Uber's tipping point

MARKETS

• U.S. markets: Nothing's better than being graded on a curve. S&P companies were supposed to report a more than 4% decrease in profits, but so far they've reported a drop of slightly over 1.2%. That's put stocks within reach of all-time highs.

GEOPOLITICS

Is TikTok a National Security Threat?

On Wednesday, Senate Minority Leader Chuck Schumer and Sen. Tom Cotton sent a letter to Acting Director of National Intelligence Joseph Maguire asking him to investigate TikTok.

It wasn't because their POV vid got 102 views. They're concerned that the Chinese video app might be working with the Chinese government to a) spread disinformation b) censor content and c) harvest user data.

• “TikTok is a potential counterintelligence threat we cannot ignore,” they wrote.
• TikTok has racked up over 110 million downloads in the U.S. and is the reason your little cousin fell into a manhole last week.

Some of TikTok’s policies do sound a lot like the Chinese government’s. The Guardian reported in September that TikTok tells its moderators to censor content about Tiananmen Square, Tibetan independence, and the religious group Falun Gong.

• Earlier that month, the Washington Post reported that a TikTok search for info on the Hong Kong protests doesn’t turn up much.

Schumer and Cotton aren’t the first to the TikTok-bashing party
Sen. Marco Rubio rolled up weeks ago. Earlier this month, he asked Treasury Secretary Steven Mnuchin to have CFIUS (pronounced “SIF-ee-yuss,” a committee that scrutinizes foreign business deals for national security issues) investigate TikTok.

• Rubio focused on TikTok owner ByteDance’s acquisition of Musical.ly in 2017, which it then merged with TikTok.

Zoom out: The U.S. has been hypercritical of Chinese firms Huawei and ZTE for their close alignment with Beijing. And now, a backlash is forming against U.S. organizations (the NBA, Nike) that have recently complied with the Chinese government’s wishes.

• Vice President Mike Pence blasted both yesterday, saying the NBA was “acting like a wholly owned subsidiary” of the Chinese Communist Party.

TikTok’s POV
A U.S. crackdown isn’t the only threat. Global user downloads dropped 4% annually in Q3 as ByteDance dialed back its ad spend. Still...177 million first-time users signed up in the quarter, per Sensor Tower data cited by Bloomberg.

Bottom line: TikTok is best known for lighthearted vids like Animojis lip syncing “Despacito.” Now it finds itself at the center of a serious international conflict.

EUROPE

Christine Lagarde Gets Out of Wearing a Halloween Costume

Next Friday, she gets the scariest job of all when Mario Draghi ends his eight-year term as European Central Bank (ECB) president. Draghi helmed his final policy meeting yesterday.

What's on Lagarde's to-do list? Heading off a recession even as the EU’s most powerful economy, Germany, is sending signals it may already be in one.

The backstory: In September, the ECB approved Draghi’s plan to juice the European economy by dropping interest rates further into the negatives and resuming monthly bond purchases of 20 billion euros.

• The plan’s split the ECB. Some officials think it was sprung on them without enough time to deliberate; others fear it’s venturing into dangerous negative rate territory.

Draghi’s watch may be ending on a sour note, but his “whatever it takes” attitude in 2012 steered the eurozone out of a financial crisis.

Looking ahead...Lagarde, the former IMF head, will review the ECB’s target numbers (like close to 2% inflation) and chart the best path to get there.

REAL ESTATE

A Mall, a Highway, and a Swamp

It can only be New Jersey.

The $5 billion American Dream mall is expected to open today in East Rutherford, NJ, after what felt like millennia of construction delays (well, more like 17 years). The “mall” will contain an indoor ice rink and ski area, amusement parks, and of course, loads of retail stores.

• You’ll have to wait for most of those attractions. American Dream will unfold in four chapters, with shopping + dining arriving in March 2020.

Zoom out: If this reminds you of the Mall of America in Minnesota...you might have a career in real estate. Both American Dream and the Mall of America are owned by the developer Triple Five, which expects similar traffic at both locations—40 million visitors/year.

GIG ECONOMY

Do You Tip Your Uber Driver?

According to a recent study, 60% of you answered “no.”

A working paper published this week highlighted the factors that influence if or how much riders tip, including pickup times, drivers’ aggressiveness, and demographics like age or language barriers. Researchers found…

• Around 16% of rides were tipped.
• Only 1% of riders always tipped.
• Riders with five-star ratings tipped 2x as often and 14% more than 4.75-star riders.
• Male riders were 19% more likely to tip.

The sample of 40+ million UberX rides is one of the largest studies of tipping behavior since the practice started in 17th century Tudor England. Note: The data is from a four-week period shortly after Uber debuted in-app tipping in 2017.

Big picture: In U.S. restaurants, a 15%–20% tip is widely understood as customary. But in growing service sectors—like ride-share, food delivery, and freelancing—tipping etiquette is less clear. Critics have complained that tipping can reinforce inequality along racial and gender lines.

+ Help us settle a debate: Do you tip at coffee shops? Let us know here.

QUIZ

New Quiz, Who Dis

Fancy, but not fanciful. Eager, yet easy. Helpful, but not while playing Halo. It's the Brew's Weekly News Quiz.

1. I’m a tech entrepreneur who’s raising money to invest in late-stage startups. I’ve been hosting L.A. dinner parties for celebs. My fund is hosting a conference for “heretical thinkers” and “thoughtcrime.” Who am I?

2. Chipotle is ramping up its efforts to outfit stores with mobile pickup lanes. What are they called?

3. Discovery, Inc. launched Food Network Kitchen, a streaming service featuring live cooking classes. Which fitness company did it borrow the idea from?

4. Fill in the blank: Biogen shocked the medical community by announcing it’s bringing back a treatment for ___________ after shelving it earlier this year.

5. This week, the CEOs of Nike and Under Armour said they’re stepping down in January 2020. What are their names? (1 point for each, free running shoes for life if you can name both).

Answers: 1. Peter Thiel 2. Chipotlanes 3. Peloton 4. Alzheimer’s 5. Nike = Mark Parker and UA = Kevin Plank

WHAT ELSE IS BREWING

• Amazon is spending big on one-day shipping, and that resulted in its first quarterly profit decline in 2+ years. Shares dropped nearly 7% after hours.
• Twitter posted strong quarterly user growth, but bugs in its advertising technology bugged investors. The company’s stock dropped more than 20% on the day.
• American Airlines and Southwest Airlines said the grounding of the Boeing 737 Max has together cost them nearly $1 billion in lost revenue this year.
• Tesla has surpassed GM in market cap after reporting a surprise quarterly profit. It’s now the most valuable U.S. automaker.
• American Express’s Green Card is getting a revamp on its 50th birthday.

FRIDAY PUZZLE

Today is World Pasta Day. To celebrate, let’s dust off one of our favorite quizzes: pasta or Italian composer?

1. Sorprese
2. Sgambati
3. Boccherini
4. Mercadante
5. Testaroli

*Answer at bottom of newsletter

Breakroom Answers

FRIDAY PUZZLE ANSWER
1. Sorprese is a kind of pasta
2. Giovanni Sgambati was a composer
3. Luigi Boccherini was a composer
4. Saverio Mercadante was a composer
5. Testaroli is a kind of pasta