Friday, June 07, 2024

Explained: Why US regulators want to investigate Nvidia, OpenAI and Microsoft

Action is the latest aggressive measure by President Joe Biden's administration against Big Tech companies


OpenAI chief executive Sam Altman, left, shakes hands with
Microsoft chief technology officer Kevin Scott at a conference
at Microsoft headquarters in May, 

Kyle Fitzgerald
Cody Combs
Jun 07, 2024


The US plans to open antitrust investigations against Nvidia, Microsoft and OpenAI over their increasing dominance and partnerships in the artificial intelligence sector.

The regulatory attempt to rein in the three high-flying technology companies is the latest aggressive measure by US President Joe Biden's administration against Big Tech's business practices.

The investigations will be split between two regulators, the New York Times reported on Thursday. The Justice Department will investigate Nvidia, while the Federal Trade Commission will probe Microsoft and OpenAI.

FTC chairwoman Lina Khan in January said the agency launched a “market inquiry” into companies such as Microsoft and OpenAI, as well as Amazon, Alphabet and Anthropic.

“At the FTC, the rapid development and deployment of AI is informing our efforts across the agency, as we work to promote fair competition and protect Americans from unfair or deceptive tactics,” she said at the FTC Tech Summit. “There is no AI exemption from the laws on the books, and we’re looking closely at the ways companies may be using their power to thwart fair competition or trick the public.”

The agency is scrutinising Microsoft's $650 million deal with Inflection AI, the Wall Street Journal reported.

As part of the deal, Inflection's AI model would be hosted on Microsoft's cloud platform and much of its team would join Microsoft's Copilot programme.

In 2019, Microsoft first announced an investment in OpenAI, maker of the popular AI tool ChatGPT. The company has since increased investments in OpenAI and partnered with the company on several levels, including using ChatGPT in its offerings such as GitHub Copilot, Designer, Teams and BingChat.

Microsoft has also not been shy about its partnership with chipmaker Nvidia, which has had an unprecedented, meteoric rise as its AI chip technology continues to be in strong demand.

The regulatory and legal remedies sought by the US ultimately revolve around concerns that the partnerships between the three companies could lead to less choice, and ultimately drive up prices due to a lack of competition.

That notion, however, is not without scrutiny.

Alden Abbott, who served as the FTC's general counsel from 2018 to 2021, is cautious and somewhat critical of the recent regulatory attempts.

“I do not know the details of the antitrust investigations, but the antitrust enforcers should not take actions that will slow innovation in this space. Keep in mind that there is no big AI monopolist, and we are not talking about mergers among the big AI players,” he said.

“As a general matter, partnerships between AI innovators and large high-tech companies such as Microsoft and software/chips innovator Nvidia should be applauded,” he added.

Mr Abbott, who now works for the Mercatus Centre at George Mason University in Virginia, US, also reflected on the potential upside of technology company partnerships, saying that competition might actually be enhanced, rather than stifled.

“By bringing complementary technologies on board, the two large established companies [Microsoft and Nvidia] may be able to enhance their competition with the other big leading competitors in [the] AI space, including Google, Meta and IBM,” he added.

Microsoft, unlike Nvidia and OpenAI, is not new to US federal regulatory scrutiny.

In 1998, the technology giant, based in Redmond, Washington, found itself accused by the Justice Department of unfairly stifling competition from rival companies, in particular, Netscape, which at the time had a popular web-browser on both Windows and Macintosh computer platforms.

String of mysterious attacks across Europe opens new front in Russia’s war on the West

Joe Barnes
Thu, June 6, 2024


Donald Tusk, the Polish prime minister, said Russia may have been behind a fire at the Marywilska 44 shopping centre in Warsaw 
- Dariusz Borowicz/Agencja Wyborcza.pl via REUTERS


First, a warehouse in east London being used to supply aid to Ukraine burned down. Weeks later, an Ikea in Vilnius, Lithuania, mysteriously caught fire.

Swedish investigators were already looking into the possibility that several railway derailments could have been caused by a state-backed saboteur.

Then an inferno engulfed the largest shopping centre in Warsaw, Poland’s capital. It was Donald Tusk, the Polish prime minister, who began joining the dots to suggest the West was under attack by Russian espionage.

“We are examining the threads – they are quite likely – that the Russian services had something to do with the Marywilska fire,” he said last month.

His claims were further bolstered when a former Russian soldier was arrested north of Paris this week after explosives detonated in his hotel room.

Warnings from European intelligence agencies that Russia is plotting acts of sabotage on the Continent in its escalation of the stand-off with the Nato military alliance have been thrust into the limelight.

An intelligence assessment shared with Western governments claims that Russia’s notorious GRU military intelligence agency, known for its attacks on foreign soil using highly-trained agents, is now turning to criminal gangs to carry out attacks in Europe.

The Kremlin’s spy network was dealt a blow in the weeks after Russia’s invasion of Ukraine on Feb 24 2022, when more than 600 of its intelligence officers in Europe with diplomatic cover were expelled.

Britain resorted to a similar tactic when James Cleverly, the Home Secretary, expelled Col Maxim Elovik, Moscow’s defence attache, after the allegedly Russia-linked arson attack on the east London warehouse that was being used by a business providing aid to Ukraine.

Four men will go on trial next year accused of setting fire to the commercial property, a court heard last month.

Lack of sophistication

Alexander Lord, lead Europe-Eurasia analyst at Sibylline, a geopolitical risk firm, said: “The capabilities these gangs can provide are pretty low-level, but they can still achieve Russian foreign policy objectives, namely, destabilising the West, deterring European decision-makers against supporting Ukraine and exacerbating polarisation and societal tensions across not only Nato but the European Union.”

The lack of sophistication is a particular worry for Western intelligence services, with the proxies now relied on by the Kremlin more likely to cause collateral damage because of their lack of skills with explosives.

A Western counter-intelligence officer told the Financial Times: “There is a greater chance of collateral damage and casualties as the proxies are not skilled in tradecraft, such as explosives.”

Their theory was displayed earlier this week when the former Russian soldier, from Ukraine’s eastern Donbas region, was badly burned in an explosion on Tuesday in a hotel room in Roissy-en-France, near Paris’s Charles de Gaulle airport.

Investigators confirmed they had discovered bomb-making materials, as Volodymyr Zelensky, the Ukrainian president, arrived in France to join commemorations marking the 80th anniversary of D-Day.

It is a trend tracked from the beginning of the year, with intelligence officers going “tick, tick, tick down a list of all of the things that have been identified as stuff that Russia would do in advance of a conflict to immobilise,” said Keir Giles, a senior consulting fellow at the Chatham House think tank.

“And since then, that pattern has just got stronger,” he added.

Unexplained explosions

Despite the lack of sophistication in some of the alleged acts of sabotage, military facilities have also been targeted.

In Germany, two men were arrested for allegedly plotting to blow up a Nato site in the south of the country that is used by the West to support Ukraine.

The Russian-German dual citizens were arrested after they were caught carrying out what the interior ministry said was “surveillance” of the US military facility.

Poland arrested a man it said was suspected of helping Russian intelligence prepare an attack on Mr Zelensky. The country’s railways, which carry military aid east to Ukraine, have also been targeted.

A Western official said: “We are seeing sabotage continue as another ascent of Russia’s behaviour.”

These more advanced incidents will further raise questions over the unexplained explosions at a BAE Systems munitions factory in Wales, which supplies shells used in Ukraine, and at a similar facility owned by German arms firm Diehl.

Russian agents were blamed for a similar attack on a Czech arms depot in October 2014, where weapons destined for Kyiv were also being stored.

Mr Lord said: “If we start to ask ourselves why this is happening now, the discussions in Western capitals around ever-growing Western involvement in Ukraine, I think what the Russians are seeing is a potential mission creep threat for them.

“Over the last two-and-a-half years, we’ve seen previous ‘red lines’ being crossed, and the Russians haven’t done anything to respond to that.”

‘Intimidation’ attempts

Nato, which is vying for a greater role in the supply of weapons and munitions to Ukraine, has taken a greater interest in the alleged malign acts by Russian-backed agents.

Jens Stoltenberg, the alliance’s secretary-general, recently said: “I can say that we have seen increased Russian intelligence activity across the alliance. Therefore we have increased our vigilance.”

Top Nato officials have warned the alliance could be at war with Russia in the next two decades, with those timescales drastically shrinking, to as little as two years, in similar warnings from national governments.

The Dutch government has warned of Russian attempts to “intimidate” both Nato and EU countries.

Kajsa Ollongren, the Dutch defence minister, recently told EU counterparts that electricity and water supplies, as well as undersea infrastructure, were particular weak spots.

Mr Giles said: “It’s something that everybody should be aware of because it is another example of Russian hostile activity that seeks to disrupt our countries and could be preparation for something more severe.”

It has also raised the question of whether the West is capable of handling malign threats from a hostile state, after so long focusing on counter-insurgency work in the Middle East.

Mr Lord said: “There are capability gaps in this regard. The focus on counter-terrorism post-9/11 was incredibly important, but the relatively benign international situation, aside from the terror threats, after the fall of the Soviet Union has led to an element of complacency that great power, competition and confrontation was a thing of the past.

“The invasion of Ukraine has radically upended that notion and Western intelligence agencies, police forces and militaries are now scrambling [to] plug capability gaps considering the severity of the state actor threat.”

Blast at Romanian DIY store injures at least 13 people

7 June 2024

Romania Explosion
Romania Explosion. Picture: PA

Four of the injured are said to be in a serious condition.

An explosion at a chain home improvement store in north-eastern Romania has injured at least 13 people, four seriously, authorities said.

A mobile intensive care unit was dispatched to the scene in the town of Botosani, in Suceava county, emergency authorities said.

Four of the injured are in serious condition, while 10 were conscious but suffered “various traumas and burns” and are receiving medical attention.

Emergency helicopters were alerted, and two ambulances and two fire trucks were sent to the scene to extinguish a blaze.

The outside of the shop attended by emergency workers
At least four people were seriously hurt (Romanian Emergency Services via AP)

A search and rescue mission is under way inside the store. It is not immediately clear what caused the blast, nor whether the injured were customers or staff members.

Two of the victims in serious condition will be transported to a hospital in the city of Iasi, about 68 miles to the south, while two will be airlifted to the capital, Bucharest, to receive faster medical care, according to the ministry of health.

Some of the injured suffered burns of 10-15% to the upper parts of their bodies, it said.

Video footage shared by the emergency authorities showed part of the building’s facade had been blown out by the explosion, with air-conditioning units strewn across the area in front of the store amid a blanket of debris.

By Press Association


Lagarde's reluctant cut leaves markets guessing on next ECB move

The European Central Bank delivered on its promise to cut interest rates but left investors querying where policy is headed next by also saying it will take longer for inflation to reach two per cent.

While Thursday’s quarter-point reduction in the deposit rate from its nine-month peak at four per cent was widely expected, the upward revision to next year’s forecast for consumer-price growth — to 2.2 per cent from two per cent — came as more of a surprise.

President Christine Lagarde noted that the inflation outlook has improved “markedly” and said there’s a “strong likelihood” that the ECB is shifting into a “dialing-back phase.” But she declined to confirm that such a change of gear has now happened.

While investors are still betting the ECB will lower rates again this year, the timing of that reduction is once again being questioned — with some already saying that cutting rates when inflation is still running hot puts the ECB’s credibility in doubt.

Traders went from betting on two additional moves this year to favouring just one. A cut in September is seen as the most likely outcome but confidence on that has waned.

“Going forward, for the ECB’s credibility they will need to hold a very, very neutral stance,” Vasileios Gkionakis, senior economist and strategist at Aviva Investors, told Bloomberg Television. “The bar for gaining more confidence has increased.”

He questions whether — in light of the stubborn price pressures — the ECB’s cut would even have arrived had officials not touted it for months in advance. 

The announcement was “almost exclusively driven by it being far too embarrassing for the Governing Council to back-pedal” on their pre-commitment, Gkionakis said. “It doesn’t make sense.”

This week’s decision begins to roll back the unprecedented barrage of hikes deployed to quell the euro zone’s worst-ever spike in prices. The step, which nudges the ECB ahead of the U.S. Federal Reserve and the Bank of England in loosening monetary policy, could also help to reinvigorate the 20-nation economy after two years of stagnation and a mild recession.

But it comes on the back of data releases — including May inflation, early-year wage rises and recent private-sector business activity — that came in higher than anticipated. Labour costs will continue to fluctuate in the near term, according to Lagarde.

“Inflation in Europe hasn’t been on a neat downward trajectory, echoing the same awkward policy and credibility dilemma faced by the Federal Reserve,” said Julian Howard, lead investment director and head of multi-asset solutions at GAM Investments.

What Bloomberg Economics says...

“The ECB tried to communicate its discomfort with elevated cost pressures, even though the Governing Council decided to reduce interest rates by 25 basis points today. President Lagarde hinted at a pause in July and the potential for more action in September, although she refrained from providing any clear indications on the timing for the cut.”

—David Powell and Jamie Rush, economists.

While people familiar with the matter are all but excluding a second cut in July, and some are questioning a September move, Lagarde did little to clarify when interest rates may next be adjusted.

“Are we today moving into a dialing-back phase? I wouldn’t volunteer that,” she told reporters in Frankfurt. “There’s a strong likelihood but it will be data dependent, and what is very uncertain is the speed at which we travel and the time that it will take.”

She also cautioned against paying too much attention to predictions from her Governing Council colleagues. “We know the path we are on but we also know there will be other bumps on the road,” she said.

They include meeting the inflation target later than planned, with the ECB’s latest quarterly outlook showing it will moderate to two per cent in the third quarter of 2025, rather than in the middle of that year as previously thought.

The revision adds to the “sticky inflation story that may limit the room for additional rate cuts,” said Theophile Legrand, a rates strategist at Natixis SA.

Nicolas Forest, chief investment officer at Candriam, goes further.

“This initial cut may not signal the start of a sustained easing cycle,” he said. “On the contrary, the new guidance remains cautious, avoiding any clear direction on future moves.”

UBIQUITOUS ACROSS CANADA

Funeral home company Park Lawn agrees to be taken private, shares surge

Shares of Park Lawn Corp. soared nearly 60 per cent in early trading after the company announced a plan to be taken private in an agreement valued at about $1.2 billion, including debt.

Under the proposal, Viridian Acquisition Inc., an affiliate of Homesteaders Life Co. and Birch Hill Equity Partners Management Inc., will pay $26.50 per share for Park Lawn.

Shares in the funeral home and cemetery company were up $9.57 at $25.92 in early trading on the Toronto Stock Exchange on Tuesday.

The agreement, which has been unanimously recommended by the Park Lawn board of directors, requires approval by a two‐thirds majority vote by shareholders.

John Nies, chair of Park Lawn's special committee which reviewed the proposal, said the transaction is in the best interests of Park Lawn and fair to the company's shareholders. 

Park Lawn owns and operates cemeteries, crematoria, funeral homes, chapels and event centres in Canada and the United States.

This report by The Canadian Press was first published June 4, 2024.

CANADA'S IMPERIALI$T BANK

Scotiabank not overly concerned by Mexico election as bank maps out growth plans: CEO

The head of Scotiabank says he's not overly concerned with the election result in Mexico, a key area of focus for growth at the bank.

Speaking at a Canadian Club Toronto event on Thursday, Scott Thomson said the election of Claudia Sheinbaum as president last weekend was no surprise, but the apparent congressional supermajority was. 

"What wasn’t expected was Congress ... that's what's created a little bit of uncertainty," he told the audience. 

The strength of the election victory — the final results of which are still pending — has raised fears that her party will press forward with constitutional changes that would weaken democratic institutions and make an already hostile business environment in some sectors even worse.

Thomson said he's reassured by how institutions prevailed after Andrés Manuel López Obrador was elected with a supermajority in 2018, and by the long-term view Scotiabank has with its operations in the country. 

He said he's also impressed by Sheinbaum and that, while she's left-leaning, thinks she can navigate sticking points around North American free trade.

"She’s very smart, very rational, and will get Mexico to the right place under USMCA."

It's also important for the bank to stick with its plans for Mexico because of its significant growth potential ahead, as the near-shoring trend is leading more manufacturing to shift there from China. 

Other major Canadian companies are also positioning for more growth in the country, and the integrated North American market, like TC Energy that has bought pipelines there, and Canadian Pacific Kansas City whose rail network spans the three countries.

"We want to be there to support clients," said Thomson.

In the short-term though, Scotiabank will be "thoughtful" about capital allocation in the country, he said.

Thomson's remarks were briefly interrupted by two protesters in the Fairmont Royal York ballroom, who raised objections to the bank's investments in Israeli defence contractor Elbit Systems Ltd., while more protesters blockaded the front door of the hotel. 

Scotiabank has noted the investment in Elbit Systems by its 1832 Asset Management portfolio managers is done independent of the bank, unless there are specific investment policies that restrict those decisions.

With files from The Associated Press

This report by The Canadian Press was first published June 6, 2024.

SEE

https://plawiuk.blogspot.com/2006/06/money-laundering-canadian-style.html


 

Federal NDP wants price cap for grocery store staples

The federal New Democrats want a price cap on grocery store staples if the Liberal government can't convince grocers to bring down the prices themselves. 

For months, the Liberals have been trying to get big grocers in Canada to sign a code of conduct that they say will bring down food prices for everyone.

And Industry Minister François-Philippe Champagne has even said he's trying to court a foreign grocer to usher in competition. 

Some food costs have recently eased due to a slight decline in inflation, but New Democrats say prices have not dropped nearly as much as they have risen in the past three years. 

NDP Leader Jagmeet Singh says he's tired of Canadians getting ripped off by corporations, which he says continue to price gouge. 

Last month, some shoppers boycotted Loblaw following a month-long campaign from frustrated consumers who are feeling the pinch and blame the grocery giant. 

This report by The Canadian Press was first published June 4, 2024.

Online streaming services must now pay into fund for Canadian news, content

Online streaming services like Netflix and Spotify are being told they must start contributing money toward local news and the production of Canadian content.

The Canadian Radio-television and Telecommunications Commission has directed foreign streamers today to pay five per cent of their annual Canadian profits into a fund.

That fund will be devoted to producing local TV and radio news, Indigenous content, French-language content, and content created by those with a diverse background.

The CRTC says the fund is expected to inject about $200 million into Canada's broadcasting system every year.

Those responsible to pay would be companies that are not affiliated with a Canadian broadcaster that make at least $25 million from Canadian broadcasting.

The new directive is meant to level the playing field between tech giants and traditional broadcasters, which already contribute to producing Canadian content.

This report by The Canadian Press was first published June 4, 2024.

American Airlines flight attendants rejected a 17% raise and a strike is getting closer

The workers haven't gotten a raise since their contract expired in 2019


Melvin Backman
Published Yesterday

American Airlines flight attendants on a picket linePhoto: Scott Olson (Getty Images)

American Airlines needs to offer a bigger pay raise if it wants flight attendants to stay off the picket line, according to their union. Reuters reports that the Association of Professional Flight Attendants, which represents the airline’s flight attendants, rejected a 17% raise offer on Wednesday that the carrier had put forward earlier this week.

The pay increase would be the first for American Airlines flight attendants since their contract expired in 2019. Negotiations were paused during the pandemic and things have been slow-going since they resumed in 2021. In recent weeks representatives from the airline and the union have been in Washington, D.C. for government-assisted mediation.

RELATED CONTENT

Delta Air Lines is giving out raises and boosting starting pay

Last month, CNN reported that American Airlines flight attendants were being offered starting salaries that could easily land them underneath the poverty line or qualify them for assistance measures such as food stamps.

The AFPA represents more than 23,000 employees of American Airlines. In its latest annual report, American Airlines said that 87% of its 129,700 full-time workers are unionized. The AFPA said Wednesday that it had set up a “strike command center” to coordinate a collective work stoppage in case it and American fail to reach a tentative agreement in the near future.

Flight attendant union rejects American Airlines’ proposed 17% pay raise

PUBLISHED WED, JUN 5 2024
Leslie Josephs@LESLIEJOSEPHS

KEY POINTS

American Airlines offered flight attendants a 17% immediate pay hike as contract talks drag on with no deal.

“There’s still a good deal of work to be done” despite the wage increase offer, CEO Robert Isom said.

American faces a flight attendant strike if the two sides don’t reach a deal with federal mediators.



American Airlines flight attendants demonstrate outside the White House in Washington, May 9, 2024.
Drew Angerer | AFP | Getty Images

The labor union that represents American Airlines flight attendants on Wednesday rejected a company proposal to immediately raise pay by 17%.

CEO Robert Isom offered flight attendants immediate 17% wage increases earlier Wednesday as contract talks continue without a deal, bringing the prospect of a strike closer.

The airline and the Association of Professional Flight Attendants have struggled to reach a new contract agreement, differing on major issues, such as pay. Flight attendants haven’t received contract raises since before the pandemic.

“We have made progress in a number of key areas, but there is still a good deal of work to be done,” Isom said in a video message to flight attendants.

The union said the two sides are scheduled to meet with federal mediators next week for a “last-ditch” effort to get a deal done, adding that flight attendants were told to prepare for a strike.

Strikes are extremely rare among airline employees. The last took place in 2010 among Spirit Airlines pilots. If the two parties can’t reach a deal, a release by federal mediators would be triggered, a process that would take several weeks.

“So, to get you more money now, we presented APFA with a proposal that offers immediate wage increases of 17% and a new formula that would increase your profit sharing,” Isom said Wednesday. “This means we’ve offered increased pay for all flight attendants and are not asking your union for anything in return. This is unusual, but these are unusual times.”

Julie Hedrick, the union’s national president, said that the airline’s focus should be on preparing a longer-term deal with the flight attendants.

“This is not that,” she said.

Also on Wednesday, the union said it opened a “strike command center” with dedicated phone lines and other resources to answer cabin crew questions.

U.S. airline pilots largely locked in new labor deals last year, while flight attendants at American, United Airlines and Alaska Airlines are still negotiating.

Last month, a bipartisan group of more than 160 House representatives wrote to the National Mediation Board, urging it to help complete deals with airlines and flight attendants.


American Airlines offers pay bump as flight attendant union opens strike center

Just last week, union leaders sent a memo to flight attendants calling for members to prepare to strike.

Julie Hedrick, president of the Association of Professional Flight Attendants leads a picket demanding better pay and working conditions in contract negotiations, Tuesday, Feb. 13, 2024 at Dallas Fort Worth International Airport.
 (Shafkat Anowar / Staff Photographer)


By Alexandra Skores
 Jun 5, 2024 


American Airlines flight attendants opened a strike center, signaling strife amid ongoing contract negotiations, while the Fort Worth-based airline offered an immediate wage increase to reach a deal.

The Association of Professional Flight Attendants, which represents American’s over 27,000 flight attendants, announced Wednesday that it opened a strike command center at its union headquarters in Euless.

Shortly after, a video message from American CEO Robert Isom was sent to flight attendants stating that a proposal was delivered to the union offering an immediate wage increase of 17% and a new formula to increase 2024 profit sharing among the workers.

If the union agrees, he said, the increase would be effective for the June bid month and increased rates would be shown in pay on June 30.

“We’re committed to paying all of our team members well and competitively,” Isom told shareholders at an annual meeting on Wednesday.

Meanwhile, union advocates will staff the center to answer questions from members, produce written materials in the event of a strike and more. Flight attendants at American are the final major workgroup among North Texas airline unions yet to reach a new contract after many became amendable before the pandemic.

“We are definitely trying to get a deal done,” said Julie Hedrick, president of the Association of Professional Flight Attendants this week. She added, “We’re going to hold our CEO to his word when he said that we will be an industry-leading [in] wages.”Related:Here’s what would it take for pilots, flight attendants to strike under federal law

Isom was also asked on Wednesday about the flight attendants’ contract during the annual meeting with shareholders.

“Our last remaining open agreement is with our flight attendants, and our plan assumes we reach a deal in 2024,” he said. “We remain in active negotiations with our flight attendants, and we’re working to get a deal as quickly as possible.”

Strike centers and strike authorization votes are often plays among unions in bargaining to place pressure on companies to get a deal to the finish.

Last year, when Southwest Airlines’ pilots represented by the Southwest Airlines Pilots Association were trying to get a contract, the union opened a regional strike center at its headquarters in Dallas. The center opened on Nov. 8. A contract was announced on Dec. 19 and ratified early this year.

The Association of Professional Flight Attendants plans to bargain with the company, alongside the National Mediation Board in Washington, D.C., next week as “one more attempt” at a deal, Hedrick said.

Many steps must be met for federal regulators to release a union from mediation and strike.

Flight attendants at American have requested such a release but remain in negotiations. The release, if allowed, would trigger a 30-day cooling off period, where parties can reach an agreement one last time. At the end of 30 days, without an agreement, an airline union would be allowed to strike and companies can lock out employees.

Union officials said every one of American’s 10 crew bases for flight attendants have trained representatives to answer questions.

American Airlines Flight Attendants Reject Immediate Pay Raise As Tensions Mount

Ted Reed
Senior Contributor
Author of Kenny Riley & Black Union Labor Power in Port of Charleston

Jun 5, 2024, 

American Airlines flight attendants picket at O’Hare International Airport in May.
 (Photo by Scott ... [+]GETTY IMAGES

This story was updated at 7:09 p.m. ET Wednesday to reflect APFA board of directors’ decision to reject Robert Isom’s offer.

American Airlines CEO Robert Isom sought to break through negotiations with flight attendants, offering an immediate 17% raise.

“We’ve offered increased pay for all flight attendants and are not asking your union for anything in return,” Isom said in a video released Wednesday. “This is unusual, but these are unusual times.” He said the raise would appear in June paychecks.

The video was sent to American’s 27,000 flight attendants, who are members of the Association of Professional Flight Attendants. It came as the union opened a strike center in Dallas and as the two sides prepare for what may be last-ditch negotiations next week. It did not provoke a positive response.

“Our CEO has decided to negotiate with our members directly,” APFA President Julie Hedrick said Wednesday in an interview. “He is trying to circumvent the union.”

Hedrick said the 17% increase represents a match of the existing Delta pay rates. “We have told them over and over again, it will not pass” in a membership vote, she said. The union’s board unanimously rejected the offer Wednesday evening.

Rather, she said, APFA wants an industry-leading contract, which would surpass Delta’s rates. Delta also provides boarding pay, which APFA has already secured in bargaining. For now, Southwest flight attendants, represented by the Transport Workers Union, have the leading industry contract. Southwest wages are 24% of American wages, but the Southwest contract does not have boarding pay.

Hedrick said American has made the same 17% offer previously, and members were not interested. That lack of interest has been made clear in emails and texts to her as well as in union chat groups, she said. “Too little, too late,” one flight attendant posted. “Stop trying to negotiate with the members and get to the damn table.”

Talks next week in Washington with the National Mediation Board will occur at American’s request. “They should focus on that, not on trying to circumvent the union,” Hedrick said.

In his video, Isom said, “The company and APFA negotiating teams have been meeting regularly for months to reach a new agreement. We have made progress in a number of key areas, but there’s still a good deal of work to be done.

“We will be back at the table with APFA leadership next week and a deal is within reach, but I don’t know how long it will take to get to the finish line and I don’t want another day to go by without increasing your pay.

“So to get more money to you now, we presented APFA with a proposal that offers immediate wage increases of 17% and a new formula that would increase your 2024 profit sharing,” Isom said.

The APFA strike center provides a dedicate strike hotline, produce written material including a strike handbook and communicate with members.

Talks are being conducted with a mediator from the National Mediation Board. So far, the NMB has held off releasing the parties, a move that would enable the union to call a strike after 30 additional days of talks. The NMB refused an APFA request for release in November, but Hedrick believes the response to a second request would be different.

ALL BOSSES HARASS

BlackBerry asks court to dismiss some claims in case alleging CEO harassed employee


IT'S THEIR JOB

BlackBerry Ltd. and its chief executive John Giamatteo have asked a U.S. court to dismiss some of the claims made by a former employee who alleges Giamatteo sexually harassed her and then retaliated against her after she reported the behaviour.

In a filing made in a Northern California court this week, the Waterloo, Ont., cybersecurity company and Giamatteo say the unnamed plaintiff's claims have no merit and are filled with "falsehoods and mischaracterizations."

“The allegations made by the plaintiff fall well short of conduct that amounts to sexual harassment or discrimination," BlackBerry spokeswoman Camilla Scassellati Sforzolini said in an email on Wednesday.

The company and Giamatteo want the court to throw out claims the plaintiff made suggesting she had encountered a hostile work environment, discriminatory pay and unpaid wages. They also want allegations about negligent hiring and failure to prevent harassment and discrimination to be dropped.

The plaintiff, who is a woman of colour, told The Canadian Press when she filed her lawsuit in April that Giamatteo had "tried to get close to her" and "woo" her, after he became the president of BlackBerry's cybersecurity business in October 2021.

The woman known as Jane Doe claims in court documents that Giamatteo suggested the pair travel together and at a dinner she presumed was a business meeting, allegedly told her stories about how he dresses up when he’s out with his daughters so people mistake him for "a dirty old man” out on a date with them.

When she reported the behaviour, she said she started being cut out of meetings and later, was told she was being terminated effective immediately as part of a “restructuring.”

In the new court filings, the company and Giamatteo say the plaintiff lost her job at BlackBerry not because she reported harassment but because she was part of a layoff that culled more than 200 staff from the firm as it was separating its cybersecurity and internet of things businesses.

The filings say the plaintiff's position fit into neither portion of the business and they felt she was "a poor fit to be placed in a new or different role because she had engaged in a long-term pattern of antagonistic and demeaning conduct toward colleagues, leading to a negative and toxic culture that surrounded her."

In the two months prior to the plaintiff being let go, the documents say, a female employee reporting to her took medical leave to "address mental health issues caused by (the) plaintiff’s abusive behaviour, and another employee ... quit on the spot when (the) plaintiff insisted he work around the clock on a weekend to complete a project on an unrealistic timeline." 

"Although a favourite of (former BlackBerry chief executive) John Chen, who sponsored her rapid rise, (the) plaintiff alienated virtually all of her peers through years of rude and divisive conduct," the documents say.

They add that the plaintiff was offered the option to resign, but she declined.

The plaintiff's lawyer, Maria Bourn, fired back at the claims, saying BlackBerry "performed a sham investigation into Mr. Giamatteo's indefensible behaviour. 

"Now they submit a filing that doesn't even tie to the law," she said in an email.

Days after her client's termination, BlackBerry named Giamatteo its new chief executive.

The plaintiff previously told The Canadian Press the move left her feeling shocked but she decided to pursue legal action because she felt if she was "silenced" it wouldn't help other women.

"I feel like I have a responsibility, particularly having been at the executive level, to help other women, whether that is other women in BlackBerry or in the industry or broader than that," she said in April.

"I am hoping that if they can hear my story, that that will help give them strength."

This report by The Canadian Press was first published June 5, 2024.