The Draghi dilemma

This is an audio transcript of the FT News Briefing podcast episode: The Draghi dilemma

Marc Filippino
Good morning from the Financial Times. Today is Wednesday, January 26th, and this is your FT News Briefing.

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Google is backtracking on its controversial plan to replace advertising cookies, and convenience store chain 7-Eleven is under pressure to split itself up. Plus, if only there were two Mario Draghis. Italy’s prime minister is seen as the top choice as the country’s next president, but politicians can’t agree on who’d fill his shoes as prime minister.

Amy Kazmin
It is unclear whether these same parties who are the most unlikely of bedfellows would ever really be able to line up together behind another individual.

Marc Filippino
The FT’s Amy Kazmin talks about the Draghi dilemma and what’s at stake. I’m Marc Filippino, and here’s the news you need to start your day.

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Google has just overhauled a crucial piece of technology it’s been developing as part of its plan to replace cookies. Advertising cookies are those small files in your browser that track your online behaviour. Advertisers rely on them to make money. To help figure out why Google is making this move, I reached out to our west coast editor Richard Waters.

Richard Waters
Well, adtech is deeply complex, but I think, you know, the way to think about this is that Google has two fundamental problems. One problem is that a lot of publishers and people in the advertising world don’t trust them, and Google hasn’t been its own best friend here because they have this tendency to cook up clever technical schemes and then drop them on the industry. And then everybody kind of runs away and looks at this and decides that, you know, do we really trust what Google is doing? The other problem, though, is that there is a fundamental tension between privacy and competition. So if Google scraps cookies, the privacy people love the idea. You know, this should make life more private for you. On the other hand, all the publishers are saying, well, hang on a minute, you know, we’re not going to be able to make money anymore. And is Google really doing this just to reinforce their own position? They’re going to make a lot of money instead of us.

Marc Filippino
Yeah, Richard. Earlier this week, we reported that German publishing trade groups complained to the EU that Google could be breaking the law with this plan to scrap cookies. So our publishers and advertisers now happy with Google’s move?

Richard Waters
I think, you know, we can almost guarantee they won’t be. And the reason I say that is that Google is moving further in the direction of privacy with the changes it’s making. It’s saying we are going to be less granular. We’re going to categorise you as a, as an internet user in a more general sense when we sell your data to advertisers. It’s great for privacy, but not so good for advertising.

Marc Filippino
So how big of a deal do you think this move is, Richard?

Richard Waters
Well, Google’s been working on this plan for two years, more than two years. So to change course at this point is pretty significant. You know, essentially, they’re saying our solution for protecting privacy hasn’t really delivered on what we claimed. So, you know, it’s significant. However, having said that, they’re still going ahead and saying they’re going to scrap cookies next year. They still say they’re going to come up with a system that they think can meet all these different interests. So, you know, if they can get it back on track, then maybe, you know, in time we’ll see if it’s not that big a deal.

Marc Filippino
Richard Waters is the FT’s west coast editor.

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Japan is famous for its convenience stores or konbini, as they’re called. They’re everywhere, and they offer everything from sushi to shipping services. The biggest konbini of them all is 7-Eleven. Many people don’t even know it’s a Japanese company. I didn’t until I read the story. And like many big corporations around the world, frustrated investors want 7-Elevens parent company Seven & i to split off some of its businesses. Here’s our Tokyo correspondent Anthoni Slodkowski.

Antoni Slodkowski
Shareholders are basically saying that Seven & i should essentially split its profitable convenience store brand 7-Eleven, which is sort of well known around the world and its other businesses such as supermarkets and sort of other department store businesses and such, which are kind of low performing and which have very thin margins. So what the investors want to see is basically the company to focus on its growth area and want to want to see the rest kind of things sort of spun off or carved out in one way or the other.

Marc Filippino
So now, three of the company’s biggest shareholders, including the US hedge fund Third Point, are considering bringing proposals for restructuring.

Antoni Slodkowski
You know, this is not the first time they’re actually dealing with calls for, you know, for reform. There’s this culture of sort of shielding these low-performing businesses inside Seven & i, and actually Third Point backed the current chief executive who hails from the convenience store segment in the hopes of a kind of a more aggressive turnaround that has not come about in the last five years since the current CEO took over.

Marc Filippino
Anthony Slodkowski is the FT’s Tokyo correspondent.

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Italian lawmakers are voting for a new president. The frontrunner is the country’s well-loved and respected prime minister and the former head of the European Central Bank, Mario Draghi. But when lawmakers cast an initial round of ballots earlier this week, most came back blank. No name on them. Actually, this was by design. It was part of a plan by members of Draghi’s national unity government to stall. To help figure out what’s going on, I’m joined by our Rome correspondent Amy Kazmin. Hey, Amy.

Amy Kazmin
Hi.

Marc Filippino
So what’s with the blank ballots?

Amy Kazmin
So the reason for the blank ballots is that basically the parties that make up Mario Draghi’s national unity government haven’t really decided on whether he should be elected president or not. And so while these political negotiations are going on behind the scenes, they all cast blank ballots to signal that talks are still ongoing and also to avoid any inadvertent destabilising political outcome.

Marc Filippino
Now, why haven’t they decided on Mario Draghi? Isn’t he incredibly popular?

Amy Kazmin
So basically, Prime Minister Mario Draghi is in fact one of the most respected people in the country. So he would be a very strong candidate as president. The problem is, if the politicians decide to elect Draghi president they’re not sure that they will be able to agree on a successor to serve as prime minister. And as they debate over who should be the prime minister to replace Mario Draghi, that the parties that make up the national unity government might end up falling apart.

Marc Filippino
So, Amy, there’s no one that these parties can agree on to replace Draghi if he were to become president?

Amy Kazmin
Part of the reason that there’s so much difficulty finding the next prime minister is that the coalition that is now behind Mario Draghi and the current government is a very, very broad-based, unusual political coalition which spans Italy’s political right to the political left. But it is unclear whether these same parties who are the most unlikely of bedfellows would ever really be able to line up together behind another who could actually bring them all together. The risk is if they can’t agree, they’ll be propelled into early elections.

Marc Filippino
And as you wrote in your piece, nobody wants that. They just want to hang on to their seats as long as they can. Now, another thing at risk here is billions of euros in Covid recovery funds from the EU, and Italy desperately needs them as part of its plan to reboot its economy.

Amy Kazmin
Italy is due to receive €200bn of this money through grants and loans, but in order to receive that money it must meet a very ambitious schedule of reforms. But the dispersal of the EU funds will only happen if Italy keeps to this very ambitious and some would say challenging time schedule. So the government really needs to keep on track. It’s due to receive another €40bn for reforms completed in 2022 if they get derailed or they lose reform momentum because of politicking or the collapse of the government or early elections, then that money won’t come as it is supposed to.

Marc Filippino
Amy Kazmin is the FT’s Rome correspondent.

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You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

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