marty in a pro-

duce section last summer. “I al-

most walked right into it, and

it’s a 6-foot-tall thing with goo-

gly eyes,” says Ms. Kaczor, who

lives in Woodland Park, N.J.,

and works in publishing. “I was

initially terrified it would run

over my foot or something.”

She avoids Marty, which she

calls a “weird gray cylinder

roaming around.”

Robots can face a bit of bul-

lying, says Bossa Nova co-

Me, creepy?

tions. Ms. Caffarra declined to

comment. A settlement of the

suit was reached Thursday, ac-

cording to the person familiar

with the matter.

News Corp has complained

that Google and other digital

companies siphon ad revenue

from content creators. Micro-

soft competes with Google in

areas including cloud services

and office-productivity tools.

Google fought a broad sub-

poena issued by then-Missis-

sippi Attorney General Jim

Hood in 2014. That subpoena

sought information on

Google’s platforms, ad prac-

tices and efforts to police

“dangerous” or “illegal” con-

tent related to illicit drug

sales, consumer credit-card in-

formation, human trafficking

and copyright infringement.

In response, Google filed a

suit against Mr. Hood that re-

sulted in a federal judge en-

joining the Mississippi probe

for a time. The judge said

Google had presented “signifi-

cant evidence of bad faith,”

suggesting that the attorney

general’s investigation repre-

sented an effort to coerce

Google to comply with Mr.

Hood’s requests regarding

content removal.

Google’s complaint came as

emails surfaced from a hack of

Sony Pictures, suggesting

movie studios were working

behind the scenes with Mr.

Hood’s office to discredit

Google. The motion-picture in-

dustry has long complained

about copyright abuses on the

internet. The injunction

against Mr. Hood was eventu-

ally overturned on appeal.

State attorneys general in-

vestigating Google have been

in discussions with Mr. Hood—

who left office in January—

about joining their effort,

likely as an expert.

chats and text messages from

Google employees. Google law-

yers asked for “a reasonable

approach and timeframe for

responding” to the demands.

In a Jan. 6 reply, the chief

of the Texas Office of the At-

torney General’s antitrust divi-

sion responded, “This is not

true: the instructions accom-

panying our [civil subpoena]

clearly indicate that these

types of electronic materials

are both covered and re-

quested, and we have not

agreed or implied that mere

email searches could suffice to

satisfy Google’s [subpoena]

obligations.”

The two sides have also

clashed over how many Google

employees must be included in

the search for responsive in-

formation. During the first

five months of the probe,

Texas proposed 96 while

Google said 11, according to a

Feb. 4 letter from Google law-

yers. Google has since raised

the number of employees it

was willing to include in the

search, according to the letter.

Google says that the com-

pany has moved quickly to

produce relevant documents

to the attorneys general, even

as it battles the Texas state at-

torney general over other as-

pects of the probe.

In a suit filed in Texas on

Oct. 31, Google sought protec-

tions to prevent consultants

hired for the Texas-led investi-

gation from improperly using

information obtained during

the probe.

The Google suit said that

one of the consultants, Cris-

tina Caffarra of Charles River

Associates, “has worked di-

rectly for numerous Google

adversaries on antitrust and

competition matters,” includ-

ing Microsoft Corp. and News

Corp, owner of The Wall

Street Journal.

Texas filed a response op-

posing Google’s suit. Texas of-

ficials believe Google’s con-

cerns about potentially

improper disclosure of sensi-

tive information are ade-

quately addressed by existing

state confidentiality protec-

A Google spokeswoman said discussions over access to information are common during investigations.

AMY OSBORNE/AGENCE FRANCE-PRESSE/GETTY IMAGES

tants who could share confi-
dential information from
Google with rival companies.
“To date, Texas has re-
quested, and we have pro-
vided, over 100,000 pages of
information,” the spokes-
woman said. “But we’re also
concerned with the irregular
way this investigation is pro-
ceeding, including unusual ar-
rangements with advisers who
work with our competitors
and vocal complainants."
The investigation by state
attorneys general seeks to de-
termine whether Google en-
gaged in anticompetitive be-
havior in building up its ad
business, among other issues.
As part of their probe, state
investigators have sought
emails and other documents
from high-level executives and
directors at the company, as
well as texts and instant mes-
sages from Google employees
who might have information
on suspect practices, accord-
ing to letters reviewed by The
Wall Street Journal under a
public-records-act request.
Google attorneys have
raised concerns to Texas in-
vestigators about the scope of
their requests.
In a letter dated Dec. 26,
for example, lawyers for
Google in Texas said that in a
recent phone call, Texas inves-
tigators had made “significant
and new requests” beyond
their September civil sub-
poena, including demands for

ContinuedfromPageOne

Google Is

Resisting

Demands

wealth management and for-

eign-exchange trading. What

was once a fast-growing

lender whose profits towered

above those of rivals became a

firm with declining revenue

that is leaning heavily on cost

cuts.

The SEC portion of the set-

tlement accused the bank of

misleading shareholders. Ac-

cording to the charges, Wells

Fargo touted to investors its

ability to sell additional prod-

ucts to current customers, a

practice known as cross-sell-

ing, even though numbers

were inflated because of the

fake accounts.

Aside from Friday’s settle-

ment, regulators and prosecu-

tors could still take action

against former executives, ac-

cording to people familiar

with the situation. Last

month, the Office of the

Comptroller of the Currency

charged eight former execu-

tives over the fake-account

scandal.

Wells Fargo for years en-

joyed a reputation as a folksy

industry darling that catered

to Main Street customers. But

that reputation was left in tat-

ters after the sales scandal be-

came public.

“Wells Fargo traded its

hard-earned reputation for

short-term profits, and

harmed untold numbers of

customers along the way,”

Nick Hanna, U.S. Attorney in

Los Angeles, said Friday.

Prosecutors said the prac-

tices date to 1998, when Wells

Fargo began to rely more

heavily on sales growth. It

pressured employees to cross

sell additional products to cur-

rent customers.

The heightened pressure

pushed many employees to

open checking and savings ac-

counts without customer

knowledge and make up iden-

tification numbers to activate

unauthorized debit cards.

Employees, afraid they

would be fired otherwise,

sometimes forged customer

signatures to open accounts or

altered customers’ contact in-

formation to prevent them

from learning about unauthor-

ized accounts, the government

said.

Regulators and prosecutors

said top managers knew of

these issues years ago. In

2004, an internal investigator

called it a “growing plague.”

In 2005, a corporate investiga-

tions manager described the

problem as “spiraling out of

control.” Employees continued

to raise concerns internally,

the government said. It also

said certain executives “im-

peded” the OCC from scruti-

nizing the sales practices.

After the scandal erupted in

2016, top executives faced

heavy criticism for holding

lower-level employees respon-

sible. Wells Fargo fired thou-

sands of branch employees,

but regulators, lawmakers and

even the bank’s own board

questioned whether junior

staffers were to blame.

A board investigation found

that the bank’s decentralized

structure allowed top execu-

tives to avoid addressing these

issues as they got bigger.

Without referring to her by

name, the Justice Department

heavily criticized Carrie Tolst-

edt, the former head of the

consumer bank. By 2012, re-

gional executives “were regu-

larly raising objections” to Ms.

Tolstedt about “unlawful and

unethical sales practices.”

Ms. Tolstedt is one of the

former executives the OCC

charged last month. Her law-

yer said Friday she “acted ap-

propriately and in good faith

at all times, and the effort to

scapegoat her is both unfair

and unfounded.”

—Rachel Louise Ensign,

Aruna Viswanatha and Dave

Michaels contributed to this

article.

happens again, while also
driving Wells Fargo forward.”
The bank, though, still faces
major regulatory problems. It
is under sanction by the Fed-
eral Reserve, which has taken
the unusual step of capping
the bank’s growth. Settling
with the Justice Department
and SEC could allow the bank
to focus on persuading the Fed
to lift the cap.
As part of the settlement,
Wells Fargo admitted that it
“unlawfully misused custom-
ers’ sensitive personal infor-
mation” and harmed some
customers’ credit ratings, col-
lecting millions of dollars in
fees and interest in the pro-
cess.
The scandal severely dam-
aged the bank’s reputation
with customers and regulators
alike, providing a case study
of sorts on how success in
banking depends on customers
trusting a firm enough to

ContinuedfromPageOne

Wells

Fa rg o D ea l

Ends Probe