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Monthly Archives: July 2017

Whatever Apple may have done in private to fight the Chinese internet law, the company has not offered a peep of criticism in public. Apple’s only public statement on the VPN ban said that the company had been “required to remove some VPN apps in China that do not meet the new regulations,” but noted that the “apps remain available in all other markets where they do business.” Despite the pulldown, Apple says there are still hundreds of VPN apps available on its Chinese app store, some of which remain unregistered with the government.

Search Apple’s website for a letter from Mr. Cook issuing a public rebuke of China’s intrusion into his customers’ privacy and freedom of expression — you won’t find it. The company has not fully tested its political and economic leverage in China. It hasn’t tested the public’s immense love of its products. It hasn’t publicly threatened any long-term consequences — like looking to other parts of the world to manufacture its products.


Apple has agreed to remove VPN apps from its Chinese app store.

European Pressphoto Agency

The company’s silence may be tactical; the Chinese government, the conventional thinking goes, does not take well to public rebuke. Yet Apple’s quiet capitulation to tightening censorship in one of its largest markets is still a dangerous precedent.

“Apple’s response is tremendously disappointing,” said Eva Galperin, director of cybersecurity at the Electronic Frontier Foundation, a digital-rights advocacy group. “I think it’s possible that Apple is playing a bigger role behind the scenes here. But the problem with that is, from the outside it looks exactly like doing nothing.”

This isn’t just a blow for the liberties of Apple’s customers in China. Authoritarian governments have a tendency to copy what works. Russia just passed a law curbing VPNs. Early this year, Apple pulled down The New York Times app in the Chinese App Store, and both Apple and Google removed the LinkedIn app from their Russian app stores. In the United States, President Trump has called for greater legal measures against the press. And he took the F.B.I.’s side in that fight over iPhones. What happens in China doesn’t stay in China.

It may be naïve to expect Apple to publicly take on the Chinese government. Sure, it may be the world’s most valuable company, with extensive investments and operations in China. But Apple is also just a foreign company — it must obey local laws, and it must watch for its bottom line. The Chinese market accounts for a quarter of Apple’s sales, and many analysts see the region as a key growth area for the company. So what was Apple supposed to do? Jeopardize its operations over a few apps?

What’s more, Apple’s silence isn’t unusual. While American tech companies frequently criticize decisions by American officials, they appear loathe to do so in China. This weekend, Amazon also began banning VPN services from the Chinese version of its cloud-computing platform, called AWS. Facebook, has been exploring ways of getting into the Chinese government’s good graces. Google pulled many of its services out of the Chinese market in 2010, blaming censorship, but it has lately been mulling ways to get back.

There is also a moral defense of Apple’s decision to give in without a public fight: Despite the VPN ban, Chinese internet users might still be better off with Apple in China than with it outside. Its app store still provides people access to millions of apps that they might not find elsewhere in China. And Apple’s own communications apps in China remain free of government censorship. For instance, Messages, Apple’s texting app, and FaceTime, its video and phone-calling app, are protected by end-to-end encryption, allowing Chinese users to communicate freely.

But that may be of limited utility.

“It will only get worse,” said Xiao Qiang, a Chinese human rights activist and an adjunct professor at the University of California, Berkeley, School of Information. Mr. Xiao sees the latest crackdowns as the beginning of a new wave of internet censorship in China. And he doesn’t buy the argument that saying something publicly would have backfired for Apple.

“They should say something,” he said. “They are a U.S. company, after all. And they’re a global company, upholding standards of privacy and speech in many, many markets outside China. So if they have to do things differently in China, they should have some public explanation for why — because that attitude could matter globally, including in the U.S.”

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In July, the S&P 500 rose 1.9 percent, the Dow added 2.5 percent and the Nasdaq gained 3.4 percent.

Apple Inc, which is expected to report quarterly results after the market close on Tuesday, dipped 0.51 percent.

The Dow Minute by Minute

Position of the Dow Jones industrial average at 1-minute intervals on Monday.




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Investors have been counting on earnings to support high valuations for equities.

S&P 500 earnings are expected on average to have grown 10.8 percent in the second quarter, according to Thomson Reuters I/B/E/S.

“The market in the last week has become jittery,” said Dennis Dick, head of markets structure, proprietary trader at Bright Trading LLC in Las Vegas. “Money managers are looking to take profits and for any excuse to do so.”

The Dow Jones Industrial Average rose 0.28 percent to end at 21,891.12 points and the S&P 500 lost 0.07 percent to 2,470.3. The Nasdaq Composite dropped 0.42 percent to 6,348.12.

Just four of the 11 major S&P sectors rose, with the financial index’s 0.62 percent rise leading the gainers.

Tesla dropped 3.46 percent after Chief Executive Elon Musk warned that the electric carmaker would face “manufacturing hell” as it ramps up production of its new mass-market Model 3 sedan.

Snap fell 1.01 percent as some investors were allowed for the first time to sell shares following the Snapchat owner’s March initial public offer.

3-Month Treasury Bills

High rate at weekly auction.












Discovery Communications dropped 8.21 percent after it said it would buy Scripps Networks Interactive for $11.9 billion.

Charter Communications Inc rose 5.85 percent to a record high after a source said Japan’s SoftBank Group Corp was considering an acquisition offer.

About 6.3 billion shares changed hands in U.S. exchanges, above the 6.0-billion average over the last 20 sessions.

(Additional reporting by Sinead Carew and Kimberly Chin in New York; Editing by Nick Zieminski and James Dalgleish)

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Discovery Communications is buying Scripps Networks Interactive in an $11.9 billion deal.

Manuel Balce Ceneta/Associated Press

NEW YORK — Discovery Communications announced on Monday an $11.9 billion deal to buy Scripps Networks Interactive, the owner of Food Network and HGTV.

The combined company would control about 20 percent of the advertising-supported pay-television audience in the United States, and it could create a force in television popular with female viewers, bringing together the Scripps channels and Discovery offerings including Investigation Discovery, OWN and TLC.

The talks took place amid broad consolidation in the telecommunications and media industries. Over the past several years, cable and broadband providers including Comcast, Charter, Verizon and AT&T have steadily increased their market presence. That has put pressure on TV companies like Discovery to grow in size as a way to gain leverage in negotiations with cable distributors.

The deal announced on Monday had been in the works for a long time. The companies held talks to combine several times — most recently in 2014 — although those discussions fell apart over a range of issues, including price. In pursuing Scripps, Discovery also faced competition from its rival Viacom.

“We believe that by coming together with Scripps, we will create a stronger, more flexible and more dynamic media company,” David M. Zaslav, chief executive of Discovery Communications, said in a statement.

The deal is valued at about $90 a share, or roughly 34 percent more than the price of Scripps stock before reports emerged about a potential sale. The transaction — made up of $63 a share in cash and $27 a share in Discovery common stock — includes the assumption of $2.7 billion of Scripps’s net debt. The companies say they expect the transaction to close early next year, subject to shareholder and regulator approval.

For Discovery, sealing the deal meant placating the Scripps family’s shareholders, who control roughly 92 percent of the broadcaster’s voting stock and who vote as a group.

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Mr. Shkreli’s actions were frenetic. Starting on Monday, jurors in Federal District Court in Brooklyn will be deciding whether they were criminal.

Major losses were not new to Mr. Shkreli in 2012. He shut down his first hedge fund in 2007 after a single bad trade. At his next fund, MSMB Capital, he lost everything after a short sale, or a bet that a stock’s value would decline, in February 2011. Days later, he created MSMB Healthcare, another hedge fund, and Retrophin, a pharmaceutical company.

Investors might have seen warning signals with MSMB: Different memorandums listed different auditors, neither of whom worked for MSMB. Mr. Shkreli kept listing Fred Hassan, a prominent pharmaceutical executive, as an investor even after Mr. Hassan’s daughter, the actual investor, repeatedly asked him to stop. Statements were sent late, in emails from Mr. Shkreli rather than from a fund administrator.

Suddenly, in September 2012, Mr. Shkreli emailed investors that he was shutting down MSMB Capital and MSMB Healthcare to focus on Retrophin and that they could cash out.

But there was nothing in the MSMB Capital accounts. The MSMB Healthcare account held $515. Retrophin was nearly broke, too.

As for Mr. Shkreli, in September 2012, he listed more than $2.6 million in liabilities and $1,415 in assets. And in October, the Securities and Exchange Commission said it was investigating MSMB Capital.

Retrophin, and Mr. Shkreli, desperately needed cash. His idea: Pursue a reverse merger into a shell company so Retrophin could go public.

An employee who had run a consumer fund for MSMB, Tim Pierotti, left the company in November, signing a termination and severance agreement. Mr. Pierotti testified that Mr. Shkreli had called him into the office on Dec. 11.

With the reverse merger, Retrophin would get 2.5 million shares that could be traded on the open market — as long as recipients were not Retrophin affiliates, in accordance with securities law. Mr. Shkreli wanted to divide the shares among seven friends and co-workers, Mr. Pierotti testified. For $400, he was to receive 400,000 shares.

Prosecutors say Mr. Shkreli tried to make it appear as though the share recipients were not aligned with MSMB or Retrophin. Evan Greebel, a lawyer who worked for Mr. Shkreli, emailed him about the shares: “I’m listing everyone’s addresses as c/o msmb…does that work for you?” Mr. Shkreli replied: “no!!”

Mr. Greebel asked recipients to confirm they were not officers or directors of Retrophin, or that they alone or with others controlled the stock. Mr. Shkreli then announced that Retrophin would have only four employees.

But several of the recipients worked for Retrophin for weeks or months after, a prosecutor argued. The morning when Mr. Shkreli said there were only four employees of Retrophin, he, in fact, told one manager who was not among the four to “get in here.”

Retrophin was down to about $11,000 in cash. Now, the reverse merger seemed out of reach. The price of the shell company Retrophin was buying had suddenly gone up, Mr. Shkreli told an investor. He went out drinking with the investor and the next morning asked him for a $10,000 loan. Mr. Shkreli never paid him back, the investor testified.

At 4 a.m. on Dec. 17, Mr. Shkreli emailed one of his most enthusiastic backers. He had a ticker symbol; his company was public, he said. “Sounds promising,” the investor, Schuyler Marshall, wrote, but he asked when the distribution of money from MSMB would be complete. He would have to keep waiting.

That was also Mr. Shkreli’s first day as chief executive. The seasoned executive he had recruited to run the company had quit; the executive testified that he did not want to be the face of the company “while Martin actually made the decisions.”

At the same time, another problem loomed: Mr. Shkreli was going to miss a very expensive deadline. He was supposed to pay Merrill Lynch $1.35 million, the settlement from the bad trade in February 2011. He persuaded the company to extend the payment deadline to the end of December.

Mr. Shkreli’s hope for quick cash from Retrophin was fading. He had joked about a $600 share price, but within days of going public, its price dropped by half, to $3.

He “was obsessed with the stock price,” Jacquelyn Kasulis, a prosecutor, said.

Around Dec. 27, the stock began behaving strangely. Volume shot up to 35,000 shares a day from about 2,000, and the price kept falling.

“I think it might be tim selling,” Mr. Shkreli emailed Mr. Greebel on Saturday, Dec. 28. Things between Mr. Pierotti and Mr. Shkreli had soured by then. Mr. Greebel did not seem to care; he had not been paid by Mr. Shkreli, and asked for money by Monday. “Zero chance,” Mr. Shkreli replied. “what to do regarding tim?”

“not sure what you can do; he has the stock,” Mr. Greebel replied.

The financial pressure on Mr. Shkreli was mounting. At 5 p.m., Mr. Shkreli emailed Mr. Pierotti, asking to see him tomorrow.

No, Mr. Pierotti replied.

Mr. Shkreli forwarded that to Mr. Greebel. “Leave it alone,” Mr. Greebel replied.

Mr. Shkreli did not. His lawyers have talked about his anxiety and depression, and shards of that seemed to come through in his emails.

On Saturday night, Mr. Shkreli wrote Mr. Greebel, “The business is on the brink of shutting down.” He wanted Mr. Greebel’s feedback on seeking private investment to get cash for Retrophin. Significantly, he suggested sending the proposal to Mr. Pierotti, which would make Mr. Pierotti an insider, preventing him from selling stock.

After midnight, he sent another email to Mr. Greebel: a draft of a news release announcing that Retrophin was shutting down.

Later Sunday morning, Mr. Shkreli sent the same proposal on private investment to the share recipients, including Mr. Pierotti. “I have been extremely stressed about Retrophin; the declining stock price is particularly alarming,” Mr. Shkreli wrote.

The ploy did not work. Mr. Pierotti said he had refused to read the email.

Mr. Shkreli wrote Mr. Pierotti again, insisting that he buy the shares back from him. “The least you can do is deign to speak with me,” he wrote. He followed, a few hours later, with another email to the share recipients. “I still have not received any responses — please help,” he wrote. “If Retrophin doesn’t raise $1m in the near future, I think you know what the result will be.”

Then Mr. Shkreli called Mr. Pierotti, “screaming and yelling,” Mr. Pierotti testified. “He demanded that I sell the shares to him.”

Mr. Pierotti did not.

It was now New Year’s Eve. Retrophin’s stock ended the year at $3.35. The company had $11,388 in cash, and a net loss of $33.6 million. Mr. Shkreli missed the extended deadline from Merrill Lynch, and his late-payment fee was now $125,000.

Mr. Shkreli began the new year by emailing Mr. Pierotti, announcing that he was suing him, then sending a letter to Mr. Pierotti’s wife, threatening to make her and their four children homeless.

In February 2013, a private investment in Retrophin was completed, injecting $10 million, and the company at last had enough cash to survive.

Mr. Shkreli went on to engage in other activities, including keeping watch over the shares he had handed to associates — illegally, the government says. He created settlement and consulting agreements so Retrophin would pay the MSMB investors, which was not something that the now-public Retrophin should have had anything to do with, prosecutors argued.

Mr. Shkreli’s lawyer, Benjamin Brafman, had a different take. “Retrophin was hanging by a thread, but where did it go after?” Mr. Brafman asked in closing arguments. “He did it, and it worked, and they got paid.”

Eventually, Retrophin became a success. Today, its market value is almost $800 million, and its share price is $20. MSMB investors, ultimately paid in part with Retrophin stock, made more than three times their original money, according to defense tallies.

As for Mr. Shkreli, by fall 2014, after increasingly strange behavior, from disclosing nonpublic information on Twitter to misleading board members, he was fired as Retrophin’s chief executive.

By the end of that year, the federal investigation into him was well underway.

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Investors have been counting on earnings to support the relatively high valuations for equities, with the S&P 500 trading at about 18 times earnings estimates for the next 12 months, above its long-term average of 15 times.

Of the 289 S&P 500 companies that reported results until Friday, 73 percent of them beat analyst expectations. This is above the 71 percent average over the past four quarters, according to Thomson Reuters I/B/E/S.

Apple Inc, a part of the Dow, is expected to report quarterly results after market close on Tuesday and its performance may hold the sway over tech stocks this week.

At 12:25 a.m. ET (1625 GMT) the Dow Jones Industrial Average was up 83.04 points, or 0.38 percent, at 21,913.35, the S&P 500 was up 1.02 points, or 0.04 percent, at 2,473.12 and the Nasdaq Composite was down 19.44 points, or 0.31 percent, at 6,355.23.

Seven of the 11 major S&P sectors were higher, with the financial index’s 0.68 percent rise leading the gainers.

On data front, contracts to buy previously owned homes rebounded in June after three straight monthly declines.

The National Association of Realtors said its Pending Home Sales Index, based on contracts signed last month, jumped 1.5 percent to a reading of 110.2.

Oil prices rose on Monday, putting July was on track to become the strongest month for the commodity this year.

Snap shares trimmed much of its losses and were down 1.9 percent at $13.55 as a share lockup ended, allowing for sales by early investors.

Discovery Communications shares were down 7.5 percent at $24.77 after it said it would buy Scripps Networks Interactive for $11.9 billion.

Charter Communications Inc shares were up 4.9 percent at $388.66 after the U.S. cable operator said on Sunday it was not interested in buying wireless carrier Sprint Corp.

Declining issues outnumbered advancers on the New York Stock Exchange by 1,471 to 1,331. On the Nasdaq, 1,668 issues fell and 1,090 advanced.

(Reporting by Ankur Banerjee, Sweta Singh, and Sruthi Shankar in Bengaluru; Editing by Arun Koyyur)

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New car sales are likely to keep falling.

On Tuesday, automakers are due to report new vehicle sales for July, and it will be no surprise if there’s another decline. After hitting a record last year, sales have fallen every month so far in 2017. Inventory levels may be more closely watched, however. Ford, General Motors and other automakers have been trimming production in response to the sales slowdown. If inventories are still high, car companies may be forced to extend the industry’s usual summer plant shutdowns. Neal E. Boudette


Investors watch Apple results for hints about new phones.

Apple will report financial results on Tuesday for the quarter that ended in June. But Wall Street will be focused on what the iPhone maker says about the September quarter, when it traditionally unveils its new phone lineup. Reports of production delays on a new high-end model for the 10th anniversary of the iPhone could mean that the expected surge in sales will be pushed out to the holiday season. Vindu Goel


German politicians and executives plan a ‘Diesel Summit’ meeting.

In an increasingly urgent attempt at damage control, political leaders and auto industry executives will meet in Berlin to address a growing public backlash against pollution from diesel cars. The “Diesel Summit” meeting will include governors of seven German states where cars are produced or where urban pollution is particularly severe, as well as top executives from Volkswagen, BMW, Daimler, Ford of Europe, Opel and major suppliers. They are expected to discuss ways to reduce emissions from cars already on the road, which are often much higher than advertised. Diesels account for more than half of passenger cars in Germany, in part because of tax breaks on diesel fuel. Jack Ewing

Despite its new model, Tesla is expected to report second-quarter loss.

The hoopla surrounding the first deliveries of Tesla’s Model 3 car will be dying down just as the company reports its second-quarter earnings on Wednesday. Another loss is expected. The company has reported losses in seven of the past eight quarters, and has been spending heavily to ramp up production of the Model 3. The company’s chief executive, Elon Musk, is counting on the battery-powered sedan to turn Tesla into a volume carmaker. He has promised that sales will climb to more than 500,000 vehicles a year once the Model 3 is rolling, a big leap from the 85,000 that Tesla sold last year. Neal E. Boudette


The Bank of England will update inflation rates.

The Bank of England will release its latest monetary policy decision and unveil its updated forecast for inflation on Thursday. The Monetary Policy Committee is widely expected to keep interest rates steady, but some members of the committee have become increasingly concerned about inflation.

At its last meeting, in June, the committee voted 5 to 3 to keep the rate at a historic low of 0.25 percent. But three committee members called for an immediate rate increase given the outlook for inflation. The Office of National Statistics said this month that inflation fell to 2.6 percent in June, which may ease some of the pressure on the bank to raise rates. Chad Bray

Economists expect that unemployment in the U.S. fell slightly in July.

On Friday at 8:30 a.m., the Labor Department will report data on hiring and unemployment in July. Economists estimate that employers added 180,000 jobs for the month, with the unemployment rate falling by 0.1 percentage point to 4.3 percent. In June, the economy added a robust 222,000 jobs, and another hiring surge could prompt the Federal Reserve to move more quickly to raise interest rates. Nelson D. Schwartz

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The HSBC building in Hong Kong. Though based in London, the bank generates much of its profit in Asia.

Kin Cheung/Associated Press

LONDON — HSBC said on Monday it would buy back up to an additional $2 billion in shares as it reported better-than-expected earnings in the second quarter.

The bank, which is based in London but generates much of its profit in Asia, has announced $5.5 billion in share repurchases since the second half of last year as its prospects have improved.

Since 2015, HSBC has significantly reshaped its operations by shedding tens of thousands of jobs, selling underperforming businesses and shrinking its global investment banking business.

“We have made an excellent start to 2017, reflecting the changes we have made since our investor update in 2015 and the strength of our competitive position,” Stuart Gulliver, HSBC’s chief executive, said in a news release.

“Our three main global businesses performed well, generating significant increases in both reported and adjusted profit before tax, and gaining market share in many of the products that are central to our strategy,” he added. “Revenue grew faster than costs on an adjusted basis compared with last year’s first half, and we passed a number of major milestones on the way to completing our strategic actions.”

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The backbiting has taken a toll. After it was reported that she was a candidate for the chief executive job, Ms. Whitman said last Thursday that “Uber’s C.E.O. will not be Meg Whitman.” She made her announcement in a series of messages on Twitter just as the Uber board was holding a quarterly meeting, at which they had planned to call a vote on whether to appoint her to the job.


Meg Whitman, the chief executive of Hewlett Packard Enterprise, announced via Twitter that she was taking herself out of the running to succeed Mr. Kalanick.

Drew Angerer/Getty Images

The internal divisions mean the search for a new leader may drag on. Even as board members speak with other candidates, including Jeffrey Immelt, who is departing as chief executive of General Electric, about the chief executive job, a lack of cohesion is apparent. Some board members are not convinced that Mr. Immelt is the right choice, given that G.E.’s stock price and profits have stagnated in recent years.

Four people are now on the shortlist to succeed Mr. Kalanick, according to one person close to the process. And at an internal meeting with Uber employees last week, Liane Hornsey, the company’s senior vice president and head of human resources, said a top candidate was expected to be chosen within the next six weeks.

Representatives for Uber, the company’s board of directors and Mr. Kalanick declined to comment, as did G.E.

“As Meg has made clear, she is fully committed to H.P.E.,” a spokesman for Hewlett Packard Enterprise said. “Our focus remains on driving the company forward and delivering for our customers, partners, employees and shareholders.”

The Uber board — which recently added new members amid a history of internal tensions — is mostly split into two camps. On one side is Mr. Kalanick, who is plotting a comeback. On the other are many of the company’s other directors, including the venture capitalist Matt Cohler and the private equity investor David Trujillo, who represent Uber investors like Benchmark and TPG Capital. Garrett Camp, an Uber co-founder, and Ryan Graves, an early employee, were part of this group in supporting Ms. Whitman’s candidacy last week.

The positions of some board members — such as Wan Ling Martello, a Nestle executive, and Yasir Al Rumayyan, who represents Saudi Arabia’s Public Investment Fund — are unclear.

As the factions have shifted, Arianna Huffington’s role has been particularly fluid. A founder of the Huffington Post who now runs a wellness company, Thrive Global, Ms. Huffington grew close to Mr. Kalanick since being appointed to the board last year, according to two people familiar with the board’s dynamics. Yet she advised him last month that resigning as Uber’s leader was a good idea.


Arianna Huffington, a founder of the Huffington Post and member of the Uber board. Her role has been particularly fluid amid the board’s shifting alliances.

Andrew Burton/Getty Images

The changing alliances have led to major disagreements within the board. Some members are upset that no chief financial officer has been appointed, even though the job has been vacant for more than two years.

There is also debate about the potential investment by SoftBank. Some board members believe that taking the money is unnecessary and potentially risky, given that Uber has $5.5 billion of cash in the bank and SoftBank’s backing of multiple ride-hailing rivals in Asia.

Some company executives are concerned that Mr. Kalanick could use a SoftBank investment to dilute other shareholders’ stake while he continues to buy stock back from employees in a bid to amass power. And aligning with Masayoshi Son, the founder and chief executive of SoftBank, could provide Mr. Kalanick with a key ally, especially if Mr. Son seeks to appoint new board members who favor Mr. Kalanick’s return as chief executive as part of an investment.

A spokesman for SoftBank declined to comment.

According to people with knowledge of the quarterly meeting last Thursday, board members’ cellphones started buzzing during the evening with text messages regarding Ms. Whitman’s removing herself from consideration. Some board members appeared crestfallen that the person they viewed as the most attractive candidate had taken herself out of the running so publicly days before she planned to spend time with the few board members she had not yet met.

In a text message between those involved in the discussions that was shown to The New York Times, one person reacted to Ms. Whitman’s announcement with a grim laugh, punctuated by an expletive.

After the news of Ms. Whitman’s decision sank in, the board members continued the meeting. By the end of the evening, they had agreed to a truce in hopes of avoiding another negative round of media coverage, according to the people familiar with the meeting. Communicating directly and avoiding backstabbing, the directors agreed, was paramount from here on.

After all, they still had a new chief executive to find.

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Salaries have risen in places like South Asia, making outsourcing there less of a bargain. In addition, as brands pour energy and money into their websites and mobile apps, more of them are deciding that there is value in having developers in the same time zone, or at least on the same continent.


Mark Orttung, the chief executive of Nexient, which is based in Newark, Calif., but set up centers in Michigan and Indiana to tap workers who didn’t want to leave the Midwest.

Jason Henry for The New York Times

Many of these domestic outsourcers are private, little-known companies like Rural Sourcing, Catalyte, Eagle Creek Software Services and Onshore Outsourcing. But IBM, one of the country’s foremost champions of the offshore outsourcing model, has announced plans to hire 25,000 more workers in the United States over the next four years.

As a result, the growth of offshore software work is slowing, to nearly half the pace of recent years.

“The nature of work is changing,” said Vishal Sikka, chief executive of Infosys, an Indian outsourcing giant. “It is very local. And you often need whole teams locally,” a departure from the offshore formula of having a project manager on-site but the work done abroad.

“It’s not enough to have people offshore in India,” he added.

Infosys announced in May that it planned to hire 10,000 workers in the United States over the next two years, starting with centers in Indiana and North Carolina.

The offshore industry is not imperiled, analysts say. But from 2016 to 2021, the offshore services industry will have average yearly growth of 8 percent, and less in the United States, the research firm IDC estimated. The rate in the previous five years was 15 percent.

“Domestic sourcing is here to stay, and it’s going to grow rapidly,” said Helen Huntley, an analyst at the research firm Gartner.


Nexient’s new office in Newark. The company has added 150 people in the last two years, and plans to hire a few hundred more over the next year.

Jason Henry for The New York Times

The first wave of internet-era digital change in business, starting in the 1990s, focused mainly on automating back-office tasks like payrolls and financial reporting. The software involved was a collection of huge programs maintained by armies of engineers.

The internet allowed that work to be sent to low-wage nations, especially India. That brought the rise of the big outsourcing companies like Tata Consultancy Services and Infosys.

Offshore services companies still excel at maintaining the software that runs the essential back-office systems of corporations. But today, companies in every industry need mobile apps and appealing websites, which can be made smarter with data and constantly updated. That software is best created by small, nimble teams, working closely with businesses and customers — not shipped to programmers half a world away.

Nexient, headquartered in Newark, Calif., has three delivery centers in the Midwest: in Ann Arbor, Mich.; Okemos, Mich.; and Kokomo, Ind. It employs 400 people, up from 250 two years ago, and plans to hire a few hundred more over the next year, Mark Orttung, the company’s chief executive, said.

The company’s business model is fairly typical for onshore companies. On projects, it will send members of a team to the client for a couple of weeks to study the business and meet their counterparts. Bill.com even interviewed and shared in the selection of five Nexient engineers who would work on the joint team.

Mr. Lacerte of Bill.com had farmed out technology work over the years, but the headaches of navigating time zones, cultures and language often outweighed the cost savings. Those problems went away when he hired a domestic outsourcer.


A set of tools at the desk of a Techtonic apprentice. Techtonic began the apprentice program in 2014, and has hired 90 percent of the graduates.

Ryan David Brown for The New York Times

Nexient has set up its centers away from the coastal high-tech hubs, like the Bay Area and New York, to tap skilled people who want jobs in the technology economy without leaving the Midwest, where living costs are far less.

Monty Hamilton, a former Accenture consultant, took over Rural Sourcing in 2009, when it had just a dozen employees. Today, the company has 300 workers in four delivery centers: in Albuquerque; Augusta, Ga.; Jonesboro, Ark.; and Mobile, Ala. The payroll will reach about 400 people by the end of the year, Mr. Hamilton said.

“Every business now realizes it’s a digital business,” he said. “They need technical help, and that’s really driven the demand for our U.S.-based talent.”

Politics seem to be playing a role, too. The American onshore companies say they are seeing a postelection spike in client inquiries, as President Trump lobbies businesses to create more jobs in the United States and seeks to curb immigrant work visas.

“The election has brought a lot of attention to these issues and to us,” Mr. Orttung said. “But nobody buys because of that.”

Rising labor costs abroad also make domestic sourcing more attractive. A decade ago, Mr. Hamilton said, an American software developer cost five to seven times more than an Indian developer. Now, he estimates, the gap has shrunk to two times. The standard billing rate for his engineers is $60 to $70 an hour, compared with $30 to $35 in India, Mr. Hamilton said.


Nick Seeber, a senior developer at Techtonic, which plans to expand to 10 new cities in the next three years.

Ryan David Brown for The New York Times

But the sales pitch made by onshore companies is not about raw labor costs. Instead, they claim the ability to deliver excellent work more efficiently than the offshore providers and less expensively than large technology services companies.

Cambia Health Solutions, headquartered in Portland, Ore., is a health insurer with two million members. In recent years, it has moved beyond insurance to provide consumers with online tools to shop for doctors and specialists, for example, and to sort through drug options based on effectiveness, prices and user reviews.

In the past two years, Cambia Health has cut its use of an offshore outsourcer in India by half, said Laurent Rotival, the company’s chief information officer. And the insurer has enlisted the help of Catalyte, an onshore outsourcer. “They can ramp up quickly,” Mr. Rotival said.

Catalyte, based in Baltimore, has doubled its work force in the last two years, to 300 people. To accommodate rapid growth, Catalyte is scouting locations for two new centers, which the company hopes to open by the end of this year, said Michael Rosenbaum, founder of Catalyte.

Training is a vital capability for all the onshore companies, but few have gone as far as the Techtonic Group in Boulder, Colo. Once a committed offshore outsourcer, Techtonic has made nurturing homegrown talent the centerpiece of its business. In 2014, it set up a training academy that feeds graduates into its Department of Labor-approved apprenticeship program for software engineers.

In the past couple of years, 30 people have gone through the program, which lasts six to nine months. Techtonic has hired 90 percent of the graduates, and many later became employees of its corporate customers, starting at salaries between $65,000 and $75,000.

Techtonic has an ambitious expansion plan, going to 10 new cities in the next three years and hiring 100 developers in each city, said Heather Terenzio, the company’s chief executive.

“American industry has relied too much on overseas technology workers and neglected the potential talent here,” she said.

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That, the newspaper theorized, might be a vehicle through which the hackers release their digital booty ahead of the Sept. 24 election, which will be a referendum on Ms. Merkel, the de facto European Union leader (and, it happens, one of the strongest Continental voices for continued Russian sanctions).

Whatever the case, if the data does leak, Germany will face a test like the one America faced last fall. More specifically, the German media will face a test like the one the American media did.

I had to wonder: Will it do better than we did? And should we have done better in the first place?

The Clinton campaign, its supporters and even some in the media itself have complained since last summer that American news organizations were all too ready to make themselves the weapons of a hostile foreign power, by happily reprinting emails from the Democratic National Committee and the Clinton adviser John Podesta, which intelligence officials say were the fruit of Russian hacking. The charge has taken on still more potency with the investigations into whether members of the Trump campaign colluded with Russia. (They say they didn’t; Russia denies involvement in the hacks.)

The view has its adherents here, including the chief editor of the influential German magazine Der Spiegel, Klaus Brinkbäumer.

“I wouldn’t say the American media failed, but I actually do agree when somebody says that they’d been weaponized and used, it’s sad to say,” he told me over the telephone from his headquarters in Hamburg.

“It was out there very quickly, and very, very soon, and of course there was a plan behind it,” he said, “and I’m not sure every journalist who used this material understood what was behind it.”

Should similarly stolen emails drop into the decidedly tamer media here, Mr. Brinkbäumer told me, Der Spiegel would not use any information it couldn’t independently verify.

“We want to be not as quick as possible but as honest as possible and as sincere as possible — that means there will be no rush,” he said.

The editors at Bild, Germany’s largest newspaper, plan to go further.

“We will have a special teaser, and in the teaser we will have a banner saying ‘Hacked,’ because ‘Hacked’ is more known than ‘Leaked’ in Germany,” Julian Röpcke, the Bild political editor, told me at the paper’s offices in the headquarters of its corporate parent, Axel Springer.

“And then we will have every paragraph where we use leaked information in red,” he said. “So we will have black and red paragraphs, and under it we will write something like, ‘The information in red was leaked to manipulate your opinion about this person.’”

Mr. Röpcke said Bild’s decisions were partly informed by what had taken place in the United States, though he said he wasn’t being judgmental about his overseas colleagues.

“I think we would have made the same mistakes, because it was so early and you didn’t really know what was happening,” he said as we spoke over Cokes in the Axel Springer Journalists Club, a throwback to a bygone newspaper era featuring original wood paneling from The London Times and sweeping views of Berlin.

Then again, United States intelligence officials suspected Russian involvement in the hacking early on. At the time, though, editors at major media outlets — including this one — said that if the contents of the emails were newsworthy, they had no choice but to report them.

Hillary Clinton’s aides argue that they were covered excessively. The much bigger story, they say, was that the emails were allegedly the fruit of a Russian attempt to undermine the American political process.

“There were not commensurate journalistic resources committed to investigating the chain of custody of the hacked materials compared with the easy task of just regurgitating what was in them,” Brian Fallon, Mrs. Clinton’s former press secretary, told me over the phone.

Sensitive to charges of excuse-making, Mr. Fallon added: “I’m not saying the media is solely to blame. The Clinton campaign made plenty of mistakes.” But that, he said, “shouldn’t free the media from looking at itself if this is going to be the norm — where foreign governments are going to interfere in elections.”

Mr. Fallon acknowledged that there had been some newsworthy material in the stolen emails. If there hadn’t been, the Democratic National Committee chairwoman, Debbie Wasserman-Schultz, would not have had to resign (over emails showing she favored Mrs. Clinton over Bernie Sanders in the primary season), and CNN would not have broken its contributors’ contract with Ms. Wasserman-Schultz’s interim successor, Donna Brazile (over emails showing she shared with the Clinton campaign a question proposed for a CNN/TVOne candidates’ town hall-style forum).

Mr. Fallon directed his criticism at less consequential tidbits, like gossipy quips captured in the email exchanges of Mr. Podesta and the prominent Clinton supporter Neera Tanden. They fed a stream of blog items and social media posts, he said, that allowed “the Russians to manipulate the news media’s attention.”

They also fed the American media’s voracious appetite for bite-size, traffic-driving tidbits that are the opiates of the nation’s new information addiction.

Several people I spoke with here said they were optimistic that news of the hack-and-leak operation in the United States had helped prepare Europe for similar efforts. They pointed to France, where leaks of stolen emails from Emmanuel Macron’s political movement, En Marche, failed to sway the electorate there.

The French newspaper Le Monde, for instance, declared that it would not allow itself to be “manipulated by the publishing agenda of anonymous actors.”

But the leaks also hit just hours before a legal blackout that forbids candidates and media to share “electoral propaganda” 44 hours ahead of voting. And, as Le Monde wrote, it was not enough time to verify any newsworthy material, anyway.

It was never clear that there was much newsworthy in the leaked files to begin with.

As Marcel Rosenbach, a cybersecurity reporter for Der Spiegel, told me, “If there’s actually something in the material that amounts to something — if there is a scandal to be reported on — that’s the most important question.”

In that case, the German media’s fervent hopes for dealing with stolen data will face their true test.

If history, and what I know about reporters everywhere, are a guide, they will publish. That, after all, is the imperative of a free press. But getting the story right means getting the whole story, including when the leaks are part of a suspected state action aimed at swaying opinion.

If we’ve learned anything so far, it’s that the answer to information as a weapon is more information, as a path to the truth. And, yes, we can handle it.

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