Good morning. Andrew Nusca here, filling in for Alan.
Qualcomm CEO Steve Mollenkopf is surely breathing a sigh of relief this morning after news emerged late Tuesday night that rival chipmaker Broadcom will formally abandon its attempt to acquire the San Diego company.
Earlier this week—and in between, um, some management shuffles—President Trump blocked Broadcom’s $117 billion bid, citing national security concerns around 5G wireless technology in particular. A Qualcomm acquisition would have amounted to the largest technology deal in history. (Paging Michael Dell.)
There’s a clear lesson in all of this: Donald Trump is willing to go quite far to protect American companies from foreign competition, particularly in the technology sector, and particularly from China.
Wait, you ask: Isn’t Broadcom based in Singapore? True. Though more than 2,000 nautical miles separate the sovereign and spotless city-state from the Middle Kingdom, Broadcom supplies chips to Chinese telecom giant Huawei. Fears that Broadcom would wind down Qualcomm’s wireless R&D led the Committee on Foreign Investment in the U.S., or CFIUS, to warn against the deal, which in turn prompted Trump to intervene.
An interesting postscript to the deal: Broadcom will reportedly continue its plan to relocate its headquarters to the U.S., even though it will be subject to hundreds of millions of dollars in additional taxes. A small price to pay to scoop up American companies beyond CFIUS’s reach.
Lastly: R.I.P. Stephen Hawking, the renowned physicist whose A Brief History of Time taught many a businessperson to think bigger. As The Guardian put it so well: “Those who live in the shadow of death are often those who live most.”
More news below.
Google Cryptocurrency Ban
Google will no longer allow advertising for cryptocurrencies and initial coin offerings (ICOs) on its network. The company announced the shift in its annual “bad ads” report, in which it also said it removed over 3.2 billion ads from the web last year. Facebook has also tried to ban cryptocurrency and ICO ads, though with limited success—even when not accounting for ads that use tricks such as a misspelled “bitc0in” to bypass the filter, scammy ads from the space still show up from time to time. Bloomberg
Volkswagen vs. Tesla
Volkswagen is planning a massive boost to its electric car production—16 new plants by 2025 with nine of those up and running by 2020; sales of 3 million electric vehicles a year by 2025. VW CEO Matthias Müller said his company would launch a new electric vehicle “virtually every month” from next year. This from a company that was, until its big diesel scandal, exceptionally cautious on the whole electric car thing. Wall Street Journal
The Hong Kong airline Cathay Pacific has posted its second annual loss in a row—the first time it has done this. Losses totaled $161 million for the year to December. Cathay blamed high fuel prices and competition from cheap Chinese carriers. Still, it pointed to improvements in its premium passenger sector and cargo business. BBC
China and Blackstone
China Investment Corp (CIC) no longer has a stake in Blackstone Group. The exit of China’s sovereign wealth fund from the private equity giant comes in the context of growing trade tensions between China and the U.S. CIC had a stake of 12.5% in Blackstone but had reportedly been selling off its shares in recent years. The stake was down to 4.5% last year and, according to Blackstone’s latest annual report, CIC vehicle Beijing Wonderful Investments “no longer owned any non-voting common units” as of February 22. Reuters
Around the Water Cooler
The replacement of Rex Tillerson with Mike Pompeo suggests the U.S. may soon pull out of the Iran nuclear deal. President Trump told reporters that disagreements with his secretary of state over Iran showed how Tillerson had a “different mindset” to the president. “When you look at the Iran deal, I think it’s terrible. I guess he thought it was okay…. So we were not really thinking the same,” Trump said. So what now? Wait for May 12, when the White House makes a decision on whether to re-impose sanctions that the deal saw lifted. Foreign Policy
IMF on Bitcoin
International Monetary Fund chief Christine Lagarde says authorities around the world need to ensure that cryptocurrencies are under control if they want to avoid a “potentially major new vehicle for money laundering and the financing of terrorism.” However, she said the underlying blockchain technology could actually help fix the problem, helping exchanges share information more quickly with regulators. IMF
Democrat Conor Lamb has claimed victory in the special election for Pennsylvania’s 18th Congressional District, although absentee ballots were still to be counted and the race still seems too close to call. With the district having been firmly Republican for the last 15 years, a Lamb victory would be a bloody nose for the party and President Trump, even if the winner will have to stand for re-election later this year. TIME
Stephen Hawking made his name hypothesizing about the universe’s past, but he had many things to say about our future. In short, we have a century at most to start spreading ourselves off this planet and into space, thanks to a variety of threats ranging from climate change and excessive population growth to nuclear or biological war. Fortune