DealBook Briefing: Media Merger Mania Takes a Cold Shower

All of a sudden, Netflix’s soaring valuation looks too lofty. (Media companies may even be reconsidering their expensive fightback efforts.)

But Matthew Ball of Redef makes a compelling point: “The company doesn’t want to be a leader in video, or even the leader in video — it wants to monopolize the consumption of video; to become TV.” That involves taking risks investors don’t like, perhaps for a long time.


Adrees Latif/Reuters

The Navajo Nation wanted to buy Remington — and abandon its AR-15s

Two months ago, Andrew suggested that someone should buy Remington, one of America’s biggest gun makers, and overhaul it. The Navajo Nation tried, offering up to $525 million. This was Native American tribe’s plan, according to Andrew’s latest column:

It intended to shift the company away from its consumer business, including curtailing the sale of the AR-15-style weapons frequently used in mass shootings, to focus on police and defense contracts. The tribe planned to use profits from those businesses to invest in research and development of advanced “smart guns.”

Remington replied that it wasn’t considering third-party takeover offers. The Navajo Nation may or may not bid again. But it’s worth asking why investors like Franklin Templeton and JPMorgan Chase weren’t interested — and what could change their minds.

Uber faces federal scrutiny over sex discrimination

The ride-hailing giant has been trying to move on from its bro-tastic past for nearly a year now. It’s slow going.

Jack Nicas of the NYT reports that the Equal Employment Opportunity Commission began investigating Uber last August. Among the regulator’s concerns: whether the company systematically paid women less than men and discriminated against them in hiring.

At Fortune’s Brainstorm Tech conference yesterday, Dara Khosrowshahi, the C.E.O., said that the company’s culture “can change, but it cannot change in the matter of months.”


Larry Fink of BlackRock.

Mike Cohen for The New York Times

The world’s biggest investor worries about trade

President Trump is showing little respect for geopolitical order. (The latest instance: alienating allies yesterday by cozying up to Vladimir Putin.) And his administration has filed claims at the World Trade Organization against China, the European Union and others. So his trade wars may soon get nastier — and Larry Fink, the C.E.O. of BlackRock, is starting to fret:

“If we do see these tariff increases come to pass and if they are sustained over time, I think it would be proper to recalibrate forecasts of G.D.P. and earnings growth. And then the markets would probably fall.”

Elsewhere in trade: Beijing is shoring up investment in its economy as it prepares for a prolonged fight with America. The chief of the Chinese e-commerce company says he can help customers find cheaper alternatives to American goods. And how the battle is giving pistachio farmers a leg up, at least in Iran.

Revolving door

Ulrich Lehner resigned as chairman of ThyssenKrupp, which has worries over its planned merger with Tata Steel. (Bloomberg)

The speed read


• Under pressure from an activist investor, Barclays may expand its U.S. bank. (WSJ)

• Didi Chuxing is reportedly planning to spin off its car services unit, raising up to $1.5 billion. (CNBC)

• As Sonos prepares to go public this week, it’s hoping to avoid the pitfalls of other recent hardware I.P.O.s. (FT)

Politics and policy

• A federal appeals court decision, backed by Judge Brett Kavanaugh, ruled that hospitals can seek more money from Medicare. (NYT)

• A federal judge temporarily blocked deportations of immigrant families reunited after separation at the border. (Politico)

• The official leave campaign in the U.K.’s Brexit referendum has been fined and referred to police for breaking electoral law. (Sky News)


• Microsoft will help Walmart, a fellow rival of Amazon, improve its services using cloud computing and A.I. (WSJ)

• An investment loophole let China invest aggressively in U.S. tech start-ups. (WSJ)

• Russian hackers used some of America’s own servers against it while meddling in the 2016 presidential election. (Bloomberg)

• A start-up called Zignal promises to use A.I. to protect banks from bot attacks. (Zignal)

Best of the rest

• Venture capital cash is drying up in China — another sign of a slowing economy. (NYT)

• On Prime Day, Jeff Bezos became the richest man in modern history, worth an estimated $150 billion. (Amazon’s systems wobbled as the day’s buying surge began.)

• Banks have the Trump tax breaks to thank for their boom. (Bloomberg)

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Ireland Moves to Divest From Fossil Fuels

A bill passed in the lower house of Parliament was a victory for the global divestment movement.

Somini Sengupta
A power station on the Dublin Bay. Supporters of the bill are aiming for full divestment within five years. CreditDave Walsh/VW Pics/UIG, via Getty Images

Ireland on Thursday moved to pull its public funds out of fossil fuels, a development that marks the most significant advance to date for a divestment campaign pushed by environmentalists worldwide.

The lower house of Parliament passed a bill that requires the country’s sovereign fund, valued at 8.9 billion euros, or about $10.4 billion, to move out of fossil fuels “as soon as practicable.”

An aide to Thomas Pringle, the member of Parliament who proposed the measure, said the bill had the support of Prime Minister Leo Varadkar and was expected to become law. When it does, Ireland will become the first country to formally pledge to divest from fossil fuels.

The vote in the Irish Parliament follows a recommendation by Norway’s central bank in late 2017 for its $1 trillion sovereign wealth fund to drop its oil company investments. While Norway, the largest oil producer in Europe, has not yet decided on whether to divest, the very suggestion is a signal of waning confidence in the future of the petroleum business by one of its major players.

A version of this article appears in print on , on Page A9 of the New York edition with the headline: Irish Pass Bill to End Investments In Fossil Fuels. Order Reprints | Today’s Paper | Subscribe

DealBook Briefing: The Disney-Comcast Fight Switches to Sky

Advertisers, who were questioning the value of Twitter “influencers,” praised the crackdown. And since the company omits suspected fake accounts from its monthly active user totals, this won’t hurt its quarterly reports. Twitter’s already riding high.

But whether it can restore faith after being accused of allowing hate speech and harassment to flourish remains to be seen.


A rare earth mine in northern China.

Chinatopix, via Associated Press

Beans are Trump’s trade secret weapon. Minerals may be Beijing’s.

President Trump’s trade battles have escalated quickly. In January, they affected 18 products; today they touch about 10,000. (Here’s a smart visualization of the ramp-up.) While it includes everything from tires to tilapia, some items matter more than others.

Soybeans are central to the spat with Beijing, because China relies on America for much of its supply. That’s good for Mr. Trump: The Chinese are stockpiling them ahead of the tariffs, which tilts trade figures his way.

But his threat to impose levies on an additional $200 billion worth of Chinese goods is forcing Beijing to rethink its tactics. Alexandra Stevenson of the NYT points out that China could cut supplies of minerals vital to batteries, smartphones and other high-tech items. They’re worryingly hard to get elsewhere.

More in trade: Brexit and the trade wars are quietly undermining the markets. There may be a slim chance of America and China restarting trade talks. So far, the fight is costing a typical American family about $60 a year (next stop:$270).

Kushner deals keep leading back to Washington

Jared Kushner may have left his role at his family’s real estate company, but he still has holdings in it. That raises questions about Kushner Companies’ dealings with partners with ties to the government.

The NYT took a look at some of those links, including to the buyer of a nuclear power company and to a visas-for-cash businessman. Mr. Kushner says that he has followed lawyers’ advice in removing himself from Kushner Companies’ dealings. But a former government ethics official told the NYT: “Jared knows who is invested with the family business. He can’t unlearn that.”


Ajit Pai of the F.C.C.

Jacquelyn Martin/Associated Press

The F.C.C. seems to want to listen to consumers

Ajit Pai, the chairman of the Federal Communications Commission, has proposed overhauling the way that consumers provide feedback during its public consultations. The WSJ reports that the move is meant to protect against abuse of the system. (Potentially fraudulent responses were rife in the net neutrality consultation, an investigation suggests.)

Meanwhile, the WaPo claims that the F.C.C. has postponed voting on a provision that would have passed informal complaints directly to companies. Lawmakers feared that F.C.C. staff would no longer review them, effectively forcing consumers into paying $225 to file formal complaints.

America might not be ready for the A.I. wars

Artificial intelligence is creating highly believable fake content for propaganda, helping government surveillance, enabling new kinds of cyber attacks, and far more. How prepared is the U.S. government?

According to a report from the Center for a New American Security, not very. The authors call current government efforts to bolster national security on A.I. “nascent.” Speaking to Axios, Paul Scharre, one of the authors of the report, said that “the United States government does not have a plan to remain a global leader in A.I. I fear that U.S. policymakers take America’s technological advantages for granted.”

Revolving door

John Schnatter, founder of the Papa John’s pizza chain, resigned as chairman after using a racial slur. (NYT)

John Amato, C.E.O. of the Hollywood Reporter-Billboard Media Group, resigned over his handling of sexual harassment coverage. (NYT)

Morgan Stanley named Tom Miles as its head of M.&A. for the Americas.

The speed read


• Broadcom agreed to buy the software maker CA Technologies for nearly $19 billion, its first major deal since trying to buy Qualcomm. Investors may not celebrate.

• Tiger Global Management, the investment firm that backed start-ups like Warby Parker and Flipkart, is said to have taken a $1 billion stake in SoftBank. (Bloomberg)

• Guggenheim has agreed to buy the financial restructuring firm Millstein & Company. (WSJ)

Politics and policy

• Tax changes since 2000 will save the top 1 percent of American households $111 billion this year. (NYT Opinion)

• After Brexit, Prime Minister Theresa May wants Britain to use E.U. rules on goods, but not on services, which make up 80 percent of its economy. (Bloomberg)


• China wants high-tech cars. German automakers want to help. (NYT)

• The Chinese telecom company ZTE now only needs to pay the Commerce Department $400 million before restarting business in America. (Reuters)

• Google is turning internet balloons and delivery drones into real businesses. (NYT)

• Facebook says it will give academics “full access” to data so that they can understand election interference. (WSJ)

Best of the rest

• Elon Musk’s next promise: cleaning up Flint’s water. (Also, why Tesla favors the number 500,000.)

• How a small Arkansas-based bank became America’s biggest construction lender. (Bloomberg Businessweek)

• How Beijing spreads its state-media messages around the world. (FT)

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DealBook Briefing: Merger Binge Could Lead to a Hangover

Elsewhere in trade: Global trade growth is starting to slow. ZTE has resumed some business in America. The American chip maker Micron is hurting after a court in China blocked it from selling some products there. Trump voters may be the biggest losers from new auto tariffs. U.S. tariffs could be a “useful” test of the European economy.


Wang Jian, center.

Krista Schlueter for The New York Times

The death of HNA’s co-founder leaves the company in a bind

Wang Jian, a co-founder of HNA Group and one of China’s richest men, died yesterday from an accidental fall in France. It’s bad timing for the Chinese company, which is trying to revive its fortunes after a debt-heavy spending spree.

Mr. Wang turned a regional Chinese airline into a huge conglomerate, striking multibillion-dollar deals for stakes in Hilton Hotels and Deutsche Bank. But that frenzy left HNA with $90 billion in debt, forcing it to sell dozens of assets amid pressure from Beijing regulators.

Mr. Wang’s death makes HNA’s current goal of simplifying its complex corporate ownership more difficult. He owned a 15 percent stake in the conglomerate, helped create the complex web of ownership, and was the point person for many of the company’s business dealings.

Stress-testing asset managers is controversial. Not doing so could be costly.

After the financial crisis, stress-tests of the banking system have become a useful check on the industry’s appetite for risk. But Bloomberg Opinion’s Mark Gilbert argues that other financial institutions that have become big lenders should also face tighter scrutiny:

The last financial crisis was notable for its depth, as the swift deterioration in the value of the assets investment banks held on their swollen balance sheets destroyed their equity. The next could be distinguished by its breadth, now that pension funds and other non-bank institutions have stepped in to fill many of the funding gaps left by the banking industry’s enforced retreat.

The European Securities and Markets Authority is set to propose tests that would measure investment funds’ ability to weather sudden changes in liquidity. But the U.S. Treasury Department has said that stress tests for mutual funds are not required. Finding out which side is right could be a painful lesson.


David Einhorn of Greenlight Capital

Brendan Mcdermid/Reuters

David Einhorn is struggling. Investors are fuming.

The hedge fund mogul has always been famously aloof, stubborn about his investments, and a big fan of expensive nights out on the town. None of that bothered clients, until his firm, Greenlight Capital, hit a long rough patch.

The WSJ looks at how Greenlight, whose assets have shrunk more than half since 2014, to $5.5 billion, has drawn criticism from investors. The value of an investment in its main fund is down 11.3 percent from the end of 2014 through last year, while the S.&P. 500 was up 38.3 percent during that time.

Some investors have already left, their patience having worn thin. But others will have to wait, since they can withdraw money only once a year, after having committed for three years. For many, the only real hope is that Mr. Einhorn rediscovers his investing mojo.


Demos Parneros

Joshua Bright for The New York Times

Revolving door

Barnes & Noble fired its C.E.O., Demos Parneros, for violating unspecified company policies. (NYT)

Diane Bryant, the chief operating officer of Google’s cloud unit, has left the company after less than a year. (CNBC)

Tatiana Martins, the federal prosecutor who supervised the investigation into Michael Cohen, has left the government to join the law firm Davis Polk & Wardwell. (NYT)

The speed read


• Carl Icahn, an investor in Dell’s tracking stock, reportedly will not push Dell to improve its offer to buy out those shares. (WSJ)

• Tim Armstrong is said to be interested in spinning out or buying Oath, the digital media business that includes AOL and Yahoo, that is part of Verizon. (The Information)

• Uber is said to be in talks to combine its Middle Eastern operations with Careem, a rival based in Dubai. (Bloomberg)

Politics and policy

• The health insurance market created by the Affordable Care Act is thriving, despite efforts to kill it. (NYT)

• Drug makers have ignored President Trump’s call for lower medicine prices. (Politico)

• Jaguar Land Rover, Britain’s biggest carmaker, said that it may have to close British factories if there’s a hard Brexit. (FT)


• A boom in A.I. research means that Silicon Valley giants have taken their talent hunt to Cambridge, England. (NYT)

• American antitrust regulators have the ability to check some of Big Tech’s ambitions. (DealBook)

• Many tech workers are questioning government contracts at their employers. But employees at Twitter, President Trump’s favorite platform, are conspicuously silent. (NYT)

Best of the rest

• How New York State’s attorney general could make President Trump’s tax returns public. (NYT Opinion)

• Americans are quitting their jobs more often. (WSJ)

• Higher testosterone levels have been linked to a higher preference for luxury goods in men. (Verge)

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Luxury’s Chess Masters Prepare for a New Game

A series of strategic shifts in the boardrooms and back rooms of the world’s biggest luxury groups — LVMH, Kering and Richemont — has been underway in recent months.

A Gucci store in Paris.CreditCharles Platiau/Reuters

On a sunny day earlier this month, scores of suited men and women found themselves in a low-rise building on the outskirts of Florence, Italy, walking by bright hand-painted murals of birds of paradise, wildflowers and dreamy-eyed women wearing turbans, T-shirts and rhinestone-encrusted sunglasses.

The location? The new Gucci ArtLab. The occasion? An investor day for Kering, Gucci’s parent company, with Marco Bizzarri, the chief executive of Gucci, taking on a starring role in front of the assembled crowd. His topic: A master plan to make Gucci the largest luxury brand in the world.

“It’s not a question of if,” he said, “but when.”

The brand had just posted record annual sales of 6.2 billion euros, or about $7.1 billion, in 2017, a 45 percent increase from the prior year. Now it planned to reach €10 billion in annual sales and a 40 percent operating margin by 2019.

To do so, Kering, which has holdings in fine jewelry and watches as well as fashion, confirmed a wider strategy already underway to narrow its focus to five of its premium houses: Gucci, Saint Laurent, Balenciaga, Alexander McQueen and Bottega Veneta.

The implications of such a shift are becoming increasingly clear. They reflect not only a strategic housecleaning at Kering, but also the quiet reorganizations that have been taking place at LVMH Moët Hennessy Louis Vuitton and Richemont, as the world’s three biggest luxury groups prepare for what may be a new stage of acquisitions and consolidation.

“This moment signals the end of an important chapter for Kering,” said Thomas Chauvet, head of European luxury goods equity research for Citibank. “After almost 30 years of asset rotations and churning through their portfolio, they have reinvented themselves as a pure luxury player.”

This change in focus has expressed itself in a flurry of hirings, firings and asset disposals over the first part of this year, as Kering reorients its focus away from small and midlevel brand acquisitions — “they have realized these brands need a lot of help and do not move the profit needle at all,” said Mr. Chauvet — and toward their Big Five.

The designer Stella McCartney at her men’s spring 2019 show in Milan.CreditLuca Bruno/Associated Press

These moves followed the divestiture of Sergio Rossi in 2015, and, analysts said, suggest that Brioni, the Italian men’s wear brand, and Altuzarra, the American women’s wear brand in which Kering has a minority stake, might well be next.

“I see it likely that these moves may be a preamble to more meaningful luxury-focused M&A down the road,” Luca Solca, head of luxury goods research at Exane BNP Paribas, wrote in an email, referring to the Kane, Maier and McCartney news.

The designer Tomas Maier at the Bottega Veneta fall 2016 women’s show in Milan.CreditAlessandro Garofalo/Reuters
Dior Men, spring 2019.CreditValerio Mezzanotti for The New York Times

Then, in June, Antoine Arnault, 41, Mr. Arnault’s eldest son and Berluti’s chief executive, was given the added responsibility of LVMH head of communications and image, reflecting an increased level of external scrutiny on the market leader. And earlier this week, the group also confirmed that LVMH was divesting itself of a minority stake in Edun, the eco-friendly fashion label started by the singer Bono and his wife Ali Hewson.

The moves have increased speculation about avenues for growth.

“As an investor, if you buy Kering right now, you are basically buying Gucci and a fundamentally fashion-focused stock which is more prone to cyclical ups and downs: It remains a risk for investors worried about putting all their eggs in one basket,” said Erwan Rambourg, global co-head of consumer and retail research at HSBC. “If you buy LVMH, you get a buy into a much more balanced and diversified portfolio with a greater spread across product categories.”

François-Henri Pinault, Kering’s chief executive, at the group’s general meeting in Paris in April.CreditEric Piermont/Agence France-Presse — Getty Images

Hence the belief in the market that, although the Kering group share price has grown by more than 35 percent this year, its chief executive, François-Henri Pinault, could now be looking for bigger luxury assets with which to capture investor interest, bolstered by recent changes to the French tax code that have improved flexibility around corporate deal making.

Kering declined to comment on its plans, but Mr. Chauvet of Citibank said: “Gucci will account for over 70 percent of group operating profit in 2018, and there will be some desire to rebalance the portfolio away from Gucci” — whether that is by bolstering performance and investment in other brands, or by “deliberately bringing another brand that is more sizable than in the past to the platform.”

In March, Exane BNP Paribas published a report looking at the possibility of a merger between Richemont and Kering, asking, “Why separate Puma just now? Why push Gucci so hard? Why secure control of YNAP (Yoox Net-a-Porter)?” and noting “Richemont and Kering are complementary: Kering is strong in soft luxury, Richemont is a champion in hard luxury. The combination would create significant scale advantage.”

The suggestion has been firmly rebuffed by both groups.

Still, after a rocky few years, the global luxury market has regained its luster. Buoyant results, bolstered by strong demand in China, have not only boosted bottom lines but contributed to a cash buildup waiting to be deployed. Kering appears to be readying itself to lead that charge.

DealBook Briefing: Disney’s Cunning New Move to Take Fox


Today’s DealBook Briefing was written by Andrew Ross Sorkin on the road, and Michael J. de la Merced and Jamie Condliffe in London.



The port in Savannah, Ga.

Stephen B. Morton/Associated Press

Trump’s secret trade weapon: the U.S. economy

With growth rates hitting levels unseen in a decade, President Trump is betting that the U.S. can weather any short-term shocks from his battles with China, Europe and other trading partners.

Exhibit A: German automakers are reportedly open to eliminating car tariffs between the U.S. and Europe, because of how important American consumers are to their business. That would be a triumph for Mr. Trump.

One concern: Some economists think U.S. growth is peaking — so Mr. Trump’s economic cushion could deflate just as the trade shocks hit.

Elsewhere in trade news: Small gadget makers could be hurt by the fight with Beijing. And average Chinese workers don’t appear to blame America for the trade fight.


A newly constructed center for migrant children in Tornillo, Tex.

Agence France-Presse — Getty Images

Corporate America is still tied up with U.S. immigration policies

President Trump has signed an executive order to end the practice of separating children from their parents at U.S. borders. It’s not yet clear how much will change.

For now, American business remains caught up in the controversy:

• Airlines have asked the government not to use their flights to carry children it has separated from their parents.

• Walmart declared itself “surprised” that one of its old stores was now a migrant shelter, though property records suggested that was a possibility.

• Dell, Motorola and HP could join Microsoft in facing criticism for working with Immigration and Customs Enforcement.

How the White House could catch up to Europe on data privacy

Perhaps realizing that the U.S. isn’t leading the international debate on the topic, the White House is said to be considering an equivalent to Europe’s General Data Privacy Regulation.

More on how the administration could move, from Shannon Vavra, Kim Hart, and David McCabe of Axios:

One option is an executive order directing one or more agencies to develop a privacy framework. That could direct the National Institute of Standards and Technology, an arm of the Commerce Department, to work with industry and other experts to come up with guidelines, according to two sources.

What to expect: Gail Slater, a White House adviser on cyber issues, told Axios that U.S. rules wouldn’t mirror Europe’s. So don’t count on a “right to be forgotten.” The White House also wants to ensure that any rules aren’t too onerous for smaller businesses.


Kevin Systrom, co-founder and C.E.O. of Instagram.

Jeff Chiu/Associated Press

Instagram finally takes on YouTube

The photo-sharing platform announced a new video portal yesterday, IGTV, that will let its users post long videos. More from Daisuke Wakabayashi and Sheera Frenkel of the NYT:

IGTV will feature videos shot vertically to fill the screens of smartphones versus the landscape orientation of televisions and computer monitors. In addition, it was reaching out to the new stars of today’s digital video world — social media stars with millions of followers on YouTube and Instagram.

Jamie Condliffe’s take: The company says that IGTV won’t have ads at first, but given how much money there is in video advertising, don’t expect that to last. YouTube shares ad revenue with content creators; Instagram could do something similar.

Elsewhere in video news: Apple’s forthcoming service plans to stream children’s shows from Sesame Workshop.


Gary Cohn

Pool photo by Michael Reynolds

What will Gary Cohn do next?

President Trump’s former economic adviser has plenty of options. He seems to be ruling out Wall Street — he told a recent conference that he’d “done the markets world.” Instead, he’s reportedly looking at entertainment — or Bitcoin. (A cryptocohn, anyone?)

But there’s a problem, according to Bill Cohan of Vanity Fair:

He was able to score conversations with senior executives at Silicon Valley firms after leaving the White House, according to the person who knows him well. But once the idea of Cohn, a Trump acolyte, was “socialized” internally, it quickly became apparent that he would not be welcome.


Jeff Bezos

Jason Redmond/Agence France-Presse — Getty Images

How Amazon learned to love D.C. lobbying

Jeff Bezos once distanced his company from Washington. But as Amazon has become a power in the land, things have changed. A lot. The WSJ sets out just how much:

Amazon now has an army of nearly 100 lobbyists at more than a dozen lobbying firms working on a list of issues including taxes, trade, government procurement, internet policy, drone regulation, grocery rules, music licensing and, more recently, food stamps. Last year, the company spent $13 million on lobbying, five times as much as it spent five years earlier, putting it just behind some of last year’s biggest corporate lobbyists, including Google and AT&T.


Atul Gawande

Lisa Lake/Getty Images for Geisinger Health System

Revolving door

Amazon, Berkshire Hathaway and JPMorgan Chase have picked Atul Gawande, a prominent surgeon who writes for The New Yorker, as C.E.O. of their health care venture. His claim to fame: influential analyses of overspending in American medicine. One piece caught the eye of Berkshire’s Charlie Munger.

Walmart plans to hire 2,000 people in tech this year. (VentureBeat)

The speed read


• SoftBank’s Masa Son wants big deals fast and often. A fellow director is worried. (WSJ)

• Britain is investigating the sale of an Airbus and Boeing supplier to a Chinese-owned rival. (NYT)

• Match Group, which owns Tinder, has bought Hinge, a dating app that calls itself an anti-Tinder. (Bloomberg)

• Tilray, a big producer of federally licensed medical cannabis and accessories, filed to go public on the Nasdaq. (Tilray)

Politics and policy

• The publisher of the National Enquirer has been subpoenaed in the investigation into Michael Cohen. (NYT)

• California’s legislature beat back an effort by a Democratic lawmaker to weaken its net neutrality bill. (Verge)

• Congress refused to cancel $15 billion in spending, defying President Trump. (Bloomberg)


• Tesla has sued a former employee whom Elon Musk accuses of stealing data and making false claims to the media. (CNBC)

• A new favorite of tech companies: convertible debt. (Recode)

• A.I. relies on mathematical tricks known as deep learning. There may be a better way. (NYT)

• The Federal Trade Commission will look at tech giants like Google and Facebook as part of a broad review. (Axios)

Best of the rest

• A big one-day loss at Deutsche Bank has raised questions about its financial controls. (Bloomberg)

• U.S. home prices are likely to rise. Blame low supply. (WSJ)

• Start-ups are good for the economy. Too bad they’re disappearing in the U.S. (Quartz)

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On the Runway: Is the Independent Designer an Endangered Species?

The sale of Dries Van Noten to Puig raises some pretty big questions about the current fashion system and whether bigger is always better.

The designer Dries Van Noten, in 2016.CreditMax Cantor for The New York Times

For many years a ritual of sorts has existed among members of the migrant fashion flock when they alight in Paris on their twice-yearly show rounds. They drop their bags, they grab a baguette (or a green juice if they can’t stomach the carbs) and then, often on Day 1 but almost never later than Day Three, they pay a visit to the Dries Van Noten men’s and women’s stores on the Quai Malaquais.

They go not necessarily to buy, though a lot of them do, but to marinate in the atmosphere, which is textured and emotive, like the clothes: full of antiques and oddities chosen by the designer from markets around the world, seemingly thrown together in unlikely yet mesmerizing combinations and colors. And they go because those two stores are the only ones in the Western Hemisphere (other than in Antwerp, Belgium, where the Van Noten brand is based), and the only ones fully controlled by Mr. Van Noten. They are perfect microcosms of what President George H.W. Bush once called “the vision thing,” which is what makes them so special.

Dries Van Noten, fall 2018.CreditValerio Mezzanotti for The New York Times

Indeed, Mr. Van Noten has often said that one of the hardest things about running a fashion brand was not just the well-documented pressure to be creative on command but taking responsibility for the growing number of employees whose livelihoods depended on him. Mr. Van Noten is a worrier and a micromanager, and sweats the details. It’s part of what makes him so successful. But the change in ownership still should give the whole fashion industry pause.

Because it raises a very real question: Whither the independent designer in today’s fashion system?

The Dries Van Noten storefront in Paris.CreditMarc Piasecki/GC Images

There aren’t that many options: find an heir who will keep it going; sell to a corporate parent; become a private equity football; close. Mr. Van Noten, planning ahead, which is something he does, chose option B. Azzedine Alaïa, another famously independent designer, did the same when he sold his brand to Richemont in 2007.

Dries Van Noten men’s, spring 2018.CreditValerio Mezzanotti for The New York Times

And, to be fair, that group has done an impressive job of not acting like a big corporate boss, and essentially leaving the Alaïa house alone except to support it in whatever it wanted to do (sometimes have a show, sometimes not). Richemont was even smart enough not to try to parachute in a new designer after the unexpected death of the founder last November, and to let the studio carry on his legacy — which also happens to be protected by a foundation the designer created. But that approach has been the exception rather than the rule.

Despite the lip service paid these days to the idea of consumers in search of the rare and one-off in a world where the digisphere has made so much so available, the tendency has been, at least when it comes to the big groups, to make brands more available: to open stores and push e-commerce and make a bid for shopper’s attention at every point possible. But that was never the Van Noten way.

It’s possible that Puig understands this and will simply let Dries be Dries. He will, after all, remain the creative director (or chief creative officer) and executive chairman. The brand is staying in Antwerp. And there’s a good chance he would like a few more stores, and a little more market share — more recognition of what he does — plus a perfume or two without having to worry about the capital expense. No one ever said he was not ambitious. Plus, there’s always vacation.

And it’s possible that Puig’s reputation as highly conservative investors in its fashion brands, an approach that has driven many of their designers batty, may actually work in Mr. Van Noten’s favor.

Dries Van Noten, spring 2017.CreditValerio Mezzanotti for The New York Times

Maybe not having to worry about bills and real estate will free him up to do more of this. Presumably that is the idea.

But the thing is, whenever students coming out of art school talked about their role models, they used to namecheck Dries, Rei and Alaïa as three creatives who defined their own styles and their own paths and stuck to them no matter what, in the face of relentless pressure to Get Bigger! and Do More Collections! and Use More Influencers! and so on and so forth.

They were the dream. What happens to those dreams now?

DealBook Briefing: Welcome to Media Merger Fight Club

The challenge now: to balance America’s growing economy and falling unemployment. More from Greg Ip of the WSJ:

By 2020 the economy will be well into overheating territory, the sort of situation that usually leads to dramatically higher interest rates and a recession. Fed officials must either raise their inflation target, assume some serendipitous boost to the economy’s potential growth rate or decline in the natural unemployment rate, abandon their economic models, or run much tighter monetary policy, especially after 2020.

The political flyaround

• The White House may try to prevent Congress from reimposing penalties on ZTE, after all. (NYT)

• Senator Jim Inhofe, Republican of Oklahoma, and a longtime friend of Scott Pruitt, said that the E.P.A. chief may need to resign. (Bloomberg)

• Tim Draper, the venture capitalist, got his proposal to split California in three on to the state’s ballot in November. (NYT)

• Senate Democrats want the S.E.C. to investigate Michael Piwowar, a Republican commissioner who criticized Citigroup’s stance on gun investments. (Bloomberg)


A robot stocks shelves at a warehouse in Shanghai.

China Stringer Network/Reuters

For a glimpse at the future of work, look at e-commerce

Reports from inside two of the world’s biggest e-commerce companies offer evidence that the robots are coming:

• Replacing warehouse staff. Axios reports that the Chinese e-commerce company has “built a big new Shanghai fulfillment center that can organize, pack and ship 200,000 orders a day. It employs four people — all of whom service the robots.”

• Automating office work. Bloomberg says that Amazon executives who negotiated multimillion-dollar deals with major brands “are being replaced by software that predicts what shoppers want and how much to charge for it.”

Jamie Condliffe’s take: Companies like to say that automation will free staff to do work that robots can’t, as happened in previous technological revolutions. But a warehouse that needs just four employees is a reminder that the disruption caused by A.I. and robotics could be unlike anything we’ve seen before.

Elsewhere in automation: Microsoft is reportedly experimenting with checkout-free retail, and talking to Walmart about it.


Win Mcnamee/Getty Images

The deals flyaround

• Sinclair’s $3.9 billion takeover of Tribune could be slowed by government scrutiny of its deal to sell three TV stations to an ally, the conservative pundit Armstrong Williams. (Politico)

• Shares in the Dutch payments processor Adyen nearly doubled in their first day of trading yesterday, but investors should take a breath. (Bloomberg Opinion)

• Opendoor, a house-flipping start-up backed by Travis Kalanick, is said to have raised $325 million at a valuation of over $2 billion — and is still in talks to raise more from SoftBank’s Vision Fund. (Recode)

• Samsung has set up the Q Fund to invest in A.I. start-ups. (VentureBeat)


A rendering of a Boring Company “skate” for the proposed Chicago transportation system.

The Boring Company

Chicago buys into Elon Musk’s tubular public transit dream

The city’s mayor, Rahm Emanuel, says that Mr. Musk’s Boring Company has been selected to build a futuristic underground transport system, whizzing passengers from downtown Chicago to O’Hare International Airport.

More from Julie Bosman and Mitch Smith of the NYT:

If completed as planned, each electric vehicle — called a “skate” — would transport up to 16 riders and their luggage. The vehicles could leave downtown and O’Hare as frequently as every 30 seconds, the city says. They would exceed 100 miles per hour and make the entire trip from downtown to O’Hare in 12 minutes.

But there are roadblocks ahead. Chicago’s City Council would need to agree to the plan. The city must negotiate a deal with the Boring Company. It will be expensive — up to $1 billion, on current estimates. Oh, and such a system has never been built before.


Yves Herman/Reuters

The tech flyaround

• ZTE is looking for a $11 billion credit line. (FT)

• Cryptocurrencies are supposed to make bank payments cheaper. Western Union’s experiments suggest that isn’t yet the case. (Fortune)

• Apple will close an iPhone security hole favored by the police. (NYT)

• From next year, reportedly, China will begin electronically tracking every new car on its roads. (WSJ)

• A new study found that Bitcoin prices were artificially inflated last year. (NYT)

A new investment trick: Study the $100 billion club

The CNBC host Jim Cramer has pitched a simple way for investors to choose where to put their money: Look at what companies with market capitalizations of $100 billion are doing. More from Mr. Cramer:

“Why should we care about these megacap stocks? Because unlike an index, the $100 billion club isn’t selected by anyone. There’s no nominating committee. The only way a company gets its name on this list is by producing years and years of gains. In the last 12 months, this club has seen 15 new members. That’s a lot, and it turns out this list is a veritable who’s who of what’s working.”

Revolving door

• G.M. named Dhivya Suryadevara as C.F.O. It now has women in its two top management positions, a first in the auto industry. (Bloomberg)

• Carlos Ghosn said he was likely to step down as Renault’s C.E.O. before his contract is up in 2022. (FT)

• Rolls-Royce plans to cut 4,600 jobs. (BBC)

The speed read

• German prosecutors fined Volkswagen $1.2 billion over its diesel emissions scandal. (NYT)

• The billions Russia is spending on the World Cup may not boost its economy in the long term. (Bloomberg)

• A court case involving a British plumber might provide some lessons for gig economy companies. (NYT)

• China’s economy shows some early signs of losing momentum. (Bloomberg)

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DealBook Briefing: Media Mergers Coming in 3, 2, 1 …

Andrew says the verdict is likely to rattle President Trump, a vocal opponent of the Time Warner deal. “Mr. Trump doesn’t like to lose, and that could make his administration more reluctant to police future deals that actually deserve to be blocked,” he writes in his latest column.


Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Jamie Condliffe in London.



Elon Musk

Shannon Stapleton/Reuters

Tesla is cutting staff in a bid for profitability

In a sign of financial sense, the carmaker announced that it would lay off 9 percent of its staff of 37,500. The cuts will mainly hit salaried employees and won’t affect production workers at its plant in Fremont, Calif. (That’s important, given its struggle to build enough Model 3 sedans.)

The aim is to slow Tesla’s cash burn: It lost $785 million in the first quarter, despite generating $3.4 billion in revenue. In an email to the staff, Elon Musk said that his company’s vision — to “accelerate the world’s transition to sustainable, clean energy” — would not happen “unless we eventually demonstrate that we can be sustainably profitable.”

DealBook’s take: Streamlining — and presumably reducing how rapidly it needs to raise money — sounds sensible for Tesla. But exciting new projects like an electric truck could now become harder to finance. There’s also a risk to that highflying stock: If Tesla behaves like a normal company, investors may start to value it as one.


Kim Il-sung Square in Pyongyang, North Korea.

Ed Jones/Agence France-Presse — Getty Images

Who wants to do business with North Korea?

When President Trump met Kim Jong-un in Singapore this week, one of his pitches to the dictator was the prospect of Western investment in North Korea. Businesses aren’t exactly lining up to build factories in Pyongyang — at least, not yet. But could that change? Alex Stevenson of the NYT assesses the chances:

Some in the business world find the idea intriguing. The North has a relatively young population and an underground entrepreneurial bent. It has a large amount of resources like rare earths and iron ore. And South Korea has offered the North a modernization plan that includes building railways and power plants.

Crossed wires? North Korean state media said Mr. Trump offered to lift sanctions on Pyongyang. That wasn’t the White House line.

The political flyaround

• President Trump is expected to impose tariffs on Chinese goods as soon as Friday. (Politico)

• Take a close look at Tom Barrack, a billionaire ally of Mr. Trump who has strong ties to the Middle East — and introduced him to Paul Manafort. (NYT)

• Mick Mulvaney’s time atop the Consumer Financial Protection Bureau — sorry, the “B.C.F.P.” — is near an end. His potential replacement: Representative Darrell Issa, a California Republican who isn’t running for re-election.

• A New York state court has curtailed the reach of the Martin Act, which has been used to bring fraud charges against Wall Street. (NYT)


Protesters at a Seattle city council meeting in May.

Elaine Thompson/Associated Press

Seattle fought Big Tech. Big Tech won.

Last month, city officials unveiled a business tax meant to help pay for homeless programs and affordable housing. It would have fallen in large part on Amazon. But the e-commerce behemoth lobbied hard against the tax — and now it’s dead.

The lesson for mayors and city governments elsewhere? Taking on tech titans is risky, especially if they employ lots of people in your district. More from David Streitfeld and Claire Ballentine of the NYT:

The politicians had no stomach for a protracted battle over jobs, even at a moment when the area’s unemployment rate is only 3.1 percent. “It is clear that the ordinance will lead to a prolonged, expensive political fight over the next five months that will do nothing to tackle our urgent housing and homelessness crisis,” they said.

The deals flyaround

• Toyota plans to invest $1 billion in Grab of Singapore, the biggest investment yet by a carmaker in the ride-hailing industry. That may not be unalloyed good news for Grab.

• Bird, a big player in electric scooter sharing, is said to be raising $300 million — equivalent to its total valuation three months ago — at a valuation of $2 billion. (NYT)

• Adyen, a European payments processor used by Uber, priced its I.P.O. at the top of the expected price range, valuing itself at $8.3 billion. (WSJ)


Wang Zhao/Agence France-Presse — Getty Images

ZTE could be in trouble again

Republican senators are betting that President Trump won’t block their effort to restore penalties against the Chinese telecom company that the White House struck a deal to save.

What Senator Bob Corker, Republican of Tennessee, told the WSJ:

“I don’t think the president cares about ZTE. Someone told me that he gave [GOP lawmakers] a wink and a nod and told them he didn’t care. I don’t know if that’s true or not, but I think he did what he did for the Chinese leader but he doesn’t really care what Congress does.”

Elsewhere in ZTE news: The company’s stock resumed trading in Hong Kong overnight after a two-month hiatus, and its market valuation is down by $3 billion.

The tech flyaround

• Malware mined nearly 5 percent of all the Monero cryptocurrency in circulation. (Palo Alto Networks)

• A blockchain experiment in Britain could remove red tape at customs borders. (FT)

• IBM thinks it can make A.I. 100 times more energy-efficient. (MIT Technology Review)

• Bill Gates’s new energy fund has made its first investments, in grid storage. (Quartz)

• Facebook has opened a design lab to improve privacy. (Bloomberg)


James Hill for The New York Times

Big banks predict who’ll win the World Cup

Ahead of the first game tomorrow, strategists and analysts have put their quantitative skills to use to predict the overall winner of the tournament. Their approaches — including A.I., statistical modeling, and economic analysis — show that picking a winner is just as divisive among the world’s largest banks as it is in sports bars from Moscow to Manchester.

UBS backs Germany, Goldman Brazil, and ING Spain. Here’s how they got to their results.

In other World Cup news: FIFA expects to make $6.1 billion from this year’s tournament. Some games will cause stock market weirdness. And people watching the tournament in Russia may have their devices hacked.

Revolving door

• Guess Inc.’s co-founder, Paul Marciano, has resigned from the clothing company after an investigation into allegations that he sexually harassed and assaulted women. (NYT)

• Cambridge Analytica’s former chief data officer, Alexander Tayler, is trying to reinvent himself as a consultant on data analytics — and compliance. (FT)

The speed read

• If robots come for our jobs, what should the government do? (NYT)

• America’s investment banks have been eating the lunch of European counterparts for years. That might be about to change. (FT)

• Why do economists rarely talk about inequality? Perhaps because they’re afraid of politics. (Bloomberg)

• Beijing says it will let foreign banks run securities businesses in China — so long as they have at least $15 billion in net assets. (WSJ)

• How long do we have to wait before productivity rises? (FT)

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Big Day for AT&T, Time Warner and U.S. as Court Rules in Antitrust Case

What are the possible outcomes?

Judge Leon could block the deal.

Doing so might encourage the Justice Department to act more aggressively when it looks at deals in the future, and might prompt a rethink by companies with similar deals in the works.

A key argument against the government’s case is that the deal is a so-called vertical merger, which means that the two companies do not produce competing products: One makes media content, and the other distributes it. Some big takeovers lately have had similar profiles — the purchase of the insurer Aetna by the drugstore chain CVS, and Amazon’s purchase of Whole Foods — and they typically make it past regulators.

So a win for the government could really shake up some businesses’ plans and open the door for a new definition of antitrust regulation.

He could let it proceed without attaching any conditions.

That would, of course, have the opposite effect. It could be the green light for more vertical takeovers, and would be seen as a setback for the Trump administration.

If the deal is allowed to proceed, Comcast is expected to make a bid for most of 21st Century Fox’s television assets — setting up a bidding war against the Walt Disney Company, which has already struck a deal to buy those holdings.


The Dallas headquarter of AT&T, whose proposed merger with Time Warner was challenged in court by the Trump administration. A ruling is expected Tuesday.

Dylan Hollingsworth for The New York Times

It’s possible that the Justice Department will appeal a ruling that goes against it, though, so things may not end there.

He could approve it but attach conditions.

The aim of the conditions would broadly be to keep AT&T from using its control of content like HBO or CNN as a weapon to increase costs for its rivals. The fear is that AT&T could charge rivals a high price for, say, HBO to make AT&T’s own product more competitive.

One way to address this would be to appoint a third party to oversee disagreements between AT&T and the cable companies that want to license Time Warner content. The government doesn’t like that approach.

Another option is to demand that AT&T and Time Warner sell off some plum assets. AT&T and Time Warner don’t like this approach, so would be expected to appeal any such decision.

Doesn’t the government challenge deals all the time?

It’s true that deals get challenged all the time, but the government’s focus in the past has typically been on protecting consumers by keeping one company, or a small group of companies, from owning too much of any one specific industry. It comes up when companies buy their competitors — what’s known as horizontal integration.

For example, in 2016, a federal judge blocked the merger of Staples and Office Depot after the Federal Trade Commission argued that the combination would leave Americans with only one dominant retailer focused on pens, paper clips and Post-it notes.

What makes the AT&T decision noteworthy is that the deal is being challenged even though it doesn’t share all the characteristics of horizontal integration.

“Vertical mergers do not fit the traditional horizontal-merger analytical framework used by the U.S. regulatory authorities,” R. Mark McCareins, a professor at the Kellogg School of Management at Northwestern University, wrote in an online discussion about vertical mergers. It means the trade commission and the Department of Justice “are faced with pounding a square peg into a round hole.”

[Read more: The Time Warner case is not AT&T’s first tangle with U.S. antitrust law.]

Didn’t this get political at one point?

Yup. Time Warner owns CNN, which President Trump has publicly and repeatedly attacked as fake news.

“AT&T is buying Time Warner, and thus CNN,” he said at a campaign rally when the deal was announced. He said it was “a deal we will not approve in my administration.”

The government had said that Mr. Trump did not communicate with antitrust officials on the deal and that their decision to oppose the merger had not been ordered by the White House. During the trial, Judge Leon rejected many of AT&T’s efforts to introduce evidence about political interference into the case.

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