Flash Briefing: Facebook caught cheating (again); Eskom plunderers attacked; Buffett’s share buybacks

By Alec Hogg

In today’s business headlines:

  • Facebook is in trouble again, this time after an investigation by the Wall Street Journal revealed it is harvesting deeply personal material from people who don’t even have an account with Mark Zuckerberg’s creation. The Journal’s analysis of the most popular Apps on the Apple and Google online stores shows 11 of them send personal information to Facebook without the knowledge of their users. Among them are the world’s most popular heartrate app and one checking ovulation cycles that’s used by 25 million women. The investigation showed six of the 15 most popular health and fitness apps send users’ information to Facebook, which admitted its business terms have been violated. Patrick Jackson, chief technology officer of Disconnect Inc, which undertook the research for the Wall Street Journal, said “This is a big mess,” adding that users have no way of stopping their private data being sent to Facebook.
  • US private equity group KKR is being tipped as the likely buyer of Walmart’s British supermarket chain Asda after the UK’s Competitions and Markets Authority spiked its proposed £7bn merger with Sainsbury. On Wednesday, the competitions authorities said the deal between the UK’s second and third largest retail groups would reduce competition in 629 areas. This will likely kill a deal that was set to create a £50bn a year giant. Sainsbury’s share price fell 15% on the news and although its executives blasted the CMA’s finding as superficial, investment analysts believe the massive deal will have to be called off.
  • Warren Buffett, the world’s most successful investor, was in the news over the weekend after the release of his annual letter to shareholders. It discloses that for the first time in decades Berkshire has started buying back its own shares. In 2018, the company acquired $1.3bn worth of its own stock, but that hardly made a dent in its $112bn yearend cash pile. Buffett invested $24bn into a share portfolio now worth $170bn, adding US bank JP Morgan Chase as a major new holding. While accounting rules and the fall in US share prices resulted in a big paper loss for the December quarter, Berkshire’s wholly owned subsidiaries generated 71% earnings growth, helped by the Trump-initiated fall in the US corporate tax rate.
  • In South African related news, president Cyril Ramaphosa last night accelerated the process of recovering plundered state resources by establishing a Special Tribunal chaired by Judge Gidfonia Makhanya. Reflecting the scale of the task, the chairman has been contracted for three years, with seven more judges appointed as members. The Tribunal has the power to adjudicate on civil proceedings brought to it by the Special Investigating Unit, which is currently investigating abuses at Eskom. Among the first likely to be nailed are 11 contractors involved in the construction of Eskom’s three new power plants. Yesterday’s Sunday Times newspaper quotes the SIU’s spokeswoman who says these companies may have siphoned off an eye popping R139bn, almost $10bn.
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