The European Union unveiled plans on Thursday to make USB-C connectors the standard charging port for all smartphones, tablets and other electronic devices sold across the bloc, an initiative it says will reduce environmental waste but that is likely to hit Apple the hardest.
The move would represent a long-awaited, yet aggressive step into product-making decisions by the European Commission, the bloc’s executive arm. Apple, whose iPhones are equipped with a different port, has long opposed the plan, arguing that it would stifle innovation and lead to more electronic waste as all current chargers that are not USB-C would become obsolete.
The new legislation is likely to come into effect in 2024 because it first needs to be approved by the European Parliament and then adopted by manufacturers. Besides phones, it would apply to cameras, headphones, portable speakers and video game consoles.
Wireless chargers would not be affected, but the main change would come for iPhones, which currently have a proprietary Lightning charging port.
“What are we offering? More freedom, fewer costs,” and less electronic waste, Thierry Breton, the European commissioner for trade, said in a news conference on Thursday.
The announcement received swift criticism from some tech observers. “This is a profoundly stupid way to approach product design and standardization,” a tech analyst, Benedict Evans, said on Twitter. “What happens in 5 years when someone wants to use a better connector?”
Still, if the legislation is enacted as proposed by the European Commission, it would become illegal to sell an electronic device without a USB-C charging port. Apple would have to switch to USB-C for its products sold across the bloc, a commission official said, noting that it already sells new iPads with such charging ports.
The legislative proposal is the latest setback for Apple in Europe, which has been accused by European Union regulators of maintaining unfair fees on rival music-streaming services like Spotify that depend on the App Store to reach customers. It is also facing an inquiry into its Apple Pay service, which is the only payment service available on Apple products and which E.U. officials have said could violate the bloc’s competition rules.
Daniel Ives, the managing director of equity research at Wedbush Securities, called the E.U. proposal a “gut punch to Apple” that would force the company to adapt its design and supply chain, and cost up to $1 billion.
“It kicks the battle between Apple and the European Union to the next level,” Mr. Ives said. “It’s like forcing Netflix to provide VCR screening alongside streaming.”
European Union officials and lawmakers at the European Parliament have been advocating a common charger since 2009, when there were more than 30 charging options on the market, now down to three. They have argued that fewer wires would be more convenient for users and better for the environment, as mobile phone chargers are estimated to be responsible for 11,000 tons of electronic waste per year across the bloc, according to estimates by the European Commission, the E.U.’s executive arm that presented the legislation on Thursday.
But Apple has also argued that if the European Union had imposed a common charger in 2009, it would have restricted innovation that led to USB-C and Lightning connectors. In a statement on Thursday, Apple said that although it welcomed the European Commission’s commitment to protecting the environment, it favored a charger-side solution that left the device-side of the charging interface open for innovation.
Mr. Breton said on Thursday that he was familiar with Apple’s concerns. “Every time we try to put a proposal, such companies start to say, ‘It will be against innovation,’” he said.
“It’s not at all against innovation, it’s not against anyone,” he added. “It’s for European consumers.”
Mr. Breton said manufacturers, including Apple, could choose to offer two charging ports on their devices if they wanted to keep a non-USB-C connector. But that is highly unlikely, as one of Apple’s main arguments in favor of its Lightning connector has been its small size on iPhones.
Critics have also charged that the European Union’s action is coming too late, because of the decline in the types of connectors in recent years. Half the charging cables sold with mobile phones in 2018 had a USB micro-B connector, while 29 percent had a USB-C and 21 percent a Lightning connector, according to study published by the European Commission in 2019. The share of USB-C charging ports is most likely to have since increased as most Android phones are now sold with it.
The European Commission said it would also require manufacturers to sell devices without chargers: If a bundled option remains available, an unbundled option of the same product would have to be offered, it said.
Adam Satariano contributed reporting.
Fears of the fallout from Evergrande’s potential collapse faded somewhat on Thursday as Chinese regulators reportedly instructed the embattled real estate developer to repay some of its debts and China’s central bank injected money into the country’s financial system.
Evergrande’s stock jumped nearly 20 percent, even as large holders said that they might dump their stakes and doubts swirled around an $83 million interest payment on a dollar bond due on Thursday.
Market watchers are assessing the implications of a potential restructuring of Evergrande’s $300 billion in debt, the DealBook newsletter reports. A full-blown bailout is unlikely, analysts say, but Beijing has the means to limit the damage if the company fails. “We believe that Evergrande is an exceptional case that is unlikely to lead to a broader systemic crisis in the property sector,” Houze Song of the Paulson Institute wrote in a recent report.
International investors in Evergrande’s bonds are preparing for turmoil — and in some cases buying more. Evergrande’s debt is in the portfolios of many major investment firms, and some hedge funds have been adding more to their holdings as prices have tumbled. A group of bondholders has tapped restructuring advisers at Kirkland & Ellis and at Moelis. For its part, Evergrande has hired the firms Houlihan Lokey and Hong Kong Admiralty Harbour Capital.
U.S. institutional investors are largely invested in Evergrande’s offshore bonds, which are worth a relatively small portion of the company’s overall debt. Those securities are linked to various private and public companies separate from Evergrande’s property business, such as an electric-vehicle division. The units could still have value even if the real estate business defaults, and bonds issued by Evergrande’s Cayman Islands-based units are governed by different rules than the debt issued in mainland China.
Beijing’s intentions are unclear, especially when it comes to prioritizing debt holders at home and abroad. In the bankruptcy of Dubai World, in which confidence in a country’s financial system was similarly wrapped up in a single company, the company managed to pay back its creditors. But Dubai is a big borrower that relies on international credit markets, quite unlike China, which has recently discouraged local companies from listing abroad, among related measures.
Despite all the uncertainty, with prices on some of Evergrande’s offshore dollar bonds that mature within months trading below 30 cents on the dollar, bargain hunters with a big appetite for risk see a bet worth taking.
The possible collapse of the real estate giant China Evergrande shook markets around the world earlier this week. But on Thursday, amid uncertainty over whether it met a critical payment deadline to its lenders, the market rallied.
Evergrande’s Hong Kong listed shares, which have been on a firm downward trajectory, soared by a head-scratching 18 percent. Hong Kong’s broader Hang Seng Index rallied 1.2 percent.
Investors are now taking bets on whether regulators in the world’s second-largest economy, after that of the United States, will step in to save Evergrande, a corporate behemoth that has been struggling under the weight of more than $300 billion in debt.
So far Beijing has remained tight-lipped, while emphasizing that no Chinese company is too big to fail. In recent weeks, however, a steady flow of negative news from Evergrande has prompted panic and raised fears of a possible economic fallout from an Evergrande default.
Unable to sell off parts of its corporate sprawl or raise fresh cash through the sale of new properties, Evergrande is also facing angry suppliers, home buyers and employees, some of whom have protested and demanded their money.
Evergrande said in a vaguely worded statement on Wednesday that it had reached a deal with investors over a bond payment due for mainland Chinese bondholders without giving any details. It offered no guidance on another payment on $83.5 million that was also due on Thursday for foreign bondholders. The company has a 30-day grace period before the missed payment would trigger a default, according to Bloomberg.
Evergrande did not respond to questions seeking clarity.
Evergrande’s fate and what its failure could mean for China’s economy have divided some of the world’s best known investors. The billionaire investor George Soros recently argued that an Evergrande collapse would set off a broader economic crash, while another billionaire investor, Ray Dalio, argued this week that an Evergrande default was “manageable.”
As China’s economic growth has slowed, officials have stepped in to shore up confidence. The central bank said on Wednesday that it had pumped $18.6 billion into markets. It added another $18.6 billion on Thursday, as officials try to circulate more cash into the banking system.
China’s push for self-sufficiency in a wide range of industries is dividing foreign companies, with some welcoming it as another chance to invest there while others worry that it will cause risks to the country’s trading partners and its own economy.
Two influential groups of foreign businesses in China issued very different reports on Thursday. They revealed a striking divide on whether international companies support China’s push to replace imports with a self-reliant emphasis on domestic production.
China has been heavily subsidizing its manufacturers of semiconductors, commercial aircraft, electric cars and other products as part of a national effort to achieve greater self reliance. The European Union Chamber of Commerce in China contended in its report on Thursday that these policies are discouraging foreign investment in China. They are also causing China to spend heavily to develop its own versions of products that are more efficiently made elsewhere, the group said.
“There are troubling signs that China is increasingly turning inwards, as can be seen in its 14th five-year plan,” the report said, referring to an economic blueprint the government released earlier this year. “This tendency is casting considerable doubts over the country’s future growth trajectory.”
The Trump administration was strongly critical of China’s emphasis on replacing imports with domestic production, an outgrowth of the country’s recent “Made in China 2025” manufacturing policy. But American companies with operations in China are, conversely, more supportive of Beijing’s policies.
A separate survey report issued by the American Chamber of Commerce in Shanghai found that a third of the chamber’s members thought China’s self-reliance strategy would help their revenue. Almost none thought they would be hurt. The rest saw little effect or said that it is too soon to know.
American companies who favor the strategy reasoned that the factories and other businesses they own in China would post greater sales to Chinese customers. They were much less worried about harm to their exports from the United States, which are often modest. Not one of the surveyed American companies had any plans to move operations back to the United States, despite efforts by the Trump and Biden administrations to encourage investment at home.
Ker Gibbs, the president of the American Chamber of Commerce in Shanghai, said that he was surprised by the views of his own chamber’s members. More than European companies, he said, American companies tend to focus mainly on the next quarter’s financial results, which are usually best served by staying in China.
“This gives them a short-term focus that serves them poorly when looking at a market like China,” Mr. Gibbs said. “They are right to focus on market growth and opportunities, but China’s push for self-reliance could limit opportunities in the long term.”
The trading app Robinhood has grown explosively, gone public and, for good measure, is now getting into crypto wallets. But internal exchanges between company managers revealed in a new legal filing — featuring Robinhood’s chief executive, Vlad Tenev — highlight the tensions between fast growth and consumer protection.
A class-action lawsuit brought by Robinhood users alleges that the company was negligent during a period of extreme market volatility in late January, knowing it had insufficient capital to handle all the trading by new and existing users. That ultimately led the company to impose limits on trading in meme stocks like GameStop and AMC, the subject of subsequent congressional hearings.
Here’s a glimpse inside Robinhood in the days before it limited trading in meme stocks:
Jan. 23: As Robinhood discussed how to manage the risks of the frenzied trading in GameStop, a company insider wrote that “the process outlined above covers firm risk well, but from a public perception POV, we may want to consider the risks our customers face. Is there a comms need or other action we should consider?”
Jan. 25: Company engineers and executives chatted about surging trading volumes. “There are internal things that are starting to buckle under pressure,” a software engineer wrote. An engineering executive noted that a “code yellow” could be declared, putting all other work at the company on hold. “Only the paranoid survive,” Tenev responded. “One who panics first panics best,” added the company’s head of data science. “Joy,” said Tenev.
Jan. 28: Robinhood limits trading in meme stocks during the peak of the short squeeze, facing inquiries from the National Securities Clearing Corporation about whether it had enough capital to cover the trading risk. In an internal chat, Robinhood’s chief operating officer, David Dusseault, wrote that the company was “to [sic] big for them to actually shut us down.”
Maurice Pessah, an attorney for the plaintiffs, said that the communications showed that Robinhood executives had been willing to put investors and markets at risk to advance their own interests. In a statement, a Robinhood spokeswoman said that the company stood by its decisions and that “communications cited by the plaintiffs are entirely consistent with Robinhood’s communications and actions on Jan. 28.”
James Mattis, the retired four-star Marine Corps general and former defense secretary, testified on Wednesday at the fraud trial of Elizabeth Holmes, the founder of the blood testing start-up Theranos, that she misinformed him before and during his time on the company’s board of directors.
Mr. Mattis, who served on the board for several years, said he had supported the start-up’s mission of cheap, fast and easily accessible blood tests but lost faith after The Wall Street Journal exposed major issues with the technology in 2015. It became clear to him, he said, that Ms. Holmes had not been forthcoming with Theranos’s directors about the problems.
“We were unable to help her on the fundamental issues that she was grappling with if we only saw them in the rearview mirror,” Mr. Mattis said. He resigned from the board in late 2016 after President Donald J. Trump tapped him to become defense secretary.
Two years later, Theranos collapsed amid lawsuits, fines and financial troubles, and federal prosecutors charged Ms. Holmes and her business partner, Ramesh Balwani, with a dozen counts of fraud and conspiracy to commit wire fraud. Both have pleaded not guilty. If convicted, they face up to 20 years in jail.
Mr. Mattis is the most prominent person to take the stand thus far in the high-profile jury trial, which began in August. Other potential witnesses include Rupert Murdoch, the media mogul, who invested in Theranos; David Boies, who was the company’s outside lawyer; and Bill Frist, a former senator and Theranos board member.
As Mr. Mattis spoke, Ms. Holmes sat upright in her seat and stared in his direction.
Elizabeth Holmes, the disgraced founder of the blood testing start-up Theranos, stands trial for two counts of conspiracy to commit wire fraud and 10 counts of wire fraud.
Here are some of the key figures in the case →
Mr. Mattis testified that he met Ms. Holmes after a speech he delivered in 2011. He was excited by the prospect of the military’s using Theranos’s blood analyzers, which Ms. Holmes claimed could perform thousands of different tests faster, cheaper and more accurately than traditional lab tests, using only a finger stick of blood. Mr. Mattis was also impressed by Ms. Holmes personally, he said, describing her as “sharp, articulate, committed.”
Mr. Mattis said he had pushed the military to do a test program of Theranos analyzers to see how they performed alongside its existing systems before joining the board. “I wanted a comparative study on Theranos from Day 1 so we could bring it online,” he said. But no test materialized.
When Mr. Mattis joined the board, he invested $85,000 in Theranos as a show of support, which he said was a significant sum “for someone who had been in government service for 40 years.” He also recused himself from any military contracts for ethical reasons.
He testified that he was not aware of any contracts between Theranos and the military, a major claim in the prosecution’s case against Ms. Holmes. She had told investors that Theranos devices were used on battlefields in Afghanistan.
Mr. Mattis said Ms. Holmes had been his primary source of information about Theranos and its technology. Prosecutors showed a presentation she had made to the board that said 10 of the 15 largest pharmaceutical companies had validated the start-up’s machines, alongside endorsements from researchers at Johns Hopkins University and the logos of the Food and Drug Administration and the World Health Organization.
Such presentations gave Mr. Mattis confidence in Theranos’s technology, he said, because “it wasn’t just Elizabeth talking about it.”
After The Journal reported that Theranos was performing only a few blood tests on its own machines while doing the rest with traditional blood analyzers, the board scrambled to gauge the report’s accuracy, according to emails introduced as evidence.
Ms. Holmes emailed that Theranos was making a transition to a different “framework” for its laboratory. Mr. Mattis said he was confused and concerned, but supported Ms. Holmes because he thought the problem was just a matter of messaging.
“I thought it was something we could fix if we got the truth out there,” he said.
Over time, Mr. Mattis said, he lost hope as he learned that the problems went deeper — that Theranos’s machines just did not work.
“There just came a point when I didn’t know what to believe about Theranos anymore,” he said.
When the Biden administration announced a mandate that employees be vaccinated or tested regularly at companies with 100 or more employees, business leaders responded with a barrage of questions. Among smaller companies, one loomed especially large: Why 100?
It’s an appealingly round, easy-to-remember number, and it captures a broad section of the American work force. President Biden estimated that his order would apply to 80 million employees and cover two-thirds of all workers.
But as a dividing line between a “big” business and a “small” one, it’s a threshold not found in any other major federal or state law. There was no explanation for how or why the number was chosen. And for entrepreneurs who employ a smattering of workers, that’s an increasingly common challenge: Every time lawmakers invent a new regulation, they also make up a new definition of which businesses count as small.
The Affordable Care Act set 50 as the number of workers after which employers would be required to offer health insurance. That edict, which took full effect in 2016, led to an intense, vocal backlash from owners who feared that the requirement would bankrupt them, with some even paring back their business to keep their employee roster under the limit.
The mandate’s actual costs turned out to be fairly muted for most — the law helped stabilize insurance prices in the notoriously erratic market for small-group plans — and, after surviving many legal and political efforts to dismantle it, the health care law has become a bedrock piece of federal policy. So why not use 50 employees as the boundary for the vaccination mandate?
The White House isn’t saying; officials did not respond to repeated questions about the 100-person criterion. The Labor Department’s Occupational Safety and Health Administration, which is responsible for drawing up the rules, has not yet explained how and when the mandate will be enforced.
As President Biden’s multitrillion-dollar jobs plan, which included nearly $175 billion in spending to encourage Americans to buy electric vehicles, wends its way through Congress, a liberal think tank has tried to flesh out the number of jobs to be gained or lost in the transition away from internal-combustion vehicles.
The report, released Wednesday by the Economic Policy Institute, concluded that it would take government subsidies focused on developing a domestic supply chain and increasing demand for U.S.-made vehicles to avoid job losses, The New York Times’s Noam Scheiber reports.
It found that without additional government investment, the industry could lose about 75,000 jobs by 2030, the year by which Mr. Biden wants half the new vehicles sold in the country to be electric.
By contrast, the report said, if government subsidies were targeted to increase the portion of electric vehicle components that are manufactured domestically, and to increase the market share of U.S.-made vehicles, the industry could add about 150,000 jobs by the end of the decade.
Looming over the transition to electric vehicles is the fact that they have substantially fewer moving parts than gasoline-powered ones and require less labor to manufacture — about 30 percent less, according to figures from Ford Motor. The vehicle-manufacturing industry employs a little under one million people domestically, including suppliers.
Facebook said on Wednesday that Mike Schroepfer, the chief technology officer and a longtime executive, planned to step down from his position next year, in a rare change to the top ranks of the social network. Mr. Schroepfer, who has worked at Facebook for more than 13 years, plans to transition into a role as a senior fellow, which he said would allow him to focus on activities outside the company.
The Federal Reserve chair, Jerome H. Powell, said on Wednesday that the central bank’s rules governing the types of assets that Fed officials can invest in would need to be updated, noting that the rules are “clearly seen as not adequate to the task of really sustaining the public’s trust in us.” His comments addressed concerns about securities trading that two of Mr. Powell’s colleagues — Robert Kaplan, president of the Federal Reserve Bank of Dallas, and Eric Rosengren, president of the Federal Reserve Bank of Boston — engaged in last year, when the Fed was carrying out a sweeping market rescue in response to the coronavirus pandemic.