Don’t look now but Amazon is setting up an airline.
Not content with doing everything from selling groceries, to handling data warehousing to making award winning TV shows, Amazon is taking to the skies with Prime Air.
Don’t get too excited. Hyperactive chief executive Jeff Bezos, who has already been experimenting with drones, isn’t offering passenger flights. Yet.
Prime Air will consist of cargo planes. The first of a 40 strong fleet will make its debut at an air show in the company’s hometown of Seattle.
However, given Amazon’s propensity of entering and disrupting businesses, would you put it past Mr Bezos to launch an experiment with passenger planes in future? Airlines all too frequently offer a miserable service to their customers. Their's is an industry ripe for a bit of disruption from an enterprising new entrant.
For now, however, Prime Air’s job will be to assist with the already rapid deliveries offered to those who sign up to company's Prime service. The fleet will help the company to provide one and two day package delivery in the US.
Such an "insourcing" move, which will tighten Amazon's control over its delivery network, amounts to a reversal of traditional business practice.
More conventional companies typically like to outsource everything outside of their core functions. Why do it ourselves if we can get someone else to do it cheaper for us? What? Customers might suffer? But if we outsource we can blame someone else if anything thing goes wrong. There'll be a bit of tit for tat between us and our service provider before the customer gives up. Result!
It’s this sort of thinking that has made dealing with large businesses such a thoroughly miserable experience. When the customer wants to speak to someone they'll be lucky if they end up getting routed through to a calls centre on the other side of the world. If they ever get past the automated phone menu.
When they do reach a call centre, the chances are they’ll be referred back to the corporate website’s Frequently Asked Questions section. Which will be similarly unhelpful.
Small wonder that Government has been so keen to adopt outsourcing on grounds of “cost” and "efficiency". The cost being any last vestiges of goodwill on the part of the customer (or the taxpayer). The "efficiency" is the speed at which they give up after being driven to distraction.
It’d be nice if I were exaggerating, but I’m not. With the help of Google, you can read any number of horror stories told by people who have had the misfortune of having to deal with companies, or Government departments, that outsource.
Amazon is doing it the other way around. OK it's leasing the planes, a fairly common arrangement, but that’s about as anyone else will be involved with Prime Air. And Prime is a brand which it is keen to protect given its importance to Amazon’s business.
What Amazon is saying is that we can handle our deliveries more cost effectively and efficiently than anyone else can. We’ll also do a better job for customers than those companies that are so keen on outsourcing. I just hope Amazon can achieve this laudable aim without making its workers miserable (hey Jeff, happy workers can make for happy customers).
As for those companies competing with Amazon? They might find that there is a cost to their complacency if they fail to work out that there are efficiencies to be gained by taking control of their own business processes.
Facebook has been trying to copy Snapchat for so long it has become a kind of running gag in tech circles. The social networking giant started trying to duplicate the ephemeral-messaging app’s core features even before it offered $3 billion in a failed bid to buy the company in 2013. And the reason why says a lot about what makes the service so powerful.
The latest copy cat attempt came on Tuesday, when Facebook-owned Instagram introduced a new feature called Stories that lets users share a collection of photos and videos that disappears after 24 hours. The new offering is fundamentally identical to Snapchat’s Stories, right down to the name.
Depending on how you count, this is the fourth or fifth such move by Facebook. The first was an app called Poke, which offered messages that disappeared automatically. It was released in 2012 and shut down in 2014. In 2013, Instagram premiered Instagram Direct, a private-messaging feature, and in 2014 Facebook debuted an app called Slingshot, which it also later mothballed.
Each of these attempts has tried to imitate one or more of Snapchat’s core features: 1) It is private, and therefore there are no public likes or favorites or comments, and 2) Its messages are “ephemeral,” which means that they automatically disappear after a specified period of time.
In the early days, those attributes meant Snapchat was dismissed by many observers as a “sexting” app, designed to allow teens or twenty-somethings to send intimate photos. But it turned out to be far more powerful than just that, which in turn has helped the company raise multiple rounds of funding, to the point where its theoretical market value is now $19 billion.
In an interview with the Wall Street Journal, Instagram CEO Kevin Systrom put his finger on one of the things that has made Snapchat’s features so appealing to younger users. He admitted that his company’s new feature was essentially a copy of Snapchat, and said that this was because “we need to have a place where you feel free to post whatever you want without the nagging fear of, did someone like that or not?”
Although the Instagram CEO didn’t provide any figures on Instagram sharing, the Journal quoted from internal documents that said more than half of all teen users of the app delete their posts if they don’t get enough likes or favorites. In other words, the fact that updates are public creates a kind of performance anxiety for many users, something Facebook and Twitter users have also mentioned.
Snapchat you used far more per day; once you shared a single Instagram photo, that was it, you didn't want to overdo. Insta had to fix this.
Posts on Snapchat, by contrast, don’t have any public likes or favorites or comments, or follower counts. Justin Kan, who sold his streaming-video startup Twitch to Amazon for $1 billion in 2014, pointed out in a Medium post earlier this year that a lot of the social and psychological friction that other services have simply isn’t there with Snapchat. And as a result, engagement levels are much higher.
On Snapchat, the frictional cost is low: the content doesn’t have to be that good, because it is going to disappear anyways, and everyone else’s content isn’t that great either. There’s no public view count, follower count, likes count, or any other social dick-measuring contest.
The only problem for Snapchat is that messages that disappear automatically aren’t a great environment for advertising, or for creating content that is engaging across a broader cross-section of users—something that Instagram has proven to be very good at. That’s why Snapchat has created newer features such as Discover, which features media content; and Memories, where users can save posts and stories.
Many younger users don’t seem to have any interest in these other features, however. They simply want to continue sharing their private photo and video messages without any pressure to perform or to rack up likes and followers. Can Instagram convince them that its new Stories feature is good for that as well, or will it just seem like a shameless copy-cat with no ideas of its own?
In a sense, Snapchat wants to become a little more like Instagram so that it can appeal to advertisers, while Instagram wants to become a bit more like Snapchat so that it can lure younger users who don’t like the social pressure of a public feed. Which one reaches its goal first remains to be seen—and there are tens of billions of dollars in value resting on the outcome. This article originally appeared on Fortune.com
Nike announced on Wednesday that it will transition out of the golf equipment business, another sign that the sport is failing to draw new participants.
The company said in a statement that it will “accelerate innovation” in its golf footwear and apparel business. At the same time, it will move away from selling equipment for the pastime, including clubs, balls, and bags.
Nike golf gear rocketed in popularity in the late 1990s and the 2000s, thanks to the dominance of Tiger Woods, whom Nike sponsors, but the segment has also declined alongside Woods’ personal and professional struggles. It was Nike’s worst-performing division last year, with sales of $706 million.
“We’re committed to being the undisputed leader in golf footwear and apparel,” Trevor Edwards, president of Nike Brand, said in the statement. “We will achieve this by investing in performance innovation for athletes and delivering sustainable profitable growth for Nike Golf.”
A steep decline in participation rates among younger generations, namely millennials, has dogged golf and the retailers that sell its apparel and gear. The number of people playing golf in the United States, which accounts for about half the global golf market, has shrunk from nearly 30 million in 2000 to an estimated 23 million, according to Reuters.
Nike rival Adidas—which has been on a roll of late, having raised its 2016 guidance for a fourth time in July—reported a rare piece of good news for the golf industry on Thursday. It said revenues at its golf business rose 7% in the second quarter, buoyed by double-digit growth at the TaylorMade golf brand. That’s notable since Adidas announced in May that it, too, was getting out of the golf business to focus on sneakers. It’s looking for a buyer for the unit. This article originally appeared on Fortune.com
Like Apple under Steve Jobs and Amazon under Jeff Bezos, Tesla Motors has an image deeply entangled with that of its founder. Only with Tesla, which on Wednesday reported a $293 million loss for the second quarter of 2016, success still lies in an often-delayed future. And so Musk is even more crucial to what Tesla is, because that future must be filtered through his vision.
That makes the quarterly calls where Musk discusses Tesla’s earnings as important to investors as the earnings numbers themselves. And Wednesday’s call was no exception. Tesla closed the books on a wild quarter that featured a $2.6 billion bid to buy Solar City, a high-profile and fatal crash of a Tesla in autopilot mode, and production problems that Musk described this way: “Man, it was hell.”
But analysts were focused instead on what lies ahead. The clearest evidence of that came from the first question, which didn’t concern the $35,000 Model 3 due next year or even solar panels, but came rather from left field: Was Tesla going to merge with SpaceX, where Musk also serves as CEO? Musk, who earlier ruled out this idea on Twitter, politely said that the “little cooperation” between the companies didn’t justify a merger.
The question highlights an issue facing Tesla and Musk alike. People understand that Elon Musk has a bold vision, but they have a harder time understanding how he’ll achieve it. Musk has tried to spell things out, most explicitly in the Master Plan, Part Deux he posted two weeks ago. And yet the how-will-he-get-there conundrum not only persists, it stands at the heart of the debate raging between the bulls and bears.
That debate is no closer to being resolved. During Wednesday’s call, Tesla’s stock seesawed between a gain and a decline in after-hours trading, ending up essentially unchanged from the official closing price of $225.79 a share. That pattern echoes what’s been playing out in Tesla’s stock for some time. Since August 2014, shares in the automaker have risen as high as $280 and fallen as low as $150, and yet today sit unchanged from two years ago.
Investors have essentially chosen to give Musk a pass this quarter, even though Tesla’s loss of $1.06 a share was 54 cents worse than Wall Street had expected. Tesla offered some silver linings around that disappointment. Gross margins were improving and could be as high as 25% or 30% in the final weeks of 2016. Tesla is also producing 2,000 Model X and Model S vehicles a week and aims to steadily increase that figure to 2,400 by the fourth quarter.
But the company is also spending heavily to prepare for the production of the Model 3, a more affordable model that could deliver enough volume to make its car operations profitable. On the call, Musk said that unit volumes of its cars could triple or even quadruple from current levels by the end of next year as the Model 3 ships. Meanwhile, mini-SUVs and small buses built on the Model X platform will move toward production as well.
That sounds enticing for patient investors. But Tesla has a history of not meeting its ambitious targets. Asked about the July 1, 2017 production date for the Model 3, Musk said, “I don’t expect us to be at full production on July 1, but I have to drive all suppliers and internal efforts to that date, knowing that some will fall short.” In other words, July 1 is a soft target, an internal yardstick for suppliers to meet or else. Not so much a date when antsy consumers can expect to start receiving their orders.
Musk also held court on a variety of topics, such as autonomous driving (“What we have under development is going to blow people away. It blows my mind, and I see it all the time.”), the machinery that manufactures Teslas (“When it looks more like an alien dreadnought, that’s when you know you’ve won.”), energy-storage sales (“I think it’s really going to go ballistic.”), and the pesky media (“Tesla can’t sneeze without there being a national headline.”)
If the Tesla sneeze-watch is relentless, it’s because Tesla sits at the center of two emerging industries, clean energy and self-driving cars, often propelling both forward. Should the company fail to deliver on its promises or run out of money trying, it would hurt investment in both initiatives. It’s hardly new that Musk’s vision is taking more time and money than expected to achieve, but there’s some encouragement to be found in his refusal to compromise on that vision.
In a summer of big tech deals, this could be counted as the most unexpected. Uber is selling its China operations to its bitter – and more successful – rival, Didi Chuxing, which controls 80% of China’s ride-sharing market. The repercussions of the deal will be felt far beyond China, affecting everything from Uber’s prospects for an IPO to the fate of its competitors in other markets.
The transaction will involve merging Uber China, mostly owned by Uber but also owned by search giant Baidu and others, with Didi’s operations. It resolves a costly battle for users that led Uber to burn through $2 billion in the past two years. Uber gets an 18% financial stake in Didi plus a $1 billion investment from the company. Both companies will hold a seat on each other’s boards.
Didi Chuxing isn’t a household name among consumers outside China, but the company has quickly emerged as a formidable player in the country’s technology industry. Formed by a merger of China’s two largest ride-sharing apps and boasting investments from Alibaba and integration with WeChat’s messaging app, Didi proved to be a juggernaut that blunted Uber’s ability to gain market share.
The news has left the tech world discussing what it all means. Here are some key outcomes from the Didi-Uber deal, which could be unfolding for the next several months.
Uber waves a white flag
Uber isn’t a company accustomed to defeat, yet this deal marks a clear capitulation in one of its most important markets. “As an entrepreneur, I’ve learned that being successful is about listening to your head as well as following your heart,” CEO Travis Kalanick wrote in a blog post about the deal. That is, Kalanick didn’t want this, but he realized he had little choice. Perhaps because of board pressure. Bloomberg, which broke the news of the Didi-Uber deal, said last week that investors were pushing for a truce between the two companies.
Uber’s defeat is its investors’ gain
Uber is departing China with a dazzling door prize: a sizable stake in a de-facto monopoly of China’s ride-sharing market. Uber’s China expedition echoes Yahoo’s experience there. After years of struggling for a foothold in China, Yahoo bought a stake in Alibaba for $1.7 billion in cash and assets, an investment which shored up Yahoo’s profits for years. Uber has swapped the losing end of a costly battle for future profits of a promising tech giant.
Uber could finally go public
With nearly $6 billion in capital raised in the past year alone, Uber may not need an IPO, a fate Kalanick has worked to avoid. But if private investors are beginning to assert their will, Uber could be going public soon enough. Uber’s losses in developing markets like China have been a key reason the company wasn’t ready for public scrutiny. Selling Uber China eliminates part of those losses and frees up resources to invest elsewhere. Uber could be the huge offering Wall Street has craved to reignite the tech-IPO market.
Tech’s China syndrome
Uber is only the latest U.S. tech giant to either stumble while pushing into China’s market or to decide early on to forego such an effort. Yahoo’s Alibaba investment marked the end of its active presence there. eBay was elbowed aside by Alibaba-owned TaoBao. Facebook and Google have little presence there because of the government’s censorship policies. Chip companies like Intel and enterprise businesses like that of Microsoft’s have fared slightly better, but the consumer Internet in China remains a domestic industry.
Bad news for Lyft
Last September, Didi invested $100 million in Lyft as part of a so-called anti-Uber alliance, a move that boosted Lyft’s prospects. Didi also forged partnerships with Uber rivals in others areas, such as Ola in India and Grab in Southeast Asia. It’s not clear where those partnerships stand right now, but if Kalanick sits on Didi’s board, there will either be some severing of those older ties or some interesting conflicts among Didi’s various partners.
It gets (even more) complicated
With Didi investing $1 billion in Uber, Apple, which in May invested $1 billion in Didi, becomes an indirect investor in Uber. Google also invested in Uber in 2013, even though Uber is now spurning Google Maps for its own technology. All three companies are racing to develop self-driving cars. Even odder, with its investment in Didi, Uber now owns part of a company with a $100 million investment in Lyft.
What next?
All of this sets the stage for some interesting potential outcomes. Will Uber’s capitulation inspire venture capitalists to take hard stands on other unicorns? Could an Uber IPO break the logjam of unicorn IPOs? Will this deal increase the pace of tech mergers? And how are all these increasingly tangled tech giants going to compete with each other when they invest in each other? The ripples from this deal will be playing out for some time.
Donald Trump spent much of his campaign breaking political norms. Depending on whom you ask, it's either one of his most endearing qualities or the greatest threat his candidacy poses.
Now, however, he's calling into question one of the foundations of US democracy - the legitimacy of its electoral process.
In the fever swamps on the left and the right, plenty of Americans have doubted the integrity of US elections.
They've levelled accusations of voter fraud. Or hacked voting machines. Or polling-place intimidation.
Some of the allegations even contain kernels of truth.
Many US voting electronic machines are woefully unsecure and produce no hard-copy backup. There have been instances of voter impersonation - although they're extremely isolated and usually involve absentee balloting. New Black Panther activity around Pennsylvania polling sites in 2008 inflamed conservatives, although a US Justice Department investigation found no illegal activity.
You don't have to dig too deep into social media or the partisan commentariat to find a thorough rehashing of any of these particular concerns. What you don't hear - at least not until now - is such accusations coming from the top of a presidential ticket.
At a rally on Monday Mr Trump said he was afraid that the November election "is going to be rigged" - backing up his statement by saying it was something he was hearing "more and more".
In a television interview, he repeated the warning.
"November 8th, we'd better be careful, because that election is going to be rigged," he said. "And I hope the Republicans are watching closely, or it's going to be taken away from us."
The "rigging" accusation isn't particularly new for Mr Trump, although he'd previously only levelled it toward the sometimes Byzantine candidate nomination process. It's much easier to question party systems that rely on state-by-state primaries and often poorly managed caucuses, as well as frequently altered delegate allocation procedures.
Mr Trump has said Hillary Clinton benefitted from a rigged Democratic Party apparatus to defeat Vermont Senator Bernie Sanders. (Mrs Clinton received roughly 3.7 million more votes than Mr Sanders, but recently released hacked emails indicate that the Democratic National Committee was manoeuvring to support the former secretary of state behind the scenes during the final months of the primary season).
Mr Trump also accused Republican Party officials of attempting to deny him the nomination, after presidential rival Ted Cruz took advantage of delegate rules to position himself to upset Mr Trump - who had a significant advantage in the popular vote - in a contested convention.
Calling the US presidential nomination system "rigged" can be overheated rhetoric, but that playing field is often tilted toward the establishment. US politics isn't too far from removed a time when nominees were picked by party bosses, while rank-and-file voters had little or no say in the process.
General elections are different. Their rules are set forth in state and federal law, overseen by courts and governed by provisions enshrined in the US Constitution.
"National elections have a clear cut set of rules," writes Josh Marshall of Talking Points Memo. "The only way to rig them is to change the vote numbers."
For Mr Trump to call the fairness of US elections into question - months before Americans head to the polls, no less - is a significant break with the tradition of presidential candidates paying respect to the electoral process, win or lose.
Image copyrightGETTY IMAGES
Donald Trump spent much of his campaign breaking political norms. Depending on whom you ask, it's either one of his most endearing qualities or the greatest threat his candidacy poses.
Now, however, he's calling into question one of the foundations of US democracy - the legitimacy of its electoral process.
In the fever swamps on the left and the right, plenty of Americans have doubted the integrity of US elections.
They've levelled accusations of voter fraud. Or hacked voting machines. Or polling-place intimidation.
Some of the allegations even contain kernels of truth.
Many US voting electronic machines are woefully unsecure and produce no hard-copy backup. There have been instances of voter impersonation - although they're extremely isolated and usually involve absentee balloting. New Black Panther activity around Pennsylvania polling sites in 2008 inflamed conservatives, although a US Justice Department investigation found no illegal activity.
You don't have to dig too deep into social media or the partisan commentariat to find a thorough rehashing of any of these particular concerns. What you don't hear - at least not until now - is such accusations coming from the top of a presidential ticket.
At a rally on Monday Mr Trump said he was afraid that the November election "is going to be rigged" - backing up his statement by saying it was something he was hearing "more and more".
In a television interview, he repeated the warning.
"November 8th, we'd better be careful, because that election is going to be rigged," he said. "And I hope the Republicans are watching closely, or it's going to be taken away from us."
The "rigging" accusation isn't particularly new for Mr Trump, although he'd previously only levelled it toward the sometimes Byzantine candidate nomination process. It's much easier to question party systems that rely on state-by-state primaries and often poorly managed caucuses, as well as frequently altered delegate allocation procedures.
Image copyrightGETTY IMAGESImage captionAl Gore calls for his supporters to respect the results of the 2000 presidential election
Mr Trump has said Hillary Clinton benefitted from a rigged Democratic Party apparatus to defeat Vermont Senator Bernie Sanders. (Mrs Clinton received roughly 3.7 million more votes than Mr Sanders, but recently released hacked emails indicate that the Democratic National Committee was manoeuvring to support the former secretary of state behind the scenes during the final months of the primary season).
Mr Trump also accused Republican Party officials of attempting to deny him the nomination, after presidential rival Ted Cruz took advantage of delegate rules to position himself to upset Mr Trump - who had a significant advantage in the popular vote - in a contested convention.
Calling the US presidential nomination system "rigged" can be overheated rhetoric, but that playing field is often tilted toward the establishment. US politics isn't too far from removed a time when nominees were picked by party bosses, while rank-and-file voters had little or no say in the process.
General elections are different. Their rules are set forth in state and federal law, overseen by courts and governed by provisions enshrined in the US Constitution.
"National elections have a clear cut set of rules," writes Josh Marshall of Talking Points Memo. "The only way to rig them is to change the vote numbers."
For Mr Trump to call the fairness of US elections into question - months before Americans head to the polls, no less - is a significant break with the tradition of presidential candidates paying respect to the electoral process, win or lose.
Image copyrightGETTY IMAGESImage captionDonald Trump supporters could view the defeat of their candidate in November as evidence of a "rigged" system
In 2000, after a contentious presidential contest that careened past election day and into an extended recount of the Florida vote and multiple rounds of lawsuits only settled by the US Supreme Court, Democrat Al Gore conceded defeat and called for unity.
"This is America," he said. "Just as we fight hard when the stakes are high, we close ranks and come together when the contest is done."
Eight years later, Republican nominee John McCain did his part to tamp down unrest within his own party following Barack Obama's election. When the audience booed his every mention of his opponent during his concession speech, he rebuked them.
"Please, please," he said to quiet the crowd.
"I urge all Americans who supported me to join me in not just congratulating him," he continued, "but offering our next president our good will and earnest effort to find ways to come together to find the necessary compromises to bridge our differences and help restore our prosperity, defend our security in a dangerous world, and leave our children and grandchildren a stronger, better country than we inherited."
Mr Trump's "rigged" language may simply be a rhetorical flourish from a candidate prone to extemporaneous musings - but it's already making the rounds among his supporters
In a podcast last week, long-time Trump advisor Roger Stone said that if the election results in November don't match opinion polls, the Republican nominee should challenge the validity of the election and warned that the unrest could end in a "bloodbath".
"If there's voter fraud, this election will be illegitimate," he said. "The election of the winner will be illegitimate, we will have a constitutional crisis, widespread civil disobedience, and the government will no longer be the government."
Such upheaval may be painfully familiar to those living in the world's less established democracies. It would be uncharted territory for the United States.
Hong Kong (CNN)Beijing has accused the U.S. of working with so-called separatists in Hong Kong and Taiwan to undermine China and plunge it into chaos.
In a video posted online by the Chinese Supreme People's Procuratorate, apocalyptic images of Syria and Iraq are contrasted with bucolic views of China today.
"The haze of 'domestic and international concerns' has not dispersed from the Chinese sky," the video says.
"Tibet, Xinjiang, Hong Kong and Taiwan separatism, as well as dissident leaders, lawyers who would fight until death and other agents of Western forces are damaging China's internal stability and harmony. Behind all these incidents, we can often catch a glimpse of the dark shadow of the Stars and Stripes."
In a post on Weibo, the Procuratorate urged people to "stay alert for color revolutions" or see "peaceful and stable China" become like Syria or Iraq.
A warning against independence movements in Taiwan and Hong Kong is overlaid on photos of Joshua Wong -- a leading Hong Kong pro-democracy campaigner and founder of Demosisto -- and Taiwanese President Tsai Ying-wen.
A federal judge denied Donald Trump's effort to have a fraud case involving Trump University thrown out because there was "a genuine issue" about whether Trump "knowingly participated" in a fraud scheme.
The judge did, however, rule that Trump's videotaped depositions in the case would remain sealed.
U.S. District Judge Gonzalo Curiel's reason for keeping the videotapes sealed was to avoid a "media frenzy" before the trial.
"There is every reason to believe that release of the deposition videos would contribute to an on-going 'media frenzy' that would increase the difficulty of seating an impartial jury," Curiel saidin his ruling on Tuesday.
A number of media outlets, including CNN, had requested that the court release the deposition videos on the grounds that the "need for transparency could not be greater" given the nomination of Trump as the Republican presidential candidate.
"The strong public interest in this case, which involves serious allegations of fraud that have become a prominent issue in the 2016 presidential campaign, weighs in favor of public disclosure of materials produced in the course of the litigation," the media outlets noted in their request to the court.
But Curiel said the election is one of the reasons he chose to allow the tapes to remain sealed. He wrote that because Trump's deposition would likely be cut and used in political advertisements and media reports, it would expose potential jurors to information before the trial -- which could taint the outcome of the case.
In a separate ruling, Curiel denied Trump's motion asking the judge to throw the case out.
"The court finds that plaintiff has raised a genuine issue of material fact as to whether defendant knowingly participated in the scheme to defraud," the judge wrote.
Transcripts of much of Trump's depositions have already been released.
This case is one of two being heard by Curiel. Trump stirred up controversy when he attacked Curiel's ability to be impartial and incorrectly identified the Indiana-born judge as a "Mexican" and called him a "hater."
Those comments earned Trump a sharp rebuke from leading Republicans, with House Speaker Paul Ryan characterizing them as a "textbook definition of a racist comment."
The billionaire industrialist Koch brothers rejected pressure over the weekend from dozens of big donors in their sprawling political network to back U.S. Republican presidential candidate Donald Trump, saying that their money was better spent trying to influence congressional races.
The rejection deprives Trump, a New York businessman who has never previously run for elected office, of a major source of fundraising and reflects how his unorthodox White House bid has sparked some disarray among fundraisers who would normally be squarely behind a Republican nominee.
The Kochs, with a nearly $300 million political warchest, have earned a reputation as powerful allies in Republican politics.
Charles Koch, the dominant player in his political partnership with brother David Koch, told attendees at a bi-annual donor retreat at a luxury resort in Colorado Springs, Colorado: “At this point, I can’t support either candidate” for the White House.
He said network’s mandate was to shore up “the country’s financial future and eliminate corporate welfare," a reference to government subsidies provided to some industries.
"But since it appears that neither presidential candidate is likely to support us in these efforts, we are focused on maximizing the number of principled leaders in the House and Senate who will," he said.
Trump's protectionist stances and pledges to review free trade agreements and to get tough on immigration have clashed with the Kochs' free-market political philosophy. Charles Koch has described as a "a blood libel" the idea he would instead support Hillary Clinton, the Democratic presidential nominee for the Nov. 8 election.
A group of wealthy Republican donors, who paid the minimum $100,000 per year to be members of the 700-strong Koch network, had been urging the brothers to step off the sidelines of the election and back Trump.
SEEKING FUTURE INFLUENCE
The donors argued that if Trump is elected, the Koch network would want to have influence on his emerging policies and cabinet picks, and to have access to a Trump administration.
Over cocktails on the patio overlooking the Rocky Mountains, in private meetings and on text message threads, some donors voiced their concern that if the Kochs alienate Trump, "it could hurt us down the road."
Some suggested that some donors could leave the Koch network over the decision not to back Trump. Oil magnate Harold Hamm, a leading candidate to serve as Trump's energy secretary, did not attend the weekend gathering.
Other donors who had been at the forefront of a movement to urge the Kochs to get on board with Trump, like billionaire broadcasting magnate Stanley Hubbard, said that in a private meeting with Charles, they had now been convinced that the Kochs were "doing the right thing."
Trump has shown no hesitation in spurning the Kochs.
On Friday, he tweeted that he had turned down an invitation to meet with the brothers. Koch insiders quickly disputed that characterization, saying an invite was never extended.
Nonetheless, the Koch brothers also did not act to stop Trump from beating 16 presidential rivals and winning the party nomination. During the primary contests, many Koch donors were urging the brothers to perform a "Trump Intervention," whereby the brothers would leverage their political operation to support Trump's rivals. The Kochs refused.
Trump officially accepted the Republican nomination in Cleveland last month, with a speech that painted a bleak picture of rising crime at home and increasing threats from overseas.
The top Koch official on criminal justice reform, Mark Holden, said the speech was inaccurate. "We are safer (now)," he said.
(Reporting by Michelle Conlin; Editing by Richard Valdmanis and Frances Kerry)
I am a retired accountant & tax consultant now devoting much of my time to upgrading my own website, writing up my blog. I play sports on a weekly basis and is engaged in some voluntary work. I am also an amateur astronomer doing online research and quite proud of my research project. Details of my research in astronomy can be viewed on my website. Just click on any blog title ( in green colour ) or hit the link in my complete profile to access my website.
