French detention of Telegram billionaire extended amid criminal probe

Good morning. Here's what happened overnight and what you need to know today.

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1.

Detention extended: French prosecutors said the arrest of Telegram’s billionaire founder, Pavel Durov, is part of an investigation into criminal activities on the messaging platform, including child pornography, drug sales, money laundering, and non-cooperation with law enforcement. Russian-born Durov, 39, is being questioned by investigators as part of the ongoing judicial process. His detention was extended on Sunday by an investigating judge and could last up to 96 hours (until 28 August 2024), prosecutors said. The investigation is led by cybercrime and anti-fraud specialists. The arrest has sparked debate over free speech on the internet, with President Emmanuel Macron denying claims of censorship and political intervention in a social media post. Telegram rejected claims that its platform enables illegal activities like terrorism, fraud and child exploitation. (Prosecutor’s statement)(The New York Times)

2.

Taxing drive: Canada will impose a 100% tariff on Chinese electric vehicles and a 25% surtax on imported steel and aluminium from China, echoing recent US and EU actions and escalating trade tensions between the Asian nation and the West. "China is not playing by the same rules," Prime Minister Justin Trudeau said. Canada may extend tariffs to chips, solar cells, batteries and critical minerals to bolster its EV supply chain. It also flagged “intentions” to limit zero-emission vehicle incentives to products from countries with free trade agreements. The EV tariffs take effect on 1 October, with the steel and aluminium surcharge starting on 15 October. Tesla’s shares dropped as much as 4% on Monday amid concerns over higher costs to shift exports from the US to Canada. (Capital Brief)(Canada’s statement)

3.

Oil soars: Crude prices surged due to geopolitical tensions and production disruptions. Brent crude futures climbed over 5% to over USD81.5 per barrel following a halt order in oil production in Libya, where a power struggle between its eastern and western governments intensified. Libya’s eastern government declared force majeure, ordering all oilfields to close and a halt to production and exports, amid a dispute over central bank control with the internationally recognised Tripoli-based government. The country holds the largest known crude reserves in Africa. “These are ‘real’ barrels that could be lost, so that would tighten the physical market for as long as it lasts,” Giovanni Staunovo, a commodity analyst at UBS, told Bloomberg. The intensifying conflict between Israel and Lebanon’s Hezbollah, and attacks by Houthi rebels in the Red Sea added to the turmoil affecting global oil markets. (Capital Brief)(Reuters)

4.

AI tags: OpenAI is backing a California bill requiring tech firms to label AI-generated content, ranging from harmless memes to deepfakes aimed at spreading misinformation for political purposed. California's AB 3211 bill, authored by Democratic representative Buffy Wicks, has passed the Assembly with a 62-0 vote and is set for a full Senate vote before advancing to Governor Gavin Newsom by 30 September. The push for transparency, including watermarking AI content, is particularly pertinent with numerous global elections this year. OpenAI's support contrasts with its opposition to another AI-related bill, SB 1047, that mandates safety testing for AI models. California lawmakers proposed 65 AI-related bills this year, though many have stalled. (Reuters)

5.

Data transfer: Uber has been fined €290 million ($477.73 million) by the Dutch Data Protection Authority (DPA) for transferring European taxi drivers' personal data to the US, violating EU rules. Uber has stopped the practice and said it planned to appeal the “unjustified” decision to impose a “extraordinary fine.” The regulatory action was triggered initially by a complaint from almost 200 taxi drivers in France with the country’s data protection authority, but the DPA took the case because Uber’s European headquarters are in the Netherlands. "In Europe, the General Data Protection Regulation (GDPR) protects the fundamental rights of people, by requiring businesses and governments to handle personal data with due care," DPA chairman Aleid Wolfsen said. "But sadly, this is not self-evident outside Europe. That is why businesses are usually obliged to take additional measures if they store personal data of Europeans outside the European Union." (DPA)

6.

Sino exit: IBM is reportedly closing most of its research and development operations in China, affecting over 1,000 jobs across multiple cities, including Beijing and Shanghai. IBM executive Jack Hergenrother briefed staff about the cuts during a virtual meeting on Monday, according to Chinese media outlet Jiemian. He explained IBM’s infrastructure business in China was contracting amid intense competition, and that the company was relocating R&D efforts to be closer to clients outside of the country. The move follows a string of US companies pulling back from China amid intensifying geopolitical tensions between Washington and Beijing. IBM's decision also follows an almost 20% drop in sales in the Asian nation in 2023. IBM's Chinese rivals have benefited from government directives favouring domestic tech providers, further eroding IBM's market share. IBM has not commented on the reports. (Capital Brief)(The Wall Street Journal)(FT)

7.

Temu disappoints: Shares in PDD Holdings, the Chinese parent of Temu tumbled 28.51% on Monday in New York. The drop followed a disappointing quarterly sales result and outlook, with revenue reaching 97.06 billion yuan ($20 billion), below analysts’ forecast of 100 billion yuan. The company also warned potential profitability declines were on the table as it planned investments to support a “sustainable ecosystem.” Net income surged 144% to 32 billion yuan, but the company said “revenue growth will inevitably face pressure due to intensified competition and external challenges.” Merchants are protesting PDD's fines and accuse Temu – which is also facing regulatory scrutiny in the US, Europe and other jurisdictions – of withholding sales revenue. PDD said it will reduce transaction fees by 10 billion yuan next year to support “high-quality” merchants while vowing to “tackle low-quality” ones. (Capital Brief) (Nikkei)

8.

Energy U-turn: New Zealand's new right-of-centre government, led by Prime Minister Christopher Luxon, plans to reverse a 2018 ban on offshore oil and gas exploration outside the Taranaki region by years end. Prompted by soaring prices, the move aims to boost investment in the oil and gas sector. A decline in natural gas production—down 12.5% in 2023 and a further 27.8% in early 2024—had led to a nationwide energy shortage, the government said. NZ also plans to ease regulatory hurdles for importing LNG and to expedite renewable energy projects, targeting a one-year consent process and initiating offshore renewable feasibility permits by 2025. Greenpeace condemned the decisions to explore for gas and import LNG as "climate denial," calling it an insult to Pacific Island nations grappling with rising sea levels due to climate change. (Reuters)