Why Fiat Chrysler nixed the Renault Merger

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Fiat Chrysler abandons its Renault merger

A last-minute request by the French government for a delay in negotiations prompted Fiat to walk away from efforts to create a new global auto giant.

Renault’s board met last night with the aim of holding a final vote on Fiat’s proposal. But the French government, Renault’s biggest shareholder, asked that such a vote be delayed up to a week.

French officials wanted more concessions, according to unnamed people involved in the talks, including commitments on jobs. But John Elkann, the chairman of Fiat, didn’t want the combined company to be seen as politically influenced — and that seemed increasingly difficult.

The French government “pulled the elastic until it broke,” an unnamed person close to Renault told the FT.

French officials said that they were mainly concerned about Nissan, Renault’s current business partner, and ensuring it came on board with the deal. Finance Minister Bruno Le Maire was scheduled to fly to Tokyo to address the Japanese carmaker’s qualms about the deal.

It’s unlikely that the talks will resume. While Fiat may have left the door open — its statement last night said that “the political conditions in France do not currently exist (emphasis added) for such a combination to proceed successfully” — the company is still worried about French government interference.

Shares in Fiat and Renault fell sharply on the news.

Mexico tariffs look increasingly likely 

High-stakes talks at the White House this week have failed to resolve President Trump’s demand that Mexico halt illegal immigration across the southwestern border, making his threat of tariffs appear ever more likely, Michael D. Shear, Zolan Kanno-Youngs and Ana Swanson of the NYT write.

• Mr. Trump set Monday as a deadline to begin taxing all Mexican goods at 5 percent. That would increase to 25 percent by October if illegal crossings do not completely end.
• “Progress is being made” in talks between officials from Mexico and the White House, Mr. Trump tweeted, but he added that it was “not nearly enough.”
• “Illegal border crossings have risen to a seven-year high, underscoring the roots of the president’s rage,” Mr. Shear, Mr. Kanno-Youngs and Ms. Swanson write.

Political resistance “has also intensified, with skeptical Republican senators asking to hear directly from the president before he takes an action that could shake the economies of both countries.”

Talks resume today. But there is “no indication that Mr. Trump would be satisfied by anything short of direct evidence that Mexico had completely ended the flow of migration through its country.”

More: Here are the U.S. states that would be hit hardest by the Mexico tariffs. And as global trade wars escalate, you might need to get ready for a 1970s-style supply shock.

YouTube will clamp down on extremist content

YouTube announced plans yesterday to remove thousands of videos and channels that advocate neo-Nazism, white supremacy and other bigoted ideologies, Kevin Roose and Kate Conger of the NYT report.

• “Videos alleging that a group is superior in order to justify discrimination, segregation or exclusion” will be banned. The policy also covers videos denying the occurrence of violent events, like the Sandy Hook shooting.
• There will be a three-strike rule for channels that post some hateful content among other acceptable content.
• Channels that “repeatedly brush up against” its hate speech policies, but don’t violate them, will be removed from YouTube’s advertising program.

But YouTube mishandled a content scandal this week, in which Steven Crowder, a conservative commentator with nearly four million YouTube subscribers, repeatedly insulted Carlos Maza, a journalist from Vox.

• “Mr. Crowder used slurs about Mr. Maza’s Cuban-American ethnicity and sexual orientation.”
• YouTube initially determined that Mr. Crowder’s comments did not break its rules.
• Then, on Wednesday, YouTube appeared to backtrack, saying that Mr. Crowder had in fact violated its rules, and that he would no longer earn ad revenue on his channel.

“The whiplash-inducing deliberations” are a reminder that “making rules is often easier than enforcing them,” Mr. Roose and Ms. Conger write.

The next economic worry: oil

Oil prices have tumbled more than 20 percent since late April. That’s another reason for analysts to be worried about the global economic picture, Clifford Krauss of the NYT reports.

Fuel inventories in the U.S. are rising, when supplies usually tighten for the summer driving season. Supplies of crude were up by nearly seven million barrels for the week, their highest level in two years. Crude oil futures in the U.S. closed yesterday at $51.68 a barrel.

Blame weaker-than-expected demand and investor worries that President Trump’s trade wars could limit global growth.

Just six weeks ago, oil’s outlook was much better. The Trump administration tightened sanctions on Iran and Venezuela, two big producers, and Libya was distracted by civil war. Analysts thought prices could exceed $90 a barrel.

Low oil prices can be useful, as they provide economic stimulus, especially for lower-income households with less-efficient cars.

But many are bracing for pain. Petroleum-producing states like Texas and Louisiana will suffer. And oil companies can’t absorb another big price drop, according to Raoul LeBlanc at the data provider IHS Markit: “If it goes below $45, it’s unsustainable.”

More: The Fed’s latest economic report showed a slight pickup in U.S. economic activity this spring. And the European Central Bank’s governing council is meeting this week.

Big Tech prepares for battle in Washington

Tech’s biggest companies are amassing an army of lobbyists to fight back against scrutiny from newly emboldened lawmakers and regulators, Cecilia Kang and Kenneth Vogel of the NYT report. The question: Is it enough?

What the lobbying efforts of Amazon, Apple, Facebook and Google look like:

• A combined $55 million was spent on lobbying last year by the four companies, according to the Center for Responsive Politics. That’s double what they spent in 2016, and some are spending even more this year.
• About 75 percent of the 238 registered lobbyists for the four companies once worked in the government or on political campaigns. Among them: two former employees of Speaker Nancy Pelosi who work for Facebook, and a former Federal Trade Commission official who leads Amazon’s Washington office.

“The internet giants have learned from the hard lessons of Microsoft, which was caught flat-footed with a sparse lobbying presence in the 1990s when federal antitrust officials called for a breakup of the software giant,” Ms. Kang and Mr. Vogel write.

They will try to win over key lawmakers like Senator Josh Hawley, who investigated Facebook as Missouri’s attorney general; Senator Mike Lee, the Republican head of the Senate Judiciary Committee’s antitrust panel; and Representative David Cicilline, the Democratic head of the House Judiciary Committee’s antitrust subcommittee.

But Big Tech may have a tough road ahead. There’s a political wind against it: Representative Hakeem Jeffries, a member of the House Democratic leadership, told Bloomberg News that Congress should investigate the tech industry even if it causes a big drop in share prices.

More: Washington’s inquiries could actually be a boon for tech investors.

Amazon promises drone deliveries “in months”

The e-commerce giant unveiled a new drone yesterday, and promised that it would be used to deliver packages to consumers before the end of the year, the FT reports. But don’t get carried away.

The new drone carries five-pound packages and has a range of 15 miles. It’s able to take off vertically, like a helicopter, then fly forward, like an airplane.

“You’re going to see this new drone delivering packages to customers in months,” Jeff Wilke, who runs Amazon’s consumer business, said at an event in Las Vegas.

Don’t get too excited. In another article, the FT notes that Amazon doesn’t have F.A.A. approval for full commercial delivery. And there are still many limits to drone use, so don’t expect them to be used for inner-city deliveries for some time.

Revolving door

Rahm Emanuel, the former mayor of Chicago and Obama administration official, will join the investment bank Centerview Partners as a senior counselor.

Allen Parker, the interim C.E.O. of Wells Fargo, is reportedly under consideration to keep the job permanently.

Tom Reilly will step down as C.E.O. of the software company Cloudera next month.

Tom Stoddard will leave his position as C.F.O. of Aviva, the British insurer.

The speed read

Deals

• Uber’s shares finally closed above their I.P.O. price yesterday. (Bloomberg)
• Peloton, the maker of internet-connected exercise bikes and treadmills, has filed confidentially to go public. (CNBC)
• The Carlyle Group and DWS are reportedly preparing takeover bids for Arriva, the British rail and bus company. (Reuters)
• Hillhouse Capital Management, the Chinese private equity firm, has agreed to buy the maker of Loch Lomond scotch whisky. (Hillhouse)

Politics and policy

• Representative Alexandria Ocasio-Cortez said that the Green New Deal climate change plan would cost at least $10 trillion. (Hill)
• House Democrats hope to roll back limits on deductions for state and local taxes. (Bloomberg)
• Senator Bernie Sanders appeared at Walmart’s annual shareholder meeting yesterday to criticize the retailer for its worker pay. The company’s C.E.O., Doug McMillon, said he is pushing Congress to raise the federal minimum wage. (WSJ, Bloomberg)
• The E.U. warned Italy that it risks legal action if it doesn’t reduce its budget deficits. (NYT)
• President Xi Jinping of China landed in Moscow yesterday for meetings with Russian officials, underscoring the countries’ ties amid China’s trade war with the U.S. (NYT)

Tech

• Google has appealed a $1.7 billion fine imposed by the European Commission for stifling competition in the online advertising industry. (CNBC)
• This year, for the first time, American adults are expected to spend more time looking at their mobile phone than their TV. (eMarketer)
• Baltimore’s bill for its recent ransomware hack attack: $18 million and counting. (Ars Technica)
• The star of Disney’s new “Aladdin” movie, Mena Massoud, is suing Tesla, claiming that his Model 3 car lost a wheel while changing lanes, causing him to crash. (Business Insider)
• Uber will offer helicopter flights from Lower Manhattan to J.F.K. airport — a journey that takes eight minutes, for a little over $200. (NYT)

Best of the rest

• How pilots are using flight simulators to help fix the Boeing 737 Max. (WSJ)
• “From Russian oil to rock ’n’ roll: the rise of Len Blavatnik.” (FT)
• How President Vladimir Putin plans to reboot the Russian economy. (NYT)
• The opioid drug maker Insys will pay $225 million to settle federal fraud charges. (NYT)
• More universities are shutting down their traditional M.B.A. programs. (WSJ)
• What counts as a living wage, exactly? (NYT)

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