25/07/2017 BBC Business Live

This is Business Live from BBC News with Ben Bland and Rachel Horne.

Hit by the EU - profits fall at Google's parent company,

Alphabet, after a huge fine levied by the European Union Live

from London, that's our top story on Tuesday, 25th of July.

Shares fall for the owner of Google, as revenues surge by 21%

but are hit by the EU's multi-billion dollar fine.

US retailer Michael Kors snaps up the luxury

Here is how the European markets for $1.2 billion.

Here is how the European markets look at the open. All in positive

territory. Really interesting moves on the Indian markets, not one we

talk about much, I will tell you about that later.

And mobile adverts targeting you based on where you are -

we'll be talking to a firm giving away free WiFi but with a catch.

Three years after it started in Sweden, a company becomes the first

in the US to microchip its employees. We want to know, would

you sign up for it? The micro-chipping, convenient

maybe, but lots of privacy issues. We will get into that later.

Three of the world's most valuable internet firms

release their latest numbers this week.

The biggest by far is Google's parent, Alphabet.

It has just reported a 21% jump in revenues.

That was better than expected, but there was less cheer

Net profit fell 27.7% to $3.5 billion.

Hitting the bottom line was a $2.7 billion fine

by the European Commission which ruled the firm

abused its power by promoting its own shopping comparison service

Nevertheless, Alphabet's share price fell 3% in after-hours trading.

But take a look at this - over the past nine years,

the firm's share price has rocketed as it has dominated the internet

From $140 a share, to just under $1,000 a share.

It's now worth more than two-thirds of a trillion dollars.

Amit Pau is managing director at Ariadne Capital.

Thank you very much for joining us this morning. What is your reaction

to the figures? Should Google be pleased or is more going on

underneath the surface? At a business level, the results are

stunning. Generating 21 billion, to grow 21%, it is phenomenal. They

make it look so simple, it is impressive. The key concerns are

operationally, the cost of driving traffic to Google sites has

increased far greater than the revenue. That is one. The second is,

90% of Google's revenue still comes from digital search. Where will

future revenue streams come from? Cloud has made good progress. At a

business level, encouraging signs on how Google grows beyond being a

search company but the elephant in the room is the EU fines. A

record-breaking $2.7 billion. Is that something that is now done and

dusted? Is there more to come? I suspect there will be a lot more to

come. This was one of only three anti-trust rules that you are

looking into. The others are on android, if the fine comes in, it

could be 9 billion, and another could be significantly more. That is

why there is a significant risk overhanging the share price. The

other thing we were talking about, going hand in hand with the fine,

the changes that Google has to make as a result of that ruling, looking

ahead, that could have potentially a bigger impact than the fine itself.

Firstly, Google will have to change the way it operates. Not just in the

shopping cart, but all other areas. That will be great for the consumer,

and the second thing, where will consumer ownership of data reside?

Alphabet not the only big tech company reporting this week,

Facebook and Amazon are due. Do you think they will be the same?

Absolutely. Netflix last week, they delivered sterling results. Watch

out for some very strong results from the tech giants. Thank you very

much for your time. Let's take a look at some of

the other stories making the news. Luxury shoemaker Jimmy Choo

has just been bought by design house Michael Kors

for nearly $1.2 billion. Jimmy Choo, which is famous

for its stilettos worn by celebrities, announced

it was putting itself up Michael Kors, which has been

struggling recently amid slowing sales, will buy Choo

for 230p per share. The UK's Serious Fraud Office has

opened an investigation into British-Australian mining giant

Rio Tinto Group. The SFO says the probe

is into suspected corruption in the conduct of business

in the Republic of Guinea by the Rio Tinto Group,

its employees and others It's asking anyone with relevant

information to get in touch. Rio Tinto says it will fully

co-operate with the investigation. Dutch firm AkzoNobel,

the owner of Dulux paint, Akzo has been fighting off

a takeover approach from US rival PPG Industries and promised to grow

profits as part of its The company says second-quarter

profit fell 6% to $537 million due to weak demand in some markets

and higher raw material costs. It is the school summer holidays in

the UK, lots of people heading off, weak one, heading abroad to the

continent for holidays. Eurotunnel, it may well be an option many people

are taking, quicker than the ferry sometimes! You speak from

experience! Eurotunnel are upbeat, about prospects, despite Brexit.

When the EU referendum happened last year, Eurotunnel lost a third of its

value in a huge shares plunge. They are saying now it has had little

impact on its financials. Lots of other business stories on the web

page as well. South Korea's SK Hynix has reached

a new earnings high. They reported this morning that

profits rose a whopping 574% That is a pretty impressive set of

results, how did they do it? Indeed. It might not be exactly a household

name outside of South Korea, but it is the second biggest chip maker in

the world after some sun and its products are used in all of our

smartphones and made by the likes of Apple and the chip-makers and what

analysts calling ash super cycle where huge demand is causing a

supply shortage and the super is expected to last at least 2018. In

the quarter the company just reported, it is seeing a huge

increase in shipments, up 20%, and the company made nearly $3 billion

in those three months. Quite an impressive figure, as you say. But

as shares were falling down 3.5% because investors were expecting

those strong results. Thank you. Let us take a look at the markets. Asian

markets, barely moved, while investors await for the next US

Federal Reserve meeting happening later this week. I want to mention

the Indian stock markets. India's stock markets hit

record highs on Tuesday with the National Stock Exchange's

much-watched Nifty index breaking the psychological 10,000 point mark

for the first time as traders take The Nifty consists of 50 of India's

top companies across more Bombay Stock Exchange's Sensex index

also hit an all-time high. The two markets have

piled on 20% this year, outperforming most other global

markets, including in Japan and the United States as confidence

is boosted by reforms Let us have a look at how the

European markets begin the trading day, all in the green, some only

just. In commodities, oil prices

extended their recovery on a pledge by leading OPEC producer

Saudi Arabia to cut exports in August to help reduce

the excess global supply Haliburton's executive

chairman also said the US shale drilling boom would

probably ease next year. Brent Crude and US Crude prices both

rose on those developments. And Samira Hussain has

the details about what's ahead The Federal Reserve, America boss

for central bank, will begin their two day meeting on Tuesday. Many

analysts and investors are not expecting another rate rise at this

meeting, but they will be looking for more guidance on when they will

start reducing the bond portfolio. American car-maker General Motors

will be reporting earnings and it comes at a time when investors are

worrying about the declining demand for cars in the US. Another company

has already said they are seeing higher than expected costs related

to the sale of Opal. Also reporting earnings, Caterpillar. Improving

demand in the construction and energy industries will likely see

the company's profits go up for the quarter. Investors are looking for

an update on full-year financial forecasts which the company raised

in April. Joining us is Alix Stewart, a fixed

income Fund Manager at Schroders. Let us start with Opec. It looks

like there is relief for the oil price. Explain what is happening.

Hopes they will extend or even increase production cuts they have

been trying to implement previously which obviously would be very

beneficial for the oil price. It is just a question of whether they can

get everybody on board and to play by the rules. Saudi Arabia have said

they will try to bring down production. Nigeria, in the original

agreement to curb production in November, Nigeria and Libya were not

held to any agreements. Nigeria now say they will. They need everybody

else to come on-board. The Saudi Arabians and the Russians are two of

the bigger ones. If everybody else ignores the rules or has exemptions,

it is quite hard to keep the cap in place. Quite often the problem with

oil is when Opec get together and bring down production and the price

the US shale production kicks in, once it gets over a certain amount.

Is that a danger? That is what we have seen. Halliburton and others

have talked about cutting back a bit in shale, with the oil price is

around 40- $50 a barrel, at the crunch point for these guys.

Changing tack slightly, big move for Jimmy Choo. Slab divans include -- a

big buyout. There is value still seen in luxury brands. Over $1

billion for shoes. Have we still got the money to pay for these items?

Clearly some people do! Not me. Alex, have you got any? I have,

actually. Thank you very much. Mobile adverts that

target you because of where you are. We'll be talking to the firm behind

"proximity marketing". You're with Business

Live from BBC News. "Unfair charges" levied on buyers

of new-build houses could be banned in England under

a proposed crackdown. Leaseholds on new-build

houses would be outlawed, while ground rents could be

dramatically reduced, under government plans subject

to public consultation. Andrew Walker is the BBC's

economics correspondent. Why do we need this crackdown? This

is something the communities and Local Government Secretary, Sajid

Javid, calls a great scandal of the housing market, whereby people

buying new homes may buy them on a leasehold basis and have the

playground rent which can in some cases escalate dramatically. -- pay

ground rent. He has written in colourful terms in the day's Times.

He says if you go to the butcher and buy sausages, you do not get an

invoice for the following 100 years. If you buy a bucket and spade, you

do not get change of ownership fees when you pass it on. He talks about

some examples and one case of 3000% increases in the ground rent to a

total of something approaching ?10,000. He thinks there is

certainly, although there are cases where leasehold arrangements are

justified, they are commonly used in flats, he is concerned that in some

cases they are being used in an unfair and financially abusive way.

Aside from making comparisons with sausages and buckets and spades,

what is the Government proposing to do? We have a consultation paper and

one of the things Sajid Javid says is that if house-builders are not

prepared to step off the gravy train, he is prepared to derail it.

He wants to look at banning unfair and unjustifiable use of leasehold

arrangements and also to ensure that where there is a case, that the

ground rent should be paid at the permanent peppercorn rent, is the

phrase he uses. It is consultation at this stage, but I am sure he will

get some very vigorous responses to his request for views. Andrew, thank

you. We have got some interesting stories

on the Business Live. A rise in personal loans, dangerous Bank of

England officials say. We have got interesting figures. Credit card

balance transfers and personal loans and outstanding car loans have

increased by 10% over the past yearment however, household incomes

have increased by 1.5%. So that's quite a chunk of money to find to

bridge the gap. We'll keep an eye on that story. Check it out on our live

page. You're watching Business Live.

Our top story: The parent company

of Google says it saw strong growth in the three months to the end

of June with revenues up 21%, but profits have been hit

by a record fine imposed by the European

Commission last month. A quick look at how

markets are faring. This is how they look at the start

of the traying day. All of them in positive territory. The FTSE 100 in

London just about outperforming Frankfurt and Paris.

Now let's get the Inside Track on a software which helps you stay

Despite the falling cost of mobile data plans,

many people rely on the 300 million public wi-fi hotspots

Devicescape is a piece of software which enables smartphone users

to connect to multiple wifi networks without going through the login

This means that users can stay connected to public wi-fi

In return, Devicescape allows brands to send smartphone

Devicescape is embedded in other popular apps -

this enables companies to send promotions to consumers

Wrer joined by the vice president of Devicescape. Thank you very much for

coming in. I think we've explained how it works and what proxity

marketing is. The idea is you target somebody based on where they are. A

company can come to you and say, "We want to target people as they walk

into a supermarket or enter a bus or underground and you can do that."

Yes, absolutely. I guess why that's important as more and more money

flows from traditional advertising into mobile, advertisers want to

know that they are getting good return on that and the adverts are

relevant. Like wise as consumers use their mobiles more and more as a way

to consume information, thet want to know the stuff getting them is

relevant. This ensures the messages that gets to the consumers is

targeted at the right time and the right place. The adverts pop up on

the lock screen. There will be people who don't want to have the

adverts. Can people opt-out? Lock screen notifications are well

understood by consumers. It's something they use every day for

their e-mails, but if it is something they don't want to see,

they can disable that this is a transparent opt-in service that they

can remove if they don't want to. Are you targeting business users? Is

it everyone? Is it more people who are using it for leisure and sending

whatsapp messages and so on? I guess at this point we are very much

targeting consumers. We work within the entertainment industry. We tend

to target people in public locations like supermarkets or coffee shops

and cinemas for example. Your success rate is 13% for the click

through rate. So for every 100 messages that are sent, 13 people

will, well, so let me count, 87 people will delete. 13 people will

click on it and will go through. How does that compare with the success

rates of other types of advertising? It is very, very high actually. If

you look at the industry average for in app geotargeted advertising. This

is when you open up an app that's relevant to your general locality,

we are 18 times higher than the industry average which shows that

consumers like this format and this form of advertising. I suppose the

danger is that for example 4G and 5G coverage gets so good that we stop

using wi-fi hotspots as much. What's your insulation against that to

safeguard the future of what you're doing? So we have moved our service

so the consumers don't have to connect to the wi-fi. Our software

sits there and it looks for the networks and just by its presence

and by us knowing that they are in the location they can serve that

particular advert to the consumer. What about rural areas? If you

haven't got the wi-fi hotspots then you are not going to be able to

target the consumers? Well, over the last ten years, we have crowd

sourced 300 million locations. So we have got broad coverage. Pretty much

anywhere that's a public location has some form of wi-fi today and I

don't think that's going away any time soon. So we can target anywhere

that's a public location today. I suppose what do you see as the

long-term ambition for the company? What would you like to see it doing

in five or ten years? We are trying to improve the effectiveness of

mobile marketing. So trying to give advertisers much better return rates

on their money and a lot of visibility. So it is much the

antidote to programmic advertising. That is specific and very relevant

to the consumer. We would like consumers to get less stuff, but the

stuff that they get is more interesting to them. We look forward

to hearing how it goes. Owen, thank you very much. Owen Geddes there.

A Wisconsin company is to become the first in the US to implant

So far more than half its employees have volunteered to have a chip

Patrick McMullan, the director of the company, Three Square Market,

told the BBC it's an exciting development.

We're a technology company and they're excited about it

The thing to understand is this is not a job performance tracker.

What it has is different things that helps you to identify who you are,

what our business is and to use it as a form of payment and by no means

is it something that we use to track what they're doing,

This takes the level of security to a whole new level.

One of the things that we're very much ensuring that it's responsible

innovation and ensuring that it's used correctly and used

for the purpose that it is intended, not for something that nobody

Alix Stewart from Schroders is joining us again to discuss.

A really interesting development that. How do you feel Alix, would

you get microchipped? You can see how we are moving from scanning

cards to using your phones for whatever and I guess the logical

next step in some ways is to just have a chip. You don't have to

bother remembering anything. The one thing to note about the chips, they

haven't got GPS. So your boss can't tell if you're in the office. It is

for logging on to computers, paying for food. Getting in and out of

buildings. It would stop that problem when you get to the doors at

reception and someone can't find their pass and they are blocking the

way. It happens here. We have got a lot of tweets. Beth says yes, I'd do

it, but I'd microchip my children first. Another viewer says no way.

Julie says, "If your employees are not responsible to keep track of

their badge, I would question the competence of any job?" What's the

fun of bionic when your own super power is being able to open doors

and pay for stuff! We were talking a while ago about whether Brexit is

causing slink flation. Things like chocolate bars getting smaller, but

the price saying the same. The Financial Times says it is not down

to Brexit and the weak pound, but it has been going on for sometime? It

seems to have been going on for the last five years, not just the last

year. I think we have all been aware of it that some of our favourite

chocolate bars don't seem to be as big as they used to be. Brexit must

play a part. Part of it would be import costs which have gone up? As

the consumers have been more constrained we have had austerity

and so on and people want to see the prices rise, this is the way that

manufacturers have got around it by shrinking. Would you rather pay an

extra amount to get the same sized Toblerone? Some of the other things

mentioned are toilet roll. 240 sheets down to 221 and fewer

biscuits in a packet and less chocolate bars. We notice that. We

know you have Jimmy Choo shoes! The reason we are talking about, there

is a quote on US immigration officials checking out on the

importation of fake designer chairs. It is incredible. The number of

them. It is really nice to think that they are training people to

spot the difference between fakes and real chairs to clamp down on

this and they have been quite successful. Last year they seized

over $4 million of fake chairs. That's an extraordinary amount. Alix

For joining us. That's it from Business Live today. There will be

more business news throughout the day. We will be back in these

chairs, not designer ones, the Business Live chairs tomorrow. See

you then. Hi there. Good morning. Yesterday we

had quite a bit of cloud across eastern parts of the UK. Some damp

and drizzly weather. Today I'm hopeful it should be brighter the

for all of us during the afternoon we are looking at sunny spells and

it