Jason visa c. E. O. Al kelly, no relation, says consumers are still swiping and tapping despite talk of a recession. Carol and then theres this weeks cover story. Google and the generals. The search giant wants to build its military business, its employees they do not. Jason much more of that ahead but we begin with our top stories. A busy week in d. C. With impeachment hearings. Trade talks hitting a series of road bumps. So much more and legislation passed by congress, supporting hong kong protesters. Lets break it down with Ryan Teague Beckwith in d. C. So ryan, help us understand everything that happened there in the nations capital. Ryan yeah. This was a long week. And i think the last news day was june 15, 2015. [laughter] this was a particularly newsy week. The sondland testimony from the ambassador to the e. U. On what day was that even . Thats how long of a week its been. Wednesday. The sondland testimony on wednesday established pretty definitively that there was at least one quid pro quo holding out the white house meeting in exchange for investigations into the bidens. Sondland testified that he was not definitively sure that there was a second quid pro quo on the aide but that establishes as a sort of pattern. And as the questioners, democratic questioners sort of made clear, a white house visit is an official act which would be the statutory term for something that could be considered a thing of value in a bribery case. So they could have an article of impeachment itself just on holding out the promise of a white house visit in exchange for a personal favor to investigating the bidens. Carol ryan you said a very long week and impeachment hearings going on and we also had trade talks again. And i feel like ive said this so much over last few years in terms of u. S. China trade negotiations, two steps forward and one step back. Where are we . Ryan i mean, it exists in a nebulous zone right now. Trump has been using twitter to argue that democrats should be somehow advancing a trade deal that he hasnt sent to them. I actually think that the impeachment means that both on the domestic side, that both trump and democrats will want to do it. For democrats, its a way of saying look, were not just out to get trump. Well work with him on something we can agree on. And this is one of the few things that they both agree on and have made some progress on. Like they agree on infrastructure. But theyve made no progress on that. Jason speaking of agreement, ryan, a rare bit of agreement on capitol hill supporting the protests in hong kong amid these trade talks. What do you make of that . Ryan yeah. The hong kong is what complicates it obviously. I think if the situation there gets much worse, it could make it very hard to continue to have this level of agreement. No u. S. Politician wants to be speaking out against democratic protesters in any country, especially those who cite america as a role model and especially in a place like hong kong thats also strategically important. So if china takes too hard of a stance there, and things get really ugly, then that is probably the biggest risk to getting a deal. Carol i have to say, ryan, from those of us here in new york it really felt like a surprise when we saw Congress Passing that legislation. It was like wait a minute. Where did this come from . What was the talk down in washington about the support by both the house and the senate in terms of those hong kong protesters . Ryan well, i mean, like i said, there is just certain things that you dont want to be on the wrong side of. And those are things that are going to anything that where americans broadly like that, anything where you think you could be hit by it and i also think just generally speaking that a lot of politicians down here genuinely side with the hong kong protesters. Think that they have a strong argument and that theyre making a good case. And they want to support them. And they dont want to look they dont want the u. S. To look like it doesnt have their back. Jason all right. Ryan teague beckwith, well leave it there. Thank you very much for wrapping up a very busy week in washington. Well, from d. C. , to london, a story in the magazine on how brexits chaos, its opening cracks in the u. K. s 300year plus union. Carol this was also going on. This week a televised debate and an Election Campaign also picking up momentum. Lets head to london and check in with tim ross. So much going on. Busy here in the states. Busy over in the u. K. Lets talk about the election trail. News from there, there was a lot of momentum, tim, whats the momentum that we need to know about as investors . Tim at the moment, the conservative party is still ahead comfortably in the opinion polls of Jeremy Corbyns labour party but in the first of the televised debates between Boris Johnson, the Prime Minister and tory leader, and Jeremy Corbyn who is challenging him from a really quite hard left leaning socialist angle, they ended in a bit of a draw. It was a stalemate. Everyone was really expecting johnson or most people were expecting johnson to do well. Hes a famous campaigner. He won the Brexit Campaign for those proleave voters in 2016. Hes won two terms as london mayor. And he was picked really by the tories as someone who could defeat corbyn but in that first debate on tuesday night, it was declared a draw really in the first opinion poll that was taken afterward. That hasnt really moved the dial in terms of where the party stands. But corbyn isnt doing terribly and johnson isnt doing brilliantly at the moment. Jason so as we look ahead, it feels like were working under the assumption there is going to be some sort of brexit and as we think about the implications of that, there are real implications if you look especially north of where you are to scotland. And that figures into a much larger and maybe in some ways more limited future for the United Kingdom. Tell us what you learned. Tim well, as in the magazine this week, we have a story about the future of the u. K. Being at stake in this election. If for example the conservative party doesnt get that majority and if the labour Party Managed to squeeze into power with the support of potentially the Scottish Nationalists who are saying they would they would help get Jeremy Corbyn into 10 downing street, that who give the proindependence campaigners in scotland a really big boost. The kind of boost they havent really had since scotland voted in its own referendum in 2014. On the question of whether to break away from the u. K. Nicola sturgeon is this sort of tough firebrand leader of the Scottish National party. And she is very sure that brexit means scotland must now get a vote on its own future and whether to break away from the rest of the u. K. And if she helps Jeremy Corbyn get into power, he might just give her that vote. Carol and its interesting because in the story we talk about Boris Johnson whos talked about after we get through brexit that the United Kingdom will be more united than ever. But really whats going on, its a bigger question out there that will ultimately everyone come together or do we see kind of an undoing of the United Kingdom as weve known it for such a long time . Tim well, its when you have these seismic shifts in political debate and in political allegiance and peoples identities change, you see quite often in referendums and weve seen that in scotland and weve seen that in the brexit aftermath across the whole of the u. K. That in the end, politics can change and countries can decide their own destiny in different ways. Another case we looked at was the situation in Northern Ireland where for the first time really people are starting to talk a bit more about the question of whether the north should join up with the republic of ireland again. Its not in any way on the cards immediately but you can see the reality in which scotland goes first and then maybe a unification referendum in ireland, too. Jason amazing, amazing. Seismic shifts it feels like happening over in your part of the world. Tim ross, thank you so much. Joining us from london. Coming up, here in the u. S. , joy replacing gloom when it comes to the economy. Its done a 180. Carol completely. Plus c. E. O. Al kelly no relation. He says consumers are still spending, swiping and tapping. Jason this is Bloomberg Businessweek. Carol welcome back to Bloomberg Businessweek. Im carol massar. Jason and im jason kelly. Join us for Bloomberg Businessweek every day on the radio. That starts at 2 00 p. M. Wall street time. You can also catch up on our daily show, via podcast. Get at that at bloomberg. Com or wherever you get your podcast. Carol and you can find us online at businessweek. Com and on our mobile app. In the economic section, a global sigh of relief. Im just going to say. What a difference three months makes. Sentiment has improved and were also hearing less about the risk of a recession. Jason heres this weeks Bloomberg Businessweek explainer. On august 14, all the indicators were bad ones. Major u. S. Stock indexes fell 3 . The bond market was signaling a recession was in the making. And the trade war between the u. S. And china wouldnt go away. Hope you didnt panic and sell everything back then because the attitude has gone from doom to boom. American stock indexes are setting records almost daily. Sentiment has changed, too. According to a bank of America Merril Lynch survey in august global fund managers, they overwhelmingly expected Slower Growth in the coming year. Now november most of those surveyed expect stronger growth in the coming year. Whats the biggest reason . A change in central bank policy. Almost a year ago, the fed was planning on three quarterpoint Interest Rate increases in 2019. Instead, it cut rates three times this year, two of them coming this fall. Meanwhile, the European Central bank has become more dovish, too. Still economists arent completely sold. They see in Business Investment lagging. They wonder whether the recent strength in the economy is sustainable sore the last gasp of an expansion thats past its prime. Carol and if indeed the expansion is past its prime jason we sat down with the economics editor behind the story you just heard, sultry sounds of his voice, peter coy joined us in studio. Peter thats the fly in the ointment of the consumer is really strong in the u. S. The u. S. Consumer had to pick one force in the entire global economy, its the u. S. Consumer out there still spending but in a sustainable way. Because real wages, adjusted for inflation, have been rising. And unemployment is super low. So people have spending power. Theyre not carrying a lot of debt. The question is can this keep going for a long time if businesses are cutting back . Because businesses cut back on spending, maybe theyre going to cut back on hiring. Maybe some of that the income of the consumer will eventually trail off. Now, ed yardeni, one of the really smart guys on wall street carol love it. Peter was telling me he thinks the downturn in Capital Spending is misleading because its a lot of it has to do with the oil patch. And you know it is weak. Carol important, yeah. Peter you take that out things kind of look better in tech, health care, are doing relatively carol finance, too. Peter finance. Carol which are key areas. Peter yeah. So but it remains to be seen. Thats still an open question. Jason i do feel like we did hear some caution on earnings calls from c. E. O. s. Essentially saying you know what . Im pulling back a little bit. Or im not spending on that new factory or im not expanding, maybe as aggressively. Peter right. Right. Jason as i could. Peter historically Capital Spending is much more volatile than Consumer Spending. Consumer spending is like yeah, tends to just rise gradually. So thats what you want to Pay Attention to, even as to the as big as Consumer Spending, it can kind of be the thing that was the tail the tail that was the tail that wags the dog. Carol and the magazine covered that. The longer you get into an expansion like here we are the longest u. S. Economic expansion on record. Peter thats right. Carol the longer youre in it to keep it going thats where Capital Expenditures usually typically come in toward the end. And give it that last kind of oomph. And i wonder if thats the case here . Peter this has been such a long cycle. In its 11th year now. That Capital Spending has had its own mini cycles within that. Weve had our ups and downs. And if we get another up here, it could really be good news for keeping this thing going. Jason and staying with Economic Growth and Consumer Spending carol we sat down with al kelly for another addition of businessweek talk. Despite all of this thought a recession coming we dont see it. Our Fourth Quarter numbers which for us were september 30 numbers were better than the third quarter. The u. S. Was up 8 . The international is up 12 excluding china. Europe was up 13 when you exclude the u. K. Which has done a little bit of selfinflicted wound. Jason whats wrong with everyone that were talking so much about recession . It might be the cycle. A long time that weve had this upswing and people look at the history and say its got to go down at some point. But the consumer has stayed extremely strong around the world. The only place we see any weakness is in the u. K. And as i said thats kind of related to the whole brexit situation. But or than that the world looks pretty darn good. Jason where are they buying . Where is their money going . In our world there are a couple of things that are really driving the increases in the number of transactions were seeing. One is obviously ecommerce. People are jumping on their phones and jumping on their ipads and jumping on their computers. And buying. In big ways. Were seeing every month those numbers, the growth in e commerce is anywhere between two and three times the growth in the facetoface world. Every single month. Were also seeing people continuing to travel. There was a real downturn in travel back in december and january. If you remember, thats during the height of the u. S. China trade talks. It was during the height of the brexit conversations. And then we had the 45day u. S. Government shutdown. And almost immediately consumers started to just stay at home and not travel. But weve seen that pick up, especially in the last six months. And thats always a good sign that when people are willing to leave their home country and go to another country, thats thats a very, very good thing. The other thing that were seeing is an increased amount of smaller ticket items being used using digital payments. And a lot of that i think is driven by mass transit. Carol i agree. We are really excited about mass transit. Just in the last 90 days, weve seen open systems in edinburgh and sao paulo. We started in june in the m. T. A. In new york where only at 18 stations from Grand Central station to atlantic avenue in brooklyn but by the end of october, of 2020, the m. T. A. Hopes to be in all 424 subway stops. Carol are people using it . Absolutely. Tap and go . Tap and go. Its so convenient. Jason right. Coming up, pun alert. Retail is in focus. Carol warby parker eyes another revenue stream. Jason this is Bloomberg Businessweek. Jason welcome back to Bloomberg Businessweek. Im jason kelly. Carol im carol massar. You can also listen to Bloomberg Businessweek on sirius x. M. Channel 119 and on a a. M. 1130 in new york. 106. 1 in boston. 99. 1 f. M. In washington, d. C. Jason bay area in london and on d. A. B. Digital and through the Bloomberg Business app. Over in the feature section, warby parker focusing on contacts. Carol see what you did there the brand made a name for itself with affordable direct to consumer glasses and just like its signature frame, the focus will be on keeping the price point low. Warby parkers cofounder spoke with bloomberg about the rollout. Were super excited to be able to produce daily contact lens. At a much better price point than you can find elsewhere in the market. And its really the first opportunity for contact lens wearers that have been wearing extended wear so two week or monthly lenses really their first opportunity to enter into an affordable daily contact lens. Jason and heres businessweeks austin carr on what it means for warby parker to become the warby parker of contacts. Just a few years ago we were talking about the retail apocalypse and in many ways were still talking about. This is the one store the company that sort of bucked that trend. They back in 2010, Neil Blumenthal and dave gilboa came up with this idea to disrupt luxottica this massive conglomerate in the eyewear space that was a monopoly, a lot of analysts think when it comes to distribution. Carol they own all of eyeglass manufacturers. Rayban, sunglass hut, pearl vision, what have you and they marked up their frames massive rates. If you you buy raybans for a couple hundred dollars, theyre pretty expensive. With warby parker one low price point of 95. It was just very straight for a direct to consumer marketing and sold online and then eventually moved on offline into physical retail. And theyve really become known as a sort of bespoke brand that has this end to end Customer Experience thats very seamless and a lot of copycats in that trend. Jason and it is this sort of threading of the needle as it were, getting toward where it feels like we are, especially highend consumers who expect high touch retail, but also the convenience that you get from online. I mean, the process of warby parker is pretty great. What they became known for was this athome tryin experience. You ever gone to a store and look in front of that little mirror, selfconscious, and you feel a little awkward doing that. They send you five pairs in the mail and you get to try them on for free. Then send them back and they send the one you pick once you pay for it. A very seamless experience and been to the stores around new york theyre beautiful, gorgeous, very seamless and it doesnt feel like a stodgy Optometry Office if you ever had that experience of being upsold by your doctor. Jason and you really went right there to one of the tensions of this story selling a razor online not that complicated. Selling socks online not that complicated. But when it comes to your eyes, it is a little more complicated. There is a whole sort of established way that people do this. Carol and if you screw up you can really screw up somebodys eyes. There can be infections. There can be eye disease. And so thats a big thing. A much harder category to get into but they think its an 11 billion market. Jason the contacts. Contacts category and eye exams. One of the big things they have to push into. Although theyve done prescription eyeglasses for many years, putting something on 0 piece of plastic, silicon on the end of your eye is more dangerous. Especially when youre ordering these things online. Theyre also part of a big category that luxottica owns and they have people that prescribe to contacts. They own eye med the second largest vision insurer in the company. And theyve locked warby parker out of the market and you cant buy your glass in network through vision insurance. And so they basically said were going to do this on our own instead of just glasses well also offer contacts and do the eye exams. Theyre tripling the number of optometrists on staff who are going to help with you your insurance and then hopefully sell you contacts from warby parker glasses downstairs. Carol one of the things you get into, austin, and looking to go from glasses now to contacts kind of build out the vertical if you want. If you want. But whats interesting is i think the question is are they expanding too late . Here they created this model and theyre spreading out do, they just wait too long to do this . I think thats a fantastic question and we note in the story one of their cofounders jeff rader left in the early days to launch another unicorn, which is harrys, the warby parker of shaving which has a 1. 4 billion valuation. I think. And then a couple of their other executives went on to found a way which is the warby parker of luggage which has 1. 4 billion valuation. So its a really good question whether or not they waited too long. At the same time, they really pitched this idea that they dont want to chase the flash in the pan, you know, sort of different verticals. A lot of the v. C. s that they were talking with in the early days become the next shoe dazzle or groupon and we will be focused on this one thing and do it really well and expand a little bit more. And they pitched this as the antiwework and dont want to be this crazy, you know, massive 100 billion overnight softbank investment. They want to be the mature step by step incremental growth company. Carol and i feel like that speaks to who these two guys are. You get into a little bit of how they managed this company, their approach. Theyre very if you spend time with neil and dave theyre very precise. Theyre as precise as the prescriptions in their glasses. They really have this attention to detail. Theyre not, you know, the adam newman type characters that are going to sort of brag about tomorrow were going to triple the size of this, and one of the guys said were comfortable launching 33 stores this year, 40 next year, 45 the year after that. This is not were going to launch 500 stores tomorrow. Jason and also interesting to think about this business, especially this expansion into contacts and eye exams. And you alluded to this earlier, austin. Is that peopleintense he have business. And in addition to the manufacturing, theyre doing, you know, these are big jocks. A lot of jobs in a lot of ways. And high touch. Its not what theyve also been pitching is its not just the instore experience. But all the under the hood refinements they have an optical lab where they do a lot of their manufacturing in upstate new york. That has about 100 jobs. And also pushing into telemedicine which is a massive category that weve seen other eyewear makers move into and thats the process of can you update your prescription using just your phone and a macbook . You can measure the distance between your laptop and your phone and you can check your eyesight doing an eye exam at home. And seems risky. Carol i know. But that could be the future. Carol right. Theyre pitching it as not a replacement but a complement to eye exams. Some people think its risky. A lot of optometry community really felt this is a bad move by the industry. But it seems to be where its headed. Jason welcome back to Bloomberg Businessweek. Carol still ahead, a special pursuits event. We are talking about the year ahead and luxury. We hear from the tiffany ceo about the future and its possible sale the Louis Vuitton. Then we get down to serious stuff. Because there is a deal in play. Jason exactly right. And we have an indepth look into a sexual abuse case before u. K. Supreme court. It could establish that barclays is responsible for harm caused decades ago and precedents that could be set around the gig economy. And, the culpability of wall street. Carol first up, this weeks cover story. Google has been pushing to win military contracts that could help the Company Finally diversify. Jason but some of googles employees hate this idea. Here is our reporter with his story. We tell the story of googles tortured relationship with the pentagon. We saw this come out into the public view when employees began objecting to what had been a secret military program to use advanced Artificial Intelligence to analyze drone imagery. This was a program that drones gather an immense amount of video. Analysts watch it, and the pentagon said that if we could have some sort of automated analysis, that would be useful. Google is one company that was helping with this. Some employees said we were getting too close to building weapons and basically broke out into this huge public spats. Spat. Eventually, google decided not to renew its work. Carol i think it speaks to the tortured relationship that google has with the government. We were talking about how Silicon Valley big tech workers were proud to kind of jason to tell washington to kiss off. Carol and now they are embracing washington. Now they are embracing washington because they are looking for new business lines. They want to be more involved. What is interesting as you have this very visceral reaction to a specific military program. I think defense work makes a lot of people uncomfortable. But if you look a little below that you also see another transition happening at google that is making people at the company uncomfortable. It is moving, trying to supplement its consumer business, Search Engines and email, with advertising, Cloud Computer business. That means entering specific relationships with large institutions, helping them analyze data. Jason talk to us about google specifically. Go back to this ragtag startup in Silicon Valley. It was in many ways the quintessential university dropout, create this company that changes the worldtype of situation. As it has grown up it has had to wrestle with its own image and its own values in a lot of ways. A lot of those came to the fore in the project maven protest. But this has not died down much. These discussions are still fierce in the company. Google has always been the most extreme case of Silicon Valley idealism. I think a lot of the work the company does is academic research. Its original mission was to organize the worlds information. Initially, it was concerned about going into advertising. Eventually, it got over that and advertising is the business. But it is moving into new businesses and challenging its own assumptions at a time when Silicon Valley culture is generally being challenged. Carol staying with technology, amazon is spending more than ever on lobbying and locally. Jason but there are some things amazon cant buy. Money cannot buy. Here is amazons political wipeout. They spent a ton of money on lobbying. 4 million. In a quarter i think they lobbied on more issues than any tech company last year. They spent 1. 5 million just on locals. Amazon is flooding politics with money. But, as i document, it has a lot of problems. Issued issue, just really struggling with this tech lash, struggling to win political battles. Carol is it the company at large . The company, as a business, is doing great. The former Obama Press Secretary runs this huge policy shop with his deputy, a former Public Administration ftc lawyer. Together they tried to staff up so they are ready to fight. A lot of issues, whether it is trade wars, they have someone talking to the administration trying to lobby. On the bigger, more iconic issues we talk about the move to new york, seattle, this huge jedi contract where amazon is competing for a government contract. Microsoft came out of nowhere and took it from them. Amazon has had just a lot of trouble on the policy front. Jason it is interesting because , you document a number of these cases which you just described in brief. What strikes me too is on paper it looks on paper like they did all of the right things. Hired a bigtime democrat and republican. That got the team in place. This feels very 2019, a bunch of unforced errors that set them back. If we take jay carney, this very polished communicator, he is hired during the Obama Administration when it seems Hillary Clinton might win. Amazon takes responding to trumps tweets almost hostile posture towards trump. This is during the campaign. Then trump is elected, and bezos and trump have this very negative relationship. Partially because bezos owns the the washington post. They have a democrat as their chief spokesman, so thats a challenge. Time passes, and carney has more recently given an interview where he suggested there were not any patriots working at the trump administration, other than the obama and bush unlike the obama and bush administration, which he apologized for. He made this really bad tweet umpires during the national games. He has just had challenges as the public voice of amazon. The other character is this guy who is sort of the inside operator. He staffed up this team, but there has been a lot of drama internally. Jason looking across the tech landscape, you understand how these companies work. Not just amazon, but the whole array of social media companies, Tech Companies, who all of a sudden really have to care more about washington. In part because washington is caring about them. And maybe not in a good way. Im growing tired of the phrase, but we are in a tech lash. Antitrust investigations, the federal trade commission, judiciary committee, state attorneys general, everyone is investigating big Tech Companies, including amazon. Carol democrats and publicans. Democrats and republicans. They are the punching bag. So that is the situation amazon faces. In my story i talked about a lobbyist who has a generally positive view of amazon. Sort of defending them saying some of the problems are just they have grown so much. They have doubled lobbying staff over the last three years. That is part of the reason. He says amazon might be having trouble, but they are doing better than google and facebook. That is a fair defense. I dont dig into google and facebook, thats a whole different dive, but there is a general sense that Tech Companies are struggling to respond. Jason coming up, a case before the u. K. Supreme court could establish whether barclays is responsible for Sexual Assault alleged to have taken place decades ago. Carol and possibly set a precedent for todays gig economy. This is Bloomberg Businessweek. Jason welcome back to Bloomberg Businessweek. Carol join Bloomberg Businessweek every day on the radio starting at 2 p. M. Wall street time. You can also catch up on our daily show by listening to our podcast. Jason and find us online at businessweek. Com. And on our mobile app. Carol the u. K. Supreme court will hold a hearing next week on a lawsuit against barclays that has drawn the bank to a reckoning on sexual abuse and who should pay for it. Its a disturbing case with broader implications. Jason it is a terrific and disturbing piece of journalism. Here is max abelson on the story came about. It was a long time ago. Months had gone by since i was sitting at my bloomberg terminal and saw a story by a great Legal Correspondent here. She has since left bloomberg news. She writes in england about the law and wrote a four paragraph story that set a group of said that a group of claimants, what plaintiffs in england are called, said that when they were teenagers and applying for jobs at barclays, lowlevel branch jobs in newcastle, northeast city in england, barclays said you have a job, but you have to go see a doctor and this doctor. His name is gordon bates. You have to go to his house. These people said that dr. Bates sexually assaulted them, 120 of them, and they wanted to hold barclays responsible because they had sent them to him. Barclays appealed and they won again barclays appealed again to the Supreme Court. This news item said the Supreme Court is going to be hearing this interesting case. I called her up and i asked, do you think this might make for an interesting story . She said i think it would. We started working on it, and one of the first things we did was get into the court system and asked them for Court Documents. It is a fascinating story that has not done coverage, as not gotten a lot of coverage, as sometimes cases dont. Where the coverage of current legal questions are quieter than in america. We got permission from the court. We got through the court really fascinating documents that shined a light on how this happened. Carol fascinating and disturbing. Fascinating and disturbing. It is an upsetting story to work on, no doubt. And im sure its an upsetting story to read and might even be upsetting for viewers and listeners now. But what was really special is that we got a couple of people who worked for barclays and were sent to dr. Bates to talk to us and share their stories. Piece of our businessweek is that i ended up writing with gavin, he deeply a deeply talented reporter, the story is about these visits and what ended up happening to our two main characters. Who we call james and anne. Carol not their real names. The Court Ordered us not to use the real names. Partially about that, which is upsetting, but also a complicated and rich story about this really fascinating question of when a company has a responsibility to their workers. In this case, Barclays Says dr. Bates was not our employee. He was essentially a contractor. We are sorry if anything bad happened, but not our fault. Carol but barclays sent possible employees to him. Or when they were employees to him for many, many years. A long time. It started in the late 60s and ended in the mid 80. A few years later, barclays has stopped sending people to the doctor. Why they would send them to the doctor in the first place is a question you might have. They said to make sure they were fit to work and insurance. And be fit for insurance. Barclays says that we only found out about this in around 2013 when people started complaining. But, without giving away too much because i hope folks read the story, we have a Court Document that includes allegations that more than half a dozen people and their parents called barclays, called managers and human relations people, to Say Something really bad happened here. It happened as early as the late 70s and into the 80s. But barclays kept using bates. Carol lets get into this whole idea of whether or not the firm takes responsibility for folks who were their employees. And what happened to them. Someone who is not technically a barclays employee. It gets to the heart of responsibility. Thats right. In a way what we do by chronicling capitalism is we follow the way things change and the relationship between companies and customers. Also, companies and their employees. When bates was alive, he would not have recognized this new kind of economy. You have uber, it is a gig economy where these multibilliondollar companies have saved a lot of money, both the cost of having to pay people on the one hand and legal liability on the other by saying these people are not our employees. They are freelancers. We are a platform for freelancers, not employers. In this case, the fight is similar. The fight is to hold barclays responsible. Our legal work here is vicariously liable. Vicarious liability is a boring sounding phrase but it is so interesting. It is a way of saying you are vicariously liable for something he did. Barclays is, in some sense, an innocent party. As a judge might describe them. Barclays as an institution was not in that room. But the question is, are they responsible for what happened in that house in newcastle, and what precedent might that set . For the economy we live in. Jason coming up we will lighten up a bit, looking ahead at the year in luxury. Carol we hear from the tiffanys ceo on challenges and consolidation. Jason this is Bloomberg Businessweek. Jason welcome back to Bloomberg Businessweek. Carol you can also listen to us on the radio on sirius xm channel 119, and on a. M. 1130 in new york, 106. 1 in boston, 99. 1 f. M. In washington, d. C. Jason a. M. 960 in the bay area, in london on dab digital, and through the Bloomberg Business app. We hosted a very special event this week at bloomberg headquarters. It was the year ahead in luxury. Carol we got the editor and host of the event. We started doing year ahead in luxury last year. Its the spinoff of our year ahead franchise. Its a half a day conference, and we get leaders from all different aspects of stuff we cover. From food and wine, travel, fashion, and cars. We had the ceo of tiffanys come in, we had the ceo of porsche come in and talk about electrification. We are excited to this every year. Jason one of the clear trends seems to be a more thoughtful approach, sustainability and whatnot. Something everybody in the luxury industry is talking about is sustainability, because its on the mind of consumers and fashion is a huge polluter. Knowing that shoppers are thinking about that when they are buying travel or shopping for clothing, we talked about it with these people. Not only sustainability ecologically, but a sustainable brand. Equity in hiring practices, Building Community around your supply chains. How can you be good in a 360 degree way . Jason and at the event, the lovely and talented carol massar spoke with the ceo of tiffany. Carol talk about a timely interview. We talked about how legacy luxury greets the future but we , had to begin with whether or not they might be doing a deal. Alessandro there are many luxury brands. But when you talk the mega brands, we talk about a handful. Among those, some of them are extremely successful. They are part of big groups. Consider vuitton, cartier, but you have other brands that are powerful. Consider chanel, hermes. Honestly, seriously, i dont think that for these kinds of level of brands there is a magic formula. The problem could be one way or the other. What is crucial is that when you lead a brand like ours with 182 years of history, you, at the end of the day, have to concentrate on the legacy and the beautiful product and promises you make with your customers. This is really the key of success. Carol indulge me for a second. In a Bloomberg Opinion piece, one of our writers said a deal would benefit both sides. For Louis Vuitton it would be dominating the jewelry market. It would automatically become a huge presence. Tiffany could avoid the tricky task of executing a turnaround in a recession on its own. I do wonder about being able to step away. We focus quarter to quarter, so when you are doing renovations on stores and pinking about the thinking about the future, you get a report card every three months. I think that makes it difficult for a publicly held company. Would there be benefits from stepping away from the public spotlight . Alessandro for sure. For any public company, to be reporting every quarter, it is a check that you have to go through every quarter. We take it very seriously because of our shareholders and obligation to report and deliver results to the benefit of our shareholders. Having said so, as a leader of a brand with such history which means value, to maximize that value, my team has to look at the quarter, but even more at the next three years, the next five years. If you want the real challenge managing a brand with a legacy like tiffany, you have of course to maximize the profits for your shareholders. But this doesnt mean just the sum of 10 good quarters. You have to think about the next 10 years. Carol having said that, listen to what you are saying. Is there a benefit to stepping away and being part of a Larger Company where you are part of a portfolio and can do the things you want to make sure the brand is around for another 100 years . Alessandro well, honestly, i dont think we have ever diverted from doing the right thing, nor have other brands. I think ill give another example. Look at hermes. They are listed, they report on quarterly results. I dont think they did the wrong thing. I think also, tiffany, we have been listed for 35 years. Of course, there are moments where you are more successful, other moments less, but i dont think we made wrong decisions because we are listed. Jason Bloomberg Businessweek is available on newsstands now. Carol also online. Jason what is your mustread . Carol the story about barclays. Barclays has been in the news a lot over the last years, and this is a story that has gone under the radar. Some great reporting from max and our team in london. You are going to be surprised by the story. It speaks to a larger story about wall street accountability. Your mustread . Jason there are different stories, but the google story the cover story, it is about google, but also about what the Company Wants to be. It is employees versus management. Its goals, hopes and dreams, and what is at its core. I found it to be a much more serious story in many ways than i anticipated. Carol its about google getting into middle age. Where does it want to be in its next chapter . A fascinating read. Do check out our daily podcast. That is available at apple podcast, soundcloud, and bloomberg. Com. Jason more Bloomberg Television starts right now. David you went to Harvard Business school. Steve yes. David did you enjoy it . Steve no. David did you want to drop out . Steve yes. David you went out to raise a fund, was that easy to do . Steve i sort of looked at that and went omg, we are going to fail. David in 2007, you thought maybe i should take the firm public. Steve i took it public for a lot of different reasons. I had a sixth sense that something terrible was going to happen in the environment. Would you fix your tie . David people would not recognize me if my tie was fixed. But, ok. Just leave it this way. All right