US Steel Fallout

Ending the difficult TOB

President Biden is expected to formally block Nippon Steel's $14 billion takeover of U.S. Steel as soon as Friday, most likely ending an industrial mega-deal that faced widespread political opposition.

But the decision could have knock-on effects, including whether even important U.S. allies like Japan could be discouraged from investing abroad in key industries. One thing is almost certain; That means we can expect many lawsuits.

The end of this deal seemed increasingly inevitable. Biden said in March that it was “critically important” that U.S. Steel remain American-owned. The United Steelworkers union opposed the deal from the beginning, questioning Nippon Steel's commitment to maintaining U.S. production and union employment levels. (It went unnoticed that U.S. Steel's headquarters were in Pennsylvania, a key election battleground state.)

Last month, a federal committee known as CFIUS that reviewed the deal on national security grounds said the Japanese suitors' global business considerations were ultimately a promise to maintain U.S. steel production levels. expressed concern that it may exceed the

President-elect Donald Trump has also vowed to block the takeover once he takes office.

Some worry that blocking the deal could dampen foreign investment. The Washington Post reported that some senior Biden advisers have warned in recent days that rejecting the deal could harm relations with Japan.

Japanese authorities pressured Biden to approve the deal. Senior Trade Minister Takehiko Matsuo wrote to Biden administration officials last month that refusing to do so would “send a harsh message that Japanese investment is not welcome in the United States, even though there are no security concerns.” It will become.”

The matter will likely end up in court. Nippon Steel complained of the White House's “unacceptable influence” in the CFIUS process. This sets the stage for lawsuits by Japanese companies and U.S. Steel over Biden's expected moves.

DealBook also questions whether the companies will sue each other, perhaps for not working hard enough to get approval. (The deal agreement calls for Nippon Steel to pay $565 million to its U.S. counterparty if regulators block the deal.)

What’s next for U.S. Steel? The company's chief executive, David Britt, warned that steelmakers needed to invest in updating aging plants. Even CFIUS acknowledged that the company had a “history of inappropriate attempts to improve its competitive position.”

One possibility is that another bidder, such as the Cleveland Cliffs, whose stock was under pressure after being previously rejected by U.S. Steel, could swoop in. But Barritt's fraught relationship with his fellow Cleveland Cliffs players raises questions about what will happen next. U.S. Steel investors will need to put more pressure on the deal to close.

what's happening here

Mike Johnson faces a tough vote Friday in the House speaker race. Johnson has the backing of President-elect Donald Trump and Elon Musk, but is hampered by a razor-thin majority and difficulties in the House Republican conference. American companies will be closely watching the results of the vote to see how they will judge Congress' ability to pass legislation after President Trump takes office.

Authorities have identified the driver in the Las Vegas Cybertruck explosion. The man, an Army sergeant on active duty leave, committed suicide just before his rented Tesla exploded outside the Trump Hotel in Las Vegas on New Year's Day. The FBI said it found no connection between this incident and a deadly assault in New Orleans hours earlier involving an Army veteran.

China has imposed trade restrictions on dozens of U.S. companies. The Commerce Department announced Thursday that it will impose export control restrictions on 28 companies, including Boeing and Lockheed Martin. The move comes just weeks before Trump's inauguration and will likely intensify the trade war between the United States and China. More shots may come soon: Biden administration considers ban on Chinese drones.

Is Tesla's sales stall a problem?

For any other car company, Tesla's sales figures announced Thursday would have been a disaster. As the market grew, deliveries for the year decreased slightly, marking the first annual decline in the company's history.

But Wall Street's reaction was relatively muted compared to the huge rally in Tesla's stock price in recent months, writes The Times' Jack Ewing in Dealbook. This reflects how well Elon Musk has sold investors on the idea that cars are part of a larger vision that includes self-driving taxis and humanoid robots, and his close relationship with President-elect Donald Trump. It reflects.

Although the stock price has fallen, the stock price has risen more than 55% since voting day. Musk's relationship with Trump has given him direct access to the White House to advance his business interests.

“Investors have shifted,” Eric Gordon, a professor at the University of Michigan's Ross School of Business, told Dealbook. “They thought of it as an EV company. Now they think of it as a technology platform. 'What will Elon think next?'

Mr. Musk has provided few details about his plans. On a conference call with investors and analysts, he highlighted the prospect of trillions of dollars in revenue from self-driving taxis, which will likely take years to mass produce.

But if the company continues to lose market share to rivals like General Motors, BMW and BYD, Musk may find it difficult to realize his grand vision. (The Chinese automaker reported record sales in 2024.)

Should Mr. Musk accelerate his plans for a low-cost Tesla? He told investors in October that he would begin selling the car this year, which is significantly cheaper than the Model 3 sedan, which starts at $42,500 before state and federal incentives.

But Musk was ambivalent about the new vehicle, insisting it was “meaningless” if it couldn't drive itself. And Tesla has yet to display a prototype.

This has led to speculation that Mr. Musk is no longer so interested in mass-produced cars. “What excites Mr. Musk is the technology of tomorrow,” Gordon said. “The Econobox EV doesn't appeal to me at all.”

One thing to watch in 2025 is Musk's reaction if car sales slump and Tesla stock drops further. Will that lead him to further leverage the skills that helped build Tesla into the world's largest electric car maker?

A blow to net neutrality

A federal appeals court has struck down the FCC's net neutrality rules for broadband internet providers that sought to protect consumers' access to online content, one of President Biden's biggest technology policy achievements.

The dismantling comes as companies brace for further restrictions as the incoming Trump administration ushered in a new era of deregulation.

The decision is a victory for cable and telecom companies like AT&T and Comcast, ending a 20-year effort to regulate cable and telecom companies the same way they regulate electric utilities. It also shows the impact of recent Supreme Court decisions expected to limit the powers of federal agencies.

Summary: The regulation, which has been supported by Google, Facebook and Netflix, comes amid concerns that internet service providers could become de facto gatekeepers with the power to slow or block access to content. It was introduced under the Obama administration. The rule was repealed during President Trump's first term, but was reinstated by the FCC in April.

Brendan Carr, who was nominated by President-elect Donald Trump to lead the FCC, has been a vocal critic of the rule.

The ruling could raise other legal challenges. It relies on the Supreme Court's decision last year to overturn the Chevron Doctrine, which required courts to defer to federal agencies' interpretations of ambiguous statutes. “The FCC lacks the legal authority to impose desirable net neutrality policies,” Justice Richard Allen Griffin wrote.

Tim Wu, a former Biden administration official who coined the term “net neutrality,” denounced the decision as “a blatant judicial move to prioritize corporate interests over American democracy.”

What's next? The fight over net neutrality is far from over. The decision does not affect state law, including California, Washington and Colorado. And Democrats on the FCC called on Congress to enact net neutrality into law. Still, many commentators say net neutrality is not as high-profile a consumer issue as it once was.

“The market no longer thinks this is a big deal, and hasn't for some time,” Blair Levin, a former FCC chief of staff, told the Times.

Major personnel changes at Meta

In the latest sign of how Big Tech companies are repositioning themselves for the new Trump administration, Meta has tapped a prominent Republican to lead its global policy team.

Semafor first reported that Joel Kaplan, a longtime Meta employee who served as deputy chief of staff under former President George W. Bush, will replace Nick Clegg.

Mehta is trying to distance himself from political attention. Mr Clegg, a former British deputy prime minister, joined the tech giant at a time when it was facing intense backlash, including for its handling of disinformation on its platform during the 2016 election.

He is particularly credited with facilitating relations with regulators in Washington and Brussels.

Were his leftist politics to blame? Mr Clegg may have been planning to resign before the election, but he made no secret of his views. Last month, he criticized Elon Musk's stewardship of X, warning that X and xAI could become meta-competitor Elon Musk's “political puppet master.”

The comments come as many companies fear retaliation from President-elect Donald Trump and Mr. Musk, and CEOs of big tech companies go out of their way to curry favor with them.

Mr. Kaplan's deep Republican roots could help Mr. Mehta in the new Trump era. He joined Facebook in 2011 and went on to represent Mr. Clegg. Previously, he clerked for Justice Antonin Scalia on the Supreme Court and is a close friend of Justice Brett Kavanaugh. (He attended Kavanaugh's controversial confirmation hearing and later apologized to Meta employees who thought his attendance indicated political preferences).

He is also one of the most vocal voices within Meta against restricting political content.

Mark Zuckerberg has largely avoided politics. The tech mogul has campaigned publicly for liberal causes for years, but changed his tune after coming under sustained attack. Mr Trump accused Mr Mehta of censoring conservative views, criticized Mr Zuckerberg and threatened to jail him.

But Mr. Zuckerberg, like other Big Tech leaders, has been trying to curry favor with Mr. Trump by visiting Mar-a-Lago to meet the president-elect after the November election.

speed reading

Great deals

Several prominent hedge funds reported double-digit returns last year, including Millennium, DE Shaw, Bridgewater Associates, and Ken Griffin's Citadel. (Reuters)

Activist short seller Hindenburg Research announced a bet on Carvana, accusing the used car sales platform of accounting manipulation. (CNBC)

politics and policy

President-elect Donald Trump has nominated Ken Keyes, a longtime tax lobbyist for clients such as Microsoft, to be assistant secretary for tax policy at the Treasury Department. (Bloomberg)

“How Silicon Valley acquired powerful House committees” (POLITICO)

the best of the rest

US Surgeon General Vivek Murthy has called for cancer warnings to be placed on alcoholic drinks. However, doing so would require Congressional action. (New York Times)

Richard Easterlin, the economist who challenged the assumption that more money always leads to more happiness, died on December 16th. He was 98 years old. (New York Times)

“Rise of the Big Potato” (Lever)

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