A round-up of some of the week’s most significant corporate events and news stories.

FBI drops legal action after breaking into Apple iPhone

For weeks, the FBI fought Apple for standing between its investigators and the contents of a terrorist’s iPhone. Now, it is Apple’s turn to be shut out, after the FBI found another way into the San Bernardino gunman’s handset — without telling the Silicon Valley company how it did it, writes Tim Bradshaw.

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Just a week after the FBI made an eleventh-hour delay to a high-stakes courtroom clash over access to Syed Rizwan Farook’s device, the US Department of Justice dropped its case against Apple on Monday.

“The government has now successfully accessed the data stored on Farook’s iPhone and therefore no longer requires the assistance from Apple” that had first been ordered by a magistrate, the DoJ said.

Some digital rights campaigners who had backed Apple celebrated. But the mood switched to concern that the FBI had uncovered a new flaw in Apple’s security.

Such a discovery might enable investigators to use the same technique on other iPhones held by law enforcement around the US, while also raising the risk that hackers and criminals could uncover the technique for criminal ends. Security experts say that any way of breaking into Farook’s iPhone 5c would probably be effective on earlier models.

The FBI has not disclosed the identity of the third party that came forward with a novel way to reach around the iPhone’s protections. An official declined to comment on the “possibility of future disclosures” over the nature or scope of the vulnerability.

● Related news story: Google received spate of court orders

Microsoft learns lessons in the power of conversation

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Satya Nadella, CEO of Microsoft

It is not often that the head of one of the world’s most powerful tech companies uses one of the main dates on his annual calendar to praise a rival’s product, writes Richard Waters.

But that’s what Satya Nadella, chief executive of Microsoft, did this week, when talking about a new force he said is sweeping through the computing world: the power of conversation.

The rival in question was Tencent, the Chinese internet company, whose messaging app, WeChat, has grown into a more general-purpose computing platform. Speaking at his company’s annual developer conference, Mr Nadella described how the Chinese mother of one of his senior executives had always resisted using computers. That was until she discovered WeChat and was finally able to join the computing age. “That shows the power of human language,” he said.

Microsoft has taken the WeChat lesson to heart. The future of human-computer relations, said Mr Nadella, belongs to “conversations as a platform” — a new layer of technology capable of underpinning any application or computer interaction, turning it into a verbal interchange as informal as one between two humans.

But he also conceded that there was much to learn before the language-enabled intelligent agents, personal digital assistants and chatbots take charge. Microsoft suffered a black eye before the conference when one of its chatbots, went off-message and began to issue racist comments. Mr Nadella’s verdict: “Back to the drawing board”.

● Related Richard Waters column: Microsoft’s Tay shows AI has come a long way but not far enough
● Tech blog post: Microsoft builds AI, AR expectations

Rosneft bullish on future even if price slides to $10

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Rosneft this week offered a demonstration of why Russian oil companies are suffering less from the fall in crude prices than producers in other countries, writes Jack Farchy in Astana.

Even if Russia’s largest oil producer — and the world’s largest listed oil company by output — reported a sharp drop in net profit in the final quarter of the year, its earnings before interest, tax, depreciation and amortisation were down just 28 per cent year on year in 2015. This compares to a 47 per cent fall in average oil prices. In rouble terms, Rosneft’s ebitda actually increased.

Svyatoslav Slavinsky, Rosneft’s chief financial officer, said the company could survive even more dramatic declines in oil prices.

“If the price keeps going down we’ll make adjustments to our plans, but we can be break even at $10 a barrel,” he told investors. The resilience of the Russian oil industry, which in January was pumping at a post-Soviet record level of 10.9m barrels a day, is down to two factors.

First, the weakness of the rouble has helped Russian oil companies cut costs in line with the fall in oil prices — Rosneft’s cost of producing a barrel of oil fell by a third in dollar terms in 2015. Second, the taxation system means the government bears the brunt of falling prices, rather than producers.

That could change if the Kremlin decides to tinker with taxes to raise more money from the sector, as is widely expected and feared by oil executives.

In the meantime, Rosneft is increasing investment — even as the Kremlin edges closer towards a preliminary deal with Saudi Arabia to freeze oil production. Chief executive Igor Sechin said this week that investments would increase by more than 50 per cent in the next three years compared with 2015 levels.

That comes in response to two years of declining oil production at Rosneft. But Eric Liron, first vice-president, said this week that oil output should stabilise this year, and analysts expect Rosneft’s hefty investments to translate into slight production growth in the next few years.

Premier agrees McCormick talks after third takeover bid

Premier Foods, the heavily indebted UK manufacturer of cakes and custard, agreed to begin talks with McCormick this week following a third takeover bid from the US spice-maker worth £1.5bn including debt, writes Arash Massoudi in London.

While Premier was dismissive of the latest McCormick approach, its decision to open its books came as some of its biggest shareholders, such as Standard Life and hedge fund Paulson & Co, pressed the company to engage with its suitor and questioned the objectivity of its directors. Premier, for its part, said the third offer that valued its shares at 65p — more than double its undisturbed price earlier this month — continued to undervalue its prospects.

At the same time, Japan’s Nissin Foods raised its stake in Premier to just below 20 per cent. The Japanese maker of instant noodles had just last week struck a deal to purchase a 17.3 per cent stake from Warburg Pincus, the US private equity firm, at 63p a share. A day before, it had announced a co-operation agreement to work more closely with Premier.

Nissin’s new shareholding has complicated any potential takeover of Premier, which has a debt burden and pension shortfall of about £1bn.

The situation has also tripped up Premier’s chief executive Gavin Darby, already under pressure from some shareholders, who was forced to clarify remarks that appeared to suggest that he had notified Nissin about McCormick’s approach before his own investors. Mr Darby, who is being advised by four sets of banks, has not spoken publicly since.

● Related Lombard column: Do the deal, Premier

● Lex note: pension spice mix

VW in fresh US lawsuit over claims of false advertising

Volkswagen’s list of woes lengthened this week when the US Federal Trade Commission filed a fresh lawsuit against the carmaker for deceptive advertising — potentially adding billions of dollars to its tab for the emissions scandal involving up to 11m cars, writes Patrick McGee in Frankfurt.

The FTC does not have the authority to levy fines but it will pursue compensation for the owners of 550,000 US cars bought since late 2008.

For seven years VW ran a series of advertisements touting its “clean diesel” technology when in reality the cars were fitted with software that would reduce emissions only during pollution tests.

In an ad for VW’s Audi unit aired during the 2010 Super Bowl, authoritarian “green police” arrest people for using plastic debit cards and incandescent lightbulbs. But a driver of a “clean diesel” Audi is waved through a roadblock. “Green has never felt so right,” the tagline declares.

Edith Ramirez, FTC chairwoman, told the Financial Times: “From what we know the conduct here appears to be quite egregious.”

If the consumer watchdog secures compensation equal to an average vehicle sale price of $28,000 — consistent with past cases — the total will exceed $15bn.

Even before the FTC lawsuit UBS analysts were predicting that the scandal would end up costing the carmaker €38bn, including €10bn in civil penalties and €9bn in criminal fines.

Mike Tyndall, analyst at Citigroup, said the total cost of the scandal would depend on how high up the chain at VW knowledge of the fraud went.