Tencent, and the Markets, Are Hurting. Blame Beijing

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Tencent’s pain could spread worldwide

Tencent, one of China’s most powerful tech giants, reported its first profit decline in a decade, and its shares fell as much as 5 percent. About $180 billion has vanished from its market value since January, with little good news on the horizon. And that’s mostly Beijing’s fault.

There’s been a crackdown on gaming in China, Tencent’s biggest source of revenue. It’s a reminder that the forces that helped create Chinese tech titans — Tencent was largely shielded from overseas rivals — can also hurt them. As Jack Ma of Alibaba once warned, love the government, but don’t marry it.

But the effect of Tencent’s struggles isn’t confined to China. Tech companies around the world saw their stocks fall, including U.S. chip makers. The reason: Everyone is looking to China for growth, and if even a Beijing favorite can’t catch a break, why should anyone else expect to?

What was Elon Musk thinking?

As concerns about Tesla’s future continue to grow, the time has come to ask about Mr. Musk’s mental state when he offhandedly tweeted his intentions.

Jim Stewart of the NYT spoke to experts on mental health and entrepreneurship, who said founders like Mr. Musk are wired differently from most people, for good and for bad. “They’re quicker to spot and act on opportunities, but that same tendency can get them into trouble in other situations,” Scott Shane of Case Western Reserve University said.

That impulsiveness has given Tesla an intensifying legal headache. The S.E.C. has subpoenaed the carmaker for information about Mr. Musk’s “funding secured” tweet. It won’t necessarily face charges, but a long, distracting investigation looks certain.

In other Tesla news: A former employee in a legal fight with the company — he says he’s a whistle-blower, they say he was a saboteur — tweeted what he said was evidence of flawed manufacturing and waste at its battery factory. One of Mr. Musk’s potential partners, Silver Lake, has experience helping founders take their companies private.

Brewers bet on cannabis

Constellation Brands, the parent company of Corona beer, announced yesterday that it was investing $4 billion in Canopy, a Canadian marijuana producer, in the biggest known deal in the cannabis business.

That move might not seem intuitive, but it’s a hedge against slowing beer sales, and other brewers show signs of thinking similarly. Both Heineken and Molson Coors are rolling out nonalcoholic THC-infused beverages.

The rewards could be big: Euromonitor expects to see a $20 billion market for legal marijuana products by 2020. There’s at least one big risk, however: What if the Trump administration cracks down hard on marijuana?

Qatar tries to lend Turkey a hand

The emirate offered $15 billion to help stabilize Turkey’s finances. It’s a symbolic gesture as President Recep Tayyip Erdogan fights a deepening economic war with the U.S.

But it’s certainly no panacea. Turkey has two fundamental problems. One is a huge debt load from years of binging on borrowing. The other, as Greg Ip of the WSJ points out, is President Trump’s increasing weaponization of international finance by raising tariffs as their targets’ currencies sink. That means Ankara’s problems aren’t likely to go away soon — and could continue to infect other emerging economies.

More in Turkey news: Deutsche Bank traders made $35 million off the chaos, while a rival at Barclays lost $19 million. Will economic troubles hurt tourism?

Shopify takes a stand on gun control

The company, which provides online stores for about 600,000 businesses, is restricting the sale of semiautomatic firearms and 3D-printed guns, Bloomberg reports. The site had become a go-to platform for these products, but its C.E.O. wrote in a blog post, “Along the way we had to accept that neutrality is not a possibility.”

It joins companies like Dick’s Sporting Goods, Walmart, Citigroup and Bank of America in limiting support for firearms companies and transactions.

Uber and Lyft win a big battle in the scooter wars

Santa Monica was where scooter-sharing companies like Bird and Lime got their start. But the California city dealt them a blow this week by seeming to favor Uber and Lyft in a race for permits to operate there.

Bird and Lime aren’t out of Santa Monica yet. But the news dismayed investors in the start-ups and threatens to arrest their red-hot growth. (Bird recently raised money at a $2 billion valuation.) And it showed once again that in tech, being big often matters more than being first.

More in Uber news: The company narrowed its losses in the second quarter, but still hasn’t shown whether it’s a real business. And some investors want it to sell its self-driving car unit.

When doing nothing at work pays off

The WhatsApp co-founder Jan Koum said in April that he would join his former partner, Brian Acton, in leaving Facebook — but he’s still turning up once a month. He has 450 million reasons to do so, in the form of stock awards. More from Deepa Seetharaman and Kirsten Grind of the WSJ:

Messrs. Koum and Acton had an unusual clause in their contracts that allowed them to collect unvested stock awards if Facebook insisted on making any “additional monetization initiatives” such as advertising in the app, so long as they remained employed at the company, according to a nonpublic portion of the companies’ merger agreement reviewed by The Journal and people familiar with the matter.

It’s not the only example of the Silicon Valley practice known as “rest and vest.” But it’s one of the most lucrative.

Revolving door

Robert Townsend will leave the law firm Morrison & Foerster to become chief legal officer at SoftBank. He was the Japanese tech giant’s longtime deals lawyer.

The speed read

Deals

Diamondback Energy agreed to buy Energen, an oil and gas producer, for $8.4 billion. (WSJ)

Best Buy plans to buy GreatCall, a maker of smartphones for elderly customers, for $800 million. (Bloomberg)

Starboard Value wants five seats on the board of Symantec to push for operational improvements. (WSJ)

Politics and policy

During closing arguments in Paul Manafort’s trial, defense lawyers hinted that the case was brought to pressure their client to cooperate with Robert Mueller. (NYT)

Despite sanctions, Russia is still betting on President Trump. (Bloomberg)

Kellyanne Conway and her husband, the former Wachtell partner George Conway, talked about the stress her White House work has placed on their marriage. (WaPo)

Trade

China and the U.S. will resume trade talks this month. (Bloomberg)

The tussle between Beijing and Washington is testing how quickly China can reduce its reliance on soybeans. (FT)

Tariffs on Korean cars could jeopardize a U.S. trade agreement with South Korea. (Bloomberg)

Tech

Jack Dorsey says Twitter is thinking of promoting alternative viewpointsin users’ timelines. Employees reportedly aren’t happy with him.

Facebook has hired 60 Burmese language specialists in Myanmar, where it is accused of letting dangerous hate speech spread. (FT)

Why Europe has been a tech underachiever, and why its moment has come. (Bloomberg)

Best of the rest

Farmers are starting to challenge the power of agriculture giants like Cargill and ADM. (WSJ)

Exxon Mobil faces a class-action lawsuit over its climate-change accounting. (Bloomberg)

California is dropping cancer warnings on coffee. (NYT)

You can find live updates throughout the day at nytimes.com/dealbook.

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