Business

Bud Light boycott still hammers local distributors one year later: ‘Very upsetting’

The Bud Light logo is seen on a truck semitrailer, Oct. 21, 2022, in Maryland. — Jakub Porzycki/NurPhoto via Getty Images

(NEW YORK) — When conservative activists set aflame boxes of Bud Light and urged a boycott in response to an endorsement from a trans influencer last spring, they sent sales of the beer plummeting in a rare success in the long history of consumer movements.

Even more improbably, the backlash continues to hammer Bud Light and strain independent local wholesalers more than a year later, according to third-party sales data shared with ABC News as well as interviews with six Anheuser-Busch wholesalers.

Most of the wholesalers, small- and medium-sized businesses that draw a significant portion of their revenue from Bud Light, said they remain weakened by the decline in sales and uncertain about when, if ever, the brand will fully recover.

The owner of an Anheuser-Busch wholesaler in the Northeast, whose child is trans, told ABC News they have taken a 30% pay cut to make up for the losses and are considering retirement.

“It was really hurtful personally,” the owner said. “I’m trying to understand what my kid is going through and then this happens.”

“It’s still very upsetting,” the owner added, noting the company’s Bud Light sales declined by 50% in the immediate aftermath of the boycott. “It’s very difficult to come in every day and look at those sales numbers, knowing I have a responsibility for everyone here.”

Another executive at a wholesaler in the Mid-Atlantic said they have spent sleepless nights devising ways to shed costs without laying off employees; and a top official at a distributor in the Southeast said they expect sales of Bud Light will remain down for at least two more years.

Still, the wholesalers added, harassment of employees and drinkers has faded, indicating the boycott fervor has died down and the brand reputation of Bud Light has begun to mend. Many of the wholesalers said sales had improved lately and Bud Light remains their top-selling beer.

The wholesalers requested anonymity because they didn’t want to be publicly identified speaking about the financial consequences of the boycott. In all, roughly 500 independent distributors sell Anheuser-Busch products nationwide.

In response to ABC News’ request for comment, a spokesperson at Anheuser-Busch touted the success of Bud Light and the company’s relationship with wholesalers.

“Bud Light continues to be the number one selling beer brand in the country because for decades it has been synonymous with programs and activations that consumers love, including partnerships with the NFL, NHL, UFC, and College Football,” the spokesperson said.

“As we have for nearly a century, we continue to work side-by-side with our 350+ wholesaler partners to drive growth for our collective business and provide best-in-class service to our consumers and retailers across the country,” the spokesperson added.

Sales of Bud Light declined by roughly 25% over the weeks following a product endorsement from Dylan Mulvaney, a transgender influencer, which sparked backlash among many conservatives last April, according to data from Bump Williams Consulting and Nielsen NIQ obtained by ABC News.

In a video posted on Instagram, Mulvaney held a specially designed can of Bud Light featuring an illustration of her. The can, Mulvaney said, included a message congratulating her on “365 days of womanhood.”

Until April of this year, sales of the beer stayed stuck at the same level while the boycott persisted, Dave Williams, the president of Bump Williams Consulting, told ABC News.

“Sales cratered and sat there. They didn’t get any worse but they sure as heck didn’t get any better,” Williams said. “I don’t think there are a lot of examples where the king of the castle, someone in such prominence, took such a public and drastic hit in beer.”

In recent months, sales have shown signs of improvement but remain well below pre-boycott levels, Williams added, noting that some customers appear to have returned to the brand as the social stigma has waned while others remain steadfast in their opposition.

“The goal is to retain the consumers they have and hopefully try to win some back.”

An executive at a wholesaler in the Southeast said Bud Light sales plummeted by at least 20% in the aftermath of the boycott and remained at that level for the rest of 2023. The blow to the balance sheet hurt company morale and raised questions about the firm’s future, the executive said.

“We’ve got employees who expected a career helping to build this brand and this business,” the executive added. “To have that undone was a bit of a shock, to say the least.”

In recent months, hostility toward the brand has faded, sales have stabilized and morale has improved, the executive added, acknowledging that sales still stand well below pre-boycott levels.

“Once a consumer drops off a product — where there is a readily available and similarly priced substitute — a habit has formed and it’s difficult to shake that habit,” the executive said. “We have to give them a reason to come back.”

Williams said Bud Light has returned to its spot as the top-selling U.S. beer by volume, even if revenue has lagged. Meanwhile, other Anheuser-Busch beer brands are performing better than they did before the boycott.

Some wholesalers expressed optimism about Bud Light’s outlook and praised Anheuser-Busch for providing financial support in response to the sales slump. They also downplayed the boycott’s impact, attributing much of the sales decline to a wider shift away from beer to other alcoholic drinks.

“The beer industry — no matter what product you’re selling — is down in sales,” Tom Davis, director of operations at Maryland-based Katcef Brothers, Inc., an Anheuser-Busch wholesaler, told ABC News. “That has a bigger impact on beer sales than anything.”

An Anheuser-Busch spokesperson shared a statement from a wholesaler with ABC News.

“Anheuser-Busch recognizes the vital role their wholesaler partners play in the business, and last year they stepped in to provide critical resources to ensure we were positioned to continue serving our consumers and communities across the country,” Sarah Matesich Schwab, President of Ohio-based Matesich Distributing, said in the statement.

“There’s lots of positive momentum in the system, and we are focused on strengthening our partnership so that we can continue to grow and succeed together,” Matesich Schwab added.

The enduring impact of the Bud Light boycott defies a decadeslong history of largely ineffective consumer boycotts, Maurice Schweitzer, a professor at the University of Pennsylvania’s Wharton School of Business who studies consumer movements, told ABC News.

The continued struggle of Bud Light owes to the easy availability of similar products as well as the highly polarized political environment nationwide, Schweitzer said.

“Given the history of boycotts and its history of ineffectiveness, it is really surprising that this one has had the staying power that it has,” Schweitzer told ABC News.

“In this moment, we’re so politicized,” Schweitzer added. “The weather is political, the employment rate is political and now beer is political.”

Copyright © 2024, ABC Audio. All rights reserved.

Business

Fed holds interest rates steady at 23-year high

Justin Sullivan/Getty Images

(WASHINGTON) — The Federal Reserve decided to hold its benchmark interest rate steady on Wednesday, prolonging an aggressive fight against inflation despite fresh data hours earlier that showed a slight cooldown of price increases.

At seven consecutive meetings spanning nearly a year, the Fed has opted to hold rates steady in response to elevated inflation and robust economic performance.

In theory, the prolonged stretch of high interest rates should weigh on economic activity, reduce consumer demand and cut prices. Instead, a resilient economy and stubborn inflation have largely defied the Fed’s efforts.

Inflation has fallen significantly from a peak of 9.1%, but price increases have barely budged in recent months and remain more than a percentage point higher than the Fed’s target rate of 2%.

The Fed has all but abandoned a previous forecast of three interest rate cuts by the end of the year.

The Federal Open Market Committee, the Fed’s decision-making body on interest rates, said last month that it does not anticipate cutting interest rates until it regains confidence that inflation is moving sustainably downward.

“So far, the data has not given us that greater confidence,” Fed Chair Jerome Powell said at a press conference in Washington, D.C., last month. “It is likely that gaining such greater confidence will take longer than previously expected.”

Some observers expect the Fed to forgo interest rate cuts for the remainder of 2024.

Roger Aliaga-Diaz, chief economist at the investment giant Vanguard, said in a statement to ABC News before the rate announcement that he believed the Fed would keep interest rates at current levels for at least the next six months.

The forecast, Aliaga-Diaz added, owes to “inadequate progress in the inflation fight and continued growth and labor momentum.”

In a note to clients, Deutsche Bank echoed skepticism about rate cuts anytime soon. “Fed officials have clearly signaled that they are in a wait-and-see mode with respect to the timing and magnitude of rate cuts,” the note said.

The Fed risks a rebound of inflation if it cuts interest rates too quickly, since stronger consumer demand on top of solid economic activity could lead to an acceleration of price increases.

A prolonged period of high interest rates, however, threatens to place downward pressure on economic growth and plunge the U.S. into a recession.

A jobs report released on Friday blew past economist expectations, demonstrating the resilient strength of the economy. Blockbuster hiring in May exceeded the average number of jobs added each month over the previous year, the U.S. Bureau of Labor Statistics said.

Average hourly wages surged 4.1% over the year ending in May, the report found. That rate of pay increase exceeds the pace of inflation, indicating that the spending power of workers has grown even as prices jump.

The data marks a boon for workers but could give pause to policymakers, since they fear that a rise in pay could prompt businesses to raise prices in order to cover the added labor cost.

Economic output slowed markedly at the outset of 2024, though it continued to grow at a solid pace.

While the Fed has resisted lowering interest rates, consumers have faced high borrowing costs for everything from mortgages to credit cards.

The average rate for a 30-year fixed mortgage stands at 6.99%, according to Freddie Mac data released last week.

When the Fed imposed its first rate hike of the current series in March 2022, the average 30-year fixed mortgage stood at just 3.85%, Freddie Mac data showed.
 

Copyright © 2024, ABC Audio. All rights reserved.

Business

Inflation eased slightly in May, outperforming economists’ expectations

Javier Ghersi/Getty Images

(WASHINGTON) — Consumer prices rose 3.3% in May compared to a year ago, easing slightly from the previous month and outperforming economists’ expectations.

The data arrived hours before the Federal Reserve is set to announce a decision about whether to move its benchmark interest rate.

Price increases have slowed significantly from a peak of about 9%, but inflation still stands more than a percentage point higher than the Federal Reserve’s target rate of 2%.

For nearly a year, the Fed has held interest rates steady at their highest level since 2001, hoping that elevated borrowing costs would slow economic activity, reduce consumer demand and lower prices.

Instead, the economy has hummed along and price increases have largely stalled.

A jobs report released on Friday blew past economist expectations, demonstrating the resilient strength of the economy. Blockbuster hiring in May exceeded the average number of jobs added each month over the previous year, the U.S. Bureau of Labor Statistics said.

Average hourly wages surged 4.1% over the year ending in May, the report found. That rate of pay increase exceeds the pace of inflation, indicating that the spending power of workers has grown even as prices jump.

The data marks a boon for workers but could give pause to policymakers, since they fear that a rise in pay could prompt businesses to raise prices in order to cover the added labor cost.

Economic output slowed markedly at the outset of 2024, though it continued to grow at a solid pace.

The Fed, in turn, has all but abandoned a previous forecast of three interest rate cuts by the end of the year.

The Federal Open Market Committee, the Fed’s decision-making body on interest rates, said last month that it does not anticipate cutting interest rates until it retains confidence that inflation is moving sustainably downward.

“So far the data has not given us that greater confidence,” Fed Chair Jerome Powell said at a press conference in Washington, D.C., last month. “It is likely that gaining such greater confidence will take longer than previously expected.”

Economists expect the Fed to hold interest rates steady for the seventh consecutive time at the close of its meeting on Wednesday.

The Fed risks a rebound of inflation if it cuts interest rates too quickly, since stronger consumer demand on top of solid economic activity could lead to an acceleration of price increases.

A prolonged period of high interest rates, however, threatens to place downward pressure on economic growth and plunge the U.S. into a recession.

Price increases have drawn attention from voters as the U.S. hurtles toward what appears to be a closely contested presidential election in the fall.

Eighty-five percent of U.S. adults surveyed by ABC News/Ipsos last month said inflation is an important issue, making it the second-highest priority among adults surveyed. The top priority, the economy, also relates to individuals’ perceptions of price increases.

On each of those issues, the economy and inflation, those surveyed by ABC News/Ipsos said they trusted former President Donald Trump over President Joe Biden by a margin of 14 percentage points.

“Inflation is something that affects absolutely everybody,” Elaine Kamarck, a senior fellow in the Governance Studies program at the Brookings Institution, previously told ABC News. “People notice it, whether they’re rich or poor.”

Copyright © 2024, ABC Audio. All rights reserved.

Business

Inflation expected to have held steady in May

Javier Ghersi/Getty Images

(WASHINGTON) — The release of inflation data on Wednesday will reveal the latest movement for consumer prices, which continue to strain households and top surveys of voter priorities less than five months before the November election.

The data will arrive hours before the Federal Reserve announces a decision about whether to move its benchmark interest rate.

Economists expect prices to have risen 3.4% over the year ending in May, which would leave the inflation rate unchanged from the previous month. Such a reading would extend a bout of stubborn inflation that stretches back to last year.

Price increases have slowed significantly from a peak of about 9%, but inflation still stands more than a percentage point higher than the Federal Reserve’s target rate of 2%.

For nearly a year, the Fed has held interest rates steady at their highest level since 2001, hoping that elevated borrowing costs would slow economic activity, reduce consumer demand and lower prices.

Instead, the economy has hummed and price increases have stalled.

A jobs report released on Friday blew past economist expectations, demonstrating the resilient strength of the economy. Blockbuster hiring in May exceeded the average number of jobs added each month over the previous year, the U.S. Bureau of Labor Statistics said.

Average hourly wages surged 4.1% over the year ending in May, the report found. That rate of pay increase exceeds the pace of inflation, indicating that the spending power of workers has grown even as prices jump.

The data marks a boon for workers but could give pause to policymakers, since they fear that a rise in pay could prompt businesses to raise prices in order to cover the added labor cost.

Economic output slowed markedly at the outset of 2024, though it continued to grow at a solid pace.

The Fed, in turn, has all but abandoned a previous forecast of three interest rate cuts by the end of the year.

The Federal Open Market Committee, the Fed’s decision-making body on interest rates, said last month that it does not anticipate cutting interest rates until it retains confidence that inflation is moving sustainably downward.

“So far the data has not given us that greater confidence,” Fed Chair Jerome Powell said at a press conference in Washington, D.C., last month. “It is likely that gaining such greater confidence will take longer than previously expected.”

Economists expect the Fed to hold interest rates steady for the seventh consecutive time at the close of its meeting on Wednesday.

The Fed risks a rebound of inflation if it cuts interest rates too quickly, since stronger consumer demand on top of solid economic activity could lead to an acceleration of price increases.

A prolonged period of high interest rates, however, risks placing downward pressure on economic growth and plunging the U.S. into a recession.

Price increases have drawn attention from voters as the U.S. hurtles toward what appears to be a closely contested presidential election in the fall.

Eighty-five percent of U.S. adults surveyed by ABC News/Ipsos last month said inflation is an important issue, making it the second-highest priority among adults surveyed. The top priority, the economy, also relates to individuals’ perceptions of price increases.

On each of those issues, the economy and inflation, those surveyed by ABC News/Ipsos said they trusted former President Donald Trump over President Joe Biden by a margin of 14 percentage points.

“Inflation is something that affects absolutely everybody,” Elaine Kamarck, a senior fellow in the Governance Studies program at the Brookings Institution, previously told ABC News. “People notice it, whether they’re rich or poor.”

Copyright © 2024, ABC Audio. All rights reserved.

Business

Fed expected to hold rates steady in fight against stubborn inflation

Bloomberg Creative/Getty Images

(WASHINGTON) — The Federal Reserve on Wednesday will announce its latest decision on interest rates, just hours after fresh inflation data is set to reveal the status of the central bank’s fight to slow price increases.

At six consecutive meetings spanning nearly a year, the Fed has opted to hold rates steady in response to elevated inflation and robust economic performance. Economists expect the Fed to continue that approach on Wednesday.

In theory, the prolonged stretch of high interest rates should weigh on economic activity, reduce consumer demand and cut prices. Instead, a resilient economy and stubborn inflation have defied the Fed’s efforts.

Inflation has fallen significantly from a peak of 9.1%, but price increases have held steady in recent months and remain more than a percentage point higher than the Fed’s target rate of 2%.

The Fed has all but abandoned a previous forecast of three interest rate cuts by the end of the year.

The Federal Open Market Committee, the Fed’s decision-making body on interest rates, said last month that it does not anticipate cutting interest rates until it retains confidence that inflation is moving sustainably downward.

“So far the data has not given us that greater confidence,” Fed Chair Jerome Powell said at a press conference in Washington, D.C., last month. “It is likely that gaining such greater confidence will take longer than previously expected.”

Some observers expect the Fed to forgo interest rate cuts for the remainder of 2024.

Roger Aliaga-Diaz, chief economist at the investment giant Vanguard, said in a statement to ABC News that the Fed would keep interest rates at current levels for at least the next six months.

The forecast, Aliaga-Diaz added, owes to “inadequate progress in the inflation fight and continued growth and labor momentum.”

In a note to clients, Deutsche Bank echoed skepticism about rate cuts anytime soon. 

“Fed officials have clearly signaled that they are in a wait-and-see mode with respect to the timing and magnitude of rate cuts,” the note said.

The Fed risks a rebound of inflation if it cuts interest rates too quickly, since stronger consumer demand on top of solid economic activity could lead to an acceleration of price increases.

A prolonged period of high interest rates, however, threatens to place downward pressure on economic growth and plunge the U.S. into a recession.

A jobs report released on Friday blew past economist expectations, demonstrating the resilient strength of the economy. Blockbuster hiring in May exceeded the average number of jobs added each month over the previous year, the U.S. Bureau of Labor Statistics said.

Average hourly wages surged 4.1% over the year ending in May, the report found. That rate of pay increase exceeds the pace of inflation, indicating that the spending power of workers has grown even as prices jump.

The data marks a boon for workers but could give pause to policymakers, since they fear that a rise in pay could prompt businesses to raise prices in order to cover the added labor cost.

Economic output slowed markedly at the outset of 2024, though it continued to grow at a solid pace.

While the Fed has resisted lowering interest rates, consumers have faced high borrowing costs for everything from mortgages to credit cards.

The average rate for a 30-year fixed mortgage stands at 6.99%, according to Freddie Mac data released last week.

When the Fed imposed its first rate hike of the current series in March 2022, the average 30-year fixed mortgage stood at just 3.85%, Freddie Mac data showed.

Copyright © 2024, ABC Audio. All rights reserved.

Business

In sweeping change, Biden administration to ban medical debt from credit reports

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(WASHINGTON) — In a sweeping change that could improve millions of Americans’ ability to own a home or buy a car, the Biden administration will propose a rule Tuesday to ban medical debt from credit reports.

The rule, which will be announced by Vice President Kamala Harris and Consumer Financial Protection Bureau Director Rohit Chopra, comes as President Joe Biden beefs up his efforts to convince Americans his administration is lowering costs, a chief concern for voters in the upcoming election.

The rule, which has been in the works since September, could go into effect sometime next year, Chopra told ABC News in an exclusive interview ahead of the policy announcement.

“Our research shows that medical bills on your credit report aren’t even predictive of whether you’ll repay another type of loan. That means people’s credit scores are being unjustly and inappropriately harmed by this practice,” Chopra said.

CFPB’s research estimates that the new rule would allow 22,000 more people to get approved for safe mortgages each year — meaning lenders could also benefit from the positive impact on peoples’ credit scores, by being able to approve more borrowers.

Some major credit report companies have already stopped using medical debt to calculate peoples’ credit worthiness, including Equifax, TransUnion and Experian. FICO and VantageScore also recently started factoring medical debt less heavily into their scores.

But 15 million Americans still have $49 billion of medical debt that is hampering their scores, the CFPB found. This rule would extend the practice to all credit reporting in the U.S.

Medical debt is extensive in the U.S. It affects two in every five Americans, according to the health policy research organization KFF, and a vast majority have debt in the thousands.

Once those debts go to collections, credit scores take a hit, which means car and home loans are harder to come by or are only offered with high interest rates — leading to a slippery slope for people who are already struggling with their bills.

Lexi Coburn, 33, first ran into that issue nearly a decade ago. She took on medical debt in 2013, when she was 23 years old and uninsured.

Her feet were too swollen to walk, so she went to the emergency room, unsure where else she could go to get medical care without insurance. She was told she had early onset arthritis.

The $425 bill from that visit was not in Coburn’s budget, so she left it unpaid. Growing up, her family frequently didn’t have the income to cover medical expenses, she said, and she felt ill-equipped to handle the medical system any differently as a young adult.

Though she was later able to enroll in health insurance through the Affordable Care Act, Coburn’s medical debt still grew to over $2,300 — including another $1,532 from dental work and a separate ER visit, both in 2019.

The consequences became clear when she tried to get a car.

“Immediately my medical debt was in the way of qualifying for a good loan that didn’t have an outrageous payment per month,” Coburn said.

“The most frustrating aspect for me was in my mid 20s, when I wasn’t making a lot of money, I needed to be able to get transportation to get to my job,” Coburn said.

She saw a perilous financial cycle mounting. Coburn’s bills and subsequently low credit score got in the way of “being able to thrive enough to pay off the debt,” she said. “So it just felt like a domino effect.”

The new CFPB rule also seeks to address the issue of incorrect, confusing and complicated medical bills, which often lead to long, drawn-out disputes between patients and billing departments — a complaint that the CFPB, as the agency tasked with consumer empowerment, receives in droves, Chopra said.

“Too often, we see that people are receiving bills that are inaccurate. Many patients are fighting over these bills for months, only to find that it then appears on their credit report,” he said.

Experts who support the CFPB’s proposed rule also point to the already-low success rate for collecting on medical bills.

“We know empirically that the repayment rates are incredibly low for medical debt, and so it’s already the case that people aren’t really paying it down. So I don’t think this policy change is going to change the behavior that dramatically,” said Matt Notowidigdo, a professor at University of Chicago’s Booth School of Business who studies health economics.

Linda Davis, a 61-year-old resident of Grand Rapids, Michigan, has chronic obstructive pulmonary disease, a type of lung disease, and uses a power wheelchair because of a lower back injury. She said she doesn’t think she’ll ever pay off her medical bills, which she estimates to be between $45,000 and $50,000.

“People might be mistaken and think, oh, well, she’s got Medicare, she’s all set. That’s not the case at all, and it can screw your whole life up. It takes control of your whole life,” Davis said.

She said her monthly income covers rent, electricity, her cell phone bill and groceries, but that she doesn’t have room in her budget for her medical bills.

“You find out [after the procedure], you’ve got all these medical bills, and what are you supposed to do with them all? You know, there’s no way on God’s green earth I could pay all those medical bills. Even if I paid a small amount every month, I wouldn’t live long enough to pay them all,” Davis said.

To Notowidigdo and many other health economists, addressing the root cause of America’s medical debt issue would mean enrolling more people in adequate health care coverage on the front end, “rather than dealing with unpaid medical bills from lack of insurance or not generous enough insurance on the back end,” he said.

Of course, for now, those large bills and low repayment rates are already a challenge for hospitals and health care systems.

If the CFPB rule leads to fewer people paying the bills, it could be the patients who suffer, some experts warned.

Ge Bai, a professor who studies accounting health policy at Johns Hopkins University, predicted that hospitals will have to make up for that loss in other ways. More stringent payment efforts, like requiring payment before patients receive medical care, could leave low-income patients worse off.

“I think in the short run, it will be great news for patients, and probably we’ll see patient advocacy groups pushing it. However, I think in the long-run, when the long-term negative effects emerge, probably we’re going to see more pushback,” Bai said.

Industry groups, like the Association of Credit and Collection Professionals, have echoed Bai’s concerns.

“There’s too much at stake for Americans’ access to quality health care by taking actions that only negatively affect the cash flow to the health care community without finding ways to replace those funds,” ACA CEO Scott Purcell said when CFPB first announced it was looking into the policy change.

Chopra rejected the notion that more people will default on their health care debts as a result of the rule, saying they’ll still have to face other penalties that come with debt.

“Those individuals will still be subject to collection actions, lawsuits and more. There are plenty of ways that people get penalized for not paying their bills. I just don’t want to see the credit reporting system be weaponized against people who already paid them,” Chopra said.

Copyright © 2024, ABC Audio. All rights reserved.

Business

Theranos founder Elizabeth Holmes’ appeal to be heard in San Francisco federal court

Former Theranos CEO Elizabeth Holmes alongside her boyfriend Billy Evans, walks back to her hotel following a hearing at the Robert E. Peckham U.S. Courthouse on March 17, 2023 in San Jose, California. (Philip Pacheco/Getty Images)

(SAN FRANCISCO) — Disgraced Theranos founder Elizabeth Holmes’ appeal will be heard at a federal courthouse in San Francisco on Tuesday.

The hearing arrives one year after Holmes began a more than 11-year sentence at a Texas prison for defrauding investors with false claims about her company’s blood-testing technology.

In a 47-page court filing in November, Holmes’ attorneys said the prosecution failed to prove a cornerstone of its case: that Holmes hoodwinked investors while knowing full well the deficiencies of her product.

“The public narrative regarding the spectacle of Theranos’ downfall is that the company’s technology simply did not work and Holmes knew it,” Holmes’ attorneys wrote. “But Holmes’ intent and knowledge on this central question were intensely contested at trial.”

“Substantial evidence showed that Holmes and Theranos’ scientists believed in good faith that Theranos had developed technology that could accurately run virtually any blood test,” the attorneys added.

Holmes’ attorneys focused their appeal on the judge’s decision to permit testimony from ex-Theranos clinical lab director Kingshuk Das as a source of information about key events rather than as an expert witness.

The defense also took issue with limits placed on cross-examination of another key witness and the case’s treatment of voided blood test results.

In a previous filing, the prosecution strongly rebuked the alleged grounds for appeal. Prosecution attorneys challenged allegations of missteps in the case and cited evidence of misrepresentations about the product made by Holmes.

“Her claims are meritless, but, regardless, unavailing given the overwhelming evidence and independent categories of fraudulent statements Holmes made,” prosecutors said in a court filing last August.

Judge Edward Davila, who oversaw the trial of Holmes, ordered her to report to prison last year after the U.S. Court of Appeals for the Ninth Circuit denied her request to remain free pending an appeal.

In denying a previous attempt to delay Holmes’ prison sentence, Davila said she had failed to raise a “‘substantial question of law or fact’ that is ‘likely to result in a reversal or an order for a new trial on all counts.'”

The appeal hearing on Tuesday marks the latest development in a legal saga that turned the former billionaire entrepreneur, who swore her startup could run hundreds of tests on a single drop of blood, into a symbol of excess and deception in Silicon Valley.

Ramesh “Sunny” Balwani, the former romantic partner of Holmes and president of the now defunct blood testing company, began serving his nearly 13-year sentence at a prison in San Pedro, California, last April. Balwani, who was second in command to Holmes at Theranos, was convicted of fraud and conspiracy.

In November 2022, Holmes was sentenced to 135 months, or 11 1/4 years, in prison.

Holmes was convicted the following January on four counts of investor fraud and conspiracy while at the helm of Theranos.

The verdict followed a four-month trial that detailed Holmes’ trajectory from a Stanford University dropout in 2003 to a star business leader on the cover of Fortune magazine a little more than a decade later.

But in October 2015, a bombshell Wall Street Journal report came out, detailing the turmoil within Theranos. As Holmes and her company were hit with official scrutiny, her fortune quickly dwindled. Less than a year later, Forbes downgraded its assessment of Holmes’ net worth from $4.5 billion to $0.

Copyright © 2024, ABC Audio. All rights reserved.

Business

This app could help reduce your wait time at customs as TSA experiences record travel

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(NEW YORK) — As airports prepare for the highest passenger volumes this summer, the Transportation Security Administration is bracing for the travel crush and sharing what passengers need to know to get through crowded airports with some ease.

TSA already announced its second busiest day in history over the weekend as summer travel is just heating up at its peak season.

Last weekend, the TSA reported that more than 2.9 million people were screened across the country and in the last 30 days alone, the agency recorded seven of the top 10 busiest travel days in TSA history.

This summer, the agency predicts it will see three million travelers in a single day for the first time ever.

For travelers planning to take an international trip, there’s a tool that can potentially help shorten wait times in line at U.S. Customs and Border Protection when you’re returning to the country.

The Mobile Passport Control, which has a free app for travelers, is run by the border control agency and allows eligible U.S. travelers to submit travel documents, a photo and customs declaration information before they get to the line or an agent.

Once the traveler inputs their information it can help cut down the time it takes speaking with a customs officer and can send you to a separate line that’s usually much shorter than the standard U.S. passport holder lane.

MPC works when coming back to the U.S. in many major airports, as well as 14 airports overseas.

Copyright © 2024, ABC Audio. All rights reserved.

Business

Apple launches AI-fueled tools for iPhone, Mac and iPad

Andrej Sokolow/picture alliance via Getty Images

(CUPERTINO, Calif.) — Apple unveiled artificial intelligence-fueled features across several key products on Monday, heralding the long-awaited entry of the tech giant into the high-stakes AI race.

The latest version of Apple’s operating system will deliver customizable tools using generative AI for iPhones, Mac and iPad, Apple said at the Worldwide Developers Conference hosted at the company’s headquarters in Cupertino, California. Language tools will be able to improve or summarize text, and image generators will supplement photos with extra adornment.

The AI capability, called Apple Intelligence, amounts to the “next big step for Apple,” CEO Tim Cook said on Monday. The advance results from an agreement between Apple and OpenAI, the firm behind popular text bot ChatGPT, Cook added.

A revamped Siri, for instance, will draw on generative chat technology to improve its language comprehension and retain context from previous requests, the company said.

Since its launch in 2011, Siri has functioned primarily as a hands-free tool for responses to specific prompts, such as queries about the weather or a user’s upcoming calendar. The new version, Apple said, will carry out extended conversations and aid in intricate tasks.

Further, Siri will be able to take actions within a user’s product, pulling up photos or adding text to the Notes app, the company said.

Apple, the world’s second largest company in terms of market capitalization, has lagged behind its behemoth competitors in the battle to develop and offer AI products.

OpenAI retains a longstanding partnership with Microsoft, which holds a minority stake in the firm and integrates ChatGPT into its Bing search engine. Last year, Google announced its own AI model called Bard, which provides brief summaries in response to some search queries.

The announcement on Monday amounts to the most important decision for Apple — and Cook — over the last decade, Dan Ives, a managing director of equity research at the investment firm Wedbush, told clients in a research note ahead of the conference.

“The pressure to bring a generative AI stack of technology for developers and consumers is front and center,” Ives said.

The fresh product arrives at a moment of relatively sluggish performance for Apple.

In its latest earnings report, Apple last month revealed a sales slump for some of its mainstay products. Smartphone sales dropped 10% over the three months ending in March, when compared with the same period a year earlier. iPad sales fell 17% over that period, the earnings report said.

In recent years, the company has relied on new models of its signature items, instead of transitioning to the next big product, analysts previously told ABC News.

The approach allows Apple to capitalize upon its loyal customer base and popular devices while it develops new products like Apple Vision Pro, the company’s mixed reality headset, analysts said.

With a starting cost of $3,499 and a higher-powered version at around $4,000, Apple Vision Pro remains far from a price point that would make it affordable for a wide audience.

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Business

Internal combustion engines are far from over: ‘There was a bit of hype’ around EVs, industry watchers say

Lamborghini says the successor to the Huracan will have an electrified twin-turbo V8 engine. A Huracan STJ is shown here. — Lamborghini

(NEW YORK) — It’s nearly impossible not to smile when you squeeze the throttle on the new Aston Martin Vantage.

Aston executives may wax on about the Vantage’s state-of-the-art infotainment system, but what’s under the hood is more exciting: a heavily reworked, hand-built 4.0 twin-turbo V8 that delivers 656 horsepower and a thunderous howl.

Take it for a spin on winding roads or test its limits on a race track — the car’s rowdy, brash exhaust note reacts to every input the driver decrees. The latest version of the British marque’s 60-year-old sports car clearly answers enthusiasts’ demands: give us a mighty engine that we can see, smell and experience.

The Vantage is not for environmentalists who are searching for performance and zero emissions. In fact, Aston executives have pushed back their timeline for building an all-electric sports car, citing the lack of interest from consumers. Instead, resources are going toward launching a powerful, “fearsome” V12 engine that could produce 824 hp.

Aston is far from alone. Bugatti’s new hypercar, coming June 20, still features a W16 engine. Lamborghini, the Italian supercar brand, said the successor to the Huracan packs a twin-turbo V8 engine.

“Enthusiasts absolutely want a V8 in the supercar segment,” Alex Long, director of product and strategy at Aston Martin, told ABC News. “They want the sound quality it brings, the feel through the cabin, everything. Our customers are not asking for an electric Aston.”

The anti-electric attitude extends beyond the enthusiast community. Forty-six percent of Americans say they are “not too likely or not at all likely to purchase” an EV, according to a recent poll by The Associated Press -NORC Center for Public Affairs Research and the Energy Policy Institute at the University of Chicago.

Earlier this year, luxury German automaker Mercedes delayed its electrification plans by five years, with CEO Ola Kaellenius telling investors the company was still committed to producing combustion engine cars. Last month, Toyota executives announced its engineers were developing smaller, next-gen engines that can run on alternative fuels like liquid hydrogen.

Industry insiders are calling the trend “return to ICE,” or internal combustion engines.

“Maybe there was a little bit of a hype [around EVs]. There are challenges with an all EV world,” McKeel Hagerty, CEO of Hagerty, an automotive enthusiast brand, told ABC News. “There’s a place for EVs for people who really want them, especially the high-performance ones, but they don’t seem to be selling and I think that tells us something.”

Tony Quiroga, editor-in-chief of Car and Driver and co-host of the magazine’s new “Into Cars” podcast, noted that EVs can work for some Americans though the inconvenience of charging can outweigh the pros.

“Everyone who wanted an EV has one now,” he told ABC News.

For enthusiasts, the attraction of owning an electric sports car is waning, he argued.

“Aside from acceleration, it’s not the same experience” as an ICE sports car, he said. “So many EVs can perform as quickly in a straight line for under $100K and buyers are realizing that.”

He went on, “V12 and even V8 engines are becoming increasingly rare — there is an exclusivity to it. Gearheads are realizing the experience is such an important part of the car and the engine is what makes these cars so special.”

Rimac CEO Matt Rimac acknowledged that wealthy drivers have shown little interest in his heavily trumpeted Nevera hypercar, which can generate a staggering 1,914 hp from four electric motors. Limited to 150 units, the Croatian company has struggled to find buyers.

“We started to develop [the] Nevera in 2016/2017, when electric was cool,” Rimac said at the Financial Times Future of the Car conference in May. “At that time, we were thinking electric cars would be cool in a few years — the best cars, or with the highest performance and so on. We notice [now] that as electrification is becoming mainstream, people at the top end of the sector want to differentiate themselves.”

Hagerty said he invites skeptical enthusiasts to drive his all-electric Porsche Taycan Turbo S in Michigan so that they, too, can realize the “undeniable performance” with electric sports cars.

“I put them behind the wheel and say try this Taycan — you don’t even have to put in sport mode,” he said. “The joke is that some EVs don’t feel like a car, that they’re an electronic appliance. The Taycan feels like a car, rides like a car and gets that torque and performance.”

He added, “I bought it because I am open to these things.”

Jason Cammisa, an award-winning automotive journalist and successful YouTube host, argued that electrification would always be a tough sell to the hardened automotive community that prefers the “old, screaming, antiquated tech” in ICE cars. There are positives to driving electric sports cars — the low center of gravity, the insane speeds — though many enthusiasts are clamoring for more than performance numbers, he said.

“For me, the most interesting cars in the world right now are naturally aspirated, high revving, manual transmission — a return to 20 years ago,” Cammisa told ABC News. “You can’t win a race with an ICE car [versus an electric one] so let’s go back to what makes these things great.”

Cammisa pointed out that even reducing cylinders in an engine can cause an uproar. He gave the example of when Porsche put in a turbocharged four-cylinder engine in the Boxster and Cayman. Owners revolted and sales slipped. To appease critics, Porsche offered a naturally aspirated flat-six engine in the cars and enthusiasts jockeyed for an allocation, paying above sticker price to get one.

“Everyone is a little hysterical right now. It’s always in response to fear,” Cammisa said. “The regulatory environment will determine what the mix of ICE and EV is. Consumers are trying to send a message to the government — stop pushing so hard on EVs — and we’re seeing a battle between the government and consumer right now.”

The solution for enthusiasts — and average motorists — may be a hybrid, which Cammisa and Quiroga both agree can satisfy drivers and environmentally conscious consumers.

For the sports car crowd, Cammisa liked the Corvette E-Ray so much that he called it “an example of a hybrid done correctly.”

It may not be tuned for efficiency, Quiroga said, but the E-Ray, the first electrified Vette with all-wheel-drive capability, is “spectacular.”

“The electric motor fills in the power before the gas engine does … it’s heavy but you can’t really notice the weight. It’s so quick and wonderful,” he added.

Karl Brauer, executive analyst at iSeeCars.com, said he expects to see more performance hybrids coming in the next few years. The Huracan successor pairs three electric motors with the V8 and even Aston Martin’s Valhalla, a mid-engine hypercar, features a hybrid powertrain.

Porsche recently announced that the 2025 911 Carrera GTS will have a uniquely T-Hybrid system that includes an electric exhaust gas turbocharger. The electric motor also functions as a generator.

“I am a huge fan of hybrids and they are the brilliant option now,” Brauer told ABC News. “We’re at an important reflection point of where we are and where things are going.”

Long, of Aston Martin, said the Vantage has even more to offer than a snarling V8 engine.

“It’s a complete reappraisal of vehicle dynamics from us,” he said. “Even people who have been with the brand for a long time, they cannot believe the level of sophistication in the ride, the lateral grip, the responsiveness. This is their trophy car.”

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