The Dangers of Tech Firms’ Safe Harbor: CEO Daily

Good morning.

Over the weekend, I caught up with a piece published last week by Bloomberg Businessweek provocatively titled, “The 26 Words That Got Us Into This Mess.” The words in question are part of section 230 of the 1996 Telecommunications Act, which allows Internet service providers to escape responsibility for the junk published on their platforms. Back then, the tech companies were the little guys—Facebook and Google didn’t even exist—and the law was supposed to provide a “safe harbor” that would allow Internet startups to flourish.

Today, of course, those startups have become Big Tech, and those words have shielded the companies from liability for now numerous well-known atrocities. The latest is the notorious website 8chan, which was the venue of choice for the venom spewed by the El Paso terrorist. Cloudfare, which hosted 8chan, belatedly terminated the service. Belatedly is a word that seems to apply to virtually every tech effort to ban hate speech, false content, etc. You can thank Section 230 for that.

The Businessweek piece, which you can read here, provides the history of Section 230, and is a case study in how the most well-intentioned legislation can go wrong. With the benefit of hindsight, it is clear that it was a mistake. Time for a change. The giant tech companies have become our leading sources of information and need to be held to a higher standard.

News below.

Alan Murray
alan.murray@fortune.com
@alansmurray

Hong Kong Airport Cancels All Flights As Protests Prompt Biggest Disruption Yet

Hong Kong airport authorities canceled remaining flights on Monday after protesters swarmed the main terminal building for a fourth day, the biggest disruption yet to the city’s economy since demonstrations began in early June.

“Airport operations at Hong Kong International Airport have been seriously disrupted as a result of the public assembly at the airport today,” the airport said in a statement. “Other than the departure flights that have completed the check-in process and the arrival flights that are already heading to Hong Kong, all other flights have been canceled for the rest of today.”

Thousands of black-clad protesters on Monday packed the arrival area, where they had gathered for a three-day sit-in that was originally planned to end last night. Shares of Cathay Pacific Airways Ltd., Hong Kong’s main airline, tumbled to a 10-year low after the news. The government planned a press briefing for 5:15 p.m. local time.

The Stoxx Europe 600 Index came off its session high and contracts for all three main U.S. equity indexes erased earlier gains.

China stepped up its rhetoric on Monday, saying protesters have committed serious crimes and showed signs of “terrorism.” Hong Kong has come to a “critical juncture” and all people who care about its future should say no to violence, Yang Guang, a spokesman for its Hong Kong and Macau Affairs Office, told reporters on Monday as protesters gathered at the airport.

The protests, sparked in June by a bill easing extraditions to the mainland, have evolved into the biggest challenge to Chinese control since the U.K. relinquished its former colony in 1997. The social unrest has hurt the economy and impacted daily life in one of the world’s most densely crowded cities, raising concern that Beijing will use force to restore order.

Authorities had deployed more aggressive tactics during the weekend protests, with riot police videotaped beating demonstrators in subway stations and officers going undercover to infiltrate the group and make arrests. The violent scenes emerged as protesters used flash mobs across the city, surrounding police stations, disrupting traffic, and hurling projectiles including bricks and petrol bombs. One officer was taken to the hospital after suffering burns in the upmarket shopping district of Tsim Sha Tsui. Mob violence broke out elsewhere.

Police responded with tear gas and rubber bullets at various locations — including inside a metro station for the first time. Dramatic videos showed riot police firing weapons at close range and beating some protesters, many of whom wore yellow hard hats and gas masks. Some 13 protesters were injured, including two in serious condition, RTHK reported, citing hospital authorities.

Cathay Pacific has come under fire after some of its employees joined the demonstrations. A Chinese state-run company told employees not to fly Cathay Pacific on business or personal trips, according to people familiar with the matter.

Hong Kong leader Carrie Lam has refused to yield to a series of demands, including that she withdraw the bill and step down from her position. Authorities in Beijing remain supportive of her government, which has warned of an economic crisis if the demonstrations drag on.

The protesters are resorting to flash mobs and violence as their numbers diminish, according to Steve Vickers, chief executive officer of risk consultancy Steve Vickers and Associates and a former head of the Royal Hong Kong Police Criminal Intelligence Bureau.

“The government’s policy of sitting on their hands and hiding behind the police is actually working,” Vickers told Bloomberg Television on Monday. “The numbers are declining, the level of violence is increasing. As violence increases, the more middle class people and ordinary people of Hong Kong will turn against this movement.”

China in recent weeks has toughened its stance toward the movement and doubled down on its support for the police. The Hong Kong and Macau Affairs Office, its top agency overseeing the former British colony’s affairs, has held unprecedented briefings condemning violent protesters and called on the people of Hong Kong to oppose them. An overseas edition of the Communist Party mouthpiece People’s Daily said last month that police should take stern action to restore order.

Hong Kong called former deputy police commissioner Lau Yip-shing out of retirement last week to handle major upcoming public events including celebrations marking the 70th anniversary of the founding of the People’s Republic of China in October. Lau had overseen the government’s crackdown on protesters during the 2014 pro-democracy Occupy movement.

Authorities had denied permits over the weekend for protests in all but Victoria Park, but demonstrators took to the streets anyway. Police made more arrests on Sunday after detaining 16 people on Saturday, with local media reporting that officers may be dressing as protesters and infiltrating their ranks to help with detentions.

China’s civil aviation authority had earlier told Cathay Pacific to ban all employees who supported or joined the recent protests from flying to the mainland, one of the strongest signs yet that Beijing is losing its patience with the demonstrations.

Cathay suspended a pilot from flying who had been detained while participating in a protest, the airline said in a statement. It also fired two workers for “misconduct.” They allegedly leaked information about the travel arrangements of a Hong Kong police soccer team, the South China Morning Post reported.

“As always our actions and responsibilities are focused on the safety and security of our operations,” the airline said.

This weekend’s protests come days after a general strike that disrupted the financial hub’s morning rush hour, leaving traffic jammed, subway lines suspended and dozens of flights canceled. Those demonstrations also ended in tear gas and dispersal operations.

“It’s affected business tremendously — all businesses basically,” Allan Zeman, chairman of Hong Kong’s Lan Kwai Fong Group, which operates restaurants and bars in the city, told Bloomberg Television. “We have to stop the violence. That’s the most important thing. Then we can talk.”

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Cathay Pacific Share Price Plunges After China Slams Its Hong Kong Protest Ties

Cathay Pacific Airways Ltd. shares headed for their lowest level in a decade as China hit out at the airline after its employees joined anti-Beijing protests in Hong Kong.

Cathay shares lost 4.5% to HK$9.84 as of 10:59 a.m., set for the lowest close since June 2009. Swire Pacific Ltd., Cathay’s parent, fell 5.3% to HK$77.50.

Late Friday, China’s civil aviation authority issued a swathe of demands to Hong Kong’s dominant airline, including barring employees who supported the recent protests from flying to the mainland, and asking the company to submit information about all crew members flying to China for verification and authorization.

In response, Cathay said it took the directives very seriously. It suspended a pilot who had been detained while participating in a protest and fired two workers for “misconduct.”

The move escalated Beijing’s actions against corporations seen as supporting — or at least tolerating — staff participation in city protests that have dragged on for more than two months. Over the weekend, signs emerged that Hong Kong authorities used more aggression against demonstrators, with riot police videotaped beating demonstrators in subway stations.

For Cathay, the aviation directive forces it to choose between fueling the wrath of its workers, or those of China — possibly the company’s most important market. Though the carrier doesn’t disclose a breakdown of its mainland China business, flights originating from there and Hong Kong account for about half the firm’s revenue.

The Chinese authority’s order could threaten not only Cathay’s direct flights to China but also those to Europe and the U.S. because those routes fly over Chinese airspace, Jefferies Hong Kong Ltd. analyst Andrew Lee wrote in a note to clients.

The Hong Kong Cabin Crew Federation expressed “deep regret” over the Chinese regulator’s demands and criticized the CAAC for making policies restricting Hong Kong people’s legal rights and freedom, and damaging the “one country, two systems“ principle by which the city is governed.

Cathay is controlled by the U.K.’s Swire family, though the airline counts government-run Air China Ltd. as its second-largest shareholder. One of the most high-profile brands in Hong Kong, Cathay became a visible target for Beijing last week after many of its employees took part in a general strike that resulted in the cancellation of hundreds of flights.

In its warning on Friday, the Chinese regulator ordered Cathay to submit a plan for boosting internal controls, flight safety and security by Aug. 15.

Cathay’s actions, or lack thereof “have led to a severe threat to aviation safety, created negative social impact and increased the risk of flying from Hong Kong to the mainland,” according to the CAAC statement.

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Australia’s New Wave of Winemakers Won’t Make Shiraz

Australian wine made a name for itself years ago with Shiraz, and the country soon became synonymous with the big, bold red. Oftentimes, this Southern Hemisphere grape bears little resemblance to its French-rooted counterpart, Syrah.

However, a new wave of winemakers are leaning in to the lighter, spicier style found in northern Rhone and eschewing the “Shiraz” label for “Syrah.” While some of these young guns say using “Syrah” is a better way to describe their wine—and to educate drinkers about the diversity of Australia’s winemaking regions—others contend that they should continue to use “Shiraz” as a way to show the evolution of the variety in the country.

Giant Steps vineyards in Yarra Valley.
Giant Steps

The grape, French in origin, made its way to Australia in 1832 when viticulturist James Busby brought vines back after a tour of French and Spanish vineyards. Shiraz’s popularity became widespread and the variety was planted across the country, but it was often used as a blending grape. However, intrepid winemakers in the Barossa Valley—such as Dr. Christopher Rawson Penfold, founder of Penfold’s Grange—had a different experience with the grape in the region’s hot climate, and deemed Shiraz worthy of its own label. In the 1950s and 1960s, inspired by the winemaking in Bordeaux, new techniques were introduced at Penfold’s, which set the benchmark for decades to come.

Fast forward to the 1980’s and 1990’s, and Robert Parker, the arbiter of wine styles for several decades, gave perfect scores to the lush and ripe versions of Shiraz from estates like Penfold’s and Torbreck, setting off a barrage of copycats. “Australia had a reputation both internationally and domestically, of producing big, sweet, jammy styles of Shiraz with the Barossa leading the charge,” says Caroline Mooney, owner and winemaker of Bird on a Wire in the Yarra Valley. While some were very good, bottles of mediocre-quality wine with higher-than-average alcohol content were also being churned out; the flood of one-note wines meant Shiraz soon fell out of favor with the drinking public.

Defining Terroir

For many winemakers, Shiraz’s downfall became a moment of reckoning; they saw it as an opportunity to talk about terroir and educate drinkers on the climactic diversity of the country. “When Bird on a Wire started [in 2008], there was a need to differentiate cool climate Shiraz, chasing a more elegant, savory, and fine tannin profile,” Mooney says, “And to offer an explanation as to why not all Australian Shiraz needed to be 16% alcohol and jammy.”

Sunrise on the Sexton Vineyard at Giant Steps Winery in the Yarra Valley.
Giant Steps

Producers in places like the Yarra Valley and Adelaide Hills, with their cool-climate profiles, adapted the French name, Syrah, to signify the soul of the style they sought. “We wanted to differentiate cool climate Syrah—a highly perfumed, spicy, savory red wine—from the warmer climate, larger wines that people have historically associated with the varietal name Shiraz,” explains Steve Flamsteed, winemaker at Giant Steps in the Yarra Valley. To illustrate his point, in the warmer region of McLaren Vale, Giant Steps produces a Shiraz, creating a clear definition of how terroir plays a major part in defining the grape.

Brendon Keys, co-owner and winemaker at BK Wines in the Adelaide Hills, notes that it’s a misnomer to call Australia the New World because it’s a country of old soils—approximately 500 to 870 million years old—with newer vines. This Old World mentality is reflected on his labels, where he uses the more historical term “Syrah.”

Steve Flamsteed of Giant Steps
Giant Steps

Image Makeover

Flamsteed thinks by adopting the term Syrah, they’ve gained an unexpected marketing advantage. “There is a sea of Australian Shiraz available—most of which is very good value at individual price points—but it seems that in Oz, the Syrah moniker tends to be associated with a more handmade wines, and people seem to be more comfortable paying a little more.”

Ronnie Sanders, president of Vine Street Imports, a U.S.-based importer specializing in Australian wine, sees a lot of similarities between Australian and American winemaking. “Australia’s a wine producing country no different than the U.S.,” Sanders says. “It’s like saying all American wines are Napa Cabernet, which we know from living here is complete nonsense. But from the outside, it could look like that, right? If you lived in Shanghai, what’s American wine? Big Napa Cab. It’s really the same stereotype in a lot of ways.” This duality of names drives home the diversity of Australia’s climates and puts the country into a relatable context for U.S. drinkers.

Peter Fraser, winemaker at Hickinbotham Clarendon Vineyard and Yangarra Estate Vineyard in McLaren Vale, Australia.
Yangarra Estate

New Momentum

Ironically, the pendulum has started to swing for Shiraz as well. While plush, juicy styles still abound, it’s more often the entry-level wines that continue along this path; for high-end wineries, it’s about restraint. “I have considered [using the term Syrah], but for a few reasons decided against it,” said Peter Fraser, winemaker at Hickinbotham Clarendon Vineyard and Yangarra Estate Vineyard in McLaren Vale. Although he says he makes his Shiraz “in somewhat of a Syrah style, I think [Syrah] is more a cold climate nomenclature. [Also], when two of the most famous Australian wines—Penfold’s Grange and Henschke’s Hill of Grace—run with Shiraz, I lean towards the conservative thinking of, why go against what people understand?”

This renewed focus on premium Shiraz is not lost on Australia’s Syrah-focused winemakers. “I think if I was starting Bird on a Wire today, I would possibly call it Shiraz as the market and understanding of this variety has evolved substantially,” Mooney says. “There is a much greater understanding of how varieties in general change from region to region and from one winemaker to another and how all of these influences combined go to make individual wines.” However, Mooney wouldn’t change a thing if given the opportunity to do it all over again.

“If I took myself back in time 12 years, I would still call it Syrah,” Mooney says. “I think many of us who chose to have helped with that greater understanding of this variety and its nuances.”

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Restaurant Review: Iceland’s Slippurinn Is an Ephemeral Culinary Destination

The summer sun doesn’t set till midnight in Iceland, but that doesn’t mean it’s hot. While wandering around Haimeay Island—the only (and then, barely) inhabited rock of the Westman archipelago off the country’s southern coast—darts of chilly rain shred the thin windbreaker purchased expressly, misguidedly for my July visit. “You should have been here last week,” a local says. “It was so warm—15 degrees!” (Or 60 degrees Fahrenheit.)

The upshot to Iceland’s temps: It’s always soup weather, and the version of lobster soup, a dish found all around the country, that I slip into at Slippurinn, a Slow Food-principled restaurant overlooking the shipyards, is reason enough to pray for a wet and rainy vacation. Poured tableside, the shellfish broth flows in a khaki cascade from the spout of an orange kettle, landing in a shallow bowl with a mannerly splish. It fills in the crevices between bowl’s treasures: a firm textured, delicate tasting tartare of wolffish (a deep-sea dweller whose face will give you nightmares) and buttery lobes of langoustine (the creature typically referred to as lobster in Iceland) swabbed with crème fraîche. The first few spoonfuls taste profoundly of caramelized crustacean shells, but the soup changes as you eat it. Neon parsley oil wells up from the bottom to bead the surface, while the melting cream sends forth emissaries of acid and fat, making the broth simultaneously brighter and richer.

Slippurinn is a family restaurant business located in Westman Iceland. Once a machine workshop that served the shipyard, it now serves seasonal and traditional food.
Courtesy of Mali Lazel

It’s outstanding, and it’s not even the best soup Gísli Matthías Auðunsson, Slippurinn’s 30-year-old chef and co-owner, makes.

That would be the halibut soup, “a really traditional Icelandic soup that’s almost been forgotten about,” says the chef, who goes by Gísli Matt. “It hasn’t been on any menu for 20 to 30 years.” The recipe is based on his grandmother’s: an ancestral ivory brew of halibut stock, skyr whey, cream, butter, and vinegar steeped with charred bay leaves. As in the lobster soup the balance of acid and fat is a thrilling high-wire walk. It’s a hallmark of the cooking at Slippurinn, and of Icelandic food in general. This nation knows its way around dairy’s multiple personalities.

Wearing a chunky knit sweater and architectural eyebrows, my server pours the halibut soup into a bowl of diced fresh apples, torn prunes, and pearly tiles of halibut cured with Arctic thyme and pink peppercorn. Parsley oil, augmented with bay, lurks at the bottom of this soup, creating a green-and-cream terrazzo effect on the surface. The textures—Crunchy! Chewy! Firm!—and synaptic snaps of tart, sweet, herbal, floral, and oceanic converge into one of the most flavorful dishes I’ve eaten anywhere. I mop up the dredges with a slab of Slippurinn’s impeccable sourdough as the rain raps the windows. I’ve been here all of 25 minutes, and I’m never leaving.

A Dream of Summer

Like the goddess Persephone, Slippurinn comes alive each spring and goes dark in the fall. Icelanders who live in or come to Haimaey—it’s a popular summer destination—and savvy tourists have about four months each year to taste the ephemeral compositions Matt creates with purebred lamb from the hilltop pastures, pristine seafood from the frosty North Atlantic, and whatever seaweeds, barks, and berries he can forage for in between.

Not a lot grows on this volcanic island—by comparison, Denmark, the seat of the Nordic movement, might as well be Provence—but the plants that do manage to root and thrive in the anemic soil and brackish tide pools are of outsized deliciousness. Matt’s goal is for “our diners to experience the sense of time and place of the islands,” he says.

Chef Gísli picks raw ingredients from Iceland’s land to incorporate into the traditional dishes.
Courtesy of Mali Lazel

When he decided he wanted to be a chef, Matt says he found “there weren’t opportunities for young cooks on the island.” So after graduating from culinary school in Reykjavik and moving back home, Matt created his own in 2012 with the help of his parents and sister. Slippurinn is a family affair: “We all focus on different things in but in a small business like this you need to be able to do a lot of things. My mom, Kata, is the headwaiter and gardener. My dad, Auðunn, is a fisherman and does everything necessary to keep the place alive with his carpenter skills. And my sister Indíana designed the place.”

Indíana kept the building’s industrial bones, warming them up with wood tables, secondhand sofas, groovy lamps, and potted plants. A shelving unit constructed from old ladders anchors one wall of the dining room, displaying dog-eared cookbooks, matte ceramics, and vintage tools. Huge windows line another, overlooking the concrete docks where be-wooled passengers disembark from boutique cruise ships and fishermen shuttle their catches between blue-and-white warehouses.

Cod powers the local trade, and doesn’t have to travel far up to the Slippurinn kitchen, where Matt dehydrates and fries its skin into chicharron. A pharaonic gold dusting of nutritional yeast and seaweed exponentially ups the chips’ marine umami. The accompanying tangy, herbal dip of strained buttermilk, lovage, lemon zest, and lumpfish roe calls to mind Greek taramasalata on a Nordic holiday. The cod’s flesh, meanwhile, becomes fish cakes as fluffy as French quenelles. The golden, racquetball-sized cakes are plated in ring with lacy caramelized onions, buttery mashed potatoes, and magenta dabs of rhubarb jam that electrify the whole dish like lights on a Christmas wreath.

Chef Gísli with his mom, the headwaiter and gardener, and sister, who designed the restaurant.
Courtesy of Mali Lazel

Rhubarb loves the endless sunlight of Icelandic summers, and given the season, its magenta fingerprints are all over Matt’s menu. Besides the fish cakes, the vegetable adds fruity acidity to a wild-tasting mountain lamb entrée consisting of a flat steak, cut from the leg, sliced and fanned around celery root crushed with hazelnuts. Rhubarb flavors the rum fizz from the cocktail menu styled like a botanical field guide, and at dinner, is baked with spent grains into a cake topped with angelica ice cream. There’s a gorgeous rhubarb cider on the wine list, too, made by Sveinn Steinsson, one of Matt’s former sous chefs from Matur og Drykkur, the acclaimed Reykjavik restaurant he opened in 2015 and sold to his partners the following year.

In addition to Slippurinn, Matt also owns Skál!, a Michelin Bib Gourmand award-winning bar in the capital’s first food hall, but his heart remains in the islands: “Slippurinn has, and always will be, my main focus.”

A Finishing Touch

The single imperfect dish at Slippurinn is probably the prettiest: thick, flaky steaks of tusk, an Atlantic white fish that looks like a squatty eel, served in skillet of whiskey-whey sauce and festooned like a ceremonial offering with flowering blue beach herbs. It just needs salt.

I find plenty of the salinity in a component of one of two desserts, shards of meringue that taste like black licorice aged in the sea air. The brittle meringue forms a teepee around layers of smooth, milk chocolate mousse, grassy chervil granita, and tart buttermilk foam. The combination of flavors has an alien, otherworldly quality, not unlike the Icelandic landscape, and I love it. The second dessert stars another plant slushy, made from lemony sorrel and strikingly emerald. It sits on a cloud of whipped skyr, and lest the whole set-up get too sour, toasted oats suspended in caramel ground it with deep stroke of cooked sugar.

Matt says these ingredients reference “the nostalgic palate of Icelanders,” and there is no better way to indulge your inner kid, Icelandic or otherwise, than Slippurinn’s secret third dessert, the off-menu hot chocolate. Icelanders take cocoa seriously, and Slippurinn’s is no dump-and-stir situation. The barista crafts it like the most elaborate coffee beverage, layering shaved bittersweet chocolate, scalded milk, frothed milk, a pool of cool cream, grated chocolate, and a few flakes of sea salt into a speckled ceramic mug. The mug has no handle, so I cradle it in my hands and inhale the warm chocolate elixir, a moment of such hygge-ness it could have been contrived by an Instagram influencer. The rain’s not letting up outside, and that’s fine by me.

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H&M and Zara Are Closing Stores To Get Ahead

Europe’s fast fashion giants may have been slow to wake up to the threat posed by e-commerce, but it looks more and more like they have raised their game enough to survive—and maybe even prosper.

Hennes & Mauritz, the Swedish company behind H&M, Monki and Weekday, and Spain-based Inditex (owner of Zara and Massimo Dutti) are both seeing the benefits of decisions taken last year to trim their networks of physical stores and throw more resources into online sales.

Eighteen months ago, H&M was still struggling with another makeover of its online store and seemingly hell bent on opening more stores that would never pay for themselves. Fast forward to this summer—a tumultuous one for stocks—and H&M has managed to hold on to the 15% gain it made when it announced its most recent quarterly earnings in late June. The results were notable for two reasons: one, its summer collections arrived with a bang, with sales rising 12% from a year earlier; second, it said it expected to whittle away its unsold inventory for the fourth quarter in a row, and forecast it would continue falling through the fiscal year-end. Shares are now up by one-third from the 14-year low they hit last August.

An employee arranges clothes at an H&M in Budapest, Hungary. The fast fashion chain has pulled off an impressive 18-month turnaround. (Akos Stiller/Bloomberg—Getty Images)
Akos Stiller—Bloomberg via Getty Images

A big factor in H&M’s turnaround is the critical eye it’s cast at its store footprint. After closing about 140 stores last year, H&M has revised down its plans for store openings this year from a net 175 worldwide to 130, and guidance for continued “optimization” of its store portfolio hints at further pruning. (A company spokeswoman declined to say whether the targets would see more revisions given the ongoing global slowdown.) Chief Executive Karl-Johan Persson told investors that some openings may be delayed while the company waits for more acceptable rent levels. More immediately, it’s cutting overcapacity in Europe, with a net reduction in H&M brand stores across the continent this year.

Zara parent Inditex, meanwhile, saw its global store count triple to nearly 7,500 under former CEO Pablo Isla. While some of that reflected a valuable diversification of the group’s portfolio to include upscale Massimo Dutti and youth-focus Bershka, the expansion left it with many stores that couldn’t pay their way in the age of e-commerce. Isla reacted by closing 355 stores last year, 76% more than he had originally planned. This year under new CEO Carlos Crespo, the company is set to close another 250, while opening 300. Inditex didn’t respond to a request for comment.

At one point, the store count of Spanish retail giant Inditex reached nearly 7,500 worldwide. (Alex Tai/SOPA Images/LightRocket via Getty Images)
Alex Tai—SOPA Images/LightRocket via Getty Images

But despite store shutterings, both H&M and Inditex are still in growth mode in the realm of brick-and-mortar with net store count expected to increase this year at both chains. That is remarkable in a year when, according to Coresight Research, U.S. retailers have already announced more store closures than they did in the whole of 2018. The industry, including homegrown icons such as Gap and Abercrombie & Fitch, has announced some 4,500 net store closures so far in 2019 (and over 7,500, unadjusted for new openings). For the whole of 2018, net closures just topped 2,600.

The two companies’ plans for online sales this year are even more striking. (A bold approach is perhaps merited, given that both firms report online sales that are still less than 15% of overall sales. For comparison, around 27% of U.S. apparel sales take place online.) Inditex has already opened online stores this year in Saudi Arabia, the United Arab Emirates, Lebanon, Egypt, Morocco, Israel, Serbia, and Indonesia (serving a combined population of nearly 500 million), and it plans to have stores up and running for its fall/winter collections in South Africa, Qatar, Kuwait, Bahrein, Oman, Jordan, Colombia, Philippines and Ukraine (another 275 million).

“We want to make our fashion collections available to all our customers, wherever they are in the world,” Isla said in May, “even in those markets which do not currently have our bricks-and-mortar stores.”

As it fine-tunes its physical footprint, Inditex is rapidly expanding its online presence. (Jason Alden—Bloomberg via Getty Images)
Jason Alden—Bloomberg via Getty Images

H&M, meanwhile, is promising big upgrades to its online store, including H&M’s improved navigation and product presentation and shorter delivery times (the latter in particular being an area where it has compared unfavorably to online-only rivals such as Zalando, Boohoo, and, of course, Amazon.com). It also promises more flexibility in payment, building on its investment in fintech unicorn Klarna last year.

All of the corporate rewiring is, admittedly, taking its toll. H&M is likely to report falling profits this year due to high investment costs, and it had to raise its borrowing to fund last year’s dividend payment. After a dividend increase earlier this year, Inditex is now paying out some 80% of its annual profit to shareholders, which sits uncomfortably with arguments from Morgan Stanley analyst Geoff Ruddell that the company has used some obscure—albeit legitimate—accounting methods to give a flattering account of its profitability over the last four years.  

Even so, with a market value of 85 billion euros, the Inditex empire of Amancio Ortega, the richest retailer on Earth, can probably survive a mistake or two. Persson’s H&M also seems to have the worst behind it. Plenty of other retailers would be glad to boast as much.

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High-End Hot Pot Heats Up in the U.S.

“Hot pot Barbie” comes draped in a dress of Angus steak, rising above a seafood platter like Aphrodite from the waves. The off-menu special at Liuyishou in Vancouver, B.C., is just a taste of the high-end, high-impact hot pot fervor finding a sweet spot with diners in cities across North America.

While the broth-based, cook-at-your-table dish has long been available in restaurants in the United States, a recent class of arrivals specializes solely in making hot pot and making it great. They bring luxury touches like A5 beef, live Japanese spot prawns, and an assortment of top shelf baijiu (a Chinese, grain-based liquor also known as shaojiu) and other spirits.

Sliced meats that can be cooked quickly before being dipped into a custom house sauce.
Haidilao

These Chinese chains started the move to the U.S. slowly, beginning with Hai Di Lao’s arrival in Arcadia, Calif., in 2013. The restaurant has been wowing people in China since 1994, with the mobbed outlets in Beijing known for offering free massages and manicures during the hours-long waits. In the States, it’s mostly known for its noodles made tableside by dancing servers. But Hai Di Lao recently opened its first U.S. store outside California in Flushing, N.Y., where the waiting area has free cell phone screen covers, jewelry cleaning, and hand treatments. The company will soon open two more stores—both in the Seattle area—but in the wait for it to expand outside California, competitors for the luxury hot pot throne have come forth.

Liuyishou, which launched in Chongqing, China, has more than 1,200 locations worldwide and last year opened its first U.S. locations, starting in San Mateo, Calif., and Flushing. This year, Liuyishou expanded to Boston and the Seattle suburb of Bellevue. Though you won’t find hot pot Barbie at all locations, you will find A5 Wagyu beef, handmade shrimp pastes and seafood balls, and giant metal rings filled with raw, impeccably sliced meats that diners can swish through the broth, cooking it quickly, before dipping it into a sauce (often one they custom make at a “sauce bar,” set up buffet-style). The luxury touches come in the form of presentation—seafood ingredients on a boat, meat arranged in eye-pleasing designs—and choice as in the multipage menu.

Hot pot is often set up in a buffet style.
Haidilao

But nowhere else has nailed the art of making hot pot as “extra” as possible quite like Dolar Shop. No, it’s not a misspelling of “dollar”; it’s derived from a Chinese term embodying the people’s willingness to work hard to gather prosperity and fortune, never turning down any opportunities. Originating in Macau in 2004, the chain has more than 50 stores in London, Paris, Tokyo, Dubai, and the like. The Flushing location has been open since 2015 and offers its own “Barbie beef.” Along with a Seattle-area location that opened last year, the company also plans to expand to Boston.

Hot pot with shrimp at Hai Di Lao.
HaiDiLao

Individual pots of soup tear the meal away from the casualness of sharing, and presentation takes the front seat here: Seafood platters arrive with pomp, afloat in plumes of dry ice. Noodles arrive tucked into custom wooden beds; handmade meatballs look like works of art on pastel plates. Live spot prawns come arranged in a circle, facing upward, as if kneeling to say thank-you for the opportunity, a small bouquet of flowers nestled in the center. To keep the table from getting crowded, tiered racks turn plates of Wagyu beef cubes from clutter into a meat tower. To spare the kind of elegant clothing that one might wear to such a feast from the splatters of dipping, disposable bibs are provided. At the end of the meal, each diner gets a free soft-serve ice cream cone.

While this type of luxury spread is a decade or older in China, until recently it had made only small inroads into heavily Chinese-American enclaves in the U.S. But the current opening spree shows the widespread appeal: Hai Di Lao’s Seattle store will be in the heart of downtown Seattle, with a nearly 8,500-square-foot spot that will seat 300 people. At the time of the company’s IPO last year in Hong Kong, Hai Di Lao was opening a restaurant at a rate of one every three days and was valued at $12 billion.

This means that we are just at the very beginning of the wave of Chinese hot pot chains coming into the U.S. Da Long Yi opened its first U.S. shop in Manhattan’s Chinatown earlier this year—specializing in tallow-frying ingredients before they are dipped. And the South China Morning Post reports that Xiao Long Kan, the third-largest chain in China, plans to open in Flushing next year, followed by planned locations in Los Angeles and Houston. And these are just the major chains: There’s also Zhen Wei Fang, with outlets in Manhattan and Miami, offering Jeju black pork belly, AAA New Zealand lamb, live lobster, and eight different kinds of tofu.

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Disgraced Financier Jeffrey Epstein Dies of Apparent Suicide

Jeffrey Epstein, the former financier accused of molesting teenage girls and sex trafficking, is dead.

Epstein, 66, was found unresponsive in his Lower Manhattan jail cell at about 6:30 a.m. Saturday after an apparent suicide attempt and was later pronounced dead at a hospital, according to the Federal Bureau of Prisons. He hanged himself, ABC News and other outlets reported. The FBI opened an investigation.

Epstein had previously been moved to a suicide-watch unit after being found unconscious in his cell with marks on his neck on July 23, a week after his bail request was rejected.

“The coward and serial predator may have taken his own life but we shall continue to seek justice on behalf of our clients,” Josh Schiller, a lawyer for some of Epstein’s alleged victims, said in a text message.

Epstein’s death came less than a day after a court unsealed documents alleging he and a friend sent a woman to have sex with a former governor, a former U.S. senator and an asset manager when she was a minor. All of them said the allegations were false.

Epstein’s death ends the case, said Randall Jackson, a litigation attorney with Willkie Farr & Gallagher and former federal prosecutor in New York.

“A criminal prosecution like this focuses on an individual and when that person dies the case can’t go forward,” Jackson said. “Certainly for the Bureau of Prisons, it is not a great reflection on what is usually seen as their goal of keeping all defendants safe even from themselves.”

A self-described “collector” of rich and powerful people, Epstein had links to a Who’s Who of prominent political and business figures. That circle, including former U.S. President Bill Clinton and billionaire Leslie Wexner, all distanced themselves from the financier after his arrest in July.

Epstein’s network was partly chronicled in his address book, stolen by a staff member around 2005 and published by gossip website Gawker in 2015. The hundreds of names included Clinton and future President Donald Trump, who are among people known to have socialized with him.

U.S. prosecutors said Epstein used his wealth and power to sexually abuse dozens of young girls for years at his homes, paying them hundreds of dollars in cash for each encounter and hundreds more if they brought in more victims.

‘Network of victims’

The alleged crimes occurred at Epstein’s residences in Manhattan and Palm Beach, Florida, from 2002 to 2005, involving minors as young as 14. The U.S. accused Epstein of “creating a vast network of victims.”

Epstein pleaded not guilty to charges of sex trafficking in minors and conspiracy and said he fully complied with the law for more than 14 years.

His latest arrest came after he pleaded guilty in 2008 to Florida state charges of soliciting prostitution and served 13 months in prison, after U.S. prosecutors in that state agreed not to charge him with federal offenses.

The agreement provoked outrage after the Miami Herald published an investigative series on it in late 2018 that led to the resignation of President Donald Trump’s labor secretary, Alexander Acosta, who as U.S. attorney in Miami at the time worked out the deal with Epstein’s lawyers.

His business operations attracted less attention even as federal prosecutors put his net worth at more than $500 million, and said he had an income of more than $10 million a year.

Wall Street connections

Epstein left little imprint on the financial markets but leveraged his connections with Wall Street to secure a steady flow of commissions and engagements that supported a lifestyle that included properties in New Mexico, Paris and the U.S. Virgin Islands, where he bought two private islands. He liked to shuttle between them by private jet and had at least 15 cars, according to federal authorities.

Epstein based much of his empire in the Virgin Islands, including Financial Trust Co., which he started in New York in 1981 as a money management firm called J. Epstein & Co. that he claimed catered only to billionaires.

Born on Jan. 20, 1953, and raised in Brooklyn, Epstein attended Cooper Union and NYU’s Courant Institute but left both without a degree. He landed a gig teaching calculus and physics at Manhattan’s exclusive Dalton School between 1973 and 1975, according to a 2002 New York magazine profile, where his students included the son of Bear Stearns then-Chairman Alan Greenberg.

Rapid rise

He joined Bear Stearns in 1976 as a lowly junior assistant to a floor trader. In a swift rise, trading options, he made partner four years later, with former Chief Executive Officer Jimmy Cayne praising his skills. He left in 1981 to set up J. Epstein & Co., but one bank executive said he remained close to Cayne and Greenberg and was a client until Bear Stearns’ demise.

Much of its operations remain unclear. His main client was Wexner, the founder of apparel maker L Brands. Epstein started managing Wexner’s money in the 1980s and a 2003 Vanity Fair profile noted the pair had a close relationship, so much so that Epstein acquired Wexner’s Manhattan mansion in 1998.

Epstein was a subject of fascination at the L Brands headquarters in Columbus, Ohio. He served as a sort of charge d’affaires for Wexner, the chairman and CEO, on matters ranging from suburban planning to yacht design. Wexner said through a spokeswoman in July that he had severed ties with Epstein almost 12 years earlier, around the time of the financier’s arrest in Florida on charges he had sex with a minor.

Rich and famous

Epstein’s links to the rich and famous were extensive. Clinton, Apollo Global Management LLC co-founder Leon Black and Glenn Dubin, co-founder of hedge fund Highbridge Capital Management, have all said they regret associating with him.

Epstein paid victims hundreds of dollars in cash after sex acts, prosecutors said. They were initially recruited to give Epstein massages, which became increasingly sexual in nature. At least three of Epstein’s employees were involved in recruiting and scheduling minors for sexual encounters with him, as well as other unspecified “associates,” authorities said.

One was based in New York, while two other assistants based at his mansion in Palm Beach were responsible for scheduling the encounters there and escorting victims to a room in the house, according to the indictment.

–With assistance from Hailey Waller, Erik Larson and James Ludden.

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America Needs Paper-Based Ballots for the 2020 Election—Cyber Saturday

As the United States gears up for next year’s presidential election, concerns over the security of the nation’s voting systems are mounting.

One issue that’s absorbing much attention in Washington, D.C., and beyond: whether to require states to use voting machines that produce paper ballots. Proponents of federal legislation mandating the requirement claim it would allow for greater election auditability, making possible hacks or errors detectable. Critics, like Senate Majority Leader Mitch McConnell, argue that this is a matter for states and local governments to figure out, not the federal government.

It’s hard to argue against the enhanced security of paper ballots. At the DEFCON conference in Las Vegas on Friday, Chris Krebs, the Department of Homeland Security’s top cybersecurity official, expressed his view. “I’ll say it, gotta have a paper ballot backup,” he told the audience. Krebs followed this up by saying that “a lot of these policy suggestions are not my job to answer—Congress has a role here.”

Progress toward overhauling voting systems has been spotty, reports Politico. The Beltway-focused news outlet published a helpful data graphic that shows which jurisdictions have succeeded in revamping their voting systems and which have not. It’s clear the pace needs to quicken.

With security experts warning of foreign interference already aimed at the next presidential race, the issue of election security should be a top—if not the top—priority for the U.S. This is not a partisan issue. The nation would do well to secure the foundations upon which its democracy rests.

Let’s figure out how to get there, together.

Robert Hackett | @rhhackett | robert.hackett@fortune.com

Tap These Bottles of Wine with Your Phone to Learn About Their Makeup

In 2015, fifth-generation winemaker Joseph Wagner sold his iconic Pinot Noir brand, Meiomi, to Constellation Brands for $315 million. The sale was the largest non-asset wine sale ever and came with a non-compete preventing Wagner from creating a new Pinot Noir brand, a non-compete that expired August 1 of this year.

Now, four years later, Wagner, who was raised on the fields of Caymus Vineyards which was founded by his family in 1972, is back in the Pinot Noir game with his new label, Böen Wines. Wagner originally launched Böen in 2015.

“It was the first brand that we created after selling Meiomi,” says Wagner. “We created Boën outside of price parameters of that non-compete, focusing on appellation-specific Pinot Noirs, knowing that down the road we’d like to come out with a multi-appellation Pinot Noir, which in this case is the Boën Tri-Appellation, as we call it.”

The wine uses grapes from Sonoma, Monterey, and Santa Barbara county. It’s been in the works for a while, something special to start offering when the non-compete came up.

“Now it’s time to showcase what these three coastal regions can do to create an extremely well-balanced Pinot Noir,” Wagner says.

Winemaker Joseph Wagner
Frank Gutierrez

When customers go to buy that Pinot Noir, they’ll also have the unique opportunity to learn more about it by tapping their phone on the top of the bottle. Bottles of the Tri-Appellation Pinot, as well as the Boën Chardonnay, will have cards on the necks on the bottles prompting buyers to “tap the cap.” With an NFC-equipped phone, oenophiles will be taken to an online portal where they can learn more about the wine.

“For us, this is a great way to get people to try something new and to learn more about the wine upfront,” Wagner says. “In this case, NFC technology—I think it is a great advancement for education to the consumer, and I do believe that it takes one step out of it, making it much easier for consumers to not just enjoy the wine, but to learn more about the wine and the source of the fruit and the philosophy that we have.”

The hope, of course, being that once someone learns more about the wine, they’ll take a bottle home and try it as well.

After tapping the cap, the app takes mobile users to a virtual farmhouse of sorts with different sections that customers can explore to learn about the particular bottle they’re looking at, more about the Boën brand, and even suggestions for food pairings.

A screenshot of the Boën Wines app, paired with the wine bottle thanks to NFC technology.
Boën Wines

Down the line, Wagner says he sees the technology being used to personalize bottles as well. For instance, you might be able to include a digital “Happy Birthday!” or “Congratulations!” message on a bottle you’re giving as a gift.

It’s a unique addition to the wine shelf, something Wagner is pretty familiar with. He was one of the pioneers in the Napa area to start using screw caps on higher-end wine.

“People quickly realized that it wasn’t the closure that made the wine, it was the wine inside that was cared for and dedication to our craft. And people could see that when they tasted it,” Wagner says. “I think we did trail blaze in that way of bringing screw caps to a luxury wine space, and we’re trailblazing in this way, giving better access for the consumer to our wines with the UI.”

Boen’s Pinot Noir
Boën Wines

He also thinks that Boën is a stand out wine.

Using grapes from cool coastal regions allows Boën to give the fruit a lot of hang time—allowing the grapes to develop more character, flavor, texture, and color on the vines without ending up high in sugar, which would result in a higher level of alcohol. While most winemakers pick grapes for sugar content, Wagner waits for physiological maturity instead.

“When you take multiple vineyards from different locations in Sonoma, Monterey, Santa Barbara counties, each one has its own individual character to it,” Wagner says. 

When you blend together the flavors from those distinctive terroirs, Wagner says it creates an “all-encompassing type of Pinot.” Pinot Noir is particularly ideal for pairing with food, being a wine that can go with everything from a good fish to a meaty steak.

Boën’s Tri-Appellation Pinot Noir is available now for $24.99. Appellation-specific editions of the Pinot Noir are also available from the Santa Lucia Highlands, Santa Maria Valley, and Russian River Valley for $34.99 per bottle.

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