CEO Daily: Monday, August 1st

Good Monday morning.

Uber has abandoned its very costly battle for the Chinese market, agreeing to merge its China service into local rival and market leader Didi Chuxing, and continuing the bifurcation of the global tech market between Silicon Valley companies and their Chinese rivals — Google and Baidu, Twitter and Weibo, Xiaomi and Apple, and so on. As part of the deal, investors in Uber China will get a 20% stake in the combined company, and Didi will make a $1 billion investment in Uber’s main business.

As Fortune‘s Scott Cendrowski points out, Uber had little choice but to bow out of a market in which it was losing roughly $1 billion a year and making slow progress in gaining market share. CEO Travis Kalanick described the deal as a decision of the head over the heart.


The deal also frees Uber to spend its money elsewhere – like in mapping. The company announced a $500 million investment to expand its internal mapping program, so it will be less dependent on Google data. Both Uber and Google are working on self-driving cars, which require ultra-accurate mapping data.


More news below.

Top News

 Tesla, SolarCity Merger Imminent?

Elon Musk hasn't let criticism spoil his plans to merge Tesla Motors with solar company SolarCity, where the Tesla CEO is the co-founder and largest shareholder. Now, more than a month after Musk said he could achieve various synergies by combining the two companies, a merger could be announced as soon as Monday morning, sources tell Reuters. Under Musk's plans, the combination would allow him to offer customers a variety of clean-energy products under one roof—from solar panels to electric cars—with both companies making use of Tesla's massive Gigafactory for lithium ion batteries. While the deal has concerned analysts, Musk and several other executives at Tesla and SolarCity have recused themselves from voting their shares when the merger comes to a vote at the two connected companies. SolarCity previously formed a special committee to ensure an independent review of Tesla's merger offer.  Reuters

 GOP Criticism Mounts Over Trump’s Feud with Khan Family

Once again, Republican presidential nominee Donald Trump is facing a chorus of criticism coming from within his own party after the billionaire spent the weekend engaged in a war of words with the Muslim American parents of Army captain Humayun Khan, who died in Iraq in 2004. House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell both issued statements showing support for the Khan family while reiterating their opposition to Trump’s proposed ban on Muslim immigration. Trump has said that Khan’s parents “viciously attacked” him in a speech at last week’s Democratic National Convention that claimed Trump “doesn’t know what the word sacrifice means.” Former Trump primary rivals Jeb Bush and Lindsey Graham have criticized the nominee for his attacks on the Khans. Trump’s vice-presidential nominee, Indiana Governor Mike Pence, issued a statement claiming that both he and Trump view Khan as a hero and noting that the Khan family “should be cherished” like other Gold Star families.  The Washington Post

Chinese Group Gambles $4.4 Billion on Gaming Deal

Chinese buyers' interest in mobile gaming has led to another mega-deal, as a consortium led by Shanghai Giant Network Technology and including Alibaba Group Chairman Jack Ma has agreed to pay $4.4 billion to buy Playtika, a unit of Caesars Entertainment that makes casino-style mobile games. Playtika's games range from "Caesars Casino" to "World Series of Poker," though the games do not count as virtual gambling because no actual currency changes hands. The deal for Playtika, which was founded in 2010 and already made $456 million in revenue in the first half of this year, follows Chinese internet company Tencent Holdings' recent $8.6 billion acquisition of gamemaker Supercell Oy—the company behind "Clash of Clans." Wall Street Journal (subscription required)

Publicis Puts Saatchi Chairman on Leave After Gender Comments

Global ad giant Publicis Groupe responded to a controversy at subsidiary Saatchi and Saatchi by asking that agency's chairman, Kevin Roberts, to take a leave of absence in the wake of recent offensive comments he made regarding gender bias in the industry and women in leadership roles. In an interview with Business Insider last week, Roberts said the debate over gender bias in the advertising industry "is all over" and then he argued that not as many women reach the executive level because they don't have the same "vertical ambition" possessed by men. AdWeek

Around the Water Cooler

 Oracle's Kurian on Company's Cloud Reinvention 

Money has been no object in enterprise software giant Oracle's push into the cloud, as product development president Thomas Kurian notes the company has spent tens of billions of dollars on acquisitions in recent years. With its latest—the $9.3 billion purchase of NetSuite—Oracle is bolstering its cloud services as Kurian looks to help guide the company's reinvention as a more cloud-centric firm with sleeker, more affordable technology. While Oracle faces stiff competition in the cloud space from the likes of Amazon, Google, IBM, and Microsoft, Kurian says his company has at least one advantage stemming from its history as a leader in the corporate world that has crunched data from major companies for decades. "Most of the world's data is already inside Oracle databases," Kurian said. The New York Times

 Trump's Quest for Business in Russia

Fortune's Geoff Smith wrote a detailed history of Donald Trump's past interest in pursuing business opportunities in Russia in the wake of the recent Russian e-mail hacking controversy involving Trump's opposition, Hillary Clinton, as well as Trump's ongoing commentary regarding Vladimir Putin. Trump's past attempts to do business in Russia include trying to build a massive hotel next-door to the Kremlin, while Trump even once tried to get Putin to meet with him at a Miss Universe Pageant in Moscow. A risky market is one reason why Trump's business plans never got off the ground in Russia, but the ongoing austerity programs in the country have also meant that "there is no demand for [Trump's] brand of upmarket bling," according to Smith. Fortune

 GM Expects Major Growth for Chinese Auto Market 

With sales growth already on the rise this year for China's recovering auto industry, General Motors is confident that growth will continue over the next few years after growth slowed in 2015 amid the country's economic struggles. GM China chief Matt Tsien says he expects auto sales in China, already the world's largest auto market, will climb to 30 million vehicles per year by 2020 after 24.6 million sold in the country last year. Tsien added that the point of saturation for the market is likely still another decade away, despite the fact that sales have grown stale in some of the country's biggest markets, major cities such as Beijing and Shanghai. Reuters

 More Big News for Tesla

Big, as in, bigger cars. Over the weekend, Tesla Motors CEO Elon Musk confirmed speculation that the electric car company is developing a Tesla Minibus that will be built on the Model X chassis and will be modeled after the classic Volkswagen Bus popularized in the 1960s. Musk said in a tweet that "people density potential is surprisingly high" for the vehicle, which could be built as a non-consumer vehicle used as part of commercial fleets. The news came the same day as Tesla's "grand opening" of its massive Gigafactory near Reno, Nevada, where the company continues working on a facility that will have cost roughly $5 billion to build once it's finished, at which point it will be one of the largest buildings in the world while dramatically increasing the world's supply of lithium ion batteries.   Fortune



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