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GDPR PHOTO

Facebook and Google are already facing lawsuits under new data rules

Europe’s sweeping data protection law came into force on Friday. And legal experts say big tech companies are already violating the new rules.

Facebook (FB) and its subsidiaries Whatsapp and Instagram, as well as Google (GOOGL), are facing lawsuits for failure to comply with the General Data Protection Regulation (GDPR).

The companies could face billions of dollars in fines if European regulators agree they failed to comply.

“We’re looking for big companies that really willfully violate the law, that kind of try to ignore it and try to get away with it,” said Max Schrems, an Austrian lawyer whose NGO, None of Your Business, filed the lawsuits.

The complaint against Facebook was filed with Austrian data regulators, Google with French regulators, WhatsApp with German regulators and Instagram with Belgian regulators as soon as the law went into effect at midnight.

From Friday, European data regulators can impose fines of up to 4% of global annual sales each time the companies run afoul of the new law.

“There is no grace period,” James Dipple-Johnstone, the deputy commissioner of the UK’s data protection authority. “We will be looking at the algorithms they use to profit off data to make sure they are fair,” he added.

Schrems has been fighting Facebook over data protection for almost a decade. His earlier lawsuit successfully challenged Facebook’s ability to transfer data from the European Union to the United States.

The next battleground with the company is GDPR.

According to Schrems and other legal experts, Facebook is breaking a GDPR rule intended to prevent companies from hoovering up sensitive information like political opinions, religious beliefs, ethnicity and sexuality without their users’ consent.

Michael Veale, a Technology Policy Expert at University College London, said that even if users’ completely remove sensitive traits from their profiles, Facebook can still glean information such as sexual orientation by analyzing their behavior on the platform and other websites.

“Facebook has trackers on 40% of websites that are visited in the world,” Veale said. “So really, Facebook can infer things from the great amount of data it has about you from across your mobile devices and apps that also send data to Facebook. The law forbids Facebook from making these inferences without explicit consent.”

Testifying in front of the European Parliament leaders on Tuesday, Facebook CEO Mark Zuckerberg insisted his company would follow the new regulations.

“We have made our policies clearer, our privacy settings easier to find and introduced better tools for people to access, download, and delete their information,” Facebook’s Chief Privacy Officer Erin Egan said in a statement emailed to CNNMoney.

Egan also said the company is building a new tool called “Clear History” which will allow users to “see the websites and apps that send us information when you use them, clear this information from your account, and turn off our ability to store it associated with your account going forward.”

The suit against Google alleges that users of the company’s Android software are forced to turn over personal data to use an Android-powered mobile device.

The lawsuit alleges this “forced consent” amounts to a violation of GDPR, which guarantees individuals the right to consent when companies want to collect and process their personal data.

Google told CNNMoney it is committed to complying with the new law.

Schrems says the new rules are tough enough to prevent the kind of data scraping that Cambridge Analytica before the 2016 U.S. election. He’s taking legal action to ensure GDPR is properly enforced.

“If we enforce the properly, we can actually get a balance in this digitalized age,” says Schrems. “In the end, you should be able to use Facebook without worrying 24/7 about your data,” he added.

Rosen Law Firm announces investigation of securities claims against Intel

Rosen Law Firm, a global investor rights law firm, announces it is investigating potential securities claims on behalf of purchasers of the securities of Intel Corporation (NASDAQ:INTC) resulting from allegations that Intel may have issued materially misleading business information to the investing public.

On January 2, 2018, news outlets reported that a significant design flaw in Intel’s processor chips could allow malicious software to read protected areas of a device’s kernel memory, causing Intel’s processor chips to be “vulnerable to hackers” “rais[ing] concerns about the company’s main products and brand.” Then, on January 3, 2018, Reuters reported that Intel’s CEO, Brian Krzanich, said “Google researchers told Intel of the flaws ‘a while ago.’” The Reuters article further stated that “Google said it informed the affected companies about the ‘Spectre’ flaw on June 1, 2017 and reported the ‘Meltdown’ flaw after the first flaw but before July 28, 2017.” On this news, shares of Intel fell $1.59 per share or over 3.5% from its previous closing price to close at $45.26 per share on January 3, 2018.

Then, on January 4, 2018, news outlets reported that Intel’s CEO sold millions of dollars worth of shares after Intel was informed of vulnerabilities in its semiconductors but before it was publicly disclosed. Intel’s CEO sold about half his stock months after he learned about critical flaws in billions of Intel’s microchips and now holds only the minimum number of shares he’s required to own. On this news, shares of Intel fell $0.83 to close at $44.43 on January 4, 2018.

Rosen Law Firm is preparing a class action lawsuit to recover losses suffered by Intel investors. If you purchased shares of Intel, please visit the firm’s website at http://www.rosenlegal.com/cases-1265.html or more information. You may also contact Phillip Kim or Daniel Sadeh of Rosen Law Firm toll free at 866-767-3653 or via email at [email protected] or [email protected].

Follow us for updates on LinkedIn: https://www.linkedin.com/company/the-rosen-law-firm or on Twitter: https://twitter.com/rosen_firm.

Rosen Law Firm represents investors throughout the globe, concentrating its practice in securities class actions and shareholder derivative litigation. Since 2014, Rosen Law Firm has been ranked #2 in the nation by Institutional Shareholder Services for the number of securities class action settlements annually obtained for investors.

Eric PHOTO

Eric Schmidt to step down as boss of Google parent company Alphabet

Alphabet, which was formed when Google restructured its operations in 2015, now has more than 70,000 employees worldwide.

Eric Schmidt will step down as the executive chairman of Google’s parent company, Alphabet, the firm announced on Thursday.

Mr Schmidt, 62, will relinquish his role at the next board meeting in January and become a technical adviser to the firm as well as continuing to serve as a director.

No reason was provided for the decision. Mr. Schmidt said that he, Google founders Larry Page and Sergey Brin, as well as chief executive Sundar Pichai, “believe that the time is right in Alphabet’s evolution for this transition.”

“The Alphabet structure is working well, and Google and the Other Bets are thriving,” Mr Schmidt said in the statement, referring to the company’s ventures outside of its core search business. “In recent years, I’ve been spending a lot of my time on science and technology issues, and philanthropy, and I plan to expand that work.”

It ends a seventeen-year reign at the top of Google for Mr Schmidt who joined as chief executive in 2001 when the company had just 200 employees.

Alphabet, which was formed when Google restructured its operations in 2015, now has more than 70,000 employees worldwide, and owns Google Search, Maps, Ads, Gmail, Android, Chrome, and YouTube.

He was brought in to guide founders Mr Page and Mr Brin, who were both then in their 20s and has guided the company through its stock market flotation in 2004, its acquisition of YouTube in 2006. He steps down with the company firmly in place as the undisputed leader in search and online advertising worldwide.

The move signals the shift to a new generation of leaders at Google, including Mr Pichai.

“He did a lot of that important public-facing work on behalf of the company,” John Battelle, author of “The Search”, a book about Google, told The New York Times.

“At a moment when the world needs to have more conversations with Google about its growing power and influence, my question is not why is Eric stepping down.

It’s who is going to fill the void.”

General Electric slashes quarterly dividend ahead of restructuring

General Electric will radically shrink to focus on aviation, power and healthcare, betting on sectors it thinks it can make profits in, as the most famous US conglomerate tries to revive its share price after a decade and a half of stagnation.

The 125-year-old company cut its dividend and profit outlook in half as it begins the transition, in a widely expected plan unveiled on Monday by new chief executive John Flannery in New York.

GE shares fell 6 per cent to $19.22, its lowest in more than five years, valuing the entire company at about $168bn, as investors worried how the slimmed-down company would generate cash to justify its stock valuation.

“By the numbers, we see a core operating performance that is below plan, and, currently, a consensus expectations curve that we think remains too high,” said JPMorgan analyst Stephen Tusa.

GE is the worst-performing Dow component this year, down 35 per cent by Friday’s close. GE stock has effectively been dead money since September 2001, when recently retired chief executive Jeff Immelt took over, posting a negative total return even after reinvesting its juicy dividends.

Mr Flannery, who took over as CEO on 1 August, said he was “looking for the soul of the company again” and would focus on “restoring the oxygen of cash and earnings to the company.”

The transition likely means the sale of $20bn of assets. GE will jettison businesses with “a very dispassionate eye,” Flannery said, keeping only units that offer growth, a leading market position and a large installed base.

That could mean exiting businesses like lighting, transportation and oil and gas, closing factories around the globe, analysts said.

GE also plans to cut 25 per cent of corporate staff at its Boston headquarters. It has already started shedding jobs at its software business.

The dividend cut, only the third in the company’s 125-year history and the first not in a broader financial crisis, is expected to save about $4bn in cash annually.

“This dividend cut will be a major disappointment to GE’s (roughly 40 per cent) retail shareholder base,” said RBC Capital Markets analyst Deane Dray.

The cut will save GE $4.16bn in payouts, the eighth biggest dividend cut in history among S&P 500 companies, according to Howard Silverblatt, senior index analyst of S&P Dow Jones Indices. GE also had the biggest cut when it slashed its dividend by $8.87bn in 2009, Silverblatt said.

GE forecast adjusted 2018 industrial free cash flow of $6bn to $7bn, up from an estimated $3bn in 2017.

The move to make GE smaller and nimbler is a turnaround from the previous multi-business approach taken by former chief executives Jack Welch and Jeff Immelt.

Flannery’s changes repudiate much of Immelt’s vision of a “digital industrial” company that builds software to manage and optimize GE’s jet engines, power plants, locomotives and other products.

Conglomerates have long been out of favor on Wall Street, where investors prefer to bet on specific industries rather than a mixed portfolio.

GE forecast 2018 adjusted earnings per share of $1 to $1.07 per share, compared with its earlier estimate of $2 per share. Wall Street was expecting $1.16, according to Thomson Reuters.

The company on Monday cut its quarterly dividend to 12 cents per share, from 24 cents, starting in December.

GE’s dividend cut – a bid to save cash when the company’s cash flow is deteriorating – is the third in its history. The other two cuts came during the Great Depression and the global financial crisis of 2007-2009.

Flannery’s strategy is a turning point for the company, which over several decades built itself into a sprawling conglomerate with interests across media, energy, banking, aviation, railroads, marine engines and chemicals.

GE executives have said that analysts have undervalued the company’s digital business. They argue the digital units should be valued more like Amazon, Google and other fast-growing tech companies.

GE will also cut its board to 12 from 18 members.

Social media firms under scrutiny for ‘Russian meddling’

Facebook, Twitter and Google lawyers defended themselves to US lawmakers probing whether Russia used social media to influence the 2016 election.

The three firms faced hard questions at a Senate panel on crime and terrorism about why they missed political ads bought with Russian money.

Lawmakers are eyeing new regulations for social media firms in the wake of Russia’s alleged meddling in 2016.

The firms said they would tighten advertising policies and guidelines.

Senator Al Franken, a Democrat from Minnesota, asked Facebook – which absorbed much of the heat from lawmakers – why payment in Russian rubles did not tip off the firm to suspicious activity.

“In hindsight, we should have had a broader lens,” said Colin Stretch, general counsel for Facebook. “There are signals we missed.”

A day earlier Facebook said as many as 126m US users may have seen Russia-backed content over the last two years.

Lawyers for the three firms are facing two days of congressional hearings as lawmakers consider legislation that would extend regulations for television, radio and satellite to also cover social media platforms.

The firms said they are increasing efforts to identify bots and spam, as well as make political advertising more transparent.

Facebook, for example, said it expects to have 20,000 people working on “safety and security” by the end of 2018 – double the current number.

“I do appreciate these efforts, but I don’t think it’s enough,” said Senator Amy Klobuchar, a Democrat from Minnesota.

Ms Klobuchar has proposed legislation that she says would make social media firms subject to the same disclosure rules for political and issue pages as print, radio and television companies.

The companies said they would work with her on the bill, but did not say they would support it.

Senators questioned whether the firms are up to the task of weighing free speech and privacy rights against concerns over terrorism and state-sponsored propaganda.

“I think you do enormous good, but your power sometimes scares me,” said Senator John Kennedy, a Republican from Louisiana.

What happened during the election?

Russia has repeatedly denied allegations that it attempted to influence the last US presidential election, in which Donald Trump beat Hillary Clinton.

But Facebook revealed as many as 126m American users may have seen content uploaded by Russia-based operatives.

The social media company said about 80,000 posts published between June 2015 and August 2017 and were seen by about 29m Americans directly.

These posts, which Facebook says were created by a Kremlin-linked company, were amplified through likes, shares and comments, and spread to tens of millions of people.

That company, Internet Research Agency, was also linked to about 2750 Twitter accounts, which have been suspended, Twitter said.

The firm also said it had identified more than 36,000 Russian bots that generated 1.4m automated, election-related Tweets, which may have been viewed as many as 288m times.

Google also revealed on Monday that Russian trolls had uploaded more than 1,000 political videos on YouTube on 18 different channels. The company said they had very low view counts and there was no evidence they had been targeting American viewers.

Most of the posts focused on sowing political and social divisions, the firms have said.

The companies said they used a combination of staff and big data to police that content, disabling fake and spam accounts.

Key recent developments:

Nov 2016: Facebook founder Mark Zuckerberg says “the idea that fake news on Facebook influenced the (US) election in any way is a pretty crazy idea”
Aug 2017: Facebook says it will fight fake news by sending more suspected hoax stories to fact-checkers and publishing their findings online
Oct 2017: Google finds evidence that Russian agents spent tens of thousands of dollars on ads in a bid to sway the election, reports say
Oct 2017: Twitter bans Russia’s RT and Sputnik media outlets from buying advertising amid fears they attempted to interfere in the election