Painted into a corner, DuPont tries to reinvent itself

Updated 22 December 2012
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Painted into a corner, DuPont tries to reinvent itself

NEW YORK: DuPont, the 210-year-old chemical company, is under pressure to exit its lucrative but unpredictable paint business as it focuses more on food and agriculture products.
More than a third of the company’s profit last year came from the popular pigment titanium dioxide (Ti02), found in products ranging from car paint to sunscreen. But thanks to falling demand, North American Ti02 prices are down 10 percent in the past six months, taking DuPont’s profit and stock price with it.
“Investors love the business on the way up,” said DuPont Chief Executive Ellen Kullman. “But investors don’t like the turns. Turns are hard to predict in the Ti02 market.”
Kullman is betting drought-resistant AquaMax corn seed, Curzate potato fungicides, Amylex beer enzymes and other food and agriculture products will make DuPont’s profit less subject to the ebbs and flows of TiO2 prices and other commodity chemicals.
A big step in that direction was her $ 5.8 billion purchase of nutritional supplements maker Danisco, a deal that sped up the company’s move into food and brought General Mills Inc. as a key customer.
Analysts support DuPont’s push to achieve steadier growth. Some have begun asking: If DuPont wants to be the food sector leader, hoping to beat the likes of seed leader Monsanto Co. and enzyme expert Novozymes A/S, why make pigment?
“They should sell the Ti02 business,” said Deutsche Bank analyst David Begleiter. “It has paid a lot of bills the past few years, but it’s served its purpose.”
DuPont shares are down nearly 12 percent in the past six months, compared with a 16 percent rise in Monsanto shares and 7 percent rise in 3M shares.
The company didn’t help confidence in October when it warned Ti02 demand will slip further in 2013. Wall Street doesn’t expect industry profits to recover until late in 2013 or early 2014 as auto and housing bounce back.
“DuPont is not yet the consistent growth company we would like,” said Hank Smith, chief investment officer at Haveford Investments, which manages more than 1.2 million DuPont shares. “They are on that trajectory, it’s just taking them an incredibly long time.”
DuPont has been exiting other chemical businesses and last August sold its performance coatings unit to Carlyle Group LP for $ 4.9 billion cash.
Kullman spoke passionately in an interview earlier this month about DuPont’s research into soy protein and biofuels, as well as the use of farm products in non-food applications. Sorona carpet fiber, for instance, is made using sugar extracted from corn.
“When the economy is not looking good, I’ll head to the labs and see what we’re doing,” Kullman said over a cup of tea at New York’s St. Regis hotel.
Kullman would not address the TiO2 unit’s future at DuPont and defended the move to increase capacity by building a new plant due to start production by 2014.
Kullman is betting that Ti02 demand will outstrip supply, something that makes investors anxious. DuPont’s Ti02 margins fell 6 percentage points in the third quarter to around 22 percent.
The aggressive move into food and agriculture means more competition for DuPont, especially from rival Monsanto, now the world’s largest seed producer with a popular line of herbicides.
DuPont is spending heavily to create an in-house product that allows genetically modified seeds to tolerate weed killer, but so far has had to license gene traits for Monsanto’s popular Roundup weed killer.
DuPont scientists had been developing a genetically modified soybean seed that blended Monsanto’s weed-killer tolerant gene traits with those developed in-house, but last year DuPont scrapped the program, partly due to a long-running lawsuit between the two companies.
A jury ruled last August that DuPont violated the Monsanto licensing agreement and was liable for $ 1 billion. DuPont will appeal the verdict, and in the meantime it’s trying to out-hustle Monsanto in an area where it has plowed big money: seed sales.
In 2001, DuPont had 40 percent share of the US corn market to Monsanto’s 10 percent, the result of its 1999 buyout of Pioneer seeds. Monsanto fought back and by 2008 it had taken 36 percent of that market to DuPont’s 30 percent.
This year DuPont’s regained some ground and now has 36 percent of the US corn market to Monsanto’s 37 percent.
“DuPont’s not as good, but they’re getting pretty darn close,” said BGC Partners analyst Mark Gulley, who said DuPont should spin off its food and agricultural units from the Ti02 and other units to give investors an option to invest in the company as a pure-play food company.
If that happens, Gulley estimates, DuPont’s shares could rise to about $ 60 per share from current levels around $ 45.


Telegram Russia ban spurs privacy debate

Updated 21 April 2018
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Telegram Russia ban spurs privacy debate

  • Telegram has always attracted a mix of criticism and respect for its use of encryption to ensure its messages between users remain confidential.
  • A Moscow court decided last week to block the app in Russia because it refused to hand over encryption keys to authorities.

LONDON: Telegram, the messaging app that re-located from Russia to Dubai, has again fallen foul of the authorities in its mother country. So what is it about the social media platform that simultaneously has governments worldwide so concerned and freedom of speech advocates so agitated?
Telegram has always attracted a mix of criticism and respect for its use of encryption to ensure its messages between users remain confidential.
A Moscow court decided last week to block the app in Russia because it refused to hand over encryption keys to authorities — sparking fresh controversy around the app, which has previously been banned in countries such as Iran, Afghanistan and Indonesia.
Telegram has been under close scrutiny in Russia since legislation was passed in mid-2016 that required communication companies to hand over encryption keys to the Federal Security Service (FSB), if requested.
There was also a move to place companies on a “register of information distributors,” which requires firms to store user online communications for a set period of time and hand over data to the authorities when needed.

 


Some of Russia’s large social networks are reportedly on the register and Telegram was pressurized to register in mid-2017. Other Western social media companies such as WhatsApp are not listed. WhatsApp did not immediately respond to a request for comment.
Weeks after joining the register, Telegram refused to agree to FSB requests for encryption keys, resulting in the Russian media watchdog Roskomnadzor seeking court approval this month to block the app.
On the day of the court decision, Telegram’s founder Pavel Durov tweeted: “Privacy is not for sale, and human rights should not be compromised out of fear or greed.” The company has also said it is technically impossible to transfer encryption keys.
It was not the Russian entrepreneur Durov’s first run-in with Russian authorities. Telegram — which was launched in 2013 — originally had its development team based in St. Petersburg, but had to leave the country due to local IT regulations. It is currently based in Dubai.
The messaging app prides itself in being the most secure and independent form of instant messaging that respects the need for privacy. Its “secret chats” option makes use of end-to-end encryption that ensures only users can read them. Messages cannot be forwarded and you can order messages to “self-destruct” within a set amount of time. It can also alert users if the recipient of the message takes a screenshot of the correspondence. So-called Telegram “Channels” can be used to broadcast public messages to a large audiences.
While WhatsApp — which is owned by Facebook — also provides end-to-end encryption, Telegram differentiates itself with claims it is faster and more secure.
Damir Gainutdinov is a legal analyst at Russian human rights group Agora, which represented Telegram in court. He has headed up its project on the defense of online freedom in Russia since 2010.
He told Arab News that the block placed on Russia was more of a power-play by the authorities.
“I think that Russian authorities believe that Telegram is a threat because they cannot control it.
“But I wouldn’t say that it is really the biggest threat. The attack on Telegram is more about showing that they can block any global service if they want,” he said.
Russia’s government has argued that the app helps to enable terrorist attacks in the country, saying that access to encrypted messages is a national security issue.
The FSB said a suicide bomber who killed 15 people on a St. Petersburg subway in April last year had used Telegram to plan the attack.
Voices from outside Russia have also criticized Telegram for not doing enough to clamp down on terrorists using the app. “Terrorists and extremist groups such as ISIS (Daesh) use encrypted applications like Telegram because it allows them to recruit new members, fundraise, incite to violence, and even coordinate terrorist activity without the threat of being discovered,” said executive director David Ibsen at the US-based non-government organization Counter-Extremism Project.
“ISIS also created public channels on Telegram to broadcast pro-ISIS news updates and disseminate other propaganda materials,” he told Arab News. Durov has been quoted as saying at a conference in 2015 that the right to privacy is more important to the company than “our fear of bad things happening, like terrorism.” Following the Paris attacks in 2015, Telegram did revise its policy on its public channels, but it has refused to take down private Daesh chats, according to Ibsen.
Social media sites are coming under increasing pressure from authorities worldwide to do more to limit the promotion of extremism online.
In a statement to Arab News, Twitter said it had permanently suspended 274,460 sites in the second half of last year — down more than 8 percent on the previous reporting period.
While Telegram is far from the only social media app to be criticized for its counter-terrorism policies, it is seen by some as the more reluctant player in the battle against online extremism. “Social media companies remove content regularly that violates their stated terms of service, and some of this includes extremist and terrorist videos, images and other propaganda,” said Ibsen. “However, despite the availability of technology that can identify and permanently prevent prohibited materials from being re-uploaded, the biggest social media platforms are not taking this vitally important step,” he said.
“Telegram has become a refuge app from the moment the preferred apps (Twitter in particular) started to clamp down on extremist content,” said Rik Coolsaet, a professor of international relations at Ghent University in Belgium who has written extensively on counter-terrorism efforts. “Its encryption offered a secure environment for terrorist recruiters and groomers, but at the same time limited their propaganda outreach, since it is more difficult to access. For that reason, Twitter remains their preferred app,” he added.
Russia is not the only country clamping down on Telegram. Iran restricted certain channels in December last year during the protests and there have been recent threats that restrictions could be reimposed. A estimated 40 million Iranians use Telegram’s channels and messaging services.
“In the case of Russia and Iran, the Telegram crackdown has much more to do with controlling the lives of its citizens than it does with preventing terrorist activity,” said Ibsen.
Telegram did not respond to Arab News’ request for comment.

 

Q&A
We talk to leading world cyber terrorism expert Chris Sampson, co-author of “Hacking ISIS: How to Destroy the Cyber Jihad” and an analyst with the Terror Asymmetrics Project

Why are governments so worried about Telegram?
Telegram was launched as an encrypted messaging app. This meant that government agencies were less likely to be able to intercept messages passing across the Internet and read private conversations. However, in September 2015, Telegram also created an option for channels, which act like chat groups. This allowed like-minded individuals to essentially host a chat room. Unless the channel was set to public you couldn’t read what was discussed without being given an invitation link. Groups like ISIS began using these channels to share propaganda and information. Other groups use Telegram in much the same manner. Non-violent resistance groups around the world would also use the messaging app and channels to communicate so authorities in the countries they fear would be less likely to intercept their discussions.

Will clamping down on social media apps be effective?
As governments crack down and ban apps, others will rise and replace them with new features and focus on security from outside eyes. They will operate either within the legal construct or outside of it depending on the countries they seek to circumvent. Since laws around the world differ dramatically, what is legal in one country could be illegal in another. We’ve seen this already happen as countries sought to ban use of Telegram, WhatsApp or even Twitter. Inevitably the access to the technology remains the same and users find a way to use both encrypted messaging and social media platforms.

Does Russia’s action set a precedent?
Countries such as Indonesia, Iran, Afghanistan and others have banned Telegram. Brazil banned WhatsApp around the timing of the World Cup only to lift the ban. Such bans are largely ineffective because the majority of users are engaged in lawful communications yet want their privacy, those engaged in illegal and potentially violent activities make up a fraction of the userbase. The better solution is to know where nefarious users are lurking on the web and keep track of them in observable spaces. Banning the public’s access to messaging apps will always fail. Telegram and similar companies should deny government agencies the keys to encryption unless there is a reason given that would justify unlocking communications. If the governments are able to seize a phone and unlock it, they’ll already have access to a suspect’s communication if they haven’t erased the data.

Decoder

Telegram

Telegram, founded by Russian entrepreneur Pavel Durov in 2013, is an app that enables encrypted messaging, together with “self-destruct” messages. It is used by 200 million people worldwide. Authorities in a number of countries criticized it for providing secure communications channels for terrorists and criminals.