Brexit Chaos, Facebook Probe, Boeing Grounded: CEO Daily for March 14, 2019
Good morning. David Meyer here, filling in for Alan from Berlin.
Even by Brexit’s generally chaotic standards, last night’s British Parliament vote was an omnishambles.
Her Brexit deal now twice-rejected, Prime Minister Theresa May tried to get lawmakers to back a motion saying they reject a no-deal Brexit on March 29, the scheduled date for the U.K.’s departure from the EU. Unexpectedly, an amendment narrowly passed that changed the motion to one that rejects a no-deal Brexit at any point, ever.
May then tried to force her Conservative Party’s members to vote against her own motion, as amended, for two likely reasons: she believes the threat of a no-deal Brexit gives her leverage over her EU counterparts (a stop-or-I’ll-shoot-myself gambit) and wanted to retain it as an option while asking the EU for a short Brexit extension past March 29; and in any case the U.K. doesn’t get to simply reject a no-deal Brexit, as that’s legally the default outcome if there’s no deal, revocation or extension.
The amended motion passed with a comfortable majority—partly thanks to members of May’s own cabinet defying her orders. That should be an immediate firing offense, but May has now lost so much authority that she let them get away with it.
What happens next:
- Today, May puts another motion to a vote, saying her government will ask the EU for an extension. It spells out two options. If Parliament finally backs her Brexit deal, it could ask for a short extension that allows it to implement the deal in U.K. law, but ends just before the newly-elected European Parliament commences work at the start of July. If it doesn’t back her deal, the government will ask for a long extension, meaning the U.K. needs to field candidates in the imminent European Parliament elections.
- The long-extension option (tentatively supported by key EU figures) is a threat to hardcore Brexiteers to back May’s deal or see Brexit go down the drain, because the best justifications would be holding a second referendum or a fresh general election.
- As we saw yesterday, amendments could leave May’s motion looking very different by the time it comes to a final vote.
- Again, Parliament’s rejection of a no-deal Brexit doesn’t change the legal situation. But politically it means the option is most likely dead, so sterling hit an almost-two-year high on the news.
There’s a big leadership lesson here: if you need to take people with you on a major, controversial project, you have to build consensus, otherwise the convoy will break down. May, who leads a deeply divided minority government, thought she could steamroll not only other parties but her own with her personal Brexit vision. She was wrong, and the wheels are falling off.
More news below.
Facebook is, according to the New York Times, under federal criminal investigation over its data-sharing deals with phone makers and other third parties. So now's a great time to read Fortune's exclusive interviews with Mark Zuckerberg, Sheryl Sandberg and other Facebook execs about how the company is trying to redefine itself. Fortune
With the 737 Max now grounded everywhere—the FAA belatedly joined the party yesterday—Boeing CEO Dennis Muilenburg spent yesterday roaming the firm's Seattle plant, talking with employees and phoning regulators and transport officials. Boeing insists the plane is safe, but under-pressure Muilenburg now says Boeing supports the grounding as a "proactive step out of an abundance of caution." Wall Street Journal
It's no secret that the smartphone industry is in a slump, but the bad news just keeps on coming. February shipments in China fell more than 20% year-on-year to a level not seen in six years. That's partly due to China's economic slowdown, but it's also a function of market saturation—and either way, China's a big market, so what happens there affects the whole industry. CNBC
Cohn on China
Former Trump economic advisor Gary Cohn says the U.S. is desperate for a Chinese trade deal as "the president needs a win." Trump himself claims he's "not in a rush whatsoever." There are still big outstanding issues, particularly those around Chinese intellectual property theft, that are blocking the deal. Bloomberg
Around the Water Cooler
Chinese customs officials are no longer blocking imports of Tesla's Model 3. The imports were suspended last week because the company hadn't implemented the right Chinese-language warning signs and nameplate labels. Reuters reports that Tesla has now fixed the problem. Reuters
Shell CEO Ben van Beurden's salary ran to more than €20 million ($22.6 million) last year, more than double the previous year's total of €9 million—which already sparked a shareholder revolt. His latest pay is 143 times the company average in the U.K. BBC
El Paso Democrat Beto O'Rourke is running for president next year, he will announce officially today—we all know already, though, thanks to a Vanity Fair spread. O'Rourke: "Man, I’m just born to be in it, and want to do everything I humanly can for this country at this moment." Vanity Fair
MoviePass executive vice president Khalid Itum has stepped down after all of three months in the post to "pursue his entrepreneurial and travel pursuits." The troubled movie-ticketing operation said: "MoviePass has moved in a new strategic direction, and will be refocusing our business model to create a more closely connected relationship between our subscription service and original content production unit, MoviePass Films." Fortune