Modi tries to deepen US tech ties

This is an audio transcript of the FT News Briefing podcast episode: ‘Modi tries to deepen US tech ties’

Marc Filippino
Good morning from the Financial Times. Today is Wednesday, June 22nd, and this is your FT News Briefing.

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India’s prime minister is in Washington today. And US regulators are cracking down on Amazon. Plus, Italy is trying to protect one of its companies from Chinese influence. I’m Marc Filippino, and here’s the news you need to start your day.

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India’s prime minister Narendra Modi is on a trip to the US this week. He kicked it off on Tuesday, schmoozing with tech leaders like Elon Musk. And today, he’s addressing Congress. John Reed is the FT’s South Asia bureau chief, and he says Modi’s visit comes at a time when relations between India and the US are at a high point.

John Reed
I think there was a meeting of minds, and this comes from both sides that India and the US can be partners in standing up as democratic counterweights to China. And I think we’ll see a lot of activity in this visit around areas where the two countries have been drawing closer together. And these include technology, critical technologies like semiconductors and AI. This includes defence, where India is trying to reduce its reliance on Russian armaments and equipment.

Marc Filippino
And John says Modi could sign some industry-related deals as a result of the trip.

John Reed
There may be something around co-operation on semiconductors, on microchips. There’s also likely to be a deal with General Electric to make jet engines locally in India. Now, this is something that India really wants. It wants to boost jobs in manufacturing, generally. So making engines in India will allow India to retool its current fleet of aircraft and begin retiring more of the Russian jets that currently dominate its fleet. It’s a really important market and the US sees it, I think, as a critical partner in standing up to China.

Marc Filippino
John Reed is the FT’s South Asia bureau chief.

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The US Federal Trade Commission is suing Amazon over its Prime service. Prime is a paid subscription. It costs $139 a year here in the US, and it gives members access to certain benefits not available to other customers. Think free same-day delivery. The FTC is accusing Amazon of signing customers up for a Prime subscription without their consent. And the watchdog said Amazon made it harder for customers to unsubscribe. The FT’s US legal and enforcement correspondent Stefania Palma joins me now. Hey, Stefania.

Stefania Palma
Hi, Marc.

Marc Filippino
So what does the FTC want out of this lawsuit?

Stefania Palma
So I think we have to wait for the whole thing to play out in courts. But what the FTC is seeking are monetary penalties as well as an injunctive relief to basically stop Amazon from what the FTC described as continuing to harm users.

Marc Filippino
And has Amazon responded to the allegations?

Stefania Palma
So Amazon has put out a statement saying that the FTC’s accusations were false on the facts and the law. They claim that it is very sort of clear and simple to cancel Prime membership. And also, they pointed out that they were not notified by the FTC of the lawsuits before the announcement. But you could arguably say that Amazon would have known that the FTC was looking into this matter since in the complaint, the FTC is saying that Amazon has actually substantially revamped the Prime cancellation process for some customers ahead of the lawsuit.

Marc Filippino
Now, Stefania, the head of the FTC, Lina Khan, has had big tech companies like Amazon in her crosshairs for a while now. The regulator has recently gone after Meta, for example. Is the FTC trying to make a statement with this lawsuit?

Stefania Palma
I mean, it is no doubt that Lina Khan has been described as a Big Tech critic. She is amongst sort of this new generation of very progressive antitrust officials that have been nominated by Joe Biden as they tried to crack down against anti-competitive conduct across the US economy. But all of that to say that, yes, absolutely. I think any kind of legal challenge that a key antitrust regulator like the FTC brings against sort of the tech giants like Amazon is significant. It definitely is not the first move against Amazon. Even just last month, the company agreed to pay $25mn to settle a lawsuit that was brought by the FTC and the Department of Justice, accusing the company that it was violating children’s privacy laws in connection to the Alexa service.

Marc Filippino
Stefania Palma is the FT’s US legal and enforcement correspondent. Thanks, Stefania.

Stefania Palma
Thank you.

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Marc Filippino
Italy is stripping a Chinese company of its influence in an Italian tyremaker. The Chinese company Sinochem owns 37 per cent of Pirelli. It’s the largest shareholder. But under a new rule, Sinochem cannot have any role in appointing Pirelli’s new CEO. I’m joined now by the FT’s Amy Kazmin, and she’s our Rome correspondent. Hi, Amy.

Amy Kazmin
Hi.

Marc Filippino
So why did the Italian government decide to do this?

Amy Kazmin
What the government cited in its decision to restrict Sinochem’s powers in the company was Pirelli’s chip technology. Pirelli is looking at embedding high-tech chips that are capable of sending geolocation data, other kinds of information about tyre conditions, road conditions, but also the locations of vehicles. And they deemed that this chip technology did have potential strategic uses, that it could be used for AI, that it was collecting a lot of data. And on these grounds, they determined that this technology itself was of strategic value. And that is the reason that they imposed this directive.

Marc Filippino
Now, Pirelli’s outgoing CEO Tronchetti Provera, has been lobbying the Italian government about this issue. Why has he been so adamant about it?

Amy Kazmin
Relationships between Tronchetti Provera and his Chinese partners have been deteriorating in recent years. Initially, he was super enthusiastic about selling a stake to the Chinese. But I think that as time went on, as Xi Jinping tightened his control on society, there were allegations that the Chinese Communist party was exerting ever more influence in the affairs of Pirelli. And I think he gradually just became more and more uncomfortable.

Marc Filippino
Is there a risk that this could sour things between Italy and China?

Amy Kazmin
This decision has come at a time when relations between Italy and China are at a very sensitive and delicate point. Italy’s Prime Minister Giorgia Meloni is considering withdrawing Italy from Beijing’s flagship Belt and Road Initiative. Italy signed up to the Belt and Road Initiative several years ago under a previous populist government. Giorgia Meloni has said that she feels that it was a mistake. So this decision to restrict Sinochem’s shareholder rights in a large Italian company that it bought into eight years ago isn’t likely to go down too well in Beijing. That said, Italian officials point out that in fact, Italy could have ordered Sinochem to sell out its shares in Pirelli completely. It did not do that. So the Italians are arguing that this is a measured approach that it’s taken to, you know, it’s not affecting Sinochem’s ability to own a stake in Pirelli, but it is protecting the sensitive strategic technology.

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

Amy Kazmin
Thank you.

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Marc Filippino
Before we go, UK inflation is stuck. New data out yesterday showed that the rate of inflation in May was 8.7 per cent, which is exactly the same as it was in April. This is the fourth month in a row the figure has been higher than economists predicted. This puts even more pressure on the Bank of England. The central bank is meeting today, and they’re expected to raise interest rates by a quarter of a percentage point.

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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.