Automakers’ brands will take a backseat to new driving “experiences” as autonomous vehicles and car sharing become more popular, according to the chief executive officer of IBM.
In an interview with CNBC’s Karen Tso at the Frankfurt Motor Show Wednesday, Ginni Rometty said consumers are increasingly prioritizing digital experiences, for example the ability to connect a car to other smart devices, in their vehicles.
“The issue is that the experience is going to be more important than perhaps the car itself or just a brand and what it says,” Rometty said. “Your brand is defined by the experience.”
Rometty pointed to a new IBM survey which found 48% of consumers say vehicle brand won’t matter to them amid the rise of autonomous cars and ride-sharing platforms over the next decade. The survey also found that among 1,500 automotive executives, only 18% are operating on a “digital data platform today.”
Auto companies are making big investments in new technologies like autonomous and electric vehicles. BMW CFO Nicolas Peter told CNBC Monday these investments are creating an “add-on cost” that is challenging the broader automobile industry.
“This is now a world where you’ve got to be able to pull the innovation from anywhere and then make it look very seamless to whoever the person driving the car is,” she said.
As a data analytics and cloud provider, IBM has a big stake in the so-called digital transformation. IBM’s shares are up roughly 28% year-to-date.
European Commission opens probe into Google and Facebook for data use
EU Commissioner of Competition Margrethe Vestager speaks during an interview to AFP at the European Commission in Brussels on May 3, 2019.
EMMANUEL DUNAND | AFP | Getty Images
“The Commission has sent out questionnaires as part of a preliminary investigation into Google’s and Facebook’s data practices. These investigations concern the way data is gathered, processed, used and monetized, including for advertising purposes,” a spokesperson for the European Commission, the EU’s executive arm, told CNBC via email Monday.
The spokesperson added that the preliminary investigations are ongoing.
A spokesperson for Google told CNBC Monday: “We use data to make our services more useful and to show relevant advertising, and we give people controls to manage, delete or transfer their data. We will continue to engage with the Commission and others on this important discussion for our industry.”
A spokesperson for Facebook was not immediately available when contacted by CNBC.
This is the second time that Europe’s competition authority has looked at how companies deal with users’ data. In July, the European Commission opened a formal investigation into Amazon to assess whether the e-retailer was complying with European rules on treating data from independent retailers.
“E-commerce has boosted retail competition and brought more choice and better prices. We need to ensure that large online platforms don’t eliminate these benefits through anti-competitive behavior,” Margrethe Vestager, the EU’s competition chief, said at the time.
Vestager, who started her second term in Brussels on Sunday, has led a wider clampdown on how tech giants operate across the 28 EU member states. She has asked Ireland to collect 13 billion euros ($14.34 billion) in unpaid taxes from Apple, fined Google a combined of $9.5 billion in antitrust cases, and also accused Facebook of misleading EU regulators over its acquisition of WhatsApp.
Speaking to a European publication last month, Vestager said that she might also look into Google’s compliance with new copyright rules after France raised concerns regarding the U.S. tech giant. Shares of Alphabet, Google‘s parent company, are up by about 25% year-to-date. Facebook shares have risen about 54% year-to-date.
In 2018, the European Union approved a sweeping data privacy law known as the General Data Protection Rule (GDPR), aimed at giving users’ a bigger say over their data.
How Germany could be set for a new political direction
30 November 2019, Berlin: Norbert Walter-Borjans and Saskia Esken wave after the announcement of the result of the vote on the SPD chairmanship in the Willy Brandt House.
picture alliance | picture alliance | Getty Images
Germany’s ruling coalition government is hanging by a thread, potentially having major implications on the country’s spending habits and wider reforms across the continent.
On Saturday, Chancellor Angela Merkel’s junior coalition party — the Social Democrats (SPD) — elected new leaders in a vote that will be confirmed later this week. Norbert Walter-Borjans and Saskia Esken, who ran on a joint ticket, want to renegotiate some of the terms of the ruling agreement with Merkel’s conservative party, the Christian Democratic Union of Germany (CDU).
“The new leaders are likely to challenge the status quo in the federal government. In particular, Esken has positioned herself in favor of an exit from the grand coalition,” Ricardo Garcia, chief euro zone economist at UBS, said in a note to clients Monday.
Saturday’s result is set to open the way for tough talks between the two partners. The new socialist leadership has said they would like to see more ambitious plans on climate change, higher minimum wages, as well as different fiscal rules.
“We don’t think that all of these will be acceptable to the CDU/CSU, in particular to its more conservative members,” Garcia added.
At ‘odds’ over spending
Under Merkel’s leadership, Berlin has rigorously pushed for a balanced budget. Its fiscal prudency respects the German constitution, where a “debt brake” law basically forces its leaders to present budgets without structural deficits. The euro zone powerhouse saw a record budget surplus of 58 billion euros ($65 billion) in 2018.
However, lower economic growth has sparked calls for the German government to change tack. The government, in particular Merkel’s CDU party, argues that economic growth is set to pick up next year and therefore there is no need to increase the country’s debt pile — something that the more-leftist arm of the SPD contests.
The SPD’s spending policies “put them completely at odds with the CDU/CSU and at the moment it seems a bit of a struggle to see a middle ground being found,” analysts at Rabobank said in an email Monday morning.
A political compromise or fresh elections?
The current political landscape makes it difficult to predict what could unfold. On the one hand, the Socialist party has seen lower public support, leading some analysts to argue that the SPD could be about to take a more assertive role in the ruling coalition. On the other hand, the CDU is unlikely to agree to massive policy changes. The German conservatives also seem divided about the prospect of an early election, with Merkel due to leave politics in 2021.
In addition, the nationalist Alternative for Germany (AFD) party has grown in popularity since its creation in 2013, having entered Parliament for the first time in the aftermath of the 2017 election.
“We see a 30%–40% chance of the SPD walking out of the grand coalition,” UBS’s Garcia predicted.
German Chancellor Angela Merkel gives a statement to the media following an agreement over the weekend between leaders of the coalition government partners over the fate of domestic intelligence head Hans-Georg Maassen on September 24, 2018 in Berlin, Germany.
Michele Tantussi | Getty Images News | Getty Images
If the SPD were to leave government, analysts have pointed to three possible outcomes: Merkel’s CDU remains in power but runs a minority government; Merkel could ask smaller parties to join her government, which could ultimately restore a majority; or early elections take place.
Opinion polls show that if an election were to take place now, Merkel’s CDU party would get 27% of the votes — down from 32.9% in 2017. The estimated support for the SPD is also lower from the previous election at 14%, versus 20.5%.
Less time for Europe
Germany is Europe’s largest economy and one of the founding members of the European Union, which gives Berlin a strong say in the future of policymaking in the region.
With political instability at home, the German government is unlikely to focus on wider EU policies.
“One thing seems clear to me, namely that the shift in SPD leadership will further raise the political uncertainty in Germany, thereby making the necessary European reforms, including banking and capital markets union and reforms of the ESM (European Stability Mechanism), much harder during the next year or so,” Erik Nielsen, group chief economist at UniCredit, said Sunday in an email.
Rising power China must be addressed by NATO
Soldiers of the People’s Liberation Army march during a parade to celebrate the 70th anniversary of the People’s Republic of China at Tiananmen Square on October 1, 2019 in Beijing, China.
Fu Tian | China News Service | Visual China Group | Getty Images
LONDON — NATO’s secretary general said the alliance needs to address the challenges and opportunities posed by an increasingly powerful China, but added that his 29-member defense organization does not want to make an enemy out of Beijing.
“What we see is that the rising power of China is shifting the global balance of power and the rises of China — the economic rise, the military rise — provides some opportunities but also some serious challenges,” Jens Stoltenberg told CNBC’s Hadley Gamble in London on Monday.
He said that while NATO would not get involved in an area like the South China Sea, China was engaging in economic and military projects closer to Europe.
The South China Sea is an area that is subject to various territorial disputes between China and other nations who claim sovereignty to some or all of the islands in the region.
“There’s no way that NATO will move into the South China Sea but we have to address the fact that China is coming closer to us, investing heavily in infrastructure,” Stoltenberg said.
“We see them in Africa, we see them in the Arctic, we see them in cyber space and China now has the second-largest defense budget in the world.”
“So of course, this has some consequences for NATO,” he added. The military alliance is about to hold its 70th anniversary summit this week on the outskirts of the U.K. capital.
Stoltenberg noted that China had recently displayed “a lot of new modern military capabilities, including intercontinental long-range missiles that can reach Europe and North America … So we need — and we will do this at our meeting in London — to address together how to respond to the rise of China.”
NATO’s secretary general insisted that the military alliance did not want to “create new adversaries” and said that “as long as NATO allies stand together, we are strong and we are safe … We are by far the strongest military power in the world,” he said.
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