The week in GRC: We Company to add woman to board, and state attorneys general to launch big tech antitrust probes
– CNN said Saudi Arabia took an important step toward listing Aramco by replacing the company’s chair with someone seen as more sympathetic to Crown Prince Mohammed bin Salman’s IPO plans. Energy minister Khalid-Al Falih was succeeded as chair of the state-owned oil company by Yasir Al Rumayyan, head of Saudi Arabia’s Public Investment Fund, Aramco said in a statement. The leadership change is the latest in a series of developments to prepare Aramco to go public in what could be the world’s biggest IPO.
– AT&T said WarnerMedia CEO John Stankey will become its new president and COO, according to CNBC. Stankey will continue to be CEO of WarnerMedia while taking on the newly created position, effective October 1. As president and COO, Stankey will report to AT&T chair and CEO Randall Stephenson. The promotion comes a few months after WarnerMedia announced an organizational shift under its new parent company, AT&T.
AT&T also said Jeff McElfresh will become CEO of AT&T Communications, effective October 1, replacing John Donovan, who previously announced his retirement.
– The SEC named Monique Winkler as associate regional director for enforcement in the agency’s San Francisco regional office. She succeeds Erin Schneider, who became regional director of the office in May 2019.
– The We Company, which owns WeWork, said it will add a woman, Frances Frei, to its board of directors, Reuters reported. The move comes after criticism of We Company’s IPO filing last month, which showed it planned to go public with an all-male board of directors. ‘Frances Frei will join our board of directors upon the completion of this offering,’ the company said in an amended filing for its planned IPO. ‘She currently serves as a professor of technology and operations management at Harvard Business School and has provided human resources consulting services to The We Company since March 2019.’
The company said it will add another director to its board within a year of the IPO, ‘with a commitment to increasing the board’s gender and ethnic diversity.’ It had originally planned to go public with an all-male seven-member board, a practice frowned upon by such major investors as BlackRock.
– According to CNN, the Federal Trade Commission said Google agreed to pay a record $170 million penalty to settle accusations that YouTube broke the law when it knowingly tracked and sold ads targeted at children. The settlement involves the largest penalty under the Children’s Online Privacy Protection Act, which YouTube allegedly violated by collecting user information from children to fuel its behavioral advertising business.
‘We know how important it is to provide children, families and family creators the best experience possible on YouTube and we are committed to getting it right,’ Google said in a blog post about the settlement. Google also said it will use machine learning algorithms to proactively identify children’s content on the platform and that, beginning in four months, data collected from all children’s content will be treated as though it were coming from a child viewer. The company settled without admitting or denying wrongdoing.
– The Wall Street Journal reported that Tapestry, the handbag company that combined the Coach and Kate Spade brands, ousted its CEO a little over two years after the merger. Tapestry said Victor Luis, who has been CEO for five years, is leaving immediately and will be succeeded by board chair Jide Zeitlin. Zeitlin is a former Goldman Sachs executive who has been on the board since 2006.
Zeitlin said the company was committed to its multi-brand strategy but needed to work on execution. He will remain board chair. The company also said board member Susan Kropf, a former Avon executive, has been named lead independent director.
– Reuters reported that, according to a study published by the Project On Government Oversight (POGO), the PCAOB has brought only 18 enforcement actions and levied just $6.5 million in fines against the Big Four accounting firms in its 16-year existence. The report could increase pressure on the agency, which in recent years has been criticized for being too close to the industry it oversees and slow to ensure the industry does its job. ‘It’s unacceptable that the agency is taking such a light-handed approach in holding these large audit firms accountable,’ POGO executive director Danielle Brian said.
Some industry advocates and former PCAOB board members say it should not be held to the same standard as the SEC and that its main function is not enforcement but to help raise the quality of audits. POGO cites written comment from a PCAOB spokesperson stating that due to resource constraints the regulator is selective about the enforcement cases it pursues. ‘Not every inspection-related deficiency rises to such a level of severity that it should result in an enforcement investigation or the institution of an enforcement proceeding,’ the spokesperson wrote, according to POGO.
– The Guardian said Facebook confirmed that hundreds of millions of its users’ phone numbers were exposed in an open online database. More than 419 million Facebook IDs and phone numbers were stored in an online server that was not password-protected, the technology website TechCrunch reported. The database was taken offline after TechCrunch contacted the web host.
Facebook confirmed the report and said it was investigating when and by whom the database was compiled. A spokesperson for the company also claimed that the number of users whose information was exposed was approximately 210 million because the 419 million records contained duplicates. ‘This dataset is old and appears to have information obtained before we made changes last year to remove people’s ability to find others using their phone numbers,’ a spokesperson said in a statement. ‘The dataset has been taken down and we have seen no evidence that Facebook accounts were compromised.’
– Judge Richard Leon of the US District Court for the District of Columbia, who had been reviewing a US Department of Justice (DoJ) decision to allow CVS Health Corp to merge with health insurer Aetna said the agreement was legal under antitrust law, according to Reuters.
Judge Leon had been examining a government plan announced in October to allow the merger on condition that Aetna sell its Medicare prescription drug plan business to WellCare Health Plans. Both deals have already closed. Leon had initially balked at approving the merger conditions and insisted on hearing from critics of the deal, but finally decided to grant the motion to approve the consent agreement.
Companies generally do not wait for final court approval before closing their transactions.
– The WSJ reported that state attorneys general are formally launching separate antitrust probes into Facebook and Google. New York Attorney General Letitia James said her office was organizing a bipartisan, multi-state probe into Facebook. Joining in the Facebook investigation so far are the attorneys general of Colorado, Florida, Iowa, Nebraska, North Carolina, Ohio, Tennessee and the District of Columbia, she said. The investigation will focus on Facebook’s ‘dominance in the industry and the potential anticompetitive conduct stemming from that dominance,’ her office said.
Separately, the Google probe is expected to be announced on Monday by a bipartisan group of roughly three dozen state attorneys general, according to people familiar with the matter. The investigation will be led by Texas Attorney General Ken Paxton, a Republican, the people said.
Facebook declined to comment. Google, which is facing a DoJ antitrust probe, said it is co-operating with inquiries. ‘Google’s services help people every day, create more choice for consumers and support thousands of jobs and small businesses across the country,’ a company spokesperson said. ‘We continue to work constructively with regulators, including attorneys general, in answering questions about our business and the dynamic technology sector.’