31/10/2017 Business Briefing

This is Business Briefing.

I'm Sally Bundock.

More cash and more controversy.

Facebook unveils record profits

and vows to keep a closer eye

on its content.

Plus, the new face of the Fed.

He's set to be the world's most

powerful central banker,

but will Jerome Powell carry

on where Janet Yellen left off?

And here are the markets.

Asian shares are higher

after the Fed kept interest rates

unchanged and said the US economy

is growing at a "solid pace"

despite Hurricanes Harvey and Irma.

But some are tiring, and we will

explain why that is.

We start with the world's biggest

social network.

It keeps getting bigger, more

profitable, and more controversial.

Facebook has announced record

profits and another big jump

in the number of people using it.

That will only fuel the debate

about about the power of the network

and the content that appears on it.

Let's show you some of the details.

Facebook made profits of $4.71

billion in the three months

to September, up 80%

on the same time last year,

as advertisers spend ever more cash.

Well over two billion people log

onto Facebook at least once a month,

more than a quarter

of the world's population.

It's up 16% over the past year.

With this vast reach of course

comes growing scrutiny,

for example, over its role

in the US election.

Earlier in the day, Facebook

admitted to a Congressional hearing

that political content originating

from Russia was seen by 126 million

people, a huge chunk

of the electorate.

Its chief lawyer said the company

was sorry and would learn

from its mistakes.

None of this has put investors off.

Facebook's share price has hit

new record highs this week,

valuing the company

at over $530 billion.

It pains us as a company,

it pains me personally to see

that we were...

..that our platform

was abused in this way.

People in this country care deeply

and what about issues of public

concern and it's one

of the strengths of our country that

people are so willing

to speak freely about them.

The fact that foreign actors

were able to use our platform

to exploit that openness,

is a deeply painful lesson for us,

and one we are focused

on learning from going forward.

He said deeply painful many times.

With me is James Erskine,

the director of social media

marketing consultancy,

Social Circle.

It is nice to see you. It is an

interesting day. Facebook coming out

with strong robust earnings, going

strength to strength, and yet we

hear the lawyer saying how deeply

painful it is. What do you make of

it?

It is funny you talk about

Facebook as being controversial,

even though it is the old timer of

social media. You mentioned many

numbers. A few more fascinate me.

One is 6 million advertisers are

currently live on the Facebook

platform. It stands to reason why it

is profitable. In order to

understand where it is going in the

future, you have to look at its

past. It is part of the duopoly.

Revenue goes to Facebook or Google.

It is quite predatory, at least in

the past. Classified advertising is

going that way. Another thing is

look at the acquisition. Instagram

in 2012. It does what it is doing in

a business sense. In a content

sense, that is where it is coming

under close scrutiny. That is an

exciting challenge.

Exciting, or a

big headache? How does it police

itself and how does it do that

effectively enough so it is not

regulated via another authority?

It

is really tough, that is what with a

first. It has always had a position

where it is a platform. We work with

creators around the world to look at

how they make use of different

social networks. That is what we do.

We see how people engage on

Facebook. But how does it police

itself? The first line of its

statement around results were about

increasing another 10,000

journalists. We have to look at new

products as well. They very cleverly

have new products around creators

and video. Now it is specifically a

mission in its own video content. So

I think it has more shaky ground to

stand on.

Despite efforts, do you

think it will be regulated anyway.

And not just Facebook, Google and

Twitter?

It will be tough to

regulate it because of the

incredible amount of traffic. If it

democratises, it will be strong

enough to say it is up to the

community to police it. Whether you

agree or not that, that is another

question.

Thank you for your time

this morning. We will dig into that

during the newspaper talk. And now

we will stay with the US.

Later today, President Trump

will name the successor

to Janet Yellen as head of the US

Federal Reserve when her term

ends in February.

Several reports say he has

settled on Jerome Powell ,

a current Fed Governor.

And as Michelle Fleury reports,

that will mean continuity.

A new man at the Federal Reserve

will be seen as representing

continuity with outgoing chair Janet

Yellen. That should calm any jitters

from investors who more than

anything want stability, as they

hate unexpected change. Jerome

Powell is widely assumed to have if

you are similar to Janet Yellen's.

Things should be the same, needing

more gradual rate rises and a

winding down of the Federal Reserve

asset pile which it accumulated in

an economy ravaged by the financial

crisis. What is less clear is

whether Jerome Powell will have the

same approach to the other big job

of regulation. He spoke in favour of

loosening rules for the banks put in

place after the crisis by the bank.

What is unknown is how he will

manage relations with the president

about to appoint him. That is

Michelle Fleury who was extremely

busy right now. That nomination news

is expected to come before Donald

Trump goes to Asia. He has the big

trip. He will go to China. China

ahead of that is taking steps to

boost for imports. We will speak to

Rico Hizon. What has China announced

ahead of his arrival?

Six days to go

before Donald Trump arrives in

Beijing. China is making some moves

to appease Donald Trump! Beijing

will be lowering tariffs when

importing consumer products and

stepping up banking finance for

imports. Details of what products

are affected are not provided. By

China, as everyone knows, it has a

vast trade surplus and has been

accused of countries like the US of

protecting domestic companies with

unfair trade practices like high

import tariffs. Today, Donald Trump

called the trade deficit between the

two countries embarrassing. He also

described the trade gap as horrible.

Official figures reveal America has

imported four times the amount of

goods from China banned exports, so

far this year at least the pit

hopefully. -- hopefully he will be

appeased.

Thank you.

Now, let's brief you some other

business stories.

The Bank of England is set

to deliver one of the most closely

watched interest rate decisions

since the financial crisis.

Economists and investors

are expecting the first increase

in a decade, taking the main

interest rate to 0.5%

from its record low of 0.25%.

President Trump will outline his

long-awaited tax reform proposals in

Washington later. He has promised to

cut corporate and personal taxes to

boost the economy. Critics have said

the reforms will largely benefit big

business and the wealthy.

So, what is trending in business

news this morning?

Well, popular on Quartz Media

is the story that Tesla has

made its biggest ever quarterly

loss, and it has delivered far fewer

of its new Model Three

cars than it had predicted.

Is the magic of Elon Musk fading?

On the Financial Times Twitter feed,

a study that claims the global

gender gap has widened in the past

decade and will take 100

years to close.

And this one is causing a storm on

Twitter.

The CEO of pizza chain, Papa John's,

berating the American Football

governing body for not "showing

leadership" over player protests,

because it has hit pizza sales!

And don't forget, let us know

what you are spotting on line.

Use the hashtag #BBCTheBriefing.

And now for the markets. This

trading session in Asia is ahead of

the Central Bank day as far as the

UK and the United States is

concerned. That is a look at the Dow

Jones the night before. Apple

earnings as well. Facebook shares

are up 5% in after hours trade on

Wall Street. Next, we will take you

through the stories making headlines

in global media, including an

analysis of Donald Trump's reaction

ahead of the deadly terror attack in

New York. That is coming up. We will

see you soon.