2020 04 13 Bloomberg Businessweek Europe Edition

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● The big bankruptcy test 24

● Fast-tracking a vaccine 8
● Organized labor’s moment 18
WOULD
April 13, 2020
EVERYONE
PLEASE
MUTE?
Zoom is suddenly critical infrastructure.
No one is more surprised than Zoom 44
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no matter what tomorrow
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April 13, 2020
◀ Zoom times: Have a

remote cocktail hour.
Catch up with relatives.
Date. Visit your therapist
FEATURES 44 The New Social Network

Eric Yuan never meant for Zoom to be a household name. Then came the virus
50 Continental Divide
A Bloomberg TV anchor’s family confronts the pandemic in China and the U.S.
COURTESY JIM ALEY
54 Instagram vs. Facebook

An excerpt from the book No Filter shows the founders’ epic power struggle
◼ CONTENTS Bloomberg Businessweek April 13, 2020
◼ IN BRIEF 4 1.5 million and counting ● Bye-bye, Bernie ● Airbnb ◼ COVER TRAIL
◼ AGENDA 5 China’s GDP takes a beating ● A World Bank-IMF confab How the cover
gets made
◼ REMARKS 8 Big Pharma is trying to rustle up a vaccine, fast ①

[Blooping video
login sounds]
BUSINESS 12 China’s year of the electric vehicle faces a shakeout
1 13 For vitally needed medical gear, consider the 3D printer
“This week’s story
is about Zoom. With
everyone working from
15 ▼ With farmers hoarding feed, this little piggy had none home, the video app
is basically critical
infrastructure.”
“I’ll get on it.”
[Rapid mouse-clicking]
16 How CVS’s CEO is managing the madness

“Feels urgent, but not
TECHNOLOGY 18 Amazon employees are worried—and fired up to unionize enough Zoom.”
2 20 On top of everything else, here come the hackers [Child screaming]
21 Is quantum computing on the verge of a quantum leap? ③
FINANCE 24 With bankruptcies likely to soar, bring on more debt relief

3 26 These funds looked safe, but they sure were stock-heavy
2
27 Your retirement dreams may not be completely shattered
28 What happens when nobody pays the rent
ECONOMICS 30 Blue-collar workers usually take a severe hit in a

“Well … you went there.
recession, and the one that’s coming looks no different Little much, no?”
[Dog barking]
POLITICS 34 A new stimulus is on the way, but consensus will be tricky
“Is that your dog?”
35 The EU can’t do much about Orban’s power grab
[Furious typing sounds]
37 Some nations are mulling immunity certificates
38 Pakistan’s health-care system was already broken. Now… “I don’t have a dog!”
PIGS: ALEX KRAUS/BLOOMBERG. CORONAVIRUS: ALISSA ECKERT AND DAN HIGGINS/CDC. BACKGROUNDS: ZOOM
39 Strange, but in times like these, people love their leaders [A thousand rustling
SunChips bags]
SOLUTIONS 40 As AI battles the pandemic, regulatory questions pile up “I never thought I’d miss
the open-plan office.”
42 Europe casts a wary eye on how robots gather data
43 These tech pros are figuring out how invasive AI can be
◼ PURSUITS 60 The rush to purify air at home

63 Smell the roses, or a reasonable facsimile
64 Shining a light on the real reason you can’t sleep
66 Yves Béhar’s “wellness machine” for over-40 bones…
67 … and the best way to soothe them after that workout
◼ LAST THING 68 The Spanish flu, Covid-19, and how the job markets differ
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Bloomberg Businessweek April 13, 2020

IN BRIEF
○ Global ○ The captain of the
Theodore Roosevelt aircraft
coronavirus carrier, Brett Crozier, was
fired after he appealed
cases to his superiors for help
surpassed because of a coronavirus

outbreak on his vessel.
1.5 million. Acting Secretary of the
Navy Thomas Modly, in a
speech to the crew, called
him either “too naive or too
The U.S. reported the highest
number, more than 400,000. But new
stupid” to be in command
infections showed their first signs of of the nuclear-powered
slowing in France, Italy, and Spain,
Europe’s hardest-hit countries, where
ship. While Modly later
lockdowns have lasted for more than apologized for the remarks,
two weeks. China said it didn’t have ○ Bernie Sanders, the onetime front-runner to be the Democratic Party’s
any new deaths for the first time since
he quit shortly thereafter. presidential nominee, ended his bid for the White House on April 8. His decision
the pandemic began. makes former Vice President Joe Biden the party’s presumptive nominee.
○ U.K. Prime Minister Boris ○ Poland’s ruling party took ○ 3M will provide an ○ Blackstone CEO Steve
Johnson, who spent the the controversial step of additional Schwarzman predicted
previous week quarantined maintaining a May 10 date disruptions from the
with a coronavirus infection,
was taken to a hospital on
April 5 and transferred to
for presidential elections,
which will have to be held
via mail because of the
55.5m
masks a month for U.S.
coronavirus pandemic will
cost the U.S. economy
$5 trillion in gross domestic
an intensive-care unit to coronavirus. The Law health-care workers and product. But the slump has
4 receive oxygen after his & Justice party wants others fighting Covid-19. also created investment
health deteriorated. Foreign President Andrzej Duda The company had been opportunities, and the
Secretary Dominic Raab to remain in power for locked in a public spat firm will put some of its
took over most of his duties. five more years, but the with President Trump, who $150 billion in dry powder to
opposition is crying foul called for a halt to exports use, he said.
because the lockdown of protective face masks.
has kept them from
campaigning.
○ Rolls-Royce ○ Airbnb is raising ○ Cardinal George Pell

$1 billion in debt and equity was released
eliminated its securities from investors from prison after
dividend, the first Silver Lake and Sixth the High Court of
time the biggest Street Partners after the Australia overturned his
pandemic devastated its convictions for child sexual
U.K. manufacturer business. The company’s abuse following a two-year
won’t make planned IPO this year legal battle. The cleric,
a payout to looks increasingly unlikely, who was serving a six-year
analysts say. sentence, had maintained
shareholders. his innocence since being
charged in 2017. The court
found the jury had not
properly considered all ○ Lufthansa lost its finance chief in
the middle of its worst crisis. Ulrik
the evidence presented Svensson resigned for health reasons,
The stock rose a record 18% on April 6 at the trial. the German carrier announced,
after the aircraft engine maker said it depriving it of a key executive to help
has about £6.7 billion ($7.4 billion) shore up its finances depleted by a
in liquidity. largely grounded fleet.
By Benedikt Kammel
● Milk prices are plunging, because restaurant and ● Chinese coffee chain ● Woodward and Hexcel
school closings are creating an oversupply, forcing dairy Luckin Coffee said its called off a merger. The
cooperatives to dump the product. chief operating officer and deal, announced in January,
some underlings may have would have formed an
Class III milk futures, price per 100 pounds fabricated billions of yuan aerospace and defense
in sales, upending what was giant with annual revenue of
$5b
supposed to be a local rival
to Starbucks and one of
China’s best growth stories.
supplying companies
including Boeing and Airbus.
4/8/19
$15.86
4/7/20
$14.04
●“Better
● Tesla will cut employee
salaries by 30% ◼ AGENDA
to save costs
days will while the electric-
ILLUSTRATION BY CAROLYN FIGEL FOR BLOOMBERG BUSINESSWEEK. SANDERS: DANIEL ACKER/BLOOMBERG. JOHNSON: JACK TAYLOR/GETTY IMAGES. PELL: MICHAEL DODGE/GETTY IMAGES.
car pioneer shuts down
return. production. The measure is

temporary, says CEO Elon
We will be
Musk, and employees who 5
can’t work from home will
be furloughed without pay,
with our
LUCKIN COFFEE: GILAI SHEN/BLOOMBERG. MUSK: SIMON DAWSON/BLOOMBERG. LUFTHANSA: PATRICK PIEUL/GETTY IMAGES. DATA: COMPILED BY BLOOMBERG
though they get to keep

medical benefits.
friends
again. We
will be ▶Tallying China’s Lockdown Fallout
with our ● An auction of awards
and artifacts belonging to
China releases key economic data for the first quarter on
April 17, with economists predicting GDP to contract by
families
the late actress Doris Day more than 5% after the coronavirus froze large parts of
raised almost the country’s industrial production.
again. We
will meet $3m
Among the 1,100 items
▶ JPMorgan Chase
opens the earnings
season on April 14, and
Wells Fargo files on
the same day. Bank of
America, Citigroup, and
▶ On April 14, the Bank
of Indonesia decides on
interest rates. It lowered
borrowing costs for the
second straight month
in March to shore up
▶Taiwan
Semiconductor
reports earnings on
April 16. Demand for
consumer electronics
and their components
again.”
put up for sale by Julien’s Goldman Sachs disclose the economy. has remained high as
on April 15. people shelter at home.
Auctions were a vintage
Ford convertible and one of
her Golden Globe Awards. ▶ The International ▶ The health ministers ▶ Stuck at home,
Monetary Fund and of EU member states but still want to look
Queen Elizabeth II urged the public the World Bank hold hold a videoconference fabulous? Christie’s has
to be patient and adhere to social their spring meetings on April 15 to exchange an online auction of fine
distancing rules in an extraordinary April 14-17 to discuss strategies on the jewelry from houses
speech from Windsor Castle, only the ways out of the global region’s fight against the including Cartier, Tiffany,
fifth time in the monarch’s 68-year economic crisis. coronavirus outbreak. and Van Cleef & Arpels
reign that she’s appeared in a starting on April 13.
special address.
◼ REMARKS
Racing Against Time

8
And the Virus
ILLUSTRATION BY CHARLOTTE POLLET
◼ REMARKS Bloomberg Businessweek April 13, 2020
year-to-date. This could easily be a vaccine bubble. The time

● It can take years to develop a
frame the U.S. government has given out, of having a shot
vaccine, but Big Pharma is betting big within 12 to 18 months, has drawn skepticism from many vac-
it can beat Covid-19 quickly cine experts. “You would have to have everything go per-
fectly to get there,” says Seth Berkley, chief executive officer
of the nonprofit Gavi, the Vaccine Alliance, which helps devel-
● By Robert Langreth and oping countries finance and distribute vaccines. “The most
Cynthia Koons important thing is to have people understand that science is
miraculous and can make things happen but it isn’t going to
happen tomorrow.”
Much about the coronavirus has defied belief—the speed at Still, the first steps are happening remarkably quickly. To
which it has spread around the world, the insidious way it pen- understand the buzz around Moderna, one must understand
etrates the lungs, the unexpected impact it’s having on young how much it’s accomplished in just a few short months. On
people in some parts of the world while sparing them else- Jan. 11, when few in the West were paying attention to the
where. The most effective way to stop it would be to vaccinate virus, Chinese scientists posted the genetic sequence of the
the global population. For that to happen in the next year or new coronavirus that was spreading in Wuhan. Researchers
so, an almost equally implausible set of circumstances has to at Moderna took note. They’d been pioneering a novel vac-
occur: flawless scientific execution, breakneck trials, and a mil- cine technology for another coronavirus disease and went
itary-style manufacturing mobilization unlike any the pharma- to work on devising a vaccine against the new one. By late
ceutical industry has put in place before. Normally it takes 10 February, when President Trump was still downplaying the
or 15 years of careful lab work and meticulous testing to bring risk of coronavirus, Moderna’s scientists had already deliv-
a totally new vaccine to market. For the coronavirus, the drug ered the first batch of candidate vaccines to researchers at the
industry hopes to compress this time frame by tenfold. U.S. National Institutes of Health. When the coronavirus was
This may sound like mission impossible, but Big Pharma starting to explode in the U.S. in mid-March, the first healthy
wouldn’t be working this hard if it didn’t think it had a shot patient received a dose in a small, government-sponsored
at pulling it off. Already, Cambridge, Mass.-based biotech safety trial. 9
Moderna Inc., a company that’s never launched a product, The technology being used by Moderna, Pfizer, and sev-
has started human trials of a vaccine harnessing a brand-new eral others relies on the body’s own cells to produce viral
type of RNA technology to protect against coronavirus. Pfizer proteins. Moderna’s vaccine consists of genetic material that
Inc., with German partner BioNTech SE, is working on a vac- codes for the spike protein on the surface of the corona-
cine with a similar new technology, while Johnson & Johnson virus. (Those red bumps in the ubiquitous coronavirus image
is building off a template for its experimental Zika and Ebola that’s emblazoned in your brain by now.) Once injected into
vaccines. French drugmaker Sanofi is adapting technology the body, the RNA slips into human cells and tells them to
used for manufacturing its flu shots to see if it will protect produce the viral proteins. “When you inject a person in
against the coronavirus. the arm with our vaccine, what you are really injecting is
All told, more than two dozen coronavirus vaccines are instructions for their body to make thousands of copies of
already in early stages of testing. “There is no precedent for proteins from the surface of the virus,” says Stephen Hoge,
the speed at which we are moving,” says Clement Lewin, president of Moderna. If the vaccine works, those proteins
an associate vice president at Sanofi. In his two and a half will then trigger the body to generate protective antibodies
decades of work on vaccines, “I can’t think of a parallel.” against the virus.
It’s a sentiment echoed throughout the halls of pharma In practical terms, the RNA technology can move faster
and biotech as leaders of some of the world’s biggest compa- into trials because, unlike traditional vaccines, it doesn’t
nies race to rewrite the rules in a bid to slow or stop the coro- involve brewing batches of protein or inactivated viral par-
navirus. To accomplish this, they’re going to need to radically ticles in living cells, a bespoke process that can take months
change the way drug development works. This for a vaccine to ramp up. Some flu vaccines are still made in chicken eggs.
that J&J, for one, is promising it won’t even make a cent from. If the RNA technology sounds exotic and unproven, that’s
From a public-health perspective, a vaccine can’t come soon because it is. There isn’t an approved RNA vaccine yet for any
enough: More than 1 million people have been infected with disease, nor are there existing plants already making these
the coronavirus globally, with hot spots such as New York and vaccines in enormous quantities.
Seattle building field hospitals to accommodate sick patients. In addition to betting on new technologies to speed the
The mere hope of a vaccine has generated so much excite- process, companies are throwing caution to the wind by
ment that shares in drug giants such as Pfizer and J&J have performing numerous testing steps in parallel. Pfizer, in its
shot up in recent weeks, with one-day spikes of 6% and 8%, partnership with BioNTech, hopes to get an experimental
respectively, rare moves for large companies that normally RNA vaccine into humans later this month. Pfizer is taking
aren’t prone to big swings. Moderna is up more than 75% a novel approach to improve its odds: Instead of testing
◼ REMARKS Bloomberg Businessweek April 13, 2020
the single vaccine candidate it thinks will work best, it’s whom will be clamoring for inoculations. The real question
planning to move into human trials with four different options isn’t just proving whether a vaccine works, “but how quickly
simultaneously, to see which of those is the most successful can you ramp up manufacturing to meet global need,” says
before taking the studies to bigger populations. Vaccine mak- Mark Feinberg, a former Merck & Co. vaccine executive who
ers normally do three stages of human trials, moving sequen- now leads the International AIDS Vaccine Initiative.
tially from small safety studies to bigger and bigger efficacy “There aren’t a lot of drugs in the industry that are filled
trials. But Pfizer is considering an all-encompassing trial that at these scales, period,” says Moderna’s Hoge. “Even large
would grow larger over time as results flow in. And the com- pharma companies don’t usually operate on this kind of a
pany hopes to share incoming trial data with regulators in scale. No one entity or one company” will be able to do it on
real time for quicker decision-making about how to proceed. their own, he says.
“We are proposing to basically change the way we do devel- While big players such as J&J and Sanofi may not be able to
opment as a result of this crisis,” says Kathrin Jansen, head get into trials as fast as Moderna, their proven manufacturing
of vaccine research and development at Pfizer. capabilities do give them an edge in scaling up to hundreds of
RNA vaccine technology isn’t without its risks. Less is millions of doses should their vaccines work. Sanofi says the
known about its efficacy, and while there’s a decent amount of coronavirus vaccine it’s working on uses the same technol-
early-stage safety data showing the technology should be safe, ogy already used in one of its licensed flu vaccines, making
there are concerns some RNA vaccines could induce unwanted it easier to produce in large quantities. Sanofi hopes to begin
immune responses. Another issue that all Covid-19 vaccines human trials of its first vaccine, which uses the protein tech-
will have to avoid is a troublesome complication called “dis- nology of its Flublok flu vaccine, by fall. Its U.S. manufactur-
ease enhancement,” hints of which were seen in animal tests ing plants have capacity for 100 million to 600 million doses a
of vaccines for SARS, another coronavirus disease. year, depending on the amount of vaccine that ends up being
And as the battle against HIV shows, there’s no guarantee needed for each shot, says Lewin, the associate vice presi-
a vaccine is possible. Some of the approaches touted now are dent. Sanofi isn’t stopping there: The company also hopes
likely to fizzle, either because of side effects or lack of efficacy. to begin trials on a second vaccine that uses RNA technology
But coronavirus experts are guardedly hopeful that with so similar to Moderna’s by yearend.
10 many of the best and brightest pharmaceutical minds work- J&J is relying on an old playbook, working off a platform
ing on the problem, at least one vaccine will work. the company used for experimental vaccines for several dis-
Another challenge for any coronavirus vaccine would be eases including Ebola, Zika, and RSV, a respiratory illness
scaling up production. Say it works. There would then be the that can be particularly problematic for young children. It’s
need to meet the global demand for inoculations. Pfizer has an inactivated cold virus with a piece of the coronavirus
started making plans to invest in manufacturing capacity both spike protein on it to generate an immune response. J&J
in the U.S. and abroad. Moderna says it already has the ability started by evaluating 10 different approaches to the coro-
to produce millions of doses of bulk vaccine per month at a fac- navirus before selecting one on March 30, a development
tory that was gearing up to produce a different vaccine. But for that sent its shares up 8%.
a development-stage company with no marketed products, it The drugmaker has seen its ability to do this type of epi-
will be a tall order. Moderna is talking to potential partners to demic vaccine research wax and wane—diseases such as
get that off the ground, but it won’t name names. Ebola and Zika petered out while it was studying experimen-
And as ambitious as “millions” of vaccines sounds, it’s only tal shots, slowing the pace of research. But the company man-
a fraction of what the demand for a Covid-19 vaccine could be. aged to continue the work by using the vaccine in outbreaks
While not precisely comparable to the situation now, a 2018 prior to official approval. It’s ready for this possible outcome,
planning road map for a pandemic influenza vaccine, put out too. “We have clinical trial capacity around the world in 80
by the U.S. Centers for Disease Control and Prevention, shows countries, and we will be prepared to move around the world
the enormity of demand for such a vaccine. to where an outbreak is. If it is Brazil, we will be there. If it’s
First in line would be millions of doctors, nurses, and in Africa, we’ll be there. China, we’ll be there,” says Paul
other first responders as well as infants, toddlers, and preg- Stoffels, J&J’s chief scientific officer.
nant women. That’s 26 million people in the U.S. alone. Next It would be ideal for the coronavirus to taper off to the
in line would be millions of other essential personnel plus point that all of these vaccine trials would grind to a halt.
children with preexisting conditions. After that would be But top industry officials aren’t counting on this outcome,
broader groups of higher-risk patients, including 41 million given that the curve of patients and deaths is only increas-
adults over age 65 and 38 million younger adults with pre- ing. “It’s really scary. Most likely we need a vaccine to put a
existing conditions. Add them all together, and you get well stop to the epidemic, and that’s where we go full bore with
north of 100 million Americans who would be high-priority the input of a lot of scientific expertise from inside and out-
candidates to get a vaccine. side but also a lot of discussions with governments around
And that’s just the U.S. It doesn’t include hundreds of the world,” Stoffels says. “It’s at least an insurance that at a
millions more in China, Europe, India, and elsewhere, all of certain point we can put a stop to this virus.” <BW>
B
U
S
I
N
12
E
S EV Makers in China
S Could Use a Jump
later when the government imposed a lockdown
○ Just as foreign carmakers
that kept workers and buyers home.
were revving up electric vehicle General Motors in February introduced the
sales there, the virus hit big Menlo, its first electric Chevrolet in the country.
Daimler started making the electric Mercedes EQC
at its sprawling Beijing factory. BMW is scheduled to
This year was supposed to be a watershed for elec- begin producing its iX3 electric SUV in China soon,
tric vehicles, with BYD, Daimler, General Motors, and Volkswagen is starting production at two new
Tesla, and other titans set to roll out new models Chinese plants. But as more cars roll off the coun-
and open manufacturing plants in China, the tech- try’s gradually reopening assembly lines, it remains
nology’s largest market. Then the coronavirus hit, to be seen whether consumers will race to buy them.
short-circuiting demand for cars of every sort and “In terms of the automobile industry, it is still fac-
leaving EV makers with, at best, a dream deferred. ing great difficulties and problems, especially the
Because of the pandemic and its accompanying problem of weak consumption demand,” says Xin
economic meltdown, 2020 is on track to be the third Guobin, vice minister in the Ministry of Industry and
straight year of declining sales in the world’s big- Information Technology.
gest auto market, jeopardizing multibillion-dollar The outlook is particularly clouded for local EV
expansion plans by EV makers. Tesla Inc. in January makers, which have most of their sales in China.
began deliveries from a new factory in Shanghai Warren Buffett-backed BYD Co.’s earnings plunged
Edited by
after co-founder Elon Musk spent years courting more than 90% in the last six months of 2019 vs. a
James E. Ellis Chinese leaders, only to temporarily shut it weeks year earlier—before the impact of the virus hit. NIO,
◼ BUSINESS Bloomberg Businessweek April 13, 2020
WM Motor, and Xpeng Motors—startups with backing Change in passenger vehicle sales
from technology behemoths Alibaba Group Holding, February 2020 vs. February 2019
Tencent, and Baidu—may struggle to survive as their
funding lifelines run out. And things could be even 0%
more dire for the scores of Chinese EV startups that
U.S.
Brazil
China
India
France
lack the backing of a high-profile investor.
Canada
Russia
Spain
Japan
Italy
Germany
“An EV shakeout is inevitable,” says Michael -20
Dunne, chief executive officer of ZoZo Go, an indus-

try consultant based in Hong Kong. “The corona-
South Korea
virus shock has driven investor appetite to nothing, -40
so all EV startups are scrambling for cash.”

Even before the pandemic, the days of fast
growth for China’s automakers were ending. Sales -60
fell in 2018, the first decline in more than two

decades, and dropped again last year as the U.S.-
China trade war hit the economy. In 2020, China February 2019 sales -80
auto sales may decline as much as 10%, according 1.23m 1.18m

to S&P Global Ratings. One reason: China’s gross
domestic product growth is forecast to be as low as
1.4%, compared with a pre-pandemic estimate of Still, NIO and other locals aspiring to be China’s
5.9%, according to Bloomberg Economics. answer to Tesla are scrambling to stay afloat. The
Compounding EV makers’ woes in China are carmaker, backed by Tencent Holdings Ltd., said
global supply chain interruptions, the plunge in oil first-quarter sales would drop by more than a fifth,
prices, and China’s rollback of some emissions stan- to perhaps 1.2 billion yuan ($170 million), adding
dards. Plus, the government last year started cutting that it might not have enough liquidity to survive.
back on subsidies for EV buyers. Meanwhile, WM Motor Technology Co., backed by 13
President Xi Jinping’s government is trying to Baidu Inc., cut the price of its EX6 Plus SUV 50%
strike a balance between helping EVs, which it con- in an apparent bid to boost sales. Says ZoZo Go’s
siders crucial to China’s long-term industrial future, Dunne of China’s EV startups: “Starved of cash, they
and bolstering producers of traditional vehicles, could come apart at any time.” �Bruce Einhorn,
which account for most of today’s sales. The gov- Tian Ying, and Chunying Zhang, with Christoph
ernment will keep domestic EVs exempt from a Rauwald and Oliver Sachgau
10% sales tax, and it agreed to prolong subsidies for
THE BOTTOM LINE Fast growth in electric vehicles is a key
EV purchases for two more years. “Businesses and component of China’s plan to become a global manufacturing
consumers will welcome such policies, which will superpower. But the pandemic could slow that transition.
PHOTO ILLUSTRATION BY 731; PHOTOS: BLOOMBERG (2); GETTY IMAGES (3); CHEVROLET (1); DATA: BLOOMBERGNEF
energize the market and help us work through the

challenges 2020 will pose,” NIO Inc. said in an email.
So far, the big foreign companies aren’t back-
ing away. Tesla reopened its Shanghai factory in
February, when Daimler AG also ramped up its 3D Printing Startups
China production. Daimler will fold its Smart mini-
car marque into a venture with Zhejiang Geely
Holding Group Co., the Chinese automaker con-
Hack the Pandemic
trolled by Daimler’s largest shareholder, Li Shufu.
Smart will become an all-electric brand, and the ● They’re using the technology to crank out
first vehicles are still set to hit the roads in 2022. scarce parts for test kits and ventilators
“Our electric offensive is one of our top priorities,”
Daimler said in an email.
BYD, which also makes electric buses and EV bat- As New York state has become the epicenter of
teries, says it’s confident it can minimize the impact the Covid-19 pandemic, officials say they will
of the outbreak. “The demand for new-energy vehi- need 30,000 ventilators for use by the most crit-
cles is slightly sluggish, yet the trend of China’s eco- ical patients in coming weeks. But getting even a
nomic growth remains unchanged and the trend of few of the lifesaving machines has proved a huge
rapid development of the new energy industry is still challenge as hospitals around the world jockey
on track,” BYD said in an online message. for the scarce supply. So engineers at Formlabs
◼ BUSINESS Bloomberg Businessweek April 13, 2020
Inc., a venture-backed manufacturer of 3D print-

ers, helped doctors and researchers at Northwell
Health, the state’s biggest private health-care pro-
vider, to quickly design an adapter that converts
breathing machines normally used to treat sleep
apnea and other nighttime respiratory conditions
into emergency ventilators.
“We’re really trying to innovate our way out of
it,” says Todd Goldstein, director of Northwell’s 3D
design and innovation department, which began
using the printed adapters last month. “We’re not
just standing around waiting for equipment to show
up. We have to be proactive about either sourcing
or creating products now.”
As the U.S. and other countries warn of a dire
shortage of ventilators, testing kits, and protective
equipment to deal with the pandemic, an unlikely
hero is coming to the rescue: the 3D printing com-
munity. 3D tech startups, equipment manufactur-
ers, and even home hobbyists are sharing designs
and working with local hospitals and health agen- virus. Formlabs is retooling an FDA-approved fac- ▲ 3D-printed nasal
swabs at Formlabs’
cies to provide lifesaving equipment and medical tory in Millbury, Ohio, that was used to make pro- Massachusetts
supplies that can be quickly created on gear from totypes and small-batch medical devices to churn headquarters
the $15 billion niche printing industry. Meanwhile, out as many as 100,000 nasal swabs a day.
government regulators, including the U.S. Food and The company, which usually supplies aerospace
14 Drug Administration, are invoking emergency poli- and automotive companies, has fielded requests
cies to get the equipment to front-line medical staff. from more than 150 hospitals and government
The 3D mobilization comes not a moment too agencies asking for help to make swabs, ventila-
soon. As Covid-19 infections top 1.5 million and tor parts, and other equipment. “This is innova-
deaths surpass 83,000 worldwide, medical sup- tion out of necessity,” says Chief Executive Officer
plies from masks to breathing machines have Maxim Lobovsky.
become scarce almost everywhere. In the U.S., Around the world, the grassroots movement is
the American Hospital Association estimates that gaining momentum. A widely circulated Google
960,000 patients will require mechanical ventila- document that allows those with 3D printers to be
tion to help them breathe if the virus continues its matched with hospitals and medical facilities look-
projected spread. Yet the ventilator task force of the ing for help now lists almost 6,000 names, includ-
Society of Critical Care Medicine says the country ing printing farms, other businesses, engineers,
has at most 200,000 units available. and hobbyists. They span the globe, from Vietnam
Northwell purchased Formlabs’ 3D printing sys- to the U.K. to the U.S.
tem 18 months ago to make customized medical In Spain, a consortium that includes medical
devices for patients at its operations, which include and tech experts centered around the Leitat
23 hospitals and nearly 800 outpatient facilities. Technology Centre has just developed one of the
Northwell has so far printed more than 400 adapt- first 3D-printed ventilators. And Prague-based
ers so it can put to work idle sleep-breathing-aid Prusa Research a.s., which holds the Guinness
devices commonly known as BiPAP machines. world record for operating the most 3D print-
Goldstein says his hospital system is working with ers simultaneously, with almost 1,100 machines,
city and state officials to widely circulate the design worked with the Czech Republic’s health ministry
to other medical facilities that have 3D printers. to design and fabricate clear face shields that can
Massachusetts-based Formlabs, which sells its be worn over surgical masks to provide another
3D printers to hospitals for as little as $4,000 for protective barrier for medical workers. It plans
a desktop model, is also working with Northwell to donate as many as 120,000 shields in coming
to design 3D-printed nasal swabs, a critical part of weeks, and its open-source design has been down-
Covid-19 testing kits now in tight supply. The swabs loaded more than 100,000 times in the past few
are made in a small number of factories—the big- weeks, says CEO Josef Prusa.
gest one is in Italy, which has been hit hard by the 3D printing is well suited for the quick
BUSINESS Bloomberg Businessweek April 13, 2020
turnaround jobs often needed as hospitals design a surgical mask, are considered low-risk and don’t
equipment that can be customized to machines need FDA clearance, the regulator is working
already in use at a facility or that meet the spe- with larger 3D companies to approve designs of
cific needs of local doctors and nurses. Shapeways higher-risk parts or products using a fast-track pro-
Inc., a New York City manufacturer that typically cess, the companies say. The agency on March 24
3D-prints items for makers of aerospace products issued an emergency authorization to allow BiPAPS
and drones, has quickly pivoted to also make 10 dif- to be modified for use as ventilators—a fix that,
ferent face shield designs for U.S. hospitals. these days, often involves a 3D-printed part.
Such shields are typically manufactured using The frenzy to produce medical gear is also giv-
plastic injection molding, which cranks out high ing the 3D printing industry a boost that could help
volumes but take months to design and test. While it weather the looming economic downturn, which
the 3D-printed shields can be turned out within seems likely to pinch its traditional sales to aero-
days, they come with one big setback: higher cost. space and automotive customers. “This feels like a
Shapeways is selling its reusable face shields for huge turning point as we deal with a global reces-
$30, compared with $5 to $10 for single-use dispos- sion,” says Formlabs’ Lobovsky. “People are seeing
able ones, it says. “There are cheaper, more effec- it’s not hypothetical that 3D printing can shorten
tive ways to produce these parts,” says Shapeways supply chains and make them more robust. It’s sud-
CEO Greg Kress. “3D printing wouldn’t be your first denly become very real.” —K. Oanh Ha
choice if it’s not an emergency. Right now, it’s the
THE BOTTOM LINE The coronavirus pandemic has resulted in
only option.” a shortage of hundreds of thousands of ventilators. 3D printing
Although face shields, usually used along with companies are developing gear to quickly help fill the gap.
a
Farmers Are P n ic- 15
Buying, Too ○ Fears of shortages have sent agriculture

players globally in search of animal feed
Days after President Trump extended America’s pigs, and 9 billion chickens fed isn’t as simple as
quarantine guidelines, Tyler Beaver, the 31-year- it may seem. Farmers are worried their feed mills
old founder of brokerage Beaf Cattle Co., couldn’t could close as employees get sick or that their
get hold of the rations that feed his clients’ cows. slaughterhouses could slow production, forc-
3D PRINTING: PHOTOGRAPH BY TONY LUONG FOR BLOOMBERG BUSINESSWEEK. PIG: GETTY IMAGES
He’d already tried sellers in the traditional producing them to keep animals for longer. They’re also
ing areas of the U.S. such as Kansas, Missouri, and concerned that a shortage of trucks could make it
Oklahoma, only to find they were mostly sold out. harder for farm supplies to reach them.
Soon, in a bid to connect his customers with a feed Even the plunge in gasoline demand affects the
mill still willing to sell, he changed strategy and feed supply. As ethanol plants shut down—because
tried to pull feed from the Delta region, hundreds the fuel additive isn’t needed when gas isn’t sell-
of miles away—again without luck. ing—the animal feed market is being starved of an
Just as virus-spooked consumers have rushed important ingredient called dried distillers grains
to grocery stores to stockpile everything from toi- (DDGs) that are a byproduct of ethanol production.
let paper to pasta, farmers raising America’s cattle, Distillers grain is a key ingredient in rations for beef
hogs, and chickens have filled their bins with feed, cattle and dairy cows.
fearing the spread of the coronavirus would dis- The rush to fill bins hasn’t happened only in the
rupt their supply chains. “There’s a rush to buy just U.S. French feedmakers stepped up ingredient pur-
because of the uncertainty in the market,” says the chases at the start of the lockdown, and demand
Fayetteville, Ark.-based Beaver. “They just don’t jumped as plants that produce biofuels started to
want to be caught without.” slow down. A similar trend occurred in Germany
Keeping America’s 95 million cows, 77 million last month. “This is a new phenomenon,” says
BUSINESS
BW Talks Larry Merlo

David Webster, head of animal nutrition and
health at Cargill Inc., adding that the agribusiness The chief executive officer and president
giant has seen its global feed sales volume climb of CVS Health Corp. runs a company with
10% or more in the past month. “We saw a bit of
this in China in February, but now we are seeing almost 10,000 U.S. locations and some
globally, in every geography that we operate in.” 300,000 employees engaged in the fight
France’s Avril Group also experienced strong against the novel coronavirus pandemic.
demand in the past few weeks as customers rushed
to finalize purchases over concerns that production —Carol Massar and Jason Kelly
could be suspended as biodiesel demand plum-
meted. And German farm cooperative Agravis ○ CVS is looking to hire 50,000 full-time or part-time workers to deal with
Raiffeisen AG said there was some panic meal the increased demand at its stores ○ The company has waived charges
buying from feedmakers. “If you have a huge cat- on home delivery of prescriptions ○ It’s moving a prototype testing center
tle herd, you want to make sure you have enough at a pharmacy drive-thru lane in Shrewsbury, Mass., to a larger lot nearby
feedstuffs available on your farm,” says Thorsten
Tiedemann, chief operating officer at Getreide AG,
a Hamburg-based trader that sells rapeseed meal, How is worker safety? and fast and furious—to
a feed ingredient. keep our shelves stocked.
We’ve been working around
That’s why James Holz, a farmer in Jefferson, We have not experienced
the clock to provide PPE
Iowa, recently bought three weeks’ worth of ration any disruption to date.
[personal protective
for his 3,000 cattle, triple the norm. Because he’s in We have been in constant
equipment] and other safety
the U.S.’s top ethanol-producing state, he typically contact with our suppliers.
measures, and including
doesn’t need to stockpile. Some cattle producers They tend to carry about a
protective panels at our
there get multiple deliveries of distillers grains a three- to six-month supply.
pharmacies and front store
day. “A lot of guys use their last scoop at 9 a.m., and Americans can be reassured
checkouts. We are offering
16 then the truck comes at 10 a.m.,” says the 34-year- the pharmaceutical supply
to help employees with
old farmer. But even he was taking no chances. chain is in good shape.
dependent-care needs,
Still, because farmers’ bin space is limited, they
while providing sick leave to
can’t really hoard the same way that consumers
part-time employees for the How’s the parking lot experiment going?
are doing, says David Hoogmoed, president of
duration of the pandemic.
the Purina Animal Nutrition unit of Land O’ Lakes We’re doing about 150 tests
Inc. (the Purina that makes the dog and cat food is per day, largely targeting
owned by Nestlé SA). “What we are seeing isn’t a What else are you doing for them? health-care workers and
run on feed, but a keep-everything-full scenario,” local first responders. We’re
he says. “While the producer [in the past] may have We have a number of things
working with state officials
run things down to the last minute and ordered to provide some peace of
on how we can begin to test
feed for tomorrow, they are building in, in their mind. For example, we’re
more broadly. This is a one-
inventory management, more of a safety stock.” providing cash bonuses
drive-thru location. If we’re in
While sales at Purina’s livestock business to our pharmacists, other
a larger parking lot—where
increased only by single digits, there probably was health-care professionals
many of the other facilities
a boost of more than 20% in the companion animal who are on the front
are closed—you’d have three
segment, which includes horses and rabbits. Even lines—including our store
or four drive-thru lanes and
with social distancing in place, Hoogmoed says the associates and managers—
the ability to do exponentially
company has kept its more than 60 mills operating, and other individuals.
more tests. We’re working
adding overtime and some weekend shifts and run- to get a testing site up with
ning “a very strong throughput.” “When you have Is the supply chain holding up? multiple drive-thru lanes, so
a pet, even if it’s a horse—not a dog and a cat—they we can do many more tests,
have a name and you want to take care of them,” he Our supply chain team is
anywhere from 500 to 1,000
says. “We had a very large runup in retail feeds in doing a great job working
a day, where individuals can
with suppliers—creatively,
DAVID PAUL MORRIS/BLOOMBERG
all of our outlets and most of our customers.” —Isis know results within an hour.
Almeida, Agnieszka de Sousa, and Megan Durisin,
with Michael Hirtzer, Millie Munshi, and Niu Shuping
○ Interviews are edited for clarity and length. Listen to Bloomberg Businessweek With
THE BOTTOM LINE America’s 95 million cows, 77 million pigs, Carol Massar and Jason Kelly, weekdays from 2 p.m. to 5 p.m. ET on Bloomberg Radio.
and 9 billion chickens need to keep on their diets. So farmers are
stocking up in case low ethanol production causes feed shortages.
Be ready for
the next
trade dispute
In global financial markets, uncertainty is the only constant.

From global manufacturing shutdowns to cross-border
trade disputes, commodity price shocks to corporate
collapses, overnight liquidity crises to out-of-the-blue
policy revisions — when you need to make sense of market
upheaval, Bloomberg delivers the essentials to help you get
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April 13, 2020
18
walkouts or strikes, a wor rs at
○ The virus could give workers
Amazon-owned Whole Foods Market
something that’s been elusive called a sickout.
for years: leverage The retail giant has fended off organized
labor in its U.S. warehouses over the years
through a mix of well-worn, corporate anti-union
There are many reasons Tonya Ramsay might have tactics and perks aimed at reassuring the work-
just kept working. The 29-year-old, who works in force—and the shopping public—that Amazon is a
the shipping department of an Amazon.com Inc. generous employer. But the new coronavirus threat-
ware use tside Detroit, pays the mortgage at ens to do what unions have failed to do for years:
the house where she lives with i hh
herr boyfriend a
and Arm its workers with leverage. Still, observers say
11-year-old son. But she was scared. Managers at Bezos & Co.
C are bettin
betting that even in a national emer-
Y
the 855,000-square-foot facility where Ramsay gency, occasional hardball tactics in dealing with ith
works said two of her co-workers had been diag- their own employees won’t do lasting damage to the
nosed with Covid-19. Ramsay suspected—correctly, goodwill the company has amassed with shoppers,
it turns out—there were more cases to be identified. especially when they need Amazon more than ever.
Worried about their safety, Ramsay and a few The company was on track to account for about
dozen colleagues walked off the job on April 1. With 39% of online purchases in the U.S. this year,
some carrying signs, they stood—6 feet apart—on a according to eMarketer Inc., before the outbreak of
sidewalk outside the warehouse and appealed to the coronavirus led to a surge in online shopping.
Amazon Chief Executive Officer Jeff Bezos to shut Executives weren’t planning for a pandemic, but
down the facility and authorize paid leave for work- they’d already created a corporate infrastructure
ers so they wouldn’t risk exposure to the respiratory designed to thrive in it. In the last decade, Amazon
virus. Drivers in passing cars honked in support. built hundreds of highly automated warehouses,
ILLUSTRATION BY JUSTIN METZ
Historically, Michigan is union territory. sorting facilities, and smaller sites geared toward
Amazon isn’t. The walkout at Ramsay’s warehouse quick urban deliveries. It uses dozens of freighter
capped a remarkable 72 hours in the online retail- aircraft; companies working on its behalf operate
Edited by
Jeff Muskus and
er’s occasionally tense relationship with its work- tens of thousands of delivery vans.
Molly Schuetz force. Employees at depots in three states staged The company has added perks to ensure that the
TECHNOLOGY Bloomberg Businessweek April 13, 2020
people staffing all that show up to work as the virus into a quarantine following contact with someone
spreads. When the first rumblings of discontent diagnosed with Covid-19. As Smalls’s plight garnered
appeared early last month, it tacked on a temporary wide media attention, Amazon executives sketched
raise to its $15 an hour starting wage and introduced out a plan to portray him as immoral and a threat
two weeks of sick pay for infected or quarantined to his co-workers. “Make him the most interesting
people. It later offered more lucrative overtime. part of the story, and if possible make him the face
“Like every other business that’s open and trying of the entire union/organizing movement,” David
to meet huge demand, they’re just trying to manage Zapolsky, Amazon’s general counsel, wrote in meet-
and keep as many people working as they can,” says ing notes first obtained by Vice News. (Zapolsky said
Rob Duston, a partner with Saul, Ewing, Arnstein his comments were “personal and emotional.”
& Lehr, who’s represented companies in labor dis- Amazon called its employees “heroes” and said
putes. “It’s a question of managing the workforce it’s taking measures to support each one. It’s said a
and not letting a group—a highly vocal group—con- small number of workers have participated in the
trol what they do with 800,000 employees.” walkouts and called their critiques unfounded.
Amazon gets high marks in surveys of corporate Peter Cappelli, a professor of management at the
reputations, the fruits of years of sterling customer Wharton School at the University of Pennsylvania,
service and innovative products. But executives at
its headquarters in Seattle are aware that its heavy-
handed tactics with workers could deal lasting dam- Amazon’s Revolving Doors
age to that stature and potentially make customers Turnover rates for warehouse workers across all businesses in counties where four of Amazon’s
largest U.S. fulfillment centers are located, before and after those facilities opened
less likely to shop on its sites. Some consumers are
Year Amazon warehouse opened 2017
already showing an appreciation for the work that
keeps essential goods moving during a crisis, as they
tip grocery clerks or continue to write checks to the 100%
day care providers or dog walkers they’re unable to

use during the pandemic. 19
Amazon’s opposition to unions brings a risk of 50%
public-relations headaches, such as when it tried

to build a massive corporate campus in Queens,
N.Y. Its position on unions played a big role in 0%
turning local elected officials against the planned Riverside County, San Joaquin Tarrant County, Maricopa County,
Calif. County, Calif. Texas Ariz.
25,000-person campus, which was scuttled in
February 2019 in part because of the opposition.
DATA: U.S. CENSUS BUREAU, MWPVL INTERNATIONAL
Helping to lead that campaign against Amazon
was the Retail, Wholesale and Department Store says the memo was evidence that Amazon sees the
Union, which has offered aid to workers trying to battle over public opinion as more important than
organize at Whole Foods and has its sights on a communications with its front-line workers. That
massive Amazon warehouse in Staten Island. could be a mistake, he says.
Stuart Appelbaum, the union’s president, Still, workers face steep odds should they pur-
says he expects the pandemic to change how sue formal union recognition. Turnover at Amazon
Americans view workers in critical jobs, opening warehouses is high, leaving few workers with the
up an opportunity to organize. “I think there’s expertise and institutional memory to seek conces-
greater consciousness of the importance of the sions from management. And, eventually, the cri-
work that’s done by low-wage workers in our soci- sis will end. Meanwhile, the economic damage has
ety,” he says. “Workers are going to see how their added millions of people to the ranks of the unem-
employers handle this crisis, and they’re going to ployed, some of whom would likely be content with
understand that they can no longer be passive, but whatever labor conditions Amazon would demand,
they need to have a collective voice.” as long as it meant a paycheck. “The increase in
Recently, that voice was embodied by Chris unemployment will be so large, it’s going to change
Smalls, a manager in the outbound department the dynamic of the job market from a worker’s mar-
of Amazon’s Staten Island warehouse who was ket to an employer’s market,” says Julia Pollak, an
dismissed after he led a walkout on March 30 to economist with ZipRecruiter. —Matt Day
demand better measures to keep workers safe.
THE BOTTOM LINE Amazon had the upper hand against
Amazon says he was fired because he returned to labor organizers, but the pandemic has put the company on the
the warehouse after the company had ordered him defensive as workers complain. And consumers are sympathetic.
◼ TECHNOLOGY Bloomberg Businessweek April 13, 2020
Covid-19 Provides ● The travails of a

banking software maker
Cover for Hackers show how vulnerable

corporate security is
Hackers silently entered the computer network of the subsequent investigations. “We retained con-
London-based banking software maker Finastra trol of our network through the action that we
in mid-March as the company was focused on took in taking our servers offline, and our ability
developing emergency plans for operating amid to resume operations in a relatively short space
the emerging coronavirus pandemic. Moving with of time reflects that,” says a company spokes-
precision and speed, they captured employee person. The breach was previously reported by
passwords and installed backdoors in dozens of KrebsonSecurity.com, an investigative journalism
servers in critical parts of Finastra’s network. site that focuses on cybercrime.
Although hardly a household name, Finastra Ransomware, a type of malware that encrypts
Group Holdings Ltd. is an essential part of the computer files, is often deployed through links in
global financial system, its software and services fraudulent emails—so-called phishing attempts.
running everything from banks’ websites to the Once it gets into a computer network and begins
back-office systems they use to manage their own
money. Its more than 8,500 customers include 90
of the world’s 100 largest banks.
For about three days the attack went unnoticed,
but the hackers’ activity on one of Finastra’s cloud
20 servers set off a tripwire that alerted the company’s
security team and triggered a destructive finale to
the intrusion. On March 20 the hackers—apparently
aware they were being hunted—began detonating a
potent strain of ransomware called Ryuk.
As the malware quickly spread, locking up server
after server, Finastra’s information security team
evaluated its dwindling options before settling on
the nuclear one: The company pulled all potentially
infected servers offline. First hundreds, then thou-
sands, came down. The attack ground to a halt—as
did critical parts of Finastra’s business. In an instant,
services for many of its customers went dark.
The inside story of Finastra’s breach—which
Bloomberg Businessweek has reconstructed locking up data, hackers demand a ransom in ● Of the world’s 100
largest banks, Finastra
through dozens of internal documents provided exchange for a decryption key. Ransomware works with
by a person close to investigations conducted attacks have been growing in recent years against
by Finastra and a security firm it hired—show
the vulnerabilities companies are facing as they
all types of government agencies and businesses,
including school districts, doctors’ offices, and
90%
grapple with depleted resources and scattered multinational corporations. But the Covid-19
workforces, as well as the increasingly aggressive pandemic has presented hackers with a once-
hacking groups eager to exploit them. “We believe in-a-generation opportunity to strike vulnerable
the attack came deliberately whilst we focused targets as entire offices are working from home
ILLUSTRATION BY STEPHANIE DAVIDSON
on moving the majority of our global workforce, and information technology staffs are stretched
including several thousands of our colleagues in thin. The Ryuk strain of ransomware was created
the Americas, to safer work from home processes by a Russian organized crime ring cybersecurity
in light of COVID-19,” Chief Executive Officer Simon researchers have dubbed Wizard Spider.
Paris said in a March 23 statement. Eric Friedberg, co-president of Aon Plc’s
Finastra declined to comment on several spe- Stroz Friedberg incident response firm, which
cific questions about the hack, its response, and wasn’t involved in the Finastra incident, says
that since January the time between attackers in Hobbs, N.M., also said it was affected. “With all “This is the
gaining access to a network and deploying ran- this coronavirus horror, this is the last thing that last thing that
somware has dropped from weeks or months to needs to be happening to us,” one customer wrote needs to be
from 2 to 10 days. He says the accelerated pace has online. Both banks several days later posted that happening”
slashed the time victims have to detect intrusions their online banking and bill-pay services had been
and respond, maximizing the hackers’ leverage. restored. Representatives of the banks didn’t return
Finastra had one advantage, though: It learned messages seeking comment.
about the breach fast, after its security team was Finastra’s hack may be a sign of things to come
alerted to unusual activity on a Finastra server as coronavirus-induced lockdowns grind on
hosted in a Microsoft cloud, according to a detailed and hackers target companies already in crisis.
timeline of events prepared by investigators and But its response could also provide a model for
reviewed by Bloomberg Businessweek. This was the deterrence. The company didn’t pay any ransom,
tripwire alerting Finastra that it had a bigger prob- according to the person familiar with the internal
lem. The company found the hackers had installed investigations. It didn’t have to. Because Finastra
malware on dozens of critical servers known as decided to shut down essential services instead of
domain controllers. That meant they had power paying up, it absorbed one kind of cost to avoid a
over large banks of subordinate servers and the data potentially worse kind. �Jordan Robertson
on them, according to a spreadsheet of infected
THE BOTTOM LINE Covid-19 is providing a once-in-a-generation
servers also prepared by investigators. opportunity to strike vulnerable targets as companies shift to
Finastra already suffered from poor cyber- work from home.
security hygiene in basic areas, including fail-
ures to fix known software security issues. These
vulnerabilities helped the attackers spread
quickly throughout the network once they were
inside, the person familiar with the investiga-
tions says. Finastra’s information security team
Is This the Breakthrough
had recommended fixing those issues but was Quantum Computing 21
overruled by senior managers who were concerned

the changes could cause disruptions in older appli-
cations, the person says.
Has Been Waiting For?
Still, the early detection allowed Finastra to map
the hackers’ movements before they began deploy- ● A secretive team in Palo Alto says it’s working on a device
ing the ransomware. This helped the company several orders of magnitude more powerful than Google’s or IBM’s
identify and isolate potentially infected servers
and bring key services back online within days—
the difference between a knockout and a black eye. The technology industry has spent decades try-
It couldn’t be determined how many finan- ing to puzzle out the basis of a quantum computer.
cial institutions were affected by Finastra’s ser- Such a machine, powered not by the simple on/off
vice outages or whether any sensitive data were choreography of conventional transistors but by
stolen. According to the documents and the person the ethereal forces of quantum mechanics, would
familiar with the investigations, however, several allow for calculations on a scale inconceivable
of Finastra’s core businesses experienced out- with today’s fastest processors. Engineers,
ages, some of which lasted at least several days, mathematicians, and scientists talking about the
including services that manage mortgage lending, theoretical applications of quantum computers
student loan processing, and retail banking. Many make them sound like magic wands—capable of
community banks and credit unions that Finastra unlocking huge troves of secrets about our physical
highlights on its website posted notices the day world and advancing civilization in dramatic ways.
of the attack, and over the course of several days If only we could build one.
afterward, that their services were down because PsiQuantum, a 5-year-old startup based in Palo
of a breach at a core banking-service provider, with- Alto, says it’s well on its way to creating a commer-
out naming Finastra. cial quantum machine, the boldest claim to date
Horicon Bank, a network of community banks in among a legion of hopefuls in the field. It’s raised
Wisconsin, said it was one of “hundreds” of finan- $215 million to build a computer with 1 million
cial institutions impacted in the U.S. by the inci- qubits, or quantum bits, within “a handful of years,”
dent. Lea County State Bank, a community bank co-founder and Chief Executive Officer Jeremy
O’Brien tells Bloomberg Businessweek. While the information and instructions. The idea behind Optical fibers on a
PsiQuantum test bench
22 qubit figure will mean little to people outside the a quantum computer is that it will run on qubits, at the company’s lab in
industry, it’s considered the breakthrough point which are similar to standard bits but far more flex- Palo Alto
for making a true, general-purpose quantum com- ible. Based on principles of quantum mechanics,
puter that would be broadly useful to businesses. As each qubit can be a one and a zero simultaneously.
such, PsiQuantum’s machine would mark a major Picture a piece of string fixed between two points.
leap forward and deal a devastating blow to rival Pluck the string just right, and it makes a wave where
projects by the likes of Google, Honeywell, IBM, it appears to be up and down at the same time.
and a sea of startups and university labs. “If they These properties, in theory, allow quantum
are really able to pull this off, it immediately distin- computers to achieve a quantum speedup, which
guishes them and puts them in a completely differ- grows exponentially as more qubits are added to
ent field so far ahead of the competition,” says Peter the system. The ramifications are mind-blowing.
Rohde, a fellow at the Centre for Quantum Software “By the time you get to 80 qubits, you are in a place
& Information at the University of Technology where the qubits are storing more information than
Sydney. “This strikes me as incredibly exciting.” the total number of atoms in the entire universe,”
The “if” from Rohde reflects the challenges of says Samir Kumar, general manager of Microsoft
quantum computing and, partly, the secrecy that’s Corp.’s venture capital arm, which has invested in
surrounded PsiQuantum’s work. O’Brien’s interview PsiQuantum. Practically speaking, this means large
○ O’Brien
PHOTOGRAPHS BY CARLOS CHAVARRIA FOR BLOOMBERG BUSINESSWEEK
with Bloomberg Businessweek is his first detailed dis- calculations that would take decades or centuries to
cussion of the company’s technology since its found- complete using even modern supercomputers can
ing in 2015. The CEO and his co-founders (Terry be performed in minutes on a quantum machine.
Rudolph, Mark Thompson, and Pete Shadbolt) The belief is this will lead to stunning breakthroughs
are Australian and British academics turned in chemistry, biology, and other scientific fields.
industrialists. Over the past five years, they’ve hired Researchers have discovered numerous tech-
more than 100 people to help them try to develop niques for creating qubits, but PsiQuantum is mak-
what’s known as a silicon photonic quantum coming them with photons, or single particles of light.
puter—essentially, a computer that runs on light. These photons are sent down pathways placed
Today’s computer chips each contain billions of on a silicon chip. Tiny, partially reflective mirrors
tiny transistors that flip between on and off states to bounce the photons into a state of entanglement
form binary digits, or bits, strings of ones and zeros where more quantum forces can be applied to
that the computers can translate into electronic bind qubits in ways that amplify their forces. Then
a sensor measures the photons, and some further Jonathan Dowling, a quantum computing expert ▼ Qubits
steps allow the PsiQuantum team to produce and who co-directs the Hearne Institute for Theoretical A bit in today’s
computers can be in a
read a calculation. Physics at Louisiana State University. “I love Jeremy, state of either one (on)
The techniques PsiQuantum is pursuing were but he’s a good salesman, too.” or zero (off)
considered virtually impossible to pull off for a O’Brien acknowledges that PsiQuantum’s secrecy
time. Among other obstacles, scientists thought breeds skepticism, but he remains supremely con- 0 1
a machine based on photonics would have to be fident in the company’s technology. “I don’t want
incredibly large. “As we began working on this archi- to sound arrogant here, but I really don’t care what A qubit can be in both
states at the same
tecture, it appeared that our machine would have to people’s criticisms are,” he says. “I just could care time—a quality called
be the size of the Sierra Nevada mountain range,” less whether someone’s got 5, 10, 50, or 100 qubits. superposition—and can
store vastly more data
O’Brien says. After a series of research advances, If you need a million, tell me how close you are in
however, his team has set to work building its first time and money to that. That’s what we’ve done.” 1
computer, which it expects will be the size of an What’s clear for the moment is that O’Brien and
office conference room. GlobalFoundries, one of his co-founders have attracted a ton of cash and
the world’s top chipmakers, has already started pro- a world-class team. Rudolph, the company’s chief
ducing early versions of PsiQuantum’s chips using architect, happens to be the illegitimate grand-
its standard manufacturing facilities. (This marks son of famed quantum theorist and Nobel Prize-
a significant contrast with other quantum experi- winning cat hater Erwin Schrödinger. Besides
ments, which rely on exotic materials and custom Microsoft and Playground, PsiQuantum’s inves-
0
manufacturing.) Now it’s up to O’Brien’s engineers tors include Atomico, Founders Fund, Redpoint
to create quantum variants of the networking, soft- Ventures, and BlackRock Advisors. “There are still
ware, and the other components needed to make a R&D problems to be solved,” says Siraj Khaliq, a
functioning computer. “We’re going to be building partner at Atomico. “But they have solutions and
them as fast as you can,” O’Brien says. then backup plans for most of them.”
The leading quantum contenders to this point
have crafted lab-bound machines that top out in 23
the dozens of qubits. Last year, Google showed that
its 54-qubit machine needed only three minutes to
perform a calculation that would take a traditional
supercomputer 10,000 years. While impressive,
the feat was considered of limited use because
Google’s machine was built to perform well on that
single calculation rather than a broad set of jobs.
It and rival devices have also lacked sophisticated
error correction technology, which is deemed
crucial to ensuring that calculations derived
from a mass of entangled qubits are trustworthy.
PsiQuantum’s big claim is that its technology will
be able to string together 1 million qubits and dis-
till out 100 to 300 error-corrected or “useful” qubits
from that total. O’Brien and PsiQuantum’s backers
question whether Google can ever reach similar
qubit totals with its technology. “It is like climbing a O’Brien says he’s already looking ahead to the ▲ PsiQuantum’s
experimental silicon
tree to get to the moon,” says Peter Barrett, a general problems that quantum computing may be able to wafers contain dozens
partner at Playground Global, which invested in solve, from calculating which catalyst for carbon of quantum chips
PsiQuantum. A Google spokesperson says the com- sequestration can best slow climate change to map-
pany typically doesn’t comment on rivals’ work. ping more efficient ways to fertilize crops and feed
Of course, PsiQuantum has a ways to go, too. an ever-growing population. “I think it is fair to say
Until it has a completed computer, the company that we are going to look back on the pre-quantum
can’t run calculations to compare against Google computing world and wonder how we survived,”
or anyone else. It’s also declining to publish aca- he says, “never mind sustained 10 billion people
demic papers that can be reviewed for their merits with our primitive, caveman tools.” �Ashlee Vance
or to let outsiders evaluate its technology. “I’m a
THE BOTTOM LINE PsiQuantum’s well-pedigreed team has raised
little hesitant to trust anybody until I see some sort $215 million from big names for its photonic quantum computing
of refereed publication or detailed specs,” says model, but a working device is still likely years away.
F The Bankruptcy Trap

I ● For the economy to escape
the crisis and grow again,
nightmare scenario for the financial impact of the
Covid-19 pandemic. Steps can be taken to avoid it,
but it’s not clear whether governments and cen-
N people and companies will tral banks in the U.S. and around the world will
take them in time.
need help with their debts
The best way to avoid debt gridlock is to use
government support to keep the number of bank-
A
Bankruptcy laws were written to help individual ruptcies below the tipping point at which they
companies. They don’t work so well when many get become systemic, says Joseph Stiglitz, a Nobel
into trouble at once. The companies’ balance sheets laureate economist at Columbia University. He
are interdependent: Reducing what one owes will co-wrote a paper with Tarik Roukny and Stefano
N weaken its creditors, making it impossible for them Battison about interconnectedness and systemic
to pay their creditors, and so on. Businesses that risk that was published in 2018 by the Journal of
could have bounced back are forced to liquidate as Financial Stability. “Somewhere between the case
their court cases drag on. of an isolated bankruptcy (American Airlines) and
C This is called systemic bankruptcy, and it’s the mass default (Indonesia, with 70% of businesses
E
24
Edited by
Pat Regnier and
Molly Schuetz
◼ FINANCE Bloomberg Businessweek April 13, 2020
in arrears) is the borderline between individual so no one gets an advantage during the pause. ▼ Bloomberg U.S.
Financial Conditions
and systemic bankruptcy. There’s no bright line,” The $2.2 trillion CARES Act that President Index, which measures
Stiglitz wrote in an email on April 6. (His example Trump signed on March 27, and the monetary stress in the bond,
equity, and money
of an isolated bankruptcy, American Airlines, was actions of the Federal Reserve, attempt to wave markets to assess the
under protection from creditors from 2011 to 2013.) a yellow flag for the U.S. economy. The stimulus overall availability of
credit
If government aid fails to stem the tide, Stiglitz bill includes grants to families and loans to compa-
says, the fallback should be what he calls “super nies that will be forgiven if they don’t reduce staff. 2
Chapter 11”—building on the chapter of the federal Small businesses can reorganize in Chapter 11 more ▲ More accommodative
bankruptcy code that’s designed to keep a com- easily under a new subchapter that took effect in
pany in business. It would resolve the problems of February, and the CARES Act temporarily makes 0
many companies at once under the auspices of a businesses with up to $7.5 million in debt eligible
government-appointed supervisor. It would also be for the flexibility. Meanwhile, the Fed is buying
▼ Tighter
fast, usually keep management in place, and give Treasury securities and mortgage-backed securi- -2
more consideration to workers and less to creditors ties to suppress borrowing costs and finding cre-
than in conventional bankruptcies, in his vision. ative ways to extend a lifeline to various sectors.
In some cases the federal government would It’s almost certainly not enough, though. The -4
inject money in return for shares, so taxpayers U.S. economy needs nothing short of life support
would get a piece of the potential upside. “This is for the duration of the lockdown, and some sec-
going to be rough justice,” Stiglitz says. Companies tors aren’t being helped. For example, Michael -6
that don’t like the government’s offer could try Bright, chief executive officer of the Structured 12/31/19 4/6/20
their luck in standard Chapter 11. He says he hasn’t Finance Association, says that mortgage servicing
been approached by anyone in Congress or the companies—which collect payments—are caught
White House about implementing super Chapter 11, in a vise between home and building owners who
which he and co-author Marcus Miller broached in are skipping payments and the ultimate lenders,
an unpublished paper in 1999 and again in 2010 in or owners of mortgage-backed securities, who con-
an article in Britain’s Economic Journal. tinue to expect payment on the loans. “The govern- 25
Systemic bankruptcy is more than a remote ment is kind of waiting to see how bad it gets. It’s a
threat. The record jump in initial claims for unem- dangerous game they’re playing,” he says.
ployment insurance—10 million in the two weeks Companies that lack investment-grade bond
through March 27, vs. a recent two-week average of ratings also have less access to help, though some
fewer than half a million—shows that companies are are eligible for the Small Business Administration’s
in extreme distress and a lot of consumers are hav- Paycheck Protection Program or the Federal
ing trouble paying bills. A handful of companies have Reserve’s forthcoming Main Street Business
already filed for Chapter 11 citing Covid-19, including Lending Program. Critics say some of those debt-
British clothing retailer Laura Ashley Holdings Plc ors, such as companies that borrowed heavily
and U.S. energy companies Whiting Petroleum Corp. to juice their investment returns in the expec-
and Hornbeck Offshore Services Inc. tation of good times, shouldn’t be bailed out. “The
The underlying problem is that, as Harvard But Lee Shaiman, executive director of the Loan governmentis
economist Lawrence Summers has put it, economic Syndications and Trading Association, says circum- kindof waiting
time has stopped because of the pandemic, but the stances are so extreme that all companies should toseehow
financial clock continues to tick. Interest payments, be eligible for aid, regardless of their investment baditgets.It’s
rents, and other obligations are still coming due, rating: “I look at this as a meteor hitting the Earth. adangerous
but the money to cover them has dried up. Yet a It could never have been anticipated.” gamethey’re
blanket moratorium on all financial obligations isn’t The same thing happened in the 2008-09 finan- playing”
the right solution. It would benefit some well-off cial crisis, which pitted those who favored bail-
ILLUSTRATION BY MOLLY ROSE DYSON. DATA: BLOOMBERG
individual and business debtors that don’t require outs to rescue the economy against those who
the help and harm some who need the payments, opposed helping fat cats. Stiglitz says a few simple
such as an elderly homeowning couple who live off rules can separate the deserving from the unde-
the rent from a tenant or two. serving. Without such rules, he says, “This could
What’s needed, says David Skeel, a University be a drawn-out process. If it’s a drawn-out process,
of Pennsylvania Law School professor, is a yel- the likelihood of systemic bankruptcy increases.”
low flag like the one waved at a Nascar race when �Peter Coy
there’s an accident. The flag doesn’t stop move-
THE BOTTOM LINE Policymakers need a way to prevent debtors
ment, but it locks all the cars—in this case, all from going under while the economy is on lockdown. A kind of
the debtors and creditors—in the same order simplified, fast Chapter 11 process could be part of the solution.
Advisors, which offers target-date funds. “If you are
Were These
▼ Returns of target-
date funds designed
retiring now, you are screwed.” James Veneruso of for investors retiring in
investment consultant Callan LLC says fund compa- 2020, 2/20 to 3/20
nies increased stock exposure in target-date funds
Mutual Funds
Share of fund in
during the bull market, in part because higher stocks
returns attracted more business. He predicts “the
same hand-wringing and gnashing of teeth” that fol-
Off Target? lowed the last financial crisis over such allocations.
Fidelity, Vanguard, and T. Rowe Price represen-
tatives say their asset allocation reflects a prudent
–13%
Putnam
Retirement
balance of protecting nest eggs while providing for Advantage
● Portfolios aimed at reducing risk as owners needed growth over what could be decades of retire-
approach retirement still had a lot in stocks ment. The companies consider these funds long-
term investments, and, in general, more aggressive
funds have posted higher returns over the decade.
As the bull market soared, investors in America’s For example, the T. Rowe Price Retirement 2020
–15%
401(k) retirement plans increasingly entrusted their Fund’s ten-year return of 6.5% beat 95% of similar
BlackRock
savings to a one-stop kind of investment. All they had funds, according to Morningstar. Vanguard beat 91%, LifePath
to do was pick a fund that corresponded with their and Fidelity’s Freedom fund, 51%. “People are living Index
retirement date. Presto, they had an age-appropriate longer than a generation ago and are more reliant on
mix of stocks and bonds. savings in 401(k) plans and what they get from Social
These so-called target-date funds hold $1.4 tril- Security,” says Joe Martel, a T. Rowe Price target-date
lion, equal to a quarter of the money in 401(k)s. portfolio specialist. Stocks have also rallied in recent
The offerings generally place 20-year-olds mostly in days, paring back those steep losses.
stocks and then glide gradually into bonds as clients Still, other investment firms are more cautious.
26 near their departure from the workforce. In theory, The reason: While markets tend to recover, timing
that strategy should protect older investors from the matters. Those who enter a bear market early in
worst of bear markets—like the one sparked by the retirement may end up selling off their investments
–18%
coronavirus pandemic. when they’re beaten down to meet income needs.
Vanguard
But those who’ve just reached retirement may be Putnam Investments, for example, has less than Target
in for a nasty surprise. These supposedly sensible a third of its Putnam Retirement Advantage 2020 Retirement
target-date funds can be quite aggressive. Under a fund in equities. As a result, the fund fell less than
–19%
time-honored rule of thumb—albeit one many think 13% from Feb. 20 to March 20. “When you lock in
Fidelity
is out of date—the percentage you hold in bonds losses early in retirement, that gets magnified all of Freedom
should equal your age. By that approach, a 65-year- the way through,” says Brett Goldstein, a portfolio
old would have only 35% in stocks. manager for the Putnam Retirement Advantage
The three biggest providers of target-date funds Funds. Similarly conservative funds from John
bet way more on the market. For investors retiring Hancock Investment Management and BlackRock
this year, Vanguard Group and Fidelity Investments Inc. held up well, too.
put roughly half in stocks; T. Rowe Price’s main Target-date funds, born in the 1990s, took off
target-date fund for that age is 55% equities. Some after 2006, when Congress passed a law encourag-
other fund companies had lower exposure. For many ing employers to sign up workers automatically in
people, their retirement plan’s choice of target-date 401(k)s. It also let companies pick a default option,
fund will determine how much risk they’re taking. and target-date funds were among the few allowed.
Being aggressive during the coronavirus-related Two years later, in the financial crisis, the funds geared
market plunge smarted. From Feb. 20 to March 20, toward older investors suffered big hits because of
Vanguard, Fidelity, and T. Rowe Price, which together their heavy stock holdings, sparking congressional
manage 69% of all target-date assets, had among the hearings. As the market recovered, they’ve became
–23%
steepest losses for portfolios geared toward 65-year- more popular than ever.
T. Rowe
olds, according to fund tracker Morningstar Inc. An Target-date funds were designed to prevent classic Price
investor in T. Rowe Price’s Retirement 2020 Fund lost investment mistakes, such as piling into funds with Retirement
23%; the other firms’ customers weren’t far behind. the strongest recent performance or being too conser-
“People have been exposed to far more risk than vative when young and too aggressive in retirement.
they realize,” says Zvi Bodie, a Boston University pro- A new kind of advisory service, relying on automated
fessor emeritus who consults for Dimensional Fund recommendations, uses a similar approach. Like
target-date funds, so-called robo-advisers such as their money in stocks. Otherwise, they risk running
Betterment LLC rely on research that recommends out of money over a decades-long retirement.
investors shift from stocks to bonds over time, while After the 2008 financial crisis, Fisher Investments
retaining a healthy chunk of stocks at retirement. faced at least a dozen legal claims from retirees with
Some financial scholars have found shortcomings in aggressive portfolios. In some cases, the firm suc-
the assumptions behind target-date funds, particularly cessfully argued that clients would have been fine if
in the way they can be one-size-fits-all. In their view, they’d held on through the downturn. Spokesman
investors need to consider individual circumstances John Dillard says the company’s Global Total Return
such as the stability of their career and their health strategy fell as much as 32% during the recent cri-
and wealth. “If you are a retiree in a 2020 target-date sis but is now down 16% this year, through April 6,
fund, and you and your spouse have a guaranteed which is a smaller loss than its benchmark. “Clients
pension, then maybe there is nothing wrong with of all types who have been with us are nicely ahead
having 50% or 60% in stocks,” says Moshe Milevsky, over the last few years or longer in an absolute and
a professor of finance at York University in Toronto. relative sense,” he says.
“If you are retiring and all you have is a 401(k), then Last month, Fisher sent a letter to clients: “The
you shouldn’t have a lot of equity.” For investors con- best thing to do in moments of extreme panic is sit
cerned about running out of money, Milevsky likes tight.” Raymond Runquist, a client who’s 76, is doing
immediate annuities, insurance products that pro- that for now. The retired Dallas engineer is nearly all
vide a guaranteed lifetime income. (Milevsky has in stocks and avoids checking how much he’s lost.
written nonacademic research paid for by financial “I’m going to stay the course,” he says. “I have lived
firms, including insurers.) through other ups and downs.” �Sabrina Willmer
Target-date funds aren’t the most aggressive retire-
THE BOTTOM LINE Target-date funds are the default choice in
ment products. Billionaire money manager Ken Fisher many retirement plans and can help prevent savers from making
has long said retirees should put as much as 100% of huge mistakes. But they might be riskier than investors expect.
27
The FIRE Movement

Meets the Crash ● Even supersavers have to scale
back their early retirement dreams
For many leaders of the penny-pinching FIRE crowd, ◀ Personal finance

blogger Tanja Hester
ambitious projects are suddenly on hold. FIRE
stands for “financial independence, retire early,” but
even though the goal is to get out of the 9-to-5 grind,
spreading the word is a business of its own. And as
with almost every other business, the coronavirus
pandemic has brought things to a screeching halt.
Grant Sabatier, who writes the Millennial
HESTER: MARK BUNGE. DATA: MORNINGSTAR, BLOOMBERG
Money blog, had to postpone a 1,000-plus-attendee

Financial Freedom Summit. Joshua Fields Millburn
and Ryan Nicodemus, who dub themselves the
Minimalists, had to postpone a West Coast speak-
ing tour, as well as production on a Netflix film.
It’s a tough moment for some FIRE followers,
too. The movement is based largely on the idea that
you can live on less and save more through inten-
sive financial planning, and the 11-year bull market
made the possibility of hitting their numbers seem
well within reach. That’s gone now. Early retirees

may find finances strained just as efforts to rekindle When Nobody Pays Rent
former careers are frustrated by a sharp economic
downturn. “I’m sure there are people who retired
in the past six months who are freaking out, and I ● The problem of missed payments is cascading
feel truly bad for them,” says Tanja Hester, a former across the real estate industry
political consultant who retired about two years ago
at age 38 and writes the blog Our Next Life. “This will
bring hardship to the FIRE community like it does
to everyone else,” she says. “But far less because, by
and large, we have insulation.”
Sabatier, 35, sheltering with his wife in upstate
New York about 150 miles away from their Brooklyn
home, says these times could swell, rather than
shrink, FIRE’s ranks. “FIRE to me has always meant
living life on your own terms,” he says. “From that
perspective, the core philosophies and values and
principles of FIRE are more important than ever.”
Still, for those who are suddenly short of money,
that rhetoric may not be comforting. “Many people
that were close to or already considered themselves
FIRE may suddenly find themselves not able to con-
sider themselves financially independent,” says
New York-based financial planner Roger Ma. “That
may be especially painful.”
28 The FIRE movement became trendy in recent The swelling ranks of unemployed Americans and
years, particularly among millennials. The number images of shuttered shops and empty streets have
of blogs on the topic has exploded to more than 100 begun to tell the grim tale of the economic destruc-
since 2011. The basic idea is to save and invest as tion caused by the Covid-19 pandemic. They also
much as possible early in one’s career and amass at presage a brewing real estate crisis. About $81 billion
least 25 times annual expenses, with the goal of accu- in commercial rent comes due in a typical month
mulating a big enough nest egg to be able to retire in the U.S. The delay of a sizable portion of that will
early and live on annual withdrawals of about 4% of put an enormous strain on the complex systems for
the value of the portfolio at retirement. financing real estate and highlight how quickly the
Hester worries about some FIRE followers, espe- pain caused by social distancing has spread.
cially recent retirees and a younger, aggressive con- Just 69% of renters paid their rent by April 5,
tingent who’ve never seen a down market and according to data from 13 million units published
advocate holding almost all of a portfolio in stocks. by the National Multifamily Housing Council, com-
“There’s been this attitude of ‘It’s OK to wing it pared with 81% who paid by March 5, providing an
because things will work out,’ and for the last decade early look at how bad things could get if job cuts con-
that’s been true,” she says. “No one was getting laid tinue and households blow through savings. In one
off, no bad things were halting people’s progress.” scenario, renters would need $96 billion in payment
Hester hopes for a “cleansing” moment that assistance over the next six months, according to an
will tone down some FIRE notions, including the analysis from the Urban Institute. It won’t be much
idea that a 4% withdrawal rate is safe for everyone, better for homeowners. Roughly 15 million house-
and the belief that if you fall short you can always holds—about 30% of mortgage borrowers—could miss
go back to work, which could be hard in a reces- payments if the economy stays shuttered through
sion. Still, she sees the potential for some aspects the summer, according to Mark Zandi, chief econo-
of FIRE to grow in popularity. “What about the mist at Moody’s Analytics.
biggest spike in unemployment will have people So far the local, state, and federal governments
saying, ‘I want to rely more on my job’?” she asks. have responded by imposing temporary bans on
�Suzanne Woolley, with Brandon Kochkodin foreclosures and evictions, dulling the short-term
impact of the economic shutdown in the hope that
THE BOTTOM LINE A long bull market made it easier for young
people to imagine early retirement. Even though that’s over, those
social-distancing efforts ease later this spring and
who saved heavily still have some insulation. consumers and businesses get back on track. Those
measures won’t be enough, though, if the economy Only a quarter of renters live in units financed with ▼ Estimated impact of
a month of missed rent,
doesn’t rebound quickly. “The initial thinking behind government-backed loans, says Mary Cunningham, by share of payments
it seems like it was that this is going to last a month a vice president at the Urban Institute. Most prop- missed in each category
or two, and things will go back to normal,” says erty owners will have to make arrangements with Office
Tomasz Piskorski, a professor at Columbia Business their lenders as collections fall. Small landlords in Apartment
School, who favors forgiving some interest payments particular lack access to the cheap credit needed to Retail
for affected mortgage borrowers. “It buys us some weather the storm, and even people who rent from Industrial
time. But it’s going to take months or years to get larger companies are unlikely to get the same level $8b
back to a new normal.” of forbearance as homeowners do. Sean Dobson,

The prospect of missed payments is causing prob- chief executive officer of Amherst Holdings, which
lems across the landscape, as economic pain spreads operates about 20,000 single-family rental homes,
from tenants and property owners to lenders and says his company will offer forbearance “as long
beyond. Real estate investment trusts that invest in as we can. But we don’t have the Federal Reserve 6
mortgages, many of which committed the cardinal sin to lend to us.”

of using short-term debt to finance long-term assets, After a decade in which tight housing inventories
have been forced to sell mortgage securities at deep have allowed landlords to hike rents, there’s a sense
discounts to meet margin calls from their lenders. that property owners have had their power dimin-
That dynamic was a hallmark of the global financial ished. A chorus of voices, from local housing activ- 4
crisis, but this time around it’s harder to argue that ists to Representative Rashida Tlaib, a Democrat from
distressed households or corporations were greedy Michigan, have called on Congress to cancel rent.
or reckless, or that they should have been better Another set worries that eviction moratoriums will
prepared for an unprecedented economic shock. give renters permission to skip payments that land-
Tom Barrack, chairman of real estate investment lords will never get back. “The politicians are com- 2
trust Colony Capital Inc., argues that real estate manding that you can’t evict people, and obviously
finance companies and other nonbank lenders are that leads to a lot of behavior changes,” said Jeffrey
the pipes that provide liquidity to businesses and Gundlach, chief investment officer of DoubleLine 29
individuals, so backstopping mortgage investors is Capital, in a recent webcast.
critical to helping small firms and their workers. But It’s not just apartment dwellers who can’t pay 0
he’s not optimistic about government intervention. rent. Companies including Subway Restaurants and 5% 10% 20% 30%
In an election year, it doesn’t look good to bail out Mattress Firm Holding Corp. have informed land-
industries perceived to be overleveraged, he says. lords that they may not be able to make rent pay-
Similar problems are festering throughout real ments in full. For now, there’s not much commercial
estate. The Coronavirus Aid, Relief, and Economic landlords can do: A global pandemic is a tough time
Security Act, passed in March, provides forbearance to find a new tenant.
on government-backed mortgages. Those loans are Rents must be paid eventually, and landlords will
packaged together and sold as securities, and when have claims even in bankruptcy. In cases where busi-
homeowners miss payments, mortgage servicers are nesses shut down because of government order, ten-
required to advance principal and interest. That’s ants will pursue claims of force majeure, arguing that
problematic for servicers, who’d need up to $100 bil- their contractual agreement has been superseded
lion, according to preliminary estimates from the by social-distancing decrees. Landlords may make
Mortgage Bankers Association. the same case to lenders. The blameless nature of
They’re not the only ones who will need help. At the crisis could make some problems easier to solve,
least 2,600 commercial real estate borrowers have lowering resistance to government bailouts. A bigger
already touched base with mortgage servicers about challenge may be mustering a strong response during
ILLUSTRATION BY JUN CEN. DATA: COSTAR PORTFOLIO STRATEGY
potential debt relief on more than $49 billion in loans, a crisis in which officials worldwide have repeatedly
according to Fitch Ratings. More than 75% of those been slow to take decisive action.
inquiries, made during the last two weeks of March, “It’s almost like we’re watching this unfold in
were for hotels and retail real estate, Fitch said. slow motion,” says Scott Rechler, CEO of RXR Realty,
What happens next for renters will depend which owns apartments, offices, and other commer-
on where people live and how their buildings are cial real estate. “We know the bad part is coming,
financed. Some states have passed temporary bans but we don’t know how long it will last or how resil-
on evictions, and Fannie Mae and Freddie Mac have ient we’ll be.” �Patrick Clark
promised forbearance to apartment owners suffer-
THE BOTTOM LINE A lot of people aren’t going to be able to pay
ing hardship because of Covid-19 on the condition rent for a long time. Everyone wants help from the government, the
that the landlords pause evictions. question is: Will a rescue be big enough and come fast enough?
Blue- olla
Bloomb ek , 2020
E America
C Braces for
O
N
O
M
I
30
C
S Recession
● The pandemic is wiping Faced with declining orders and no clear idea of
when things might change, United States Steel Corp.
out gains in manufacturing informed state authorities on March 23 that it plans
employment in politically to shut down its mill in Lone Star in May, putting
many, if not all, of the 600 employees out of work.
important states
The facility turns out steel pipe for an oil industry
that’s retrenching in response to a sudden collapse
PHOTOGRAPH BY MISTY KEASLER FOR BLOOMBERG BUSINESSWEEK
in crude prices.
Located a little over two hours due east of Dallas, “Anytime something like this comes up—people
toward the border with Louisiana and a world away down here rely so much on oil price and the market—
from the bustle of New York—or Wuhan—Lone Star everybody gets scared,” says Trey “Tiny” Green,
is a pocket of rural Texas that’s so far managed the 6-foot-9-inch, 315-pound president of United
mostly to avoid the Covid-19 outbreak. According Steelworkers Local 4134, which represents hourly
to state data, just one case had been reported in all employees at the plant. “We’re in the infancy of try-
of Morris County as of April 7. The town, though, ing to console and talk to our members on what
which has a population of about 1,700, isn’t doing the future will bring.” If there is any consolation
as great a job of escaping the impact of a U.S. to be had, it may be that the steelworkers of Lone
Edited by
economy tumbling into what threatens to be the Star aren’t alone in the U.S. in 2020 in confronting
Cristina Lindblad deepest recession in generations. a daunting downturn and uncertain future. Across
◼ ECONOMICS Bloomberg Businessweek April 13, 2020
the nation, what President Trump had been hyping country became the so-called world’s factory— ◀ U.S. Steel will be
shutting down a plant
as a “blue-collar boom” going into November’s elec- according to a group of economists led by MIT’s in Texas that makes
tion is quickly turning into a blue-collar bust. Daron Acemoglu and David Autor. pipes for the oil industry
in May
Forecasts by Goldman Sachs Group Inc. and Economic downturns also have a habit of accel-
others of an historic economic contraction in the erating profound changes that lead to longer-term
months to come point to some 20 million jobs job losses. Past downturns have spurred investment
being lost by July, pushing the national unemploy- in the automation of production lines, for example,
ment rate into the midteens. The job destruction is says Mark Muro, a senior fellow at the Brookings
happening in waves. Many of the record 3.3 million Institution who’s written extensively on the role of
Americans who filed unemployment claims in the technology in economic development. And this one
week ended March 21 worked for hotels, restaurants, isn’t expected to be different.
and other service businesses that shut down in com- In one 2012 study, economists found that
pliance with government orders to limit the spread since the 1980s, 88% of the “routine”—or easily
of the coronavirus. automated—jobs lost in the U.S. disappeared within
But increasingly the data are showing that 12 months of a recession. Muro estimates there are
America’s factory workers haven’t been spared. now 36 million such vulnerable jobs in the U.S.
Unemployment claims for the week ended “That’s one meta thing that will be a reality in the
March 28 totaled 6.6 million, with many of the lay- next year,” he says. “Managers are motivated by the
offs coming from manufacturers shutting down cruel reality of the bottom line.”
plants in response to rapidly shrinking order books What happens this time, of course, will depend
or from pressure from unions concerned about largely on how long the near-total collapse in eco-
their members’ health. Even before the worst lay- nomic activity lasts. “Longer than I thought just a
offs took effect, the U.S. had lost 18,000 manufactur- week ago” is the answer you hear most often from
ing jobs in March. An estimated 623,000 auto and economists, company executives, and even workers
parts workers are on furlough, according to Kristin on the production line.
Dziczek, vice president for industry, labor, and eco- In Waukesha, Wis., Austin Ramirez, chief exec- 31
nomics at the Center for Automotive Research in utive officer of family-owned Husco International
Ann Arbor, Mich., a figure that represents 80% of Inc., which makes hydraulic parts for major auto-
the industry’s total hourly workforce. makers, says that during the last full week of
From the Texas oil patch to traditionally blue- March, his customers went from lodging orders
collar states such as Michigan, Ohio, Pennsylvania, to “telling us to just shut it all down.” He now
and Wisconsin to newer ones including Tennessee,
the U.S. industrial economy is embroiled in a slow-
down that to managers and union reps already U.S. Manufacturing Employment
seems likely to be deeper than the one the country ◼ Recession
endured more than a decade ago. 20m
Some of the impact—maybe a substantial

amount—may be offset by the roughly $2 trillion eco-
nomic rescue plan Congress approved on March 27. 15
Manufacturers such as General Motors Co. and Ford

Motor Co. have also begun retooling production
lines at idled plants to make ventilators and other 10
medical equipment needed to fight the pandemic. 1/1960 3/2020

Yet much of the help coming from the federal
DATA: FEDERAL RESERVE BANK OF ST. LOUIS
government is expected to take weeks to deploy.
Also, the scale of the wartime manufacturing expects an 80% to 90% drop in business in April.
mobilization now taking place pales in compari- How does it compare to the last recession that
son with everyday production. A recession now came with the global financial crisis? “I think it’s
appears inevitable. And it is an historic fact that going to be worse. And ’08 and ’09 were terrible
America’s recessions tend to be worse for manu- for us,” he says.
facturing workers. Some 2.3 million of them lost Husco has so far avoided any layoffs, and Ramirez
their jobs in the last downturn. That’s roughly on is hoping he can hold the line. About an hour’s drive
par with the estimated 2.4 million job losses sus- west, in Fitchburg, Wis., Sub-Zero Group Inc., which
tained by all sectors of the U.S. economy from 1999 makes high-end refrigerators and other residential
to 2011 as a result of the “China Shock”—when that kitchen appliances, notified the state on March 19
◼ ECONOMICS Bloomberg Businessweek April 13, 2020
that it was laying off approximately 1,000 workers War II, and we’re in uncharted waters and need to
for a two-week period. be flexible,” says Patrick Gallagher, a senior United
The company’s original plan was to put everyone Steelworkers official who represents hourly employ- “It’s not
back to work on April 13. Yet as Wisconsin braces ees at a U.S. Steel facility in Lorain, Ohio, that’s also just about
for a surge in Covid-19 cases and the state and fed- scheduled to be shuttered in May. Covid-19. Even
eral government extend shelter-in-place orders and The steel industry, which Trump hailed as one when we’re
other restrictions on movement, it doesn’t take of the great successes of his protectionist poli- through that,
much imagination to see the date slipping into May cies, again finds itself at the center of a down- there’s going
or beyond. In its letter to state officials announcing turn. ArcelorMittal SA has idled a blast furnace at to be this
the temporary closure, Sub-Zero ominously said it its Indiana Harbor site southeast of Chicago and uncertainty”
expected demand for its products “to remain down.” another at its Dofasco plant in Hamilton, Ont. Both
It also warned that “some employees are anticipated supply critical products to the automotive industry.
to not be recalled.” U.S. Steel plans to shut down one of its blast fur-
“I hope this doesn’t last long, but I think expect- naces in Granite City, Ill., which supplies both the
ing it to only last a month is not realistic,” says Aaron automotive industry and the oil industry. Trump
Richardson, mayor of Fitchburg, a city of 29,000 that visited the Granite City mill in the summer of 2018
had been experiencing a boom thanks in part to its to mark the reopening of its two blast furnaces
location just outside Madison, the bustling univer- thanks, company executives said, to his tariffs.
sity town that’s also the state capital. Communities likely to be hit by the recession,
For many manufacturing companies, the Covid-19 such as Granite City and Lorain, have borne the
shock has added a layer of uncertainty on top of pre- brunt of America’s deindustrialization over the
existing conditions ranging from the impact of trade past four decades and had in many cases staged
wars and tariffs to the woes of Boeing Co., which only a fragile recovery in recent years. “At the fore-
with 17,000 suppliers in the U.S. alone is a major ground is this absolute emergency for precarious
economic engine for the country. service workers,” says Muro of Brookings. “But in
32 At Haynes International Inc., executives were a decade in which much of manufacturing country
already struggling with the impact of Boeing’s move never really recovered fully, we are seeing another
to halt production of the 737 Max when the corona- brutal event now.”
GREEN: PHOTOGRAPH BY MISTY KEASLER FOR BLOOMBERG BUSINESSWEEK; PANNEBECKER: PHOTOGRAPH BY BRIAN WIDDIS FOR BLOOMBERG BUSINESSWEEK
virus crisis hit. The specialty metals Haynes’s plant
in Kokomo, Ind., churns out are used in the fabrica-
tion of the plane’s fuselage as well as its jet engines.
Then in early March, when Covid-19 cases began
ticking up in several U.S. communities, managers at
the Kokomo plant began deep-disinfecting the prem-
ises daily and introduced staggered shifts so work-
ers would be in less close contact. But with orders
tumbling and concerns about employees’ well-being
mounting, the company moved to shut things down.
The March 19 notice the company filed with
state authorities called for a two-week shutdown
affecting about 625 workers at the Kokomo facil-
ity and some 140 at its headquarters nearby. Dan
Maudlin, the company’s chief financial officer,
says hope remains that business will bounce back
quickly as the pandemic fades. But executives are
also resigned to the helplessness of their situa- While much of the focus is on the spread of the ▲ Green, president of
United Steelworkers
tion as they dial in for their team calls each day, he virus in major cities such as New York, the longer- Local 4134
says. “It’s literally a daily changing environment,” lasting economic turmoil—or at least the slower
Maudlin says. “We’ll just see what happens with recovery—is likely to be in smaller cities that took
the whole economy in general, and hopefully we’ll years to bounce back from the last recession, says
flatten the curve” of Covid-19 infections. John Lettieri, who heads the Economic Innovation
The unprecedented nature of what’s being Group, a think tank that made its name focusing on
described as an economic hard stop isn’t lost on the geography of America’s last downturn. In one
many people. “This is the greatest social upheaval such place—Fort Wayne, Ind.—the damage is already
in America since the Great Depression or World apparent. Demand at food pantries surged 40% once
◼ ECONOMICS April 13, 2020
the economic shock started at the end of March,

according to an umbrella group for the city’s reli-
gious congregations.
This downturn is also likely to hit midsize com-
panies that are often stuck in the middle of supply
chains and more vulnerable to even short shocks.
Federal aid may help some of them weather it a bit.
But even when their employees return to work, they
will do so to a new normal of lower demand. “One
of the great lessons of the Great Recession is that it
takes a long time to rebuild,” Lettieri says. “These
things are not overnight exercises.”
Dennis Slater, president of the Association of ◀ Pannebecker, a
forklift operator at a
Equipment Manufacturers, which represents com- Ford plant in Sterling
panies that make gear for the farming, oil, mining, Heights, Mich.
and construction industries, says the mood among we’re going to have to get back to work sooner or
his 1,000-plus members has turned in recent later. So let’s start looking towards how we’re going
days from seeing a short-term shock to recogniz- to do that instead of just sitting at home and twid-
ing something that will have a longer-lasting eco- dling our thumbs.”
nomic impact. “This is not going to be 30 days,” Even for those still at work in American fac-
he says. “It’s not just about Covid-19. Even when tories, the economic impact is rapidly creep-
we’re through that, there’s going to be this uncer- ing closer. As much of the rest of the U.S. late
tainty: ‘Are we really through this, OK? Are we last month was coming to grips with the realities
done? Can we go back to business again?’ I think of home working and schooling, Daniel Logan, a
that uncertainty will take longer than whatever it supervisor at a plant in rural Manchester, Tenn.,
takes to get through this.” that turns out weatherproof mats and carpets 33
Even as such questions build, there are those for automakers including Mazda, Toyota, and
pushing for a rapid return to whatever approxima- Volkswagen, was counting his luck. Covid-19 cases
tion of normalcy is available. The Big Three U.S. auto- were popping up in nearby counties, but the dis-
makers are locked in a battle with their union, the ease hadn’t yet reached Coffee County, where his
United Auto Workers, over whether it’s even safe to employer, VIAM Manufacturing Inc., is located.
resume production as the virus continues to spread. That luck is beginning to run out. The county
Ford announced on March 31 it was canceling plans reported its first confirmed case of Covid-19 on
to restart some U.S. factories in mid-April and now March 28, and nine days later had seven, accord-
says it doesn’t know when production will resume. ing to state data. Logan says the 350-person fac-
Caught in the middle are front-line workers, some tory where he works was running full steam until
of whom were heartened by Trump’s push to lift March 26, when VIAM cut temporary workers in two
most if not all recommended restrictions by Easter. of the plant’s three buildings. “Definitely not looking
(The president abruptly changed tack after being forward to the coming weeks and seeing what’s
convinced by health officials that lives were still at going to happen, because I don’t doubt one bit that
risk.) One of those workers is Brian Pannebecker, our company will eventually have to close its doors,”
a forklift operator at a Ford axle plant in Sterling says the 37-year-old father of three. “Everywhere is
Heights, Mich., who—even with union benefits that feeling the reach.”
give him 85% of his non-overtime take-home pay—is Logan and his wife have loaded up on frozen food
taking a meaningful financial hit from the closures. and have enough savings to get by if he’s laid off,
“I’m not coming in any closer contact with people he says. But he worries about co-workers he knows
at work than I would if I go up to Kroger and buy who are “week-to-week paycheck people” and will
groceries for the week,” says Pannebecker, who is a struggle to make it even until the $1,200 government
Trump supporter. “Like President Trump has said, checks promised in the rescue plan arrive. “It’s going
you can’t allow the cure to be worse than the sick- to be a rough couple of weeks, for especially those
ness and let it destroy our country. people,” he says. �Shawn Donnan, Joe Deaux, Reade
“We’re going to have to learn to live with this. Pickert, and Keith Naughton
And there may be another wave of it coming down
THE BOTTOM LINE Manufacturing employment takes more of
the road. So we’re going to have to learn to func- a beating in downturns than other sectors. This recession should
tion and take certain precautions,” he says. “But be no different.
P When $2.2 Trillion

O Isn’t Enough
L ● After passing the largest municipalities with fewer than 500,000 residents.
She wants the next bill to be passed this month,
I
relief bill ever, lawmakers are though the House isn’t scheduled to be back in ses-
going back for more sion until April 20 at the earliest. It’s possible to
pass legislation with most members out of town,
as long as no one objects.
T On March 27, Congress passed the CARES Act, the

third rescue bill meant to stanch the economic
damage caused by the coronavirus pandemic. The
$2.2 trillion legislation funds direct payments of
Republicans have been slower to lay out pri-
orities for Phase 4. Senate Majority Leader Mitch
McConnell told the Associated Press on April 3 that
there will be a fourth bill, but said he and Pelosi
I
$1,200 to most taxpayers; supplementary unem- have “a little different point of view” about the tim-
ployment insurance; loans to corporations and ing and what should be included in it.
small businesses; and aid for states, local govern- The prospect of a smaller, intermediate
ments, and hospitals, among other allocations. package—a Phase 3.5—emerged on April 7, when
C
34
But after 6.6 million unemployment claims were Treasury Secretary Steven Mnuchin said he was
filed the week ended March 28 and with cases of asking Congress for $250 billion more to help small
Covid-19 rising sharply, a consensus began to form businesses and that he expected it to be approved
among lawmakers: Given the scale of the crisis, the quickly. Democrats countered the next day with a
S largest relief package in U.S. history is not enough.

There’s going to be a Phase 4 stimulus—but con-
sensus on what form it takes will be more elusive.
House Speaker Nancy Pelosi initially proposed
broader, $500 billion plan.
With negotiations continuing and set to be con-
tentious, three likely beneficiaries of more aid are:
a bill that would, among other things, fund water ● Hospitals

and transportation infrastructure and broadband
internet. President Trump tweeted his own enthusi-
asm for a large infrastructure package on March 31.
The alarming increase in the number of Covid-19
cases in the U.S., however, prompted Pelosi to nar-
row her earlier proposal. On a private conference
call on April 6, Pelosi told fellow Democrats that the
next stimulus bill will be at least an additional $1 tril-
lion and that it would replenish funds for programs
established in the CARES Act, according to people
on the call. Pelosi said there should be additional
direct payments to individuals, extended unemploy-
ment insurance, more resources for food stamps,
and more funds for the Payroll Protection Plan that As hospitals in some cities are pushed to the brink,
provides loans to small businesses. (Trump has said hospital and doctor groups are pressing both to get
that if another round of stimulus is needed, more the $100 billion allocated in the CARES Act to pro-
direct payments to Americans would be “absolutely viders right now and to persuade lawmakers to
under serious consideration.”) send more money.
Edited by
Pelosi said the bill will also assist state and McConnell said that health care should be “at
Amanda Kolson Hurley local governments, with an emphasis on smaller the top of the list” for more relief. Pelosi and Senate
◼ POLITICS Bloomberg Businessweek April 13, 2020
Minority Leader Chuck Schumer called for a fur- coronavirus. Cincinnati decided to furlough as
ther $100 billion for hospitals on April 8. many as 1,700 workers after revised budget esti-
“Hospitals are burning through cash very mates projected a $27.5 million deficit. Pennsylvania
quickly,” Wells Fargo Securities senior analyst laid off 2,500 seasonal, temporary, and part-time
George Huang told Bloomberg. “The longer it goes employees, along with interns.
on, the increased likelihood hospitals will need “State and local governments are going to have
more cash infusion.” huge declines in revenue,” says David Cooper, a
Schumer has also proposed hazard pay for senior economic analyst at the Economic Policy
health-care workers and other essential workers. Institute. “We should definitely anticipate further
cuts if there is not additional support provided to
● Small businesses state and local governments from Congress.”
States are also on the front line of the coronavi-
rus emergency, struggling to purchase enough per-
sonal protective equipment for health-care workers
and ventilators for patients.
Maryland Governor Larry Hogan, who is the
head of the National Governors Association, said on
March 30 that “no one in the country has enough
gear. Every governor in America is concerned
about that.” Hogan said he’s requested that half of
the next stimulus package go to states.
But Representative Dan Kildee, a Michigan
Democrat, says getting Republicans to agree
to help states and localities will be “very
A $349 billion pool was allocated in the CARES tough.” He adds, “I don’t know how sustain-
Act for restaurants, hardware stores, dry clean- able bipartisanship is as we move into recovery.” 35
ers, beauty salons and the like, in the form of for- �Billy House and Erik Wasson, with Fola Akinnibi,
givable loans over two months. But the American David McLaughlin, Ben Brody, Shruti Singh, and
Enterprise Institute estimates that small businesses Lauren Coleman-Lochner
may need more than $1 trillion to replace lost rev-
THE BOTTOM LINE U.S. lawmakers are planning a fourth bill
enue over the next three months. to help struggling households and boost the economy, but how
The government’s rescue plan got off to a rocky expansive Phase 4 will be is unclear.
start as small businesses struggled to submit doc-
uments and lenders ran into trouble with the gov-
ernment’s portal for loans.
● States and municipalities Orban’s Power Grab

Stymies the EU
● Strained by the coronavirus, Europe can do
little to stop Hungary’s authoritarian turn
Viktor Orban was Hungary’s firebrand champion

of democracy when the Iron Curtain fell in 1989,
the liberal student leader who told the Russians to
go home. As an authoritarian prime minister three
decades later, he just called into question whether
ILLUSTRATIONS BY KATI SZILÁGYI
The CARES Act included $150 billion in direct aid for his country is a democracy at all.
state and local governments, and Democrats pro- With the European Union preoccupied with
posed on April 8 to give them another $150 billion. how to fight the novel coronavirus and its eco-
Cities and states are already eliminating jobs nomic fallout, Orban enhanced his already formi-
as they brace for the full financial impact of the dable power on March 30 by allowing himself to
POLITICS Bloomberg Businessweek April 13, 2020
rule by decree indefinitely, ostensibly to tackle his success at legitimizing at home and abroad
the emergency. There were murmurs of outrage what he calls an “illiberal democracy.” His defin-
in western European capitals, followed by private ing moment was in 2015, when he opposed Merkel’s
admission that the EU isn’t capable—or willing—to decree of an EU-wide welcome for refugees from
do anything about its rogue member. the Syrian war. Orban portrayed himself as the
If the coronavirus has shown up the EU’s frailties Continent’s border guard, building a fence to shut
in finding a united response to the crisis, Orban’s migrants out and allowing those stranded in a
ability to thumb his nose at western Europe exposes Budapest railway station to flee to western Europe.
a weakness that risks longer-lasting damage to the Orban, 56, is a political chameleon who’s the EU’s ○ Orban
post-Cold War integration project. The EU will ulti- longest-serving leader after Merkel. He first won
mately get through the pandemic. It seems it can do power as a conservative in 1998, a decade after the
little to stop a political malaise that’s been spread- student movement morphed into his Fidesz party.
ing for far longer, with Hungary energizing nation- Another stint in opposition from 2002 saw him
alists in Poland, Italy, and elsewhere. turn into a divisive populist. By the time he became
Orban certainly picked his moment. The EU is prime minister again, in 2010, his support base had
recovering from Britain’s departure on Jan. 31 and widened, backing him as the man to restore dignity
doesn’t need another big conflict now, according to Hungarians left behind by the country’s transition
to diplomats in Brussels. Two officials say that few to a globalized member of the EU.
people in European diplomatic circles were sur- Since then he’s used his two-thirds supermajority
prised by Orban exploiting a crisis to grab more to railroad through parliament measures to dis-
power, but nobody really wants to force the issue. mantle checks and balances, such as stacking the
Any talk of action, such as suspending courts with loyalists, passing a new constitution,
Hungary’s EU voting rights or even withholding and changing electoral law. He built a propaganda
aid, has gone nowhere because of the need for machine that includes almost 500 media outlets,
consensus in EU decision-making. Orban is back- and he’s cracked down on civic groups.
36 stopped by Poland, whose nationalist government Governments including the U.K.’s have triggered
has been playing its own game of chicken with emergency legislation to enhance their power to
the European authorities over a political takeover address the pandemic, but they don’t go as far as
of the judiciary. Warsaw has provided cover by Orban’s open-ended law. It grants him the right to
promising to veto any sanctions on Budapest, and rule by decree until he agrees the pandemic no lon-
vice versa. The Poles also joined Orban in com- ger requires it. Hungary had recorded 895 cases of
plaining that the EU wasn’t providing enough Covid-19, with 58 deaths, as of April 8. “Orban is doing
money to help address Covid-19. Within a day, his government filed a raft of leg- what he’s
As for the Continent’s indomitable firefighter, islation to withdraw the power of mayors, clas- doing because
German Chancellor Angela Merkel, concern about sify the details of a $2 billion rail project funded by he knows he
Hungary is simply not high on her agenda given China, and even expand control over theaters. He can get away
the pandemic, according to a person in Berlin backtracked on the mayors after his own lawmak- with it”
familiar with her thinking. Member states are at ers protested and spooked investors dumped the
odds over how to pay for the damage from the currency, the forint. Orban promised to give up his
virus as Italy, in particular, struggles with the new power once the crisis is over.
effects of its outbreak. For now, few in the EU are willing to call Orban
Even calls to kick Orban’s Fidesz party out of the out publicly. In a joint statement on April 1, a major-
biggest bloc in the European Parliament can’t seem ity of EU governments said they were “deeply con-
to get traction. Germany’s Christian Democratic cerned about the risk of violations of the principles
Union, which wields the most influence in the of rule of law, democracy and fundamental rights
group, has shown no indication it supports that. arising from the adoption of certain emergency
“Orban is doing what he’s doing because he measures.” There was no mention of Orban. In a
knows he can get away with it,” says Mujtaba twist, Hungary signed the statement the next day.
Rahman, managing director for Europe at Eurasia, It said the values it’s defending are “common to
a political risk consulting firm. “The EU, by and all of us.” —Zoltan Simon, Ian Wishart, and Arne
large, has not fully understood who they’re deal- Delfs, with assistance from Patrick Donahue, Marek
ing with, and that explains why they haven’t mobi- Strzelecki, and Ewa Krukowska
lized tools to constrain him.”
THE BOTTOM LINE With Poland offering to veto any sanctions,
The Hungarian leader’s stature as a trailblazer a weakened EU is constrained from checking Hungary’s
among Europe’s nationalists is largely because of “illiberal democracy.”
POLITICS Bloomberg Businessweek April 13, 2020
The Antibody Advantage

○ The prospect of “immunity certificates” for the coronavirus-resistantt raises hope—and
hope and concerns
During the Great Plague of London in 1665, houses for antibodies against the
where the infection appeared were painted with a virus (antibodies are pro-
red cross and sealed, condemning the occupants teins produced by th he
to death. Now the idea of visibly identifying the immune system tha at
infected is being turned on its head as governments help defend againsst
around the world look at how to reopen economies pathogens). The e
shattered by the coronavirus crisis. tests could show w
With hundreds of millions forced to stay home who’s been infec ted
to stop the spread of the virus, politicians and and holds some
public-health experts are searching for safe mech- immunity—even peo-
anisms to allow people to return to work without ple who didn’t ha ave
sparking a second wave of infections. Officials and symptoms. Testing g for
scientists in Italy, Germany, and other countries immunity raises thorny
t
are considering giving certificates to people who’ve questions abou t whether
recovered from Covid-19, the illness caused by the antibody-positive workers
w might be
coronavirus. The certificates would allow them to favored for jobs, especially
e in consumer-
escape restrictions, while the uninfected might facing industries lik
ke restaurants and retail. 37
7
have to remain isolated until a vaccine or treatment For now, giving p
privileges to people with
is found. U.K. Health Secretary Matt Hancock has antibodies may be the price of getting the
even floated the idea of an immunity wristband. economy moving again, as long as governments
“All countries are discussing what the exit strat- provide enough support for those without a job,
egy could be,” says Hans-Dieter Volk, head of says Allison Hoffman, a professor at the University
Germany’s Institute of Medical Immunology at the of Pennsylvania who specializes in health-care
Charité-Universitätsmedizin Berlin. “We cannot law. “From a policy perspective, it’s not especially
continue this way. Everybody knows it.” worrisome if the rest of the population has good
Wearing a bracelet or waving a piece of paper unemployment coverage,” she says. “It would
to show your immune status might sound like speed economic rebuilding, which I think every-
the plot of a dystopian novel, and scientists and one would want, whether employed or not.”
public-policy experts are warning the prospect The bigger problem: Scientists still don’t know
of “immunity passports” could make the current enough about the virus to say with certainty how
crisis worse. long immunity lasts. Anthony Fauci, director of
For one, they worry it could create a two-tiered the U.S. National Institute of Allergy and Infectious
workforce and perverse incentives for people to try Diseases, is optimistic, predicting “a few years” of
to contract the virus, particularly millennials who durable immunity. Others aren’t so sure. “My guess
LUDOVIC MARIN/AFP/GETTY IMAGES; ILLUSTRATION BY BENEDIKT RUGAR
might feel their chances of surviving it are high. is that the protective immunity will last at least
“Like the ‘chickenpox parties’ of old, some work- three months—that’s the worst-case scenario,” says
ers will want to get infected,” says I. Glenn Cohen, Peter Openshaw, professor of experimental medi-
a bioethics expert at Harvard Law School, referring cine at Imperial College London. “It’s likely to last
to when parents deliberately exposed children to much more than that—between one and five years—
others with chickenpox at a young age, when symp- but until that time has passed, we won’t know for
toms tend to be milder. “That sounds crazy, but if sure.” Researchers in countries including Germany
having the antibodies becomes the cost of entering and Italy are starting projects to study the anti-
the job market and thus feeding your family, there bodies of hundreds of thousands of people to see
may be workers who feel pressured into it.” how long immunity lasts and map out where the
Governments, companies, and researchers virus has been lurking.
around the world are trying to roll out blood tests The U.K. has trumpeted antibody testing as
◼ POLITICS Bloomberg Businessweek April 13, 2020
a solution but struggled to get it off the ground. the population to gauge how many cases have
British scientists trying to validate thousands of gone undetected.
test kits have found them unreliable. If the U.K. Another caveat: Testing positive for antibodies
wants to introduce so-called immunity bracelets, could mean you’re still infectious. People develop
it will need to be able to do antibody testing on a antibodies at the end of the first week, when they
mass scale, which is only possible with accurate, can still infect others, Charité’s Volk says. Without
rapid home kits—and those could take months to symptoms, there’s no way to know whether people
develop, scientists say. (U.K. Prime Minister Boris are continuing shedding the virus or have recov-
Johnson was hospitalized with Covid-19 on April 6.) ered unless they take a swab test.
So far, there’s been less talk about formal immu- Even with all the drawbacks, antibody testing,
nity certificates in the U.S., which is only begin- whether it results in immunity certificates or not,
ning to push antibody testing. On April 7, New could help politicians plot their way out of mass
York Governor Andrew Cuomo said his state has lockdowns. “It’s important to understand how
developed an antibody test. The Food and Drug the virus infiltrated society—how random or how
Administration granted its first emergency use clustered it is—to make political decisions,” Volk
authorization on April 1 for a rapid antibody test says. “If we have hot spots, maybe you keep them
using a finger-prick blood sample, developed closed for another couple of weeks and open less-
by Cellex Inc. It cautioned, however, that the infected regions. But it’s too early to give you an
test shouldn’t be used as the sole basis for diag- immunity passport to let you do what you want.”
nosis. The U.S. Centers for Disease Control and �Stephanie Baker and Erik Larson
Prevention has started blood testing for antibodies
THE BOTTOM LINE Large-scale antibody testing could help
on people who live in Covid-19 hot spots who never countries get out of lockdown, but it’s not a silver bullet and tests
had symptoms, using representative samples of aren’t yet reliable.
38
Pakistan Faces a
Viral Catastrophe ● The country of 210 million is ill-prepared
for the pandemic
Syed Mohammad Yahya Jafri, 22, a Pakistani student The country is one of only three with ongoing polio “The camp
from Karachi, was coming to the end of a two-week transmission, and it’s struggled in recent years to was a breeding
pilgrimage to Iran when his head started spinning. contain AIDS and dengue outbreaks. ground for the
He felt weak and feverish but decided the best thing Health care in Pakistan “continues to suffer from virus”
to do was head home. It was mid-February, and coordination challenges and an acute shortage of
most countries weren’t yet blocking people with resources,” says Arsalan Ali Faheem, a consultant
flu-like symptoms from traveling. at DAI, a U.S.-based company that advises on devel-
No one stopped Jafri at the airport in Tehran opment and health projects. “The country has been
when he arrived for his Iran Air flight, or on landing hard-pressed to find resources for health delivery.”
in Karachi. He went about his routine there, encour- Pakistan’s biggest problem is money. Health care
aged that his symptoms seemed to be intermittent. competes for scarce funds with the armed forces,
But when they became constant, along with a nag- which absorb a huge share of the national budget.
ging cough, Jafri went to a local hospital and insisted Ambulances are funded largely by charities, and
on being tested for the novel coronavirus. He soon even when hospitals do have critical-care equip-
learned he was one of the first two confirmed cases ment, they may lack staff trained to operate it. Prime
in Pakistan. Minister Imran Khan has tried to improve services,
A little more than a month later, the country has but the government has limited influence over the
about 4,000 official cases—likely a fraction of the true provincial authorities that deliver much of the care.
figure—and is preparing for an outbreak that could Together, federal and provincial health spending in
● The number of tests
drive its fragile health-care system to the breaking the last fiscal year was the lowest since 2016, accord- for Covid-19 performed
point. Pakistan’s health expenditures, according to ing to Asad Sayeed, an economist at the Collective in Pakistan is less than
50k
the World Health Organization, are just 2.9% of gross for Social Science Research in Karachi.
domestic product, less than half the global average. Proximity to one of the first hot spots outside
◼ POLITICS
Leaders The Virus ‘Bump’

East Asia has been an important factor in the local
outbreak. Shia Muslims such as Jafri represent a Even as cases of Covid-19 rise in their
bit more than 10% of the Pakistani population, and countries, several Group of 20 leaders—
thousands travel every year to holy sites in neigh-
boring Iran. Until mid-March, when Pakistan closed including some who’ve been sharply
its land borders, most were able to return home criticized over their response to the
without disruption. At one border crossing, thou- outbreak—are enjoying a bump in their
sands of travelers without symptoms were waved
through. Those who felt ill were sequestered in approval rating. Political scientists say
a makeshift tent city on the Pakistani side that, this “rally-around-the-leader” effect is
according to patients, had no soap or hand san- common in times of emergency. But
itizer. “If one is affected, everyone would get it,”
says Mohammad Hussain, 42, who spent more it isn’t universal: Japan’s Shinzo Abe,
than two weeks there. “The camp was a breeding Mexico’s Andrés Manuel López Obrador,
ground for the virus.” and Jair Bolsonaro of Brazil have all
Khan’s administration is playing catch-up. Public
gatherings have been banned and travel sharply cur- lost popularity.
tailed, though the government struggled to reach a
deal with religious authorities to close most mosques World leaders’ change in approval
and shrink crowds at Friday prayers. Bolstered by
the military, officials are going door to door look-
Approval rating, Jan. 30 to April 5 Covid-19
ing for cases, a daunting task in one of the world’s deaths per
most populous countries. In Karachi, authorities 30% 40% 50% 60% 1m people
have converted a convention hall into a 1,200-bed
field hospital in anticipation of a surge in patients.
Emmanuel Macron
France 133.1
So far, Khan has ruled out a nationwide lockdown 39
like that in India, arguing that suspending economic
Boris Johnson
U.K. 79.7
activity in a country where a quarter of citizens
live in poverty would be a humanitarian disaster.
Donald Trump
U.S. 31.5
Provincial governments in Punjab and Sindh, which
contain about three-quarters of the national popula-
Angela Merkel
Germany 20.0
tion, have tried to close workplaces and keep people
at home, but compliance has been spotty, with res-
Justin Trudeau
Canada 7.7
idents still crowding snack carts and supermarkets.
Pakistan’s other obstacles would be familiar to
Jair Bolsonaro
Brazil 2.4
doctors elsewhere. Diagnostics are in short supply: Scott Morrison
1.6
Australia
Fewer than 50,000 tests have been performed,
compared with almost 2 million in the U.S. The Aga A.M. López Obrador
0.7
Mexico
Khan University Hospital, one of Karachi’s top med-
ical facilities, closed its doors to new coronavirus Shinzo Abe
Japan 0.7
patients in late March after crowds overwhelmed a
screening clinic, potentially exposing staff to infec- CONFIRMED CORONAVIRUS DEATHS AS OF APRIL 6. DATA: MORNING CONSULT, JOHNS HOPKINS CORONAVIRUS RESEARCH CENTER,
NATIONAL STATISTICS AGENCIES, UNITED NATIONS POPULATION DIVISION
tion. Protective gear for physicians is a problem.
One of the first Pakistanis to die from Covid-19 was
a 26-year-old doctor.
With such limited resources, keeping the dis- President Trump has seen a boost in polls,
ease under control will fall largely to regular cit- though it’s small compared with those
izens. Jafri, now recovered, says he’s fearful that
message isn’t getting through. After a slow start,
of peers Angela Merkel and Emmanuel
“the government is doing all it can,” he says. “The Macron. Will it last until Election Day in
biggest problem are the people who are not taking November? That’s unclear—crisis-driven
the virus seriously.” �Faseeh Mangi
bumps fade over time, though no one
THE BOTTOM LINE With underfunded hospitals and disjointed
management, the coronavirus could push Pakistan’s health-care
knows how long this crisis will last.
system to collapse.
S Artificial
O Intelligence
L
U
T
I
O
40
N
S AI Gets a Chance
To Strut Its Stuff
The deployment of technology to fight Covid-19 is a business
opportunity that comes with regulatory risks
In China, doctors use artificial intelligence tools biological structure of the new coronavirus and
provided by Huawei Technologies Co. to detect made it available to scientists working on a vac-
ILLUSTRATION BY MAXIME MOUYSSET
signs of Covid-19 in CT scans. In Israel, Tyto cine. AI is also behind biometric identification
Care Ltd. offers in-home medical exams, using systems being rolled out by governments to
AI to deliver clinical-grade data to remote doc- track the virus and enforce lockdown efforts,
April 13, 2020 tors for diagnosis. Chinese tech giant Baidu including temperature screening systems
Edited by
Inc. devised an algorithm that can analyze the deployed throughout Beijing and CCTV cameras
Rebecca Penty
◼ SOLUTIONS Bloomberg Businessweek April 13, 2020
hooked up to facial-recognition software in Moscow. “AI is argue. “In society and in police work, we are permanently
being used to fight the virus on all fronts, from screening confronted with errors, but suddenly with facial recognition,
and diagnosis to containment and drug development,” says there’s zero tolerance,” Wim Liekens, chief information offi-
Andy Chun, an adjunct professor at City University of Hong cer of the Belgian police, said in January at a privacy con-
Kong and AI spokesperson at the Hong Kong Computer ference in Brussels.
Science Society, a nonprofit industry group. The use of biometric technologies to tackle the corona-
The pandemic is opening up a massive opportunity for virus is part of the broader surveillance regimes of govern-
the tech industry, while it shines a light on calls for more ments tracking their citizens’ compliance with restrictions
scrutiny of AI innovations being developed faster than reg- on movement. In China, authorities sourced data from
ulators are able to devise rules to protect citizens’ rights. phone carriers and called on private companies to create
The quick introduction of AI tools to fight the virus is being AI solutions to trace all citizens’ travel patterns. In Europe,
done in the name of the greater social good, but it raises telecommunications operators are supplying governments
important questions around accuracy, bias, discrimination, with aggregated and anonymized mobile phone location
safety, and privacy. Fever detection, facial recognition, and data to monitor lockdown efforts, and some countries are
other forms of remote biometric identification technology pushing ahead with voluntary apps to trace whom infected
can collect sensitive data, which can put people at risk if people have had contact with.
not handled properly. Unlike China, Europe has strict privacy rules about what
The implementation of some of the technology is based companies and organizations can do with people’s data,
on extraordinary powers used by governments to restrict but, under special circumstances, governments can pass
their citizens’ freedoms, as well as exemptions from data emergency bills to use citizens’ data without their consent.
protection laws. Governments, international agencies, and So far, publicly announced tracking plans in Europe have
companies may be unwilling to part with that level of access been in line with the bloc’s strict privacy rules, according to
to personal information when the crisis subsides, says Tom European data protection authorities. Still, the regulators
Fisher, a senior research officer at Privacy International, say they intend to keep a watchful eye to ensure no party
a U.K.-based nonprofit advocacy group that’s tracking oversteps the bounds.
tech’s role in the global response to Covid-19. “This is why Corporations are also turning to biometric identifica- 41
we have to be critical right now, while these measures are tion to protect against the virus. ASML Holding NV, a Dutch
being deployed, and make sure these measures are neces- maker of semiconductor manufacturing machines, has
sary and proportionate so we don’t get in a situation where installed an infrared thermal camera at its headquarters in
our rights in the future are being eroded,” he says. Veldhoven, at the entrance to a sanitized clean room where
Even before the emergence of the coronavirus, facial it assembles large equipment for chipmakers. Poland’s
recognition had become a target for privacy and civil lib- Pragmasoft fast-tracked its remote fever-detection solu-
erties advocates, who’ve urged governments to ban the tion, Feverguard, in light of the crisis and already has pre-
software or issue a moratorium until safeguards are put in orders from factories and offices in Poland, with interest
place. People with darker skin tones and women are par- from potential clients in the U.S. and Serbia. ASML says
ticularly susceptible to being misidentified: A recent global it doesn’t record names and temperatures to ensure the
software study from the National Institute of Standards company is in line with privacy rules. Pragmasoft says it
and Technology found that false positives are generally as uses low-resolution thermal sensors, obscuring any iden-
much as 100 times more likely for Asian and black faces tifying physical features.
compared with images of white people. For AI developers, the coronavirus pandemic rep-
Attempts to regulate AI are in their infancy. While juris- resents an opportunity to prove their tech can be a force
dictions including Singapore and the U.S. have released for good, says Jon Medved, chief executive officer of
guidelines for its use, the European Union is racing to be Israeli private equity firm OurCrowd, which invested in
the first to propose firm rules. In February, the EU called for Tyto, based in Netanya, Israel. “AI allows you to encoun-
feedback from citizens on its plans to regulate AI, including ter a new reality, begin to understand, and fight back,”
remote biometric identification technology, and will use that Medved says. “We will look back at this time and say that
to inform proposed laws later this year. Software such as the Covid crisis was the coming of age of AI—not as a
facial recognition generally can’t be used for remotely iden- threat to humanity, but as a real aid in terms of fighting
tifying people under existing EU privacy rules—with some global dangers.” �Natalia Drozdiak, Gwen Ackerman,
exceptions—and the bloc wants to figure out where exactly and Kari Soo Lindberg, with Ilya Khrennikov
people’s red lines lie.
U.S. and European law enforcement officials warn
THE BOTTOM LINE The pandemic is helping to spur AI technologies and
against bans of tools they say can make societies safer. startups. But the speedy rollout of controversial biometric identification tools
Governments should craft careful policies instead, they is shining a light on the need for regulation.
◼ SOLUTIONS Bloomberg Businessweek April 13, 2020
companies officials didn’t intend to target. For less risky

Europe Cracks systems, such as AI-based parking meters, the EU is
proposing voluntary labeling, similar to eco-labels seen
Down on the Robots on household appliances, which would allow compa-
nies to pledge to abide by ethical guidelines on trans-
parency, human oversight, and other issues.
For high-risk applications that could endanger peo-
The riskiest ple’s safety or legal status—such as self-driving cars,
AI systems remote surgery, and biometric identification—the
may need to EU has outlined new mandatory legal requirements.
be retrained Companies could be forced to have their systems
in the EU tested before deployment and retrain their algorithms
under new in Europe with different datasets to guarantee that
laws users’ rights are held to the bloc’s standards.
The provision for high-risk systems is already put-
ting some in the tech sector on edge. DeepMind’s
When DeepMind, the artificial intelligence company research on the coronavirus, for instance, was con-
owned by Google parent Alphabet Inc., released its ducted using open source data from around the world,
predictions about some of the building blocks of the according to Sylwia Giepmans-Stepien, a Brussels-
virus that causes Covid-19 in early March, it gave med- based public policy and government relations man-
ical researchers a small but potentially important clue ager at Google. “Limiting some AI models to only using
that could help them develop a vaccine and treatments European data would significantly limit those capabil-
for the respiratory illness. The company’s deep learning ities in the current crisis, and that also applies to AI in
system, AlphaFold, which predicts the shapes of pro- normal situations,” she said at a recent online confer-
teins when no similar structures are available, is just one ence discussing the EU’s AI plans. Such checks could
42 example of the powerful role AI is playing in the fight also result in Europe “trailing
against the novel coronavirus. behind more pro-innovative
The innovations that DeepMind and others are rap- ▼ AI software revenue economies” and could “incen-
idly rolling out could be complicated by AI laws to be ◼ North America tivize companies to relocate
unveiled by the European Union this year. Even as the ◼ Asia-Pacific to other markets with fewer
coronavirus upends business, economic, and legislative ◼ Europe bureaucratic hurdles,” says
plans the world over, the EU is pushing ahead with its ◼ Other regions Christian Borggreen, vice
AI policy proposal, which would make it a global leader Projected president of the Computer
in regulating the sector. The European Commission, $120b & Communications Industry
the bloc’s executive body, released its plan in February, Association, which represents
calling for public feedback by the end of May. Unless Google, Amazon, Facebook,
prolonged virus-related disruptions get in the way, a and others.
formal proposal is expected by yearend. Brussels is standing firm.
ILLUSTRATION BY MAXIME MOUYSSET. PHOTO: GEERT VANDEN WIJNGAERT/BLOOMBERG. DATA: OMDIA

60
Businesses should pay close attention. They’ve Margrethe Vestager, the EU’s
seen before how the EU has punched above its tech czar, says the goal of her
weight as an international rulemaker. Its sweeping plan is to generate trust around
laws on privacy—which forced the likes of Google and 0 the technology and how it’s
Facebook Inc. to change how they collect user data— deployed so people are more
2018 2025
set a global standard, influencing other countries to willing to embrace innovation.
follow suit. The same could hold true with AI. The “That line of thinking is as rel-
U.S. and China are home to the biggest commercial evant as ever,” Vestager said in an online discussion in
AI companies—Google and Microsoft, Beijing-based late March. “That’s what led us to say, ‘For some types
Baidu, and Shenzhen-based Tencent—but if they want of technology that puts our fundamental values at risk,
to sell to Europe’s consumers or businesses, they may we will need regulation.’ I think that still holds true.”
be forced to overhaul operations. �Natalia Drozdiak
The EU has mapped out a tiered approach to AI
legislation to match rules to different levels of risk.
THE BOTTOM LINE The EU is leading the way on regulation of AI, but some
That’s come as some relief to businesses, which had of the controls it’s considering could hinder companies, including those
warned against blanket regulations that could hit helping to fight the pandemic.
Influence Movers and Shakers

These tech leaders are shaping AI regulation at a critical time. Business is
booming for facial recognition and thermal sensing tools, spurring calls from
civil liberties advocates for rules to protect citizens. �Natalia Drozdiak
● MARGRETHE VESTAGER ● JOY BUOLAMWINI ● BRAD SMITH

Executive vice president of the European Commission Founder of the President and chief legal
for a Europe Fit for the Digital Age Algorithmic Justice officer at Microsoft Corp.
The European Union’s competition commissioner League and a researcher Smith was one of the
since 2014, Vestager has earned a reputation at the Massachusetts first tech leaders to call
as a hard-nosed regulator after she leveled stiff Institute for Technology for regulation of facial
fines and penalties on tech giants for allegedly Media Lab recognition to prevent
abusing their market positions or dodging taxes. Buolamwini’s 2018 abuse of the technology.
In her new expanded role as EU tech czar, she is report with Microsoft He also pushed for
responsible for designing regulation at a time when researcher Timnit Gebru government regulation
Big Tech, suffering from trust issues, is calling for showed error rates in his recent book,
more rules—a circumstance that could turn what in facial-recognition Tools and Weapons:
was once Silicon Valley’s biggest nemesis into software of as much The Promise and the
its best shot at salvation. as 35% for systems Peril of the Digital Age.
classifying darker- Smith praised the
skinned women. The state of Washington for
report has pushed tech passing a law in March
companies to try to to govern facial
correct issues and has recognition and called 43
raised awareness about on others to follow suit.
the dangers posed by
the technology.
● HOAN TON-THAT ● KAI-FU LEE

Chief executive officer Founder of Sinovation
of Clearview AI Inc. Ventures and one
Ton-That’s facial- of the most prominent
recognition company figures in the Chinese
stockpiles billions internet sector
of photos of individuals In his 2018 book, AI
scraped from social Superpowers: China,
media accounts with Silicon Valley, and the
the aim of helping law New World Order, Lee
● GEOFFREY HINTON enforcement agencies describes how China
match up suspects may well surpass
Emeritus professor at the University of Toronto without criminal records. the U.S. as the global
and vice president and engineering fellow at The entrepreneur says AI leader because of
Alphabet Inc.’s Google his technology has helped its demographics and
Hinton, along with University of Montreal professor officials nab sexual its amassing of huge
Yoshua Bengio and Facebook Inc.’s chief AI scientist predators and terrorists, datasets. Beijing’s
Yann LeCun, won the A.M. Turing Award in 2019 for but Clearview’s methods position has prompted
research into neural networks, a machine-learning have stoked the debate President Trump to invest
software that loosely mimics the human brain. Hinton about the risk new AI more in research and
has raised concerns about potential misuse of systems pose for privacy restrict business with
the technology, especially for weapons systems. and other civil liberties. Chinese tech companies.
44
Eric Yuan built Zoom into a tech unicorn

in the unflashy business of enterprise
communications. Then, suddenly, the world
needed it to be something else
By Drake Bennett and Nico Grant
45
ike the rest of us, Eric Yuan is taking things

day by day right now. The founder and chief
executive officer of teleconferencing software
company Zoom gets up each morning, after three
or four hours’ sleep, and nervously checks the
previous day’s capacity numbers to make sure
the servers aren’t overwhelmed by traffic. Then
he begins the long slog of videoconference calls
from his Bay Area home. “It’s too many Zoom
meetings,” he says, via Zoom. “I hate that.”
Along with the crush of new users blunt the toll of the coronavirus, those webcam images tiled on the screen. A
and the challenge of running a busi- lucky enough to still have jobs are try- few days earlier, British psychiatrist
ness during a pandemic, there’s the del- ing to work them from home. To do so, Rob Baskind Zoomed into the funeral
uge of negative news stories, the letter they’re turning to remote collabora- of his mother, who had succumbed to
46 from the New York state attorney gen- tion tools; messaging platforms such as the virus. For many, Zoom has become
eral, complaints from Democratic sen- Slack and videoconferencing software not just a way to socialize, but the social
ators, and class actions filed on behalf like Cisco Webex, Microsoft Teams, and, fabric itself.
of consumers and shareholders—all especially, Zoom, have seen explosions Yuan is as surprised as anyone else at
accusing Zoom of mishandling or abus- in traffic. “Every day is a record,” Yuan this turn of events. He didn’t set out to
ing user data while allowing hackers to says. Zoom’s daily users, 10 million in create a business that would be a house-
run amok. It’s not helping that, with December, now number 200 million. The hold name, in these circumstances or
school and college canceled, Yuan’s company’s share price has climbed 72% any others. And while it’s a testament
three kids are at home clogging up in the same period—doubling from early to the technology that it has mostly
the Wi-Fi. The other night he got an February to late March before dropping handled a twentyfold surge in usage,
email from a mother about a troll who off—even as markets and the global econ- in other ways the company, like many
invaded her kid’s Zoom virtual class- omy have been pummeled. others, was blindsided by the past few
room and showed inappropriate con- Zoom’s new traffic isn’t just from weeks. “I never thought that overnight
tent. Afterward, he couldn’t fall asleep. workplace conference calls. Its sim- the whole world would be using Zoom,”
The only thing keeping Yuan sane is ple interface—users enter a meeting he says. “Unfortunately, we did not pre-
his mom, who’s been living with the fam- with one click—has made it perfect for pare well, mentally and strategy-wise.”
ily. Each day for lunch she brings him a millions of people who want to main- Historically, giant communications
noodle or rice dish she’s made, upbraid- tain at least a diluted form of human networks—Facebook, Twitter, AT&T—
ing him when he forgets to eat it. And if contact. Schools and colleges are have all had their growing pains, but
Yuan has time after dinner, mother and teaching classes on Zoom; Alcoholics none had to go through them in just
son take a walk in his backyard. “I tell Anonymous groups are using it to hold weeks. In times as vertiginous as these,
myself, every morning when I wake up, meetings; people are going to Zoom even success can be brutal.
two things,” Yuan says. “Don’t let the family reunions and happy hours and
world down. Don’t let our users down.” trivia nights. They’re dating, talking u an has always been
A month ago his company was merely to therapists, and having birthdays. frustrated by the inconve-
a fast-growing success story in the some- In photos his sister posted on Twitter, nient fact of distance. The
what boring universe of enterprise com- Hunter Lee, a Walmart food sales associ- younger son of husband-
munications. Today, suddenly, Zoom is ate in Greensburg, Pa., celebrated turn- and-wife mining engineers, he grew up
critical infrastructure. As billions of peo- ing 21 with family and friends looking in China’s Shandong province, a pen-
ple around the world socially distance to out from the corner of the room, their insula extending into the Yellow Sea.
Zoom Boom
Studying math and computer science users a flattering soft-focus mode and a The 25 best-performing companies among the 500
largest U.S. stocks by market cap*, from 2/21 to 4/6
at Shandong University, he had to take menu of digital backdrops: the north-
a 10-hour train ride to see his girlfriend, ern lights, the Golden Gate Bridge, Industry: ● Consumer ● Technology
a problem he solved by marrying her a pristine beach. These panoramas ● Health care ● Other
at 22. Yuan, now 50, idolized Bill Gates free home users from worrying about
and was determined to work in Silicon whether their half-dressed spouse and +26.8% Citrix Systems
Valley. His visa application, though, was children are in the webcam’s sight-
denied on his first try, and on the next line. Customized Zoom backdrops are
seven, after a bureaucratic mix-up. It canvases for self-expression, and the Regeneron
Pharmaceuticals
took nearly two years of persistence, but art form has already grown baroque.
on the ninth attempt, he got into the U.S. A video producer named Dan Crowd
Yuan found a job in California at created one recently that looks like a
Webex, then a startup. By the late normal office but is a trompe l’oeil ani-
1990s, technology had made real-time mation in which the door opens and
video chat—long a sci-fi staple—a real- Crowd himself walks in, obliviously
ity, and Webex was among the first interrupting his own meeting.
+20.8% Zoom
companies to make a working prod- In a world of philosopher-CEOs
uct. Yuan was one of 10 engineers promising to transform the human con-
when he joined Webex in 1997, and by dition through ride-hailing or renting
the time Cisco Systems Inc. acquired it shared workspaces, Yuan is passionate
a decade later, he was vice president about videoconferencing software and
for engineering, managing 800 work- uninterested in declaiming on other top-
ers. Seeing the rise of the iPhone and ics. After Zoom’s valuation surpassed MarketAxess
its imitators, he became convinced $1 billion in 2017, he publicly scoffed at

the company needed a product that the unicorn label, saying it didn’t mean
worked on mobile phones, not just anything unless the business contin-
*AS TRACKED BY THE BLOOMBERG U.S. LARGE CAP PRICE RETURN INDEX. EXCLUDES TWO INDEX MEMBERS THAT BEGAN TRADING DURING THE PERIOD. DATA: BLOOMBERG
47
PREVIOUS SPREAD: PHOTO ILLUSTRATION BY 731; YUAN: ETHAN PINES/THE FORBES COLLECTION/CONTOUR RA/GETTY IMAGES; BACKGROUND: WELLCOME COLLECTION.
PCs. Cisco’s leadership didn’t agree, and ued to grow. When Zoom went public
Yuan left in 2011 to found Zoom Video in April 2019, shares jumped 72% on the
Communications Inc., taking a contin- first day of trading, giving it a value of
gent of engineers with him. $16 billion and Yuan a net worth of $3 bil-
Headquartered in San Jose, Zoom lion. He went on Bloomberg Television
built a research and development team complaining that “the price is too high”
in China, where engineers would work and implored employees to get back Gilead Sciences
for far less than their American coun- to work. Today the company’s market
terparts. Yuan personally contacted capitalization is about $32 billion. Clorox
every company that considered Zoom
but went with a competitor, some- oom had an early glimpse of Chewy
thing he still does. Zoom was appeal- the coronavirus at work. The
Hormel Foods
ing, in part, because it was a neutral company’s Chinese offices
platform. It wasn’t tethered to Apple, and R&D facilities closed in Kroger
like FaceTime, or Google or Microsoft, late January (they’ve since reopened). General Mills
like Hangouts and Skype. Anyone, even “We were thoughtful and a little bit par- Seattle Genetics
Walmart
someone without an account, could anoid about what was to come, which Conagra Brands
join a meeting, from any device, just by has turned out to be a good thing,” Incyte
clicking a link in a text or email. Hosts Kelly Steckelberg, the company’s chief Take-Two Interactive
could record video and audio and gen- financial officer, says by Zoom from J.M. Smucker
erate transcripts, and it was easy for her home. Zoom was quick to shut- Masimo
Vertex Pharmaceuticals
people to screen-share. ter its San Jose headquarters, send-
If you can keep your meetings under ing employees home two weeks before
40 minutes and 100 participants—and, Santa Clara County issued its shelter-in- Dollar General
honestly, please do—you can use Zoom place order—a decision that was admit- DocuSign
Newmont
Booz Allen Hamilton
for free; clients who pay a monthly fee tedly easier for a videoconferencing Digital Realty
of $19.99 per meeting host can gather as technology company.
Netflix
many as 1,000 people on a single video After Japan and Italy closed schools -0.3% Eli Lilly
call. In addition, the technology offers in late February and early March, Zoom
▼ -23.5% Index average
removed the time limits on its free surge protection. Zoom relies heavily too. The publication also noted Zoom’s
product for educational institutions on Amazon Web Services Inc., as well panopticon-like Attendee Attention
in those countries. It continued to do as on Oracle Corp., for cloud comput- Tracking tool, which alerted a host if
so as school shutdowns spread glob- ing. So far, these efforts have paid off: people clicked over to a different win-
ally. Still, Yuan thought the disruption There have been complaints of poor dow on their computers for more than
would be brief. Then, in mid-March, his call quality, and Zoom’s website was 30 seconds, suggesting they were other-
kids’ schools closed. When Zoom’s daily briefly down for maintenance, but the wise occupied.
users passed 100 million, he began to platform has bent, not broken, under Two days later, tech site Motherboard
realize what the crisis would mean for the new demands. revealed that Zoom’s iPhone app, which
his company. On other fronts, Zoom has looked was built using Facebook Inc. software,
Since then, it’s been a dead sprint less deft. Its sudden prominence was sending user data to the social net-
to cope with the ballooning demand. has brought it the attention of secu- work giant without alerting users. On
When you’re on a Zoom meeting, rity researchers and privacy advo- March 30, former National Security
the app adjusts bandwidth so that cates, and the last week of March saw Agency hacker Patrick Wardle blogged
one participant’s poor signal doesn’t a steady stream of damaging revela- about flaws that would let attackers put
degrade another user’s experience. tions. On March 24, Consumer Reports malware on a computer or hijack the
Zoom does this by linking each partic- detailed how Zoom’s privacy policy webcam and microphone. The next
ipant to the closest of 17 data centers let it share the content of video chats day, the website the Intercept reported
it rents worldwide; if one center is with ad-tracking companies. The piece that while Zoom claimed to guard
overloaded, it sends traffic to the next highlighted how hosts don’t need par- user data using end-to-end encryp-
closest. To keep up with its new audi- ticipants’ permission to record vid- tion—the strongest available privacy
ence, the company has added two data eos, or make and share transcripts; protection—that wasn’t true. And on
centers, and it’s been buying more of hosts can read texts that participants April 3, University of Toronto research-
the cloud storage capacity it uses for exchange on the app’s chat function, ers published a paper revealing that the
48
Yu a n c e l e b ra t e s a t Zo o m ’s I P O i n A p r i l 2 0 1 9
company sometimes routed meetings detailing government data requests. should be the last company to be casual
through servers in China even when all When the University of Toronto about security.
the participants were outside the coun- report was published on April 3, Yuan It may be that the main trait that let
try, raising the possibility that Chinese responded the same day, blaming the Zoom succeed is now haunting it. Its
authorities might try to listen in. China server issue on Zoom’s scramble focus on simplifying the arcane and
Zoom was also attracting the inter- for capacity and announcing that the buggy process of videoconferencing has
est of trolls. Elementary school teachers company had corrected it. On April 4, created a product that’s also simpler for
getting their classrooms up and run- Zoom users got an email telling them others to manipulate. Yuan concedes
ning found their sessions disrupted by that all meetings would now automati- that there could be a tension between
“Zoombombers,” with malicious inter- cally have passwords. security and simplicity. “It may be time
lopers joining to shout racist epithets Yuan argues that Zoom’s issues stem to revisit that,” he says.
or screen-share pornography. (New not just from its explosive growth but Although it’s hard to imagine, at
York City’s school system, the largest also from the new types of users flock- some point the pandemic will end. 49
in the country, has banned the service, ing to it. “We built this as a platform for Will Zoom go back to being a corporate
shifting to Microsoft Teams and Google knowledge workers, for businesses with videoconferencing company? “I have no
Hangouts Meet.) White supremacists IT departments,” he says, sitting against answer,” Yuan says. His board asked him
started Zoombombing virtual Torah a digital backdrop of the San Francisco that a few days earlier, and he told them
sessions and webinars on anti-Semitism hills that he obscures as he leans into the same thing. Currently, while many
with images of swastikas. his webcam. For Zoom users in nonpan- new users aren’t paying for the service,
The company has since amended demic times, he goes on, there would some have sprung for Zoom’s paid tiers,
its privacy policy to make clear that be a tech support person helping them and some corporate clients upgraded
video and chats would not be shared; set up their screen-sharing settings and when they sent their workforces home.
updated its iPhone app to stop send- reminding them to have a password. On April 1, AllianceBernstein analyst
ing data to Facebook; and patched the In a work setting, for better or worse, Zane Chrane said the pandemic could
vulnerabilities that Wardle found. On we’re more resigned to the idea that our generate “a few hundred million” in
April 1, Chief Product Officer Oded Gal boss will snoop on us so that we don’t additional revenue. That’s on top of
addressed the encryption issue in a slack off. Unlike elementary schools and the more than $905 million Zoom pre-
repentant, if euphemism-plagued, post happy hour organizers, Zoom’s corpo- dicted for the coming fiscal year in
on the company blog. “While we never rate clients have their own data and its last earnings call, a Zoom webinar
intended to deceive any of our cus- privacy policies. And at the office, even held on March 4, just after it closed its
tomers,” he wrote, “we recognize that neo-Nazis try to watch their language. headquarters.
there is a discrepancy between the com- Yuan’s explanations are more con- Given the choice, Yuan makes clear,
monly accepted definition of end-to-end vincing for some lapses than others. If this isn’t the path he would have cho-
encryption, and how we were using it.” anything, expectations should be higher sen for himself or for the company. But
Later that day, Yuan posted his own for a collaboration app given that it he says he no longer pretends he’s in
apology and said that Zoom would engages with sensitive data. “I’m grant- control: “You can’t go back, that would
probe for further security weaknesses; ing access to a camera, a microphone, not be responsible. For now we have to
remove the attention tracker; offer to the screen, everything that happens embrace this new paradigm and figure
MARK LENNIHAN/AP PHOTO
training against Zoombombing attacks; on the computer,” says Ralph Loura, a out how to make it work.” Zoom is “now
change the default screen-sharing set- longtime chief information officer now owned by the whole world,” he adds.
tings to make things harder for trolls; at electronics manufacturer Lumentum Then he has to go. It’s lunchtime,
and issue a transparency report Holdings Inc. Zoom, in other words, and his mother is patiently waiting. <BW>
LIFE ON
BOT H SIDES
50
OF THE
CURVE https://t.me/WorldAndNews
BY SELINA WANG
THE PANDEMIC STALKS A

BICONTINENTAL FAMILY
I n mid-January, a nurse named Hui Xian Wang heard that
four people at a hospital near her own in Huanggang, a city
of 7.5 million in Hubei province, had come down with viral
relatives for re gan mian, a local dish of spicy noodles that’s
well known all over China.
Like most people, I had no idea that the coronavirus
pneumonia. The news didn’t seem too worrying. China’s main would soon become the most important story in the world,
state broadcaster, CCTV, had reported earlier that month that an economy-wrecking juggernaut that would touch me, my
a novel coronavirus was responsible for similar illnesses in parents, and everyone else I cared about.
Wuhan, just 50 miles away, but for Hui Xian life was continuing
as normal. She had plenty of other things to think about. Her
job kept her busy, and she was looking forward to the Lunar
New Year holiday, when she’d travel to Anhui province to see
H ui Xian’s early reports described a situation that was hard
to imagine. Her husband and older child were essentially
locked in their apartment, along with her father and mother.
her in-laws. Her 8-month-old son was already there, his grand- Their only outside interaction was with members of the neigh-
parents delighting in having him all to themselves. borhood committee, the lowest level of the government, which
A few days later, it began. Cases of the coronavirus were was organizing food deliveries to residential buildings.
rising by the hundreds in Wuhan and other parts of Hubei. In As a health-care worker, Hui Xian was allowed to leave, but
Huanggang, patients were arriving faster than nurses could what she found at her hospital was frightening. Basic supplies
process them, many with were scarce, and she had to wear the same mask and gloves
severe, hacking coughs and for days at a time. Local media reported that some medical
high fevers. On Jan. 23, as the staff in Huanggang had resorted to wearing raincoats and gar- 51
official total of confirmed cases bage bags as gowns and shoe covers. Hui Xian’s biggest fear
reached more than 800, the was that she’d bring the pathogen back with her. “I’m scared,”
Chinese government barred she told me. “I just take alcohol and spray myself when I get
all travel in and out of Wuhan. home. I don’t want to infect my family.”
The train station in Huanggang Soon her father, my uncle, began to feel sick, with a dry
shut down, along with the cough and shortness of breath—signs now known to indicate
bus system. By the end of the Covid-19, as the disease caused by coronavirus is called. He
month, the whole province of started taking large quantities of antibiotics, convinced they
60 million was all but sealed off would clear up the problem. Hui Xian warned him against
from the world. going for a test at the hospital, fearing that if he didn’t already
In Beijing, where I work as have Covid-19 he might contract it there. He went anyway. The
a correspondent and anchor results came back negative, and he started to feel better, but
for Bloomberg Television, THE AUTHOR he was still paranoid, hyperaware of every little scratch in his
I received Hui Xian’s daily throat and constantly wiping down surfaces with disinfectant.
updates with increasing alarm. She’s my first cousin—I’ve On Feb. 12, Hui Xian moved out of her apartment. To slow
known her almost my entire life. Since I moved to China the seemingly inexorable spread of the disease—on that day the
from San Francisco last year, she and I have spoken every number of official confirmed cases rose above 50,000—doctors
few weeks on WeChat, the all-purpose communication app and nurses were being asked to relocate to makeshift isolation
everyone here uses, catching up on each other’s lives and units. She’d be living and working in a school dormitory that
laughing about the antics of her baby and 4-year-old daughter. was also serving as a screening center for patients suspected
Hui Xian wasn’t the only person I had to worry about at of being positive. She had mixed feelings about leaving. She
the epicenter of the outbreak. My mother grew up in Hubei, already had no idea when she’d be able to see her newborn,
and she and my father, who are both chemistry professors, who was still with his grandparents in Anhui; saying goodbye
met as students at Wuhan University. Although they emigrated to her daughter as well was a depressing thought. But she felt
to the U.S. before I was born, we traveled to China every few she didn’t have much choice. “Even though in my heart I don’t
years when I was growing up, always stopping in Wuhan. I want to go, it’s my responsibility,” she told me.
have fond memories of strolling under the blooming cherry The month that followed was the hardest of Hui Xian’s life.
blossoms on the university campus, climbing trees and catch- The dormitory was one of many temporary quarantine and
ing butterflies with Hui Xian, and joining her and my other diagnosis centers that had been set up around Hubei. Before
early February, the authorities were largely telling patients return to her room, which she shared with another nurse. She
with mild symptoms to stay home, an attempt to reduce the tried to video chat with her family every day—a luxury people in
strain on overwhelmed hospitals. But the spread of the virus earlier epidemics didn’t have. Food was delivered to her door.
within households prompted a change in strategy, with anyone After all, Hui Xian was in quarantine, too.
suspected of being infected sent—whether they wanted to be
or not—to facilities like the one where Hui Xian was deployed.
Health experts have identified that decision as a turning point
in slowing the outbreak in the province.
B y early February, Beijing was in a state of suspended
animation. Events were canceled, public spaces closed,
and everyone who could work from home was told to do so.
Hui Xian was part of a team of nurses handling what Instead of a well-equipped studio, I was broadcasting from
seemed like an endless flood of patients. Her main job was my cramped apartment. I went for walks occasionally—there
to monitor their condition, taking temperatures and provid- didn’t seem to be any risk in that—but the eerie emptiness of
ing basic care, and to administer lung scans and nucleic acid the streets made me anxious.
tests, designed to confirm whether the virus’s genetic mate- I spoke to my parents in Rhode Island several times a
rial was present. Confirmed cases would be sent on to hospi- week, calling in the morning or evening to account for the
tals. But the test kits were unreliable, and official guidelines 12-hour time difference. They were following the news from
at her site required patients to come up negative three times Hubei obsessively, distressed by the stories of overcrowded
before they could return home. Hui Xian and her colleagues hospitals and desperate patients. Along with millions of peo-
didn’t know who ultimately tested positive. She just saw waves ple posting on Chinese
of patients come and go. social media, they were
She and her team worked 24 hours a day, in shifts last- appalled by the death of
ing at least six hours. The dormitory was cold, and Li Wenliang, the 34-year-
she wore warm winter clothes under a triple-layer old doctor in Wuhan
jumpsuit that also had a hood to cover her head. who’d tried to warn col-
Then there were the mask, gloves, goggles, and blue plastic leagues that a dangerous
covers for her shoes. Thankfully, supplies were adequate; in virus was spreading, only
52 the weeks since the outbreak began, auto companies and elec- to be reprimanded by the
tronics assemblers, among others, had begun making protec- government for circulat-
tive equipment. Hui Xian had no time to eat, drink, or even ing “rumors.”
use the bathroom during shifts, and she learned early on to Shortly after his death,
avoid liquids in the hours before she went on duty. For a while my mother called me, cry-
she tried wearing an adult diaper, but she couldn’t get accusing hysterically. Another
tomed to peeing while standing up. Wuhan doctor, a cele-
One of her jobs was to bring meals and medication to brated geneticist named
patients, who were each confined to a small room. The task HUI XIAN Hong Ling, had also suc-
was rarely straightforward. “You never just delivered the cumbed. My parents had
food,” she said. People wanted to talk. They wanted, badly, to known him for more than 40 years. Ling’s father was my moth-
leave. They were distraught, and in some cases, confused. One er’s favorite professor when she was studying chemistry as an
elderly woman would call for help in the middle of every night, undergraduate, and our families are extremely close, almost
then get on her knees to beg the nurses to let her go home. like an extended clan. Ling, who was in his mid-50s, spent much
The woman’s daughter-in-law was infected, so the whole fam- of his career in the U.S., but in 2007 he’d moved back to Wuhan,
ily had been sent into isolation as a precaution. They were all where he worked as a senior professor at a local university,
separated, and the woman had no way to communicate with researching rare diseases, and cared for his aging parents.
the others. Hui Xian and her colleagues tried their best to calm Ling, I learned, had developed a fever shortly after Lunar
her down, bringing extra food and checking in as much as they New Year. He resisted going to the hospital for as long as he
could, but nothing seemed to work. could, hoping to avoid the crowds and long lines. When his
“I really don’t know if I can make it,” Hui Xian told me at fever worsened, he got a CT scan that indicated a coronavirus
one point. Walking up steep flights of stairs with bulky pack- infection, but hospital beds were limited, and at that time he
ages of food and medicine, weighed down by her protec- would have needed a positive nucleic acid test to be assigned
tive gear, was “harder than climbing a mountain.” Her mask one. It took him several days to get tested and another few
was strapped on so tightly that it left sharp indentations on days to get the results. On Feb. 5, more than a week after he’d
COURTESY SELINA WANG (2)
her neck, and sometimes her goggles got so foggy that she’d first tried to get his diagnosis, he was given a bed at the hos-
lose her balance. When she inserted IV needles into patients’ pital associated with his university.
hands, she had to feel for their veins with gloved fingers. It His condition worsened. The morning before he left home,
was awful, she said, but better than risking getting sick herself. his wife shaved his beard so an oxygen mask could fit snugly on
After each shift, she’d race to the bathroom, shower, and his face. He was too weak to do it himself. She wasn’t allowed
to accompany him to the hospital, so they communicated on

WeChat after he arrived. Not long after, he wrote to say he was
feeling much better. His fever had broken, and his oxygen lev-
L ife in China has returned to a tentative normalcy. Offices,
malls, and restaurants in Beijing have largely reopened,
and domestic travel is gradually picking up. It’s not clear,
els were back to normal. But late that evening, the hospital though, exactly what “normal” now means. Wearing a mask
called with devastating news: Ling was dead. His wife rushed and standing at least a meter apart from other people no
there in a daze, begging nurses to let her see her husband longer feels strange, and I instinctively slow down when
one last time. They refused. Government guidelines called entering buildings to allow a guard to scan my forehead to
for the corpses of Covid-19 victims to be immediately disin- take my temperature. The smell of disinfectant has become
fected, sealed in body bags, and sent for cremation. Funerals strangely comforting.
were banned. Officially, almost no local coronavirus infections are occur-
Ling’s death shocked my family more than anything we’d ring in China, but international experts are skeptical that the
heard about the virus. He was young, healthy, and careful—a outbreak has been halted completely. Only on April 1 did
scientist who knew exactly what precautions to take to avoid the government begin including people who test positive
infection. It was now obvious to all of us that what was going but don’t have symptoms in its count of the infected, even
on in Hubei was an epidemic that could prove more severe though that’s standard practice in many countries. There are
than any in decades. “There’s so much we don’t know about also persistent questions about the true death toll. According
this virus,” my mother said, urging me to stay indoors. “You to the government, about 2,500 people in Wuhan died as
cannot be too careful.” a result of the virus, but Chinese social media buzzes with
Gradually, my parents became concerned that too few rumors that the real number is much higher—in part because
people in their adopted country realized what was head- of the large stacks of urns reported at funeral homes.
ing their way. President Trump was downplaying the prob- There are no longer substantial restrictions on daily life
lem, and the soaring stock market seemed to take no notice. in most places, but many people are still wary of resuming
Flights from China had been restricted, but most other travel their old routine. My grandmother lives in Tianjin, halfway
continued, even as coronavirus cases mounted in South across the country from Hubei, with her daughter, another
Korea and Italy. of my cousins, his pregnant wife, and their 2-year-old son.
When the virus began spreading in the U.S., my mother Other than for work or walks around their apartment com- 53
wanted to wear a mask, a habit that was becoming second pound, no one goes outside. They haven’t been to a restau-
nature for everyone in China. But at the time, government rant or shopped in a store since January. The same is true of
guidelines said Americans needed them only if they were my aunt and uncle in Beijing.
experiencing symptoms, and she worried that putting one Yet I’ve been struck by how calm my Chinese relatives
on would scare her neighbors and colleagues. “I don’t want have remained throughout the crisis. The lockdown was
people to think I’m the Chinese lady that’s sick,” she told me. undoubtedly harsh, but I heard no complaints. Part of that
Within a few weeks, things had changed. Coronavirus is certainly a function of history. My grandmother still tells
arrived with full force in the world’s largest economy, spread- stories of what it was like to live through the Great Leap
ing first in Washington state and California, and quickly Forward, when millions starved to death, and of raising my
reaching all 50 states. Rhode Island recorded its first case dad during the turmoil of the Cultural Revolution. Sometimes
on March 1; the total now is more than 1,200, with 30 deaths there was so little to eat, she says, that she’d water down a
so far. Massachusetts, next door, has about 15,000 cases. My single portion of porridge to serve six people. And my aunt
mother complained to me about not being able to find masks in Beijing, who spent her career in public health, was on the
and hand sanitizer; eventually, she started using alcohol to front lines of the SARS crisis in 2003. Back then, she told me,
make her own. She’s still nervous about being exposed, pain- people in the city were so frightened of infection that some
fully aware that the disease can be serious even for healthy parents advised their kids to avoid her daughter.
people like her and my dad. When a package arrives, she Hui Xian left her isolation unit on March 9, and after two
leaves it outside for a couple of days before bringing it in, further weeks of quarantine in a hotel she went back to work
reasoning that the virus will have died off by then. She wipes at her regular hospital. But aside from the occasional drive to
it down anyway, just to be sure. admire Huanggang’s cherry blossoms, she’s staying inside,
My parents are now attempting, like millions of too. She doesn’t expect to see her baby for another few
Americans, to settle into life under lockdown. The univer- months; she still thinks he’s safer with her in-laws in Anhui.
sity where they both work has closed its campus, and they’re I asked Hui Xian how she felt about her experience at
trying to teach students over Zoom and analyze data from the dormitory now that she’d had a chance to process it. I was
home, though there’s only so much they can do without surprised at how stoic she sounded. “Chinese people can eat
access to their labs. They’re doing fine, but my Chinese rel- bitter,” she said, using a common phrase for enduring
atives and I still worry about them. For weeks, they called hardship. “I feel calm. In the health-care field, you experi-
whenever they could to check on us. Now the calls are going ence so much death and birth. I don’t feel extremely happy
the other way. or extremely sad.” <BW>
One Boy Genius Too Many
54
Mark Zuckerberg promised Kevin Systrom that Instagram

would remain independent from Facebook. That
changed as Instagram started to outshine the mother ship
A book excerpt by Sarah Frier
Over the past decade, Instagram has become an engine of Zuckerberg was facing blowback from years of taking short-
commerce and cultural influence with few peers—aside from its cuts to win his product attention and ad revenue, includ-
parent company, Facebook Inc. Reporter Sarah Frier’s inside ing abusing private user data to curry favor with software
look at Instagram, based on interviews with hundreds of the com developers, allowing live broadcasts of murders and sui-
panies’ leaders, current and former employees, competitors, and cides, and turning a blind eye to meddling in the U.S. presi-
stars, traces the union of Facebook and Instagram and the dis dential election. Yet with a global #DeleteFacebook movement
integration of the relationship between their chief executive offi growing, Zuckerberg saw his other properties, the chat apps
cers. Facebook said in a statement that it has committed significant WhatsApp and Messenger as well as Instagram, as assets in a
resources to fuel Instagram’s development and that “Instagram’s new sense—as an explicitly linked family of software.
success is Facebook’s success.” Zuckerberg’s purchase of Instagram, considered wildly over-
priced at $715 million in 2012, is worth more than $100 billion
THE INSTAGRAM EVENT didn’t feel very Facebook. On a today. Instagram now delivers $20 billion in annual revenue,
San Francisco street dotted with homeless encampments, more than a quarter of Facebook’s total. And Zuckerberg’s
press and the quasi celebrities known as influencers entered promise to leave the Instagram team largely independent
a former music venue through an archway made of balloons. inspired other founders to join Facebook, too. In 2014 he bought
Attendees received raspberry-cream-filled cruffins—croissants WhatsApp for a then-stunning $22 billion, solidifying Facebook’s
shaped like muffins—along with espresso drinks and multi- dominance over modern communication, and paid $2 billion
ple kinds of green juice. Enclaves in the space were designed for the virtual-reality company Oculus, whose hardware he
specifically for selfie-taking influencers flown in to hype the hoped would lead the way into the future.
coming product announcement to their digital followers. But in late 2018, the Instagram founders abandoned their
But the event proved to be a letdown, beset by technical dif- creation, and the WhatsApp and Oculus founders left the
ficulties. Someone misplaced the file for CEO Kevin Systrom’s same year. With Facebook in crisis, Zuckerberg had stopped
presentation, so it had to be remade in a scramble while guests seeing his acquisitions as a portfolio of subsidiaries that could
waited. During the delay, the corporate blog post announcing grow into potential second acts. Instead, he would lean on
Instagram TV, a new standalone video app, went up as sched- Instagram to strengthen the Facebook app more directly,
uled, ruining the surprise before Systrom arrived onstage. An including by weaving the software together. Today, with his 55
hour after the event ended, his iPhone flashed. It was Chris company under investigation for anticompetitive behavior by
Cox, the executive whom Facebook CEO Mark Zuckerberg had the U.S. Department of Justice, the Federal Trade Commission,
recently put in charge of all his company’s apps. and 47 state attorneys general, Zuckerberg is consolidating
“We have a problem,” Cox said. “Mark’s very angry about his products’ data and building one big mega-network that
your icon.” will make Facebook proper look all the bigger. As one former
“Are you serious?” Systrom asked. “What’s wrong?” Instagram executive complained: “Facebook was like the big
“It looks too much like the icon for Facebook Messenger,” Cox sister that wants to dress you up for the party but does not
said, referring to Facebook’s chat service, which also had a hor- want you to be prettier than she is.”
izontal lightning bolt shape in the center. Zuckerberg couldn’t
stand that IGTV competed visually with a sister product. SYSTROM AND CO-FOUNDER Mike Krieger unveiled Instagram
The call was the latest in a string of reminders that, by 2018, a decade ago as an iPhone app whose filters could quickly
Facebook saw even the slightest encroachment by Instagram as improve the low-quality pictures snapped on mobile devices,
a threat. Systrom, who’d sold Instagram to Zuckerberg in 2012, so anyone could feel like a professional photographer. They
had for years retained enough authority to wall off the parts of attracted 30 million users in 18 months, and by early 2012, their
Facebook he didn’t like, often telling reporters he considered team of 12 could barely keep pace. Krieger was fixing service
Zuckerberg to be more like a board member than a boss. Lately, outages at all hours, bringing his laptop to movies, birthday par-
though, Facebook was asserting more control, and Systrom ties, bars, and, in one instance, a campsite. So when Zuckerberg
found himself forced to satisfy the concerns of Zuckerberg and reached out about acquiring the company, Instagram’s founders
his lieutenants before adding products, hiring staff, or even were ready to listen. During negotiations over Easter weekend,
PHOTO ILLUSTRATION BY 731; PHOTOS: GETTY IMAGES (4)
making announcements about his app’s popularity. Zuckerberg said all the right things. In exchange for what was,
It took months to get permission to release IGTV without at the time, more money than anyone had paid for a mobile
any tie-ins to Facebook’s existing video product. Shortly before app, he would extend Facebook’s engineering and operational
the event with the cruffins, Zuckerberg questioned whether largesse but leave Systrom and Krieger firmly in charge.
Instagram should even disclose that its user count had topped Soon after the Instagram employees moved into a small
1 billion. The subtext wasn’t very sub: A Facebook property was room at Facebook’s Menlo Park, Calif., headquarters, they
reaching thresholds that made it look like the next Facebook, began to realize their new colleagues weren’t as eager to
and the parent company wanted to make sure its namesake share as Zuckerberg had promised. In one early meeting,
website and app didn’t suffer for the comparison. Facebook’s growth team told the Instagram staffers that
Of course, Facebook’s suffering wasn’t Instagram’s fault. before they could help, they needed to figure out whether
“I need independence. I need resources”

Instagram’s popularity made people less likely to post pho- represent the nadir of the internet, Instagram appeared to
tos on Facebook. Their study proved inconclusive but served as reward the beautiful and interesting for doing cool stuff.
a warning to Instagram not to expect its software to be treated Systrom’s community, and its cultural influence, expanded
as equal. as he nurtured emerging stars and pursued relationships
Still, Zuckerberg and Systrom developed a mutual respect with A-list celebrities. Systrom was less comfortable with
over monthly strategy dinners at Zuckerberg’s Palo Alto home. Zuckerberg pushing him into the world of advertising. When
On paper they were extremely similar. Born just five months Instagram rolled out its first ads at the end of 2013, Systrom
apart, both were raised in comfortable suburban American said there should only be one sponsor allowed per day, and
towns by tightknit Northeastern families. Both attended that he wanted to personally review each ad. (Once, he took
boarding schools (Zuckerberg captained the Exeter fencing it upon himself to edit a promotional photo of fries to make
team; Systrom, Middlesex lacrosse) and elite universities them look crispier.) Zuckerberg insisted that he abandon the
(Harvard and Stanford), where they nursed passions for his- white-glove model and transition to Facebook’s system, which
tory as well as engineering. Zuckerberg was obsessed with allowed anyone with a credit card to purchase as many ads as
the ancient Greeks and Romans; Systrom loved art history. they liked. It was the right call, in terms of dollars. Instagram
Their competitive streaks manifested in different ways. reached $1 billion in annual revenue by the end of 2015.
When they went on a ski trip to bond shortly after the acqui- Yet the news that Instagram’s growth was accelerating
sition, Systrom preferred the unpredictability of backcountry while Facebook’s was slowing didn’t sit well with Zuckerberg.
trails, while Zuckerberg just wanted to race black diamonds to Systrom had done his job too well.
the bottom. No matter the stakes, Zuckerberg was win-at-all-
costs. Once, when he lost a Scrabble match to a friend’s teen- BY THE END of 2016, just as his company was facing its first
age daughter, he created a simple software program to cheat controversies related to Donald Trump’s election, Zuckerberg
for him. Systrom fancied himself a Renaissance man, with a was focused on a different kind of threat. Typical Facebook
passion for self-improvement matched only by his expensive users were posting fewer of their own thoughts and photos,
tastes for Italian leather, bespoke mountain bikes, and dinner and Zuckerberg suspected Instagram’s successful copying of
with celebrities. In 2018, around the time Zuckerberg testified Snapchat Stories was to blame. (The success came as a surprise
56 to Congress about one of Facebook’s data-sharing scandals, even to Zuckerberg, who unbeknownst to Systrom had made
Systrom passed his wine sommelier exam and sat with the another failed bid for Snapchat shortly before Instagram Stories
Kardashians at the Met Gala. debuted.) He enlisted his most trusted data scientists to study
Instagram’s success earned Zuckerberg’s respect, but not whether Instagram was becoming a Facebook alternative and
a place on the short list of Facebook executives he counted threatening its dominance. Zuckerberg thought the research
as confidants and friends. Zuckerberg couldn’t relate to showed that Instagram would start eating into Facebook’s user
Systrom’s obsession over each contour of Instagram’s design, base within six months. The word “cannibalization” started to
which slowed product development. Systrom worried that creep into his management meetings.
Facebook’s hard-sell approach—sending spammy emails to Systrom disagreed with Zuckerberg’s assessment of the
push users to log in, for example, or using red dots in the data. “This is not Instagram taking away from the Facebook
interface to create anxiety about missed messages—might cost pie to add to the Instagram pie,” he told Zuckerberg at a
Instagram the relative trust it enjoyed as a friendlier-looking weekly Monday leadership meeting. “The total pie is get-
social network. Still, he believed that keeping Zuckerberg ting bigger.” It wasn’t just Instagram vs. Facebook. It was all
happy would require him to show that Instagram remained of these Facebook properties vs. every other choice in the
valuable to Facebook’s future. He assumed Zuckerberg would world, like Netflix, Snapchat, Twitter, and, you know, sleep.
continue to honor Instagram’s independence as long as it grew Others in the room sided with Systrom. They were puzzled
quickly—and crushed the competition. by Zuckerberg’s apparent jealousy of Instagram’s success.
Zuckerberg thought there was little use doing something Zuckerberg had always said Facebook should reinvent itself
unless you were doing it for as many people as possible. With before a competitor got the chance and that the company
Facebook, he had created the largest network of humans ever, should make the decisions about how to do so based on data.
and steadily worked to capture more of their time. His oppo- “If we don’t create the thing that kills Facebook, someone else
nents included Twitter, Snapchat, Google, and anyone else com- will,” the booklet passed out at employee orientation reads.
peting for attention. He wasn’t shy about copying a competitor’s Yet Zuckerberg couldn’t seem to bear the idea that Instagram
popular features, either, whether that meant incorporating might outshine Facebook. He told Systrom he believed
more official news sources into Facebook’s news feed, like Instagram Stories was successful not because of its design,
Twitter, or making a half-dozen attempts to add Snapchat-style but because they’d happened to release the feature ahead of
disappearing photos. (Snapchat rejected his $3 billion buyout Facebook Stories. Facebook had helped Instagram long enough,
offer in 2013.) This bolt-on strategy often left Facebook looking he decided. In 2018, Instagram would have to start giving back.
less than refined, especially next to Instagram. Instagram users barely noticed Zuckerberg’s first change.
Where the viral sharing on Facebook could seem to He ordered Systrom to build a prominent link within the
Instagram app that would send his users to Facebook. to his team saying he disagreed vehemently with Zuckerberg’s
Around the same time, he had his own engineers remove the undercutting of Instagram. By the fall of 2018, Systrom started
prominent link to Instagram on Facebook’s site. confiding to his close friends that if Zuckerberg wanted to run
Zuckerberg’s willingness to expand Instagram’s team had Instagram like a mere department of Facebook, maybe it was
waned, too. He balked at adding engineers to facilitate the time to let him. In the name of growth, Instagram adopted
release of IGTV, even though Instagram was on track to hit some of the strategies Systrom had blocked in the past, includ-
1 billion users and $10 billion in revenue that year. He allowed ing pushing out frequent app notifications and aggressively
Systrom and Krieger to hire 93 more employees, bringing promoting suggested people to follow. Time spent on the app
their count to around 800—still far short of what they felt they returned to its typical levels; the Facebook strategies, which
needed. Instagram’s co-founders were shocked; Zuckerberg had seemed so cheap and anti-Instagram, worked.
granted Oculus, which was losing money, more than 600 new Not long after the IGTV debut, when his first child was
employees. Krieger dug up the numbers and learned that about six months old, Systrom went on paternity leave. He
Facebook, which hired 8,000 people in 2018, had six times as was expected back at the end of July, but extended his leave by
many employees as Instagram when it added its billionth user. a month, then another. When he came back in late September,
Instagram now felt like a Facebook product arm. Zuckerberg he and Krieger gathered their top staff in a conference room.
made this new order official with a massive reorg emphasizing They were both resigning.
the value of a “family of apps.” Systrom would now be reporting Systrom was diplomatic, explaining that after six years
to Cox, who was previously just in charge within Facebook, it was time to try other
of the Facebook app. “Let’s be straight things. But he didn’t hold back with
with each other,” Systrom told Cox. “I Facebook management. Earlier that morn-
need independence. I need resources. ing he’d reminded Cox that he’d asked for
And when something happens, I know resources, independence, and trust. “None
I’m not always going to agree with it, of the things I asked for have happened,”
but I need honesty. That’s what’s going he told Cox.
to keep me here.” In the 18 months since its founders left,
Cox knew he couldn’t afford to Instagram has grown more in Facebook’s 57
lose Systrom or Krieger, especially as image than ever, prioritizing integra-
Facebook’s and Zuckerberg’s public tion with Facebook over its own product
images were souring. He resolved to prior- development. Most Instagram users still
itize retaining the Instagram co-founders. don’t know Facebook owns the app, even
Soon, though, Facebook was facing a though it’s been rebranded as “Instagram
different crisis after the Guardian, the from Facebook.” More obvious has been
U.K.’s Channel 4, and the New York Times the increased frequency of advertising
published whistleblower testimony that on Instagram.
Cambridge Analytica, a Republican politi- Zuckerberg hasn’t disclosed an
cal consulting firm, had collected the pri- updated number of Instagram users since
vate data of tens of millions of American Facebook users to 2018. Eventually, he says, Facebook’s total user number won’t
influence the U.S. presidential election while Facebook looked be broken out, either. The company will just report one num-
the other way. Suddenly, all of Facebook’s problems were up ber—total users of the Facebook “family,” including Facebook,
for public debate. Zuckerberg made plans to hire thousands WhatsApp, Instagram, and Messenger. The overall number sits
of people to work on issues of “integrity.” Systrom requested at 2.9 billion, accounting for duplicates between the apps. Using
hires to address Instagram-specific concerns (anonymous users, an overall number will allow Zuckerberg to mask any slowdown
less-visible dangerous communities), but Zuckerberg said no. in the core Facebook app’s growth. It will also make it tougher
Instagram would have to manage its problems with existing for antitrust-minded regulators to recognize that Facebook
resources or the central integrity team. owns the world’s top Facebook alternative.
PHOTO ILLUSTRATION BY 731; PHOTOS: GETTY IMAGES (4)
After Instagram reached 1 billion users, Zuckerberg Cox, too, left the company in 2019 after disagreeing with
directed Javier Olivan, Facebook’s head of growth, to draw Zuckerberg’s push for greater encryption across the app fam-
up a list of all the ways Instagram was supported by the ily. Instagram’s new top boss is Adam Mosseri, who formerly
Facebook app. Then he ordered the supporting tools turned ran Facebook’s news feed. His title is “Head of Instagram.”
off. Instagram would no longer be promoted in Facebook’s These days, Facebook only has room for one CEO. <BW>
news feed. Sure enough, Instagram’s growth slowed to a halt.
Excerpted from the book NO FILTER: The Inside Story of
SYSTROM HAD NEVER been one to criticize Zuckerberg in Instagram, by Sarah Frier. Copyright © 2020 by Sarah Frier.
front of his employees. But after months of what he saw as Reprinted with permission of Simon & Schuster, Inc. All
obstruction and bigfooting, he wrote a long internal message rights reserved.
The global
standard
for
business
reporting.
Follow it all.
bloomberg.com/subscriptions
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HOW TO GRåW INTO A PLANT PERS N m ① “One of the easiest ways to get started is with aquatic Stay Safe&Protect Your Families in the Coronavirus Pandemic. @WorldAndNews
INDOOR LIFE Bloomberg Pursuits April 13, 2020
etHink ResH iR
Decorators get hip to off-gassing. By Joe Harper
ike many interior designers, Brigette Romanek loves higher inside homes than outside,” no matter if they were in
a high-gloss paint—a lacquer finish so shiny you can rural or highly industrial areas. On average, the agency said,
see your reflection in it. But the Los Angeles deco- Americans spend 90% of their time indoors (in good times).
rator had to rethink her methods after she gave her One big source of VOCs is home furnishings—upholstery,
usual treatment to the interior walls of a home in Hancock Park cushions, and rugs—as well as floors and paint. Interiors
and her clients almost fell ill from the smell. guru Thom Filicia, a board member of the Sustainable
She’d expected the fumes to dissipate by the time they Furnishings Council, traces this partly to a 1975 California
returned from vacation law that required all uphol-
more than a week later, but stered furniture to be
she quickly realized one’s flame-retardant. Since the
sense of smell isn’t always state is such a big market,
the best judge of air qual- the law almost ensured
ity. “Right then and there, that furniture chock-full of
something clicked,” says flame-retardant chemicals
60 Romanek, who’s worked became the nationwide
with the likes of Gwyneth standard. “There are now
Paltrow and Beyoncé and more nontoxic alternatives,
Jay-Z. “My clients had fresh so ask your vendor what
plants,” says Mihalis Petrou, founder of native landscaping service Fulli NYC. Plants that are submerged in water
noses, but I had gotten used your home products are

to it—that was the danger.” made of,” Filicia says.
Romanek has since (California banned these
joined a growing number problematic fire-retardant
of designers, manufactur- treatments in new furniture
ers, and real estate devel- as of Jan. 1, 2020.)
opers who’ve been paying “The topic of VOCs
closer attention to air qual- began coming up among
ity inside the home long trade professionals about
before the novel coronavi- five years ago,” says Jamie
rus made 6 feet of fresh air Hammel, founder of the
de rigueur. Hudson Co., which primar-
Much of the effort so ily deals in reclaimed and
far is to counteract the sustainable wood floors out
insidious consequences of of its mill in Pine Plains,
“off-gassing.” Many com- N.Y. “But very recently
mon consumer products we’ve seen consumers
emit volatile organic com- with a heightened aware-
pounds (VOCs)—potentially ness. They want no VOCs
harmful gases such as benzene and formaldehyde that are in their finish or in any glues being used.”
mostly undetectable to the senses—into the air at home. The In March, Hudson introduced a collaboration with Schotten
process can last years. & Hansen, a German sustainable flooring brand, that features
The U.S. Environmental Protection Agency says these pol- glues and finishes using ingredients only found in nature—
lutants can negatively affect immunity and respiratory and car- beeswax, linseed oil, copal resin.
diovascular health, and some may even cause cancer. One EPA Most people don’t want to give up their beloved pieces
study found the levels of some VOCs were “two to five times of furniture or rip up their floors. Fortunately for them, air
“sound like something for an aficionado, but they are easier to keep than a cactus or succulent,” he continues. “It’s like step number zero. Take Java ferns—you submerge them in
4
1
3
Hoose ouR ilteRs iselY

1. FOR PET OWNERS 2. SPACE-AGE PADS 3. CHILLY SPACES 4. LARGE ROOMS 5. EASY MONITORING
Aprilaire has been making After raising $58 million in Dyson recently updated The Alen BreatheSmart The AirVisual Pro ($269) 61
humidifiers since 1954 venture capital this year, its air purifiers with 75i (from $749) cleans uses laser sensors to
and now makes home San Francisco’s Molekule its Cryptomic line. as much as 1,300 square gauge levels of indoor
systems and standalone Inc. is a tech darling. In addition to HEPA feet of air in 30 minutes, and outdoor air quality,
be the food source for your other plants instead of faucet water, which has fluoride and makes the roots shrink.”
purifiers. It’s teamed up LEED-accredited designer filtration, the new making it ideal for temperature, and
on awareness programs Jennifer Jones lauds line comes with a spacious common areas. humidity. It also includes
with the American Lung its air purifiers’ PECO coated panel that uses The interchangeable a seven-day weather
Association and Wellness nanotechnology, said to oxidation to destroy panels are offered in forecast that reports on
Within Your Walls. Its break down the molecular formaldehyde—a 21 colors—including blue, projected air indexes. And
Allergy + Pet HEPA Air structure of pollutants common contaminant marble, and rosewood you can check the air
Purifier ($599) has a instead of trapping them that’s much smaller (shown)—to give it a quality of places around
carbon filter that combats the way standard HEPA than other VOCs—upon design-forward sheen. the globe. The purifier
odors and VOCs as well filters do. The Air Mini contact. The Pure Hot + Its quiet WhisperMax gained attention when it
as a proprietary trap ($399) purifies as much Cool model ($750) also technology allows for was used in Hong Kong
that captures pet hair as 250 square feet for features a space heater seamless integration into hospitals during the
and dander. smaller rooms. and fan. any type of space. SARS outbreak.
purification (above) has become remarkably advanced in Scialla, a former partner at Goldman Sachs, founded Delos
combating VOCs using new technology to monitor air quality in 2009 with the goal of offering commercial and residential
in addition to temperature and humidity; advanced filters real estate with a wellness focus. Bill Gates’s holding company
can trap the tiniest airborne pollutants. Cascade Investment LLC is a financial backer, and Deepak
THIS PAGE AND OPENING SPREAD: PRODUCTS COURTESY VENDORS
Whole-home air purifiers are also increasingly integrated Chopra and Leonardo DiCaprio are on its board.
into heating, ventilation, and air-conditioning (HVAC) systems. In 2014, Delos introduced its WELL Certification, meant
Last year, New York real estate company Delos Living LLC to complement the LEED green building standard—though,
began its Darwin Home Wellness Intelligence platform, a unlike LEED, it’s a for-profit initiative. (An evaluation for
system that, among other things, uses sensors to regularly a 100,000-square-foot space runs an estimated $20,000.)
monitor interior air for mold, allergens, and VOCs and to auto- Almost 4,000 WELL projects have been registered or cer-
matically remediate any issues through purification and ven- tified for a total of almost 500 million square feet across 58
tilation. “We’re not telling people what couch they can have countries. “When you consider chronic health outcomes,
in their living room,” says Delos founder and Chief Executive only 5% of those are genetic, and about 20% is your life-
Officer Paul Scialla. “You can appreciate and enjoy your aes- style,” Scialla says, citing his company’s research. “The
thetics because you also have the Darwin system.” rest, up to 70%, is determined by your environmental
water, so you don’t have to worry about watering. You can put them into any glass container, add a light on top, and you’re good to go.” Because the plant filters the water, that “can

② “This is a great time to start an herb garden on a sunny windowsill,” says Joe Ferrari, founder of the
conditions—where you’re spending your time.”

Some say that even central air has its faults. “It’s proba-
bly worth mentioning that forced-air HVAC systems can take
whatever contaminants you have and spread them around,”
says Steve Glenn, founder and CEO of Rialto, Calif.-based Plant
Prefab Inc., which builds sustainable prefabricated homes.
Romanek, the designer, finds that a mix of air-purification
techniques and new product choices is a happy compromise.
“It used to be that you applied oil-based chemicals to paints
for the look that you wanted,” she says. “But now we’ve dis-
covered that those chemicals are toxic, and in certain states
they aren’t even allowed anymore. You can literally smell the
difference from just a few years ago.”
FASHIONABLY
SANITIZE WITH She switched to such brands as England’s Farrow & Ball,
AN LG STYLER which offers full gloss for all 148 colors of its water-based wall
paints, saying they’re (almost) indiscernible from the oil-based
options she’s always loved. Ressource, a French company that
opened a showroom in the U.S. in 2018, is another high-end
option for rich, water-based paints with very low VOCs.
Rugs, in particular, can be overloaded with toxins. “I
think about babies crawling on them and putting their
mouths on them,” Romanek says. For nurseries, she opts
for new carpets with natural materials like the Earth Weave
collection from the Green Design Center. The Spanish rug
62
EEP LOTHES company Nanimarquina also uses natural materials in its
designs and eliminates toxic chemicals from the dyeing and
manufacturing processes.
HEMICAL REE Filicia, meanwhile, suggests Feizy, which offers a wide vari-
urban garden shop Tend Greenpoint. “Hardier herbs like thyme, rosemary, and sage can do well outside this
ety of rugs made from natural fiber, and Kravet for its range of
textiles including natural fibers of almost every type. His studio
has a line of furniture with Vanguard, a Hickory, N.C., manu-
Toxins can linger in the fabrics Foundation of America for its facturer known for its natural fiber also free of fire retardants.
you wear as well as in the air you ability to remove allergens and Inside her 1925 Mediterranean-style home in Laurel Canyon,
breathe. Formaldehyde—a mild more than 99% of bacteria. Bonus Romanek couldn’t give up the original maple floors. Instead,
carcinogen known to irritate the features include a smart-home she stripped and refinished them, using a more natural stain
eyes, nose, throat, or skin—is app, a pants creaser on the door’s from AFM Safecoat, this time in a much lighter tone. She finds
often used as a wrinkle reducer interior, and a gentle-dry setting,
the floors create a brighter, airier room that also feels bigger.
in permanent press fabrics. And which circulates low-temperature
sure, you won’t be getting your pristine air. “You can’t always replicate things 100%,” she says. “If I expect
clothes dry-cleaned much during Pristine air not only keeps the exact same thing, I’m going to be disappointed, so I often
isolation, but even new clothes clothes clean and smelling fresh, do something wild, crazy, and different and embrace that.”
that are warehoused along their but it also preserves the fabrics, Decorator Jillian Pritchard Cooke also encourages a more
trade routes require pesticides so of course Italy’s top furniture DIY approach by finding ways to improve natural ventila-
and chemical treatments to manufacturers are integrating tion throughout the home—in essence, bring in fresh air. The
combat mildew. Fear not— purifiers into closets for their Atlanta-based designer founded Wellness Within Your Walls
simply laundering your clothes, clientele. In 2018, Molteni&C
in 2006 to provide healthy remedies for everyday households.
especially before first use, is introduced its patented Aircube
highly effective in reducing ventilation—which also perfumes Her clients will often ask about hospital-standard HEPA
exposure to these toxins. the clothes—into its Gliss Master filters, especially after the onset of the coronavirus pan-
For the more delicate garments collection of modular wardrobes. demic. But those are designed to trap very fine particles, not
you love, the LG Styler (from At the same time, Lema debuted gases and odor molecules. She suggests looking for filters
$1,200), a new 6-foot-tall an air-cleaning system that uses with a MERV rating, or Minimum Efficiency Reporting Value.
standalone system, can steam nanotechnology and a special Ultimately, it’s best to look at a range of options. “The wrong
clean and gently sanitize as many UV lamp to naturally destroy
thing to do is come up with one element that is being pushed
as 15 different fabrics—including bacteria, odors, and mold. This
denim, wool, and sequins—in as year, Poliform will follow suit with out into the marketplace,” she says. “There’s no one solu-
little as 20 minutes. It’s certified a similar purification system for tion to bring about a healthy home environment. It’s a holis-
by the Asthma and Allergy its Senzafine walk-in closet. tic approach.”
time of year but will work equally well indoors. Herbs are a triple threat—you get a nice-looking plant that grows quickly, they smell terrific, and you can use them!”
LOLLIA ALWAYS PADDYWAX

IN ROSE ROSE + SANTAL
reate wn your
If the plan is to Made with soy and
leave town and ride food-grade paraffin,
out the pandemic this warm bergamot,
in the country, this rose geranium,
ose arden
is the candle to and sandalwood
take along. The candle has a clean
soy-and-coconut- 49-hour burn time.
wax blend burns for The price tag means
90 hours. The rose, you can put one in
Turn your home hideout hibiscus, and amber every room. $27;
into an oasis of floral scents transform a living
space into a cozy
paddywax.com
By Aja Mangum B&B but stop short NEST ROSE

of smelling “old.” $56; NOIR & OUD
margotelena.com At a chunky
also smell great. Orchids come in a variety of scents and are the lowest light requirement: Never put an orchid under direct sunlight as that will burn the plant!”
VENUS ET FLEUR 21.1 ounces and with
ROSE BLANCHE an 80- to 100-hour
“In aromatherapy, burn time, this three-
rose is associated wick candle will
with the heart last well into your
and known for isolation period. A
its warming, combination of rose
supportive, and de mai, oud, incense,
comforting black leather,
effect,” says and patchouli is
Michelle sweet and earthily
Gagnon, an masculine.
expert on $72; nest
essential newyork.com
oils for the
Well, a health JENNI KAYNE
center in New CERAMIC
York. The notes DIFFUSER
of this beeswax- Each of these
and-soy-blend spheres is
candle—geranium, handmade—no two
cinnamon, freesia, are alike—and while
and Damask rose— this one looks like it
will wrap you in an belongs in Malibu,
olfactory hug. $129; the rose, tobacco
venusetfleur.com leaf, fir, and cedar
smell will transport
CARRIÈRE FRÈRES you to a log cabin
DAMASK ROSE in Montana. $175;
BOTANICAL PALET jennikayne.com
Hang these
charming vegetal VANCOUVER
and mineral wax CANDLE CO.
disks in a closet ORTUS (RISE)
or on a doorknob, DIFFUSER
or stash them in a The Ortus skillfully
drawer. Made with DIPTYQUE combining them blends red currant,
potent Damask GÉRANIUM ROSA with geranium.” rose, and balsam
rosebuds, lemon, According to Diptyque’s 60- for a fresh modern
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lavender, cedar Jennifer Hirsch, an hour version is take that rose

chips, and orange ethnobotanist for sharp and herbal. traditionalists
blossoms, they’ll Noughty Haircare, The bright pink will approve of.
perfume a space “rose’s warm vessel is a limited Handmade in
for six months. $40; floral notes can edition. $74; small batches. $48;
carrierefreres.com be amplified by diptyqueparis.com bloomingdales.com
③ “The best-smelling flower in my opinion is the gardenia,” says Plant Dad’s Eric Shoemaker. “It requires a lot of sun. The flowers and the leaves of lavender

④ “The plant that’s giving me a bit of joy is my shooting star hoyas, which are in bloom right now,” says
Science, measures the

precise color wavelength
et the
in nanometers.
Introduced last year,
its SunTrac Dynamic
iGht dea
A19 LED ($31) fits
most lamps and can
last up to 20 years.
It has three different
illumination settings:
Why a fancy mattress isn’t the GoodDay, Afternoon,
cure for a good night’s rest and GoodNight. Lighting
Science, a leader in
LED technology with
more than 400 patents
We may hold on to the dream that the perfect mat- in the field, traces its
S t
tress is the key to a great evening of sleep, but sci- scientific roots to helping
NASA maintain the circadian
ence shows that the answer may lie in lighting.
rhythms of astronauts in
Twenty years ago, the discovery of a photosensitive pig- SUNTRAC DYNAMIC space; its lights are used in the
ment deep inside the human eye helped researchers under- A19 LED BULB International Space Station as
stand how blind people can wake up naturally in the morning Lightbulbs are traditionally well as by clients as diverse
without seeing sunlight. The pigment, melanopsin, picks up measured in temperature—a as Six Senses Hotels Resorts
the blue light of the color spectrum, which signals the brain 2700K bulb is akin to a calm Spas, Merrill Lynch, and the Los
to energize. “It was a major discovery in neuroscience,” says campfire; a 6500K matches Angeles Dodgers. The SunTrac
Steven Lockley, an associate professor of medicine at Harvard invigorating sunlight. But to Ecosystem, the company’s
pinpoint the most effective whole-home offering, includes
Medical School. He built off this discovery to help NASA deter-
midday blue light on the a daylight sensor, light fixtures,
64 mine how astronauts in space can maintain a normal sleep color spectrum, Healthé, the dimmers, and, of course,
schedule without a 24-hour sun cycle. consumer arm of Lighting circadian lightbulbs.
Remember science class in elementary school? When you
look at a flame, the blue part is the hottest; the yellow, not as
Summer Rayne Oakes, author of How to Make a Plant Love You and owner of 1,100 plants in her Brooklyn, N.Y.,
hot. That blue part of the spectrum becomes most prominent

at the height—or in the heat—of the day. Think of a lightbulb as
a flame: “In the daytime you want blue light, which is alerting
and has you as productive as possible,” Lockley says. “In the
evening you want to calm the brain with lower-temperature
light and make it dimmer.” This is why you should put your
blue-light cellphone away when it’s time for bed.
The health benefit of obeying our circadian rhythms has
led to an explosion in consumer products. Lockley now con-
sults for Light Cognitive, a Finnish group that designs wall
boxes to look like real windows, and he’s an adviser to LED
maker Lighting Science, with whom he worked on the NASA
project. He encourages getting as much natural sunlight as S
possible, above all else, and suggests keeping it simple when
it comes to sleep. “In your bedroom, put blue-enriched light
M
in the ceiling for when you wake up,” he says. “And use low- BRILLI GET IN SYNC innovations help optimize
temperature light for your nightstand lamp at bedtime.” FLUSH MOUNT vibrancy and saturation. Brilli
Interior decorators are taking these cues as well, using Brilli wants to eliminate the uses unique technology to make
blue-enriched bulbs for gallery walls and dressing areas, sterile flicker emitted by most its fixtures the only ones in the
where full-spectrum light is essential for seeing color. LED bulbs but without sacrificing circadian rhythm-measuring
New York designer Clodagh, who won the 2018 Global energy efficiency. The company, category that works with any
PRODUCTS COURTESY VENDORS
which opened for business last standard dimmer. The 13-inch

Wellness Award, says low-temperature lighting has an
year with more than $90 million Get in Sync flush mount ($75)
important side benefit in the bedroom. “When you make in private equity capital, uses comes with a lightbulb that
love, you want to look your absolute best,” she says. “And a high-quality phosphor for its transitions between the effects
it eliminates the possibility of accidentally flambéing your- circadian LED bulbs, creating a of Brilli’s calming Wind Down and
self with candles.” �J.H. rich glow. Various patent-pending energizing Charge Up bulbs.
home. “The flowers look like little shooting stars in the sky, and I’ve placed them on an armoire over my bed, so they look like they’re falling over me. They can be redolent at
Bloomberg Pursuits April 13, 2020
Z B
SORAA AERIAL PENDANT
Color is key in Soraa’s LED
technology. Its Vivid bulb, for
instance, uses the full spectrum
of the rainbow—red on one end,
violet on the other, both hard to
reproduce—to mimic natural light
for daytime productivity. In its
Healthy bulb, on the other hand,
the energizing blue wavelength
is removed completely to cue the
body for bedtime. One of Soraa’s
co-founders, Shuji Nakamura,
a Nobel laureate in physics, is
considered the inventor of blue
LED lighting, a major scientific
breakthrough because it
produced a high-energy light
with better efficiency. Much of
Soraa’s product line, including
this Aerial pendant, is for
professional decorators only.
65
brainchild of Finnish founder

aF Y and Chief Executive Officer
Sami Salomaa, who has a
c B i master’s in physics and applied
100% c LIGHT COGNITIVE SKYLIGHT
mathematics. After eight years
working for Nokia in New York,
Your home office—even if it’s in Salomaa returned to Helsinki
FOSCARINI CABOCHE the basement—can now have in the dark of a Nordic winter.
Last year the Italian lighting energizing daylight with a sense The move impressed upon him
powerhouse Foscarini SpA of spaciousness, thanks to Light the impact natural light has on
introduced the MyLight Cognitive’s interior installations mental health and well-being. In
smartphone app, which that look like windows to the 2016, Light Cognitive introduced
connects many of its stylish outside world. The screens, its first product, the LC Horizon.
fixtures to a Bluetooth dimmer. scientifically engineered to What might be mistaken for
An option to adjust the warmth mimic the light of the sun, minimalist art is a radiant light
of a light’s glow has been feature Sky Player, which fixture that evokes a bright,
added to models such as the lets you select sunrise and cloudless sky. The brand uses
Caboche suspension light sunset times, and Sky Scene, high-fidelity dynamics on its
(from $3,296, at right), by which freezes the screen screens and has expanded with
Patricia Urquiola and Eliana to mimic a specific a bespoke line, LC Limitless
Gerotto, as well as the arced time of day, a bonus (from about $10,800), available
Twiggy floor lamp designed for outfit planning. stateside through a Canadian
by Marc Sadler in 2006. The company is the distributor.
night or in the early morning hours, and different ones can smell like chocolate or cinnamon—though some smell like sweaty socks.”
⑤ “There’s a bird of paradise I’ve been growing at home for six years, and it’s huge,” says Christan Summers, Stay Safe&Protect Your Families in the Coronavirus Pandemic. @WorldAndNews
instructing you, makes a big difference.

For a beginner or someone who is over
ORKOUT WITH
40, who doesn’t feel confident going
to a crowded gym with much younger
people, you are essentially copying
A IRTUAL RAINER
what somebody is doing on screen,
so you’re self-correcting—which you
don’t really get even in a boutique fit-
ness class.
The latest way to exercise from home targets
So is there a live person talking to
the not-so-toned abs of the not-so-young you here through the screen?
You have a choice of prerecorded
workouts—they will change every three
Since its founding more than 20 years sense. What we wanted to solve was or four days. Maybe you’ve committed
ago, Yves Béhar’s Fuseproject has [the feeling of ] one-on-one instruction. to working out three times a week for
created a range of innovative home 45 minutes, so the machine’s AI will
products: a robotic crib, a TV that looks Your design is about 20 inches remember what weights you use, what
like a painting, door locks without keys. taller than Tonal and Mirror. resistance you’re at, and will adjust the
With co-founder Trent Ward, the San The importance of a large screen is so workout to the next training. And live
Francisco designer introduced Forme you can see what your trainer is doing. trainers will be available at launch.
(pronounced “form”), an AI-powered The real breakthrough for us was being
“wellness machine” for the home that able to see the trainer and yourself at Why is voice control so important?
costs $149 per month. The 6-foot-tall the same time. It’s a mirrored screen, Other products require you to take out
touch-response mirror looks a lot like so when it’s in use, you will see the your phone, but having the ability to
66 Tonal, Mirror, and other competitors instructor, but you also see yourself. quickly touch the screen and stay in the
but has a larger screen (43 inches), 4K Having somebody workout is very important, and voice is
resolution, voice control, and stowable large-scale in another way to make those quick adjust-
arms for resistance training. (Preorders front of you, ments. From a user experience, the
co-founder of Tula Plants & Design garden shop. “It’s a pain in the ass. You need three to four hours of direct
will begin on May 1.) Here Béhar tech falls away and keeps you in the
explains his own at-home routine and flow. In my experience testing it out,
why he thinks this design will res- there’s so little interruption, I can do
onate with an older crowd. in 30 minutes what would normally
take me 45 at the gym.
What’s it like introducing a new
product during a pandemic? What did you learn from
It’s accelerated the concept we’ve Peloton, if anything?
been working on for 3½ years. I’m I think Peloton has demonstrated
being asked more how to work out that the subscription business is
from home. For people over 40 like me, the right model for at-home exercis-
maintaining a schedule at the gym or ing. From our research we realized
with a trainer, it’s quite challenging— it’s more about your relationship with
you’re at an intense phase of your your trainer. The UX we developed is
career, plus with family. It’s at unique in that it shows your progress—
minimum a two-hour cycle out of you can make incremental changes
your day. with our AI that sets the weights, and
because it’s cable-resistant, we can
Do you have an exercise regimen? adjust by a pound or even half a pound
Resistance training, yoga, and medita- instead of going in 5-pound increments.
tion are the three practices that I try to When you go to the gym by yourself,
do three times a week, but we wanted you still want to know how much is
COURTESY FUSEPROJECT
to bring diversity here. For some it enough. How do you start? When do
might be barre, others stretching, so you end? I think every form of exer-
that’s why a multipurpose device in cise requires a different interface.
the home makes a lot of —Interview by James Gaddy
sun a day to keep it happy. And you have to wipe the leaves because they collect dust. I was so ready to chop it down, but then you see those new sprouts—you care, it cares back.”
THE ONE Bloomberg Pursuits April 13, 2020
perfect houseplants for a teenager moving into her first apartment. The rosary vine, or ceropegia woodii, has funky little flowers shaped like little pink bongs, with blackish-purple stamens that stick out of the end like a Barbie hookah.”
RecoveR like a champ
Float pods can have a restorative
effect on tired muscles—and minds
Photograph by Janelle Jones
Prioritizing recovery THE CASE

after workouts has We’ve all been in
become integral to isolation lately,
wellness. And as the but it doesn’t
benefits of proper have to be all bad.
recuperation become There’s a good
better appreciated— kind that calms
less soreness, and restores rather
improved circulation, than aggravates.
shorter rest between The easy-to-install
workouts—at-home Evolution filters
treatments are more itself at regular
popular. Among them, intervals and has
sensory deprivation bench-seat sides
flotation tanks are for easy entry and
some of the most exit. Fiber-optic
extravagant. Doctors magnesium and THE COMPETITION • The 102-inch-long, • Wave Float Rooms starlight is available
have recommended other essential • In 2009 the 68-inch-wide unit LLC’s Wave LS on the domed
immersion in a minerals. Superior I-sopod ($23,000) from Float Pod (price on request) interior. Regular
concentrated solution Float Tanks’ was one of the Technologies (price measures 54 inches soaks replenish
of body temperature- Evolution Float Pod first modern float on request) is fully wide by 102 inches the body’s sulfates,
saline water since ($28,900) holds a tanks visually and self-contained with long and comes magnesium, and
the 1950s. LeBron half-ton of Epsom practically suitable a built-in filtration with a steel frame. It other minerals,
James and Stephen salts and is the for home use. The system, so it takes has a touchscreen while they clear
Curry now embrace choice for Notre color therapy LED up less space interface, multicolor your head. It’s a
the experience of Dame’s football lighting, a separate than others of the LED light therapy, state of relaxation
weightlessness to team as well as superior filtration same caliber. You and an ozone so nurturing it
calm the nervous Naomi Campbell, tank, and flow- can plug a phone generator that feels like a return
system and enhance who uses one at the through heater into its audio helps disinfect and to the womb itself.
the body’s ability to S10 Recovery spa in make it a top system to stream a prevent mildew to $28,900; superior
mend by providing New York. contender. favorite playlist. keep the pod clean. floattanks.com
⑥ “My grandmother gave me cuttings from beefsteak begonias and Christmas cactus in the ’90s,” says Heather Arndt Anderson, author of Berries: A Global History. “They make
◼ LAST THING With Bloomberg Opinion
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Working Under the
Spanish Flu and Covid-19
By Justin Fox
In 1918, the last time a pandemic hit the U.S. with a sudden ● THEN AND NOW
In 1920, 4% of
68 force comparable to that of Covid-19, a little more than American workers
a quarter of the country’s workers labored in manufac- were domestic
servants, while 1%
turing. Another quarter worked in agriculture. Now fac- prepared and served
tory employees and farm laborers account for only 10% food and drinks
outside the home
and 1.5% of the workforce, respectively. Meanwhile, more (though that was
than 80% of American workers are in services, double the surely higher in 1918,
before Prohibition).
share of a century ago. In 2019 service
A lot of today’s service workers are professionals workers in private
households made
who’ve been able to continue their labors from home,
ILLUSTRATION BY GEORGE WYLESOL. DATA: HISTORICAL STATISTICS OF THE UNITED STATES, BUREAU OF LABOR STATISTICS
up only 0.5% of the

thanks to technologies unimaginable in 1918. Many work workforce, but food
services employees
in a health-care sector that, for all its struggles in recent accounted for 5.3%.
weeks, is far bigger and better equipped to fight a pan-
demic than its precursor was in 1918. Still, tens of millions
of other service workers get their paycheck from busi- ● MORE MEDICS ● SHARE OF U.S.
Skilled health- WORKFORCE
nesses the novel coronavirus has effectively shuttered. care workers BY INDUSTRY
Leisure, hospitality, and retail matter more to the econ- (doctors, nurses,
◼ Services
lab technicians,
omy now than they did in 1918. and such) made ◼ Manufacturing
Hunkering down on the farm for the duration—an up 6.1% of the
◼ Agriculture
workforce in 2019,
option for a large segment of the populace in 1918—is pos- compared with ◼ Construction
sible for only a few today. The U.S. is surely less vulnerable 1.1% in 1920.
◼ Mining
to contagious diseases than it was in 1918, but the econ- ● RECESSIONS?
omy may be much more vulnerable to their consequences. There were sharp,
influenza-induced
Economic data from 1918 proper are sparse, so the local economic
comparisons on this page use numbers based mostly downturns in
1918, and a mild
on the 1920 census. Two caveats about that data: There national recession 1920 2019
were a lot more bartenders in 1918 than in 1920, the first started in August
of that year. But
year of Prohibition. And more than 4 million American unofficial estimates ● DIFFERENT PANDEMICS—AND ECONOMIES
men served in uniform during World War I, which ended of gross domestic Some occupational categories have disappeared
product show no over the decades. In 1920, for example,
in November 1918. <BW> �Fox is a business columnist for decline from the 46,500 Americans, about 0.1% of the workforce,
Bloomberg Opinion year before. were “hucksters and peddlers.”
Age UK is calling on you, the great

British public, to help raise £10 million
to support our older people at this
time of national crisis.
Age UK has seen an unprecedented

demand for our services as older
people turn to us for support. In the
weeks and months ahead, older
people are going to need us even
more, in huge numbers. Help us
raise £10 million to keep our vital
services running.
CORONAVIRU
S
EMERGENCY
If you can help, APPEAL
please donate £10 at
www.ageuk.org.uk/bloomberg
Here is
how your £10 could help to answer calls to our advice line
donation from vulnerable older people needing information
could help and support on how to cope during this crisis.
Although it is Age UK’s aim to raise at least £10m, if this target cannot be met the funds
raised during this emergency appeal will still be disbursed for the purposes listed in this
appeal; wherever the need is greatest. If we find that the needs of older people change
during this emergency or we raise more than £10 million we will apply any money raised
to where the needs are greatest.
Age UK is a registered charity, registered charity no 1128267. Age UK will be raising funds on behalf of itself and local
Age UKs who are also registered charities and The Silver Line Help Line which is also a charity. Age UK’s registered
address is Tavis House, 1–6 Tavistock Square, London WC1H 9NA. ID204496 04/20.

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Stay Safe&Protect Your Families in the Coronavirus Pandemic.

AI has powerful potential to boost growth, quality,

● The big bankruptcy test 24

We remain invested in you.

April 13, 2020

◀ Zoom times: Have a

FEATURES 44 The New Social Network

54 Instagram vs. Facebook

◼ CONTENTS Bloomberg Businessweek April 13, 2020

◼ REMARKS 8 Big Pharma is trying to rustle up a vaccine, fast ①

“I’ll get on it.”

16 How CVS’s CEO is managing the madness

FINANCE 24 With bankruptcies likely to soar, bring on more debt relief

ECONOMICS 30 Blue-collar workers usually take a severe hit in a

◼ PURSUITS 60 The rush to purify air at home

How to Contact Bloomberg Businessweek

When we created VariDesk–the world’s leading

Learn more at Vari.com/ﬂexible-business

Bloomberg Businessweek April 13, 2020

surpassed because of a coronavirus

○ Rolls-Royce ○ Airbnb is raising ○ Cardinal George Pell

Bloomberg Businessweek April 13, 2020

car pioneer shuts down

return. production. The measure is

though they get to keep

Racing Against Time

ILLUSTRATION BY CHARLOTTE POLLET

◼ REMARKS Bloomberg Businessweek April 13, 2020

year-to-date. This could easily be a vaccine bubble. The time

◼ REMARKS Bloomberg Businessweek April 13, 2020

◼ BUSINESS Bloomberg Businessweek April 13, 2020

more dire for the scores of Chinese EV startups that

Dunne, chief executive officer of ZoZo Go, an indus-

so all EV startups are scrambling for cash.”

fell in 2018, the first decline in more than two

auto sales may decline as much as 10%, according 1.23m 1.18m

energize the market and help us work through the

◼ BUSINESS Bloomberg Businessweek April 13, 2020

Inc., a venture-backed manufacturer of 3D print-

BUSINESS Bloomberg Businessweek April 13, 2020

Buying, Too ○ Fears of shortages have sent agriculture

BW Talks Larry Merlo

In global financial markets, uncertainty is the only constant.

Bloomberg’s enterprise data management and integration

Master every uncertainty.

Find out more at bloomberg.com/mastery

©2020 Bloomberg L.P. WF757432 0420

April 13, 2020

TECHNOLOGY Bloomberg Businessweek April 13, 2020

day care providers or dog walkers they’re unable to

public-relations headaches, such as when it tried

◼ TECHNOLOGY Bloomberg Businessweek April 13, 2020

Covid-19 Provides ● The travails of a

Cover for Hackers show how vulnerable

◼ TECHNOLOGY Bloomberg Businessweek April 13, 2020

overruled by senior managers who were concerned

◼ TECHNOLOGY Bloomberg Businessweek April 13, 2020

Bloomberg Businessweek April 13, 2020

F The Bankruptcy Trap

◼ FINANCE Bloomberg Businessweek April 13, 2020

◼ FINANCE Bloomberg Businessweek April 13, 2020

Advisors, which offers target-date funds. “If you are

nies increased stock exposure in target-date funds

◼ FINANCE Bloomberg Businessweek April 13, 2020