Capital One CEO apologizes for data breach

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Good morning. 🇺🇸 Bernie Sanders, Elizabeth Warren, Pete Buttigieg and Beto O’Rourke take center stage tonight at the first of this week’s two Democratic debates. 8 p.m. ET on CNN.

🍏 Plus, Apple reports third-quarter earnings after the bell. CNBC’s Jim Cramer says shares could rally on “better-than-feared” results.

Join the Market.


Richard Fairbank gets hacked

Moving the Market: Capital One chief Richard Fairbank has apologized for one of the largest data breaches in history after a Seattle-based software engineer hacked the personal information of more than 100 million people, my colleagues Doha Madani and Andrew Blankstein report.

• “Paige A. Thompson, 33, allegedly accessed information from Capital One bank through a misconfigured security feature and then posted the data to an information-sharing site, according to a criminal complaint.”

• “Capital One said in a statement to NBC News… that no credit card account numbers or log-in credentials were compromised and less than one percent of Social Security numbers were compromised.”

The big picture: The breach highlights how vulnerable companies and their customers are in the age of cloud computing — to hackers both foreign and domestic.

• To wit, Equifax, the credit-reporting company, just paid a record $650 million in settlements for their 2017 data breach and will have to pay an additional $225 million in fines.

What’s next: Capital One expects it will have to pay as much as $150 million to provide free credit monitoring and identity protection to affected customers.

• “I am deeply sorry for what has happened,” Fairbank said in a statement. “I sincerely apologize for the understandable worry this incident must be causing those affected and I am committed to making it right.”

Bonus: NYT’s Emily Flitter and Karen Weise note that Thompson “formerly worked for Amazon Web Services, which hosted the Capital One database that was breached.”


E.U. court un-‘likes’ Facebook

Big in Luxembourg, big in the Bay: Europe’s Court of Justice has ruled that websites that embed the Facebook “Like” button must “obtain informed consent from site visitors prior to data being transferred to Facebook,” TechCrunch’s Natasha Lomas reports.

The big picture: “The ruling is significant because… Facebook’s Like buttons transfer personal data automatically, when a webpage loads — without the user even needing to interact with the plug-in.”

• “Most Internet users are likely unaware that the social plug-ins are used by Facebook to track what other websites they’re visiting for ad targeting purposes.”

Facebook reax: “Website plugins are common and important features of the modern Internet,” Jack Gilbert, associate general counsel, tells Lomas. “We welcome the clarity that today’s decision brings to both websites and providers of plugins and similar tools.”


🇺🇸 Talk of the Trail 🇺🇸

What it takes: In a new piece for Vanity Fair, Snap’s Peter Hamby says Elizabeth Warren is winning the Democratic primary by “cutting through the noise with a consistent message and a clear rationale for running.”

• “Successful candidates have a clear, consistent, and compelling point of view,” he writes. “Remarkably… there is only one candidate running this kind of campaign.”


Dara Khosrowshahi cuts 400

Ride-hail reset: Uber chief Dara Khosrowshahi has laid off a third of the company’s marketing team, or about 400 people, “as the ride-hailing company tries to cut costs and streamline its operations after its initial public offering in May,” NYT’s Kate Conger reports.

• Khosrowshahi to staff: “Many of our teams are too big, which creates overlapping work, makes for unclear decision owners and can lead to mediocre results. … Put simply, we need to get our edge back.”

• Jill Hazelbaker, the Snap, Google and McCain ’08 communications alum who now runs Uber’s marketing team, said the layoffs “were taking place because the team had grown bloated and decision-making was unclear.”

The big picture: “The layoffs are the latest shake-up at Uber since it went public two months ago. … The company, which is unprofitable, [has] faced numerous questions from Wall Street about whether it could make money.”

• Meanwhile, Uber competitor Lyft is getting rid of its chief operating officer and will divvy up his roles for other executives, rather than hiring a replacement.


Market Links

Ren Zhengfei outsells smartphone rivals in China (Reuters)

Zhang Yiming plans to create a ByteDance smartphone (Reuters)

Sundar Pichai had plans for a Huawei smartphone (Information)

Tom Barrack sets his sites on Legendary Entertainment (THR)

John Stankey considers launching a Warner golf channel (SBJ)


The Athletic hits 500,000 subs

State of digital media: The Athletic, the sports news subscription site launched three years ago by Alex Mather and Adam Hansmann, has passed 500,000 subscribers, Bloomberg’s Ira Boudway reports.

What’s next: Mather, the chief executive, says he believes the company will have “somewhere close to a million” subscribers by year’s end.

The big picture: “The site is a test for the digital-subscription model in journalism. The New York Times, the market leader, counts 3.5 million subscribers, including its crossword and cooking apps.”


Reed Hastings on film splurge

Talk of Tinseltown: “Netflix is spending hundreds of millions of dollars to produce big-budget films as it tries to shore up its subscriber base and push further into territory once controlled by major Hollywood studios,” WSJ’s R.T. Watson and Ben Fritz report.

The big picture: These movies won’t get the “wide theatrical release typically used to make such substantial investments pay off.” Instead, Netflix is betting on them to retain “existing subscribers and attract new ones.”

The numbers: “The streaming giant is investing over $520 million to make three big-budget films, said people familiar with movie budgets.”

• “Earlier this month, Netflix agreed to spend nearly $200 million to make the Dwayne Johnson action movie ‘Red Notice.'”

• “Netflix plans to release later this year ‘6 Underground,’ a Michael Bay-directed action film that is costing about $150 million.”

• “Martin Scorsese’s ‘The Irishman’ … might be the company’s riskiest bet. … [Some] close to the film offered estimates above $200 million, making ‘The Irishman’ the most expensive adult drama in recent history.”

What next: “The Irishman” will premiere as the opening night film at the New York Film Festival on September 27, kicking off what is expected to be an aggressive awards season push for the film.


🎤 What’s next: Lil Nas X’s “Old Town Road” has set a new record for the most weeks at No. 1 on Billboard’s Hot 100.

• Rolling Stone’s Elias Leight says the achievement is due in part to “how we listen to — and track — music today.”

See you tomorrow.



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