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Aug 2, 2018

DealBook Briefing: Google in China Is No Done Deal I Business I DealBook I NYT.

nytimes.com

DealBook Briefing: Google in China Is No Done Deal



CreditAly Song/Reuters

The huge ‘ifs’ about Google in China

Yesterday, the Intercept reported that Google was planning a new search tool there. The Information quickly followed with reports of a news-aggregation app.
But people with knowledge of Google’s work warned Li Yuan and Daisuke Wakabayashi of the NYT that it’s far from a done deal. The company often tests services that it never offers publicly. And talks with the Chinese government, one added, weren’t going well.
The political case for it happening: It would let the Chinese government give President Trump a political victory on tech, perhaps helping trade negotiations.
The political case against: Human rights activists and some Google employees are already objecting. And more powerful voices could join them, notes Pete Sweeney of Breakingviews: “Google’s putative move would test the tolerance of U.S. legislators, who fret companies are handing over competitive secrets in exchange for market access.”
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Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, and Jamie Condliffe and Amie Tsang in London.
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Tesla’s big promise: permanent profitability

The automaker announced its second quarter earnings yesterday: another huge loss, as expected, this time of $742 million. Never again, declared the company’s C.E.O., Elon Musk: “Our goal is to be profitable and cash-flow positive for every quarter going forward.” He thinks it’s achievable unless there’s a recession or major economic shock.
Investors celebrated. Tesla’s stock rose about 9 percent in extended trading. (They probably also liked his maturity on the earnings call, and his apology for being rude to analysts last time around.)
But Liam Denning of Bloomberg Opinion wasn’t fully convinced. He points out that Mr. Musk’s plans still involve a vast amount of spending:
Tesla is talking about getting to 10,000 Model 3s a week next year, as well as a new multibillion-dollar Gigafactory in China and, of course, the Model Y, the Semi and all the rest of it down the road.
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Senators Mark Warner and Richard Burr at a Senate Intelligence Committee hearing.CreditErin Schaff for The New York Times

Fixing election meddling won’t be easy

Facebook disclosed details of more suspicious activity on Tuesday, potentially aimed at the midterm election. It looks like what the Russians did in 2016, says Kevin Roose of the NYT, but significantly smarter: “a maturing adversary, adapting and evolving to better disguise itself, while also better imitating real activists.” Facebook may be moving faster this time, but it has a fight on its hands.
Meanwhile, in the Senate: At the Intelligence Committee hearing into foreign influence campaigns yesterday, lawmakers and independent analysts agreed that the nation hasn’t done enough to protect itself. But, as Axios points out, they really don’t agree on what to do about it.

The new deal breaker: a ‘Weinstein clause’

Companies hoping to sell are increasingly asked to vouch for the behavior of their executives, Bloomberg’s Nabila Ahmed reports.
In the wake of #MeToo, advisers are adding clauses to merger agreements that protect buyers if inappropriate behavior is revealed later. Sometimes, the buyer might even have the right to claw money back, with sellers having to put as much as 10 percent of what they receive in escrow just in case.
An example from this week: Brookfield’s agreement to buy Forest City Realty Trust stated that no allegations of sexual harassment had been made against any employees at senior vice president level or above in the last five years.
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Senator John Cornyn sponsored a bill to give the United States more power to investigate — and potentially block — foreign transactions.CreditAl Drago/Getty Images

America’s foreign investment clampdown

The Committee on Foreign Investment in the United States is getting more power. Legislation expanding its remit passed the Senate 87-10 on Wednesday, and it’s not the kind of idea President Trump would veto.
Currently Cfius can only block mergers and acquisitions. Alexandra Yoon-Hendricks of the NYT explains how that will change:
Under the bill, joint ventures, minority stakes, and real estate transactions near military bases or other sensitive national security facilities all could be investigated — and potentially squashed — by Cfius. Cfius will also be able to expand the kinds of risks it can consider — not just national security but also the United States’ competitive edge in emerging industries.
The committee will review transactions from dozens of other countries deemed to be of “special concern” — but China’s likely to be the biggest target.

Carl Icahn takes on Cigna

Mr. Icahn thinks Cigna’s $54 billion bid for the pharmacy benefit manager Express Scripts is too expensive. He’s also concerned about Amazon’s growing clout in the industry, and the risk of the Trump administration’s plans to lower drug prices.
And that matters, because he has amassed “a sizable stake” in Cigna, anonymous sources told the WSJ. Here are Cara Lombardo and Dana Mattioli on how it might play out:
An influential activist like Mr. Icahn coming out against the deal could galvanize the opposition and increase the risk it will fall through. However, only Cigna shares accumulated by July 10 can be voted for or against the deal, meaning Mr. Icahn won’t be able to convince other hedge funds to jump in and oppose it.
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Jeff Bezos, autumn/winter 2017.CreditAmy Harris/Invision, via Associated Press

Jeff Bezos, style icon

The Amazon C.E.O. has steadily, and stealthily, become one of the most stylish men in tech. And Vanessa Friedman of the NYT argues that he dresses like Amazon sells:
Pointedly, and unlike his fellow tech entrepreneurs who have enshrined the dress-down uniform in the mythology of their sector and equated it with a life of the mind, Mr. Bezos has a facility for dressing up. He has also shown a willingness to sample outfits, much as he samples industries, the better to make them his own. It’s an expression of an omnivorous, rather than laserlike, focus.

Revolving door

Alex Stamos, Facebook’s departing chief security officer, will join Stanford University as an adjunct professor. (NYT)
Anand Chandrasekher, a former Intel and Qualcomm executive, and Cristiano Amon, the current Qualcomm president, have reportedly joined the list of potentials to become Intel’s next C.E.O. (Information)
Adam Tan, the chief executive of HNA Group, is now also its chairman. (Reuters)

The speed read

Deals
■ Condé Nast has to put three magazines up for sale. Anna Wintour is staying. (NYT)
■ Ford has reportedly started offering rivals its money-losing business in South America. (Bloomberg)
■ Starbucks will deliver drinks and snacks in China, with help from with Alibaba. (NYT)
■ A hospitality group controlled by the Shanghai government may reportedly bid on the Radisson Hotel Group, worth at least $2 billion. (Bloomberg)
■ Inside Masayoshi Son’s Vision Fund family. (CNBC)
Politics and policy
■ When sanctions hit, ZTE loaded up on Washington lobbyists. (NYT)
■ In modern campaigning, the lowly text message is surprisingly powerful. (NYT)
■ The main takeaway from the Paul Manafort trial so far: he likes to spend. (WaPo)
■ Why Obamacare is so hard to kill. (Politico)
Tech
■ High device prices have helped Apple but hurt Samsung. But how expensive can an iPhone get?
■ The Trump administration is giving fintech a longer leash. (WSJ)
■ Reddit was hacked, and user data stolen. (Bonus: why don’t you do something about all these data breaches?)
■ Toronto locals are pushing back against Alphabet’s efforts to create a smart city. (WSJ)
Best of the rest
■ What it was like to be the daughter of Steve Jobs. (Vanity Fair)
■ The Fed held rates steady yesterday, and said the economy was strong. (WSJ)
■ India’s bank crisis might actually be an energy crisis. (Bloomberg)
■ With beer sales flagging, Coors is turning to marijuana. (WSJ)
You can find live updates throughout the day at nytimes.com/dealbook.