Is Tencent the Next TikTok for Trump?

Breaking: Johnson & Johnson announced that it has begun Phase 3 clinical trials for its Covid-19 vaccine candidate, which it says may be available for emergency use early next year.

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Although the Trump administration’s fight over TikTok is attracting the most attention, buzz is building in Washington about another Chinese tech giant: Tencent. We teamed up with our colleagues Ana Swanson and Erin Griffith to examine what’s at stake. (A representative for Tencent declined to comment.)

Tencent is a true internet colossus. The 22-year-old company has a market cap of more than $630 billion. It owns WeChat, a multi-feature messaging app with over one billion users worldwide, that was recently thrust into legal limbo by the Trump administration (discussed in more detail by the Deal Professor below). Tencent is also a prolific tech investor, taking stakes in hundreds of start-ups during the last decade. Over the past five years, it has been a part of more than 40 U.S. transactions with a combined value of more than $16 billion, according to Dealogic.

• Its investments in U.S.-based companies have included Activision Blizzard, Epic Games, Riot Games, Snap, Tesla and Uber.

The U.S. government is now interested in Tencent’s past deals. A 2018 law gave the Committee on Foreign Investment in the U.S., or Cfius, more resources to investigate transactions — including minority investments — that closed without being reviewed by the panel. The law also more specifically defined control of personal data as a national security concern. It gives the government the ability to investigate any deals that Tencent did not submit to government review.

• People involved in the creation of the rules said that they were developed largely to deal with a surge in Chinese investors taking minority stakes in Silicon Valley companies and a new appreciation of the power of personal data.

There are limits to the government’s powers. The Cfius panel can’t simply investigate any deal — it first must determine whether one qualifies as a “covered transaction.” There’s no specific calculus for arriving at that conclusion, but the panel’s staff asks about corporate governance, access to certain kinds of personal data (credit card information, for example, doesn’t typically qualify) and nonpublic financial information. If the panel determines that a deal is both reviewable and a potential concern, it can proceed with a full investigation (which is not always made public). That could lead to a recommendation that the president unwind the transaction.

The Tencent inquiries have already begun, with Cfius reaching out to gaming companies, including Epic Games and Riot Games:

• Tim Sweeney, the C.E.O. of Epic, described Tencent, which bought a 40 percent stake in his company in 2012, as a “really awesome partner, purely supportive, never hostile — and never in the least bit attempting to insert China influence into anything we do in the world outside of China.” He acknowledged a Cfius inquiry, adding that his company would “be participating in the process wholeheartedly.”

• A representative for Riot declined to comment.

Unwinding Tencent’s past deals would be a major escalation in the U.S.-China tech war. Along with Alibaba and Baidu, the company is a global symbol of China’s might. Chinese officials have said that the threat of a U.S. ban on WeChat “undermined the global market order.” They are said to be assembling a list of American companies to ban in China, including Cisco, should they need to respond in kind.

• It’s not clear whether these tensions would ease should Joe Biden win the election: He has also taken a hard-line stance on Beijing.

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Today’s DealBook Briefing was written by Andrew Ross Sorkin in Connecticut, Lauren Hirsch in New York, Ephrat Livni in Washington, and Michael J. de la Merced and Jason Karaian in London.

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Steven Mnuchin and Jay Powell offered cautious optimism on the economy. At a House hearing yesterday, Mr. Mnuchin, the Treasury secretary, praised the speed of the economic recovery, but acknowledged that few jobs lost because of the pandemic have been regained. Mr. Powell, the Fed chair, said the economy needed more stimulus to continue recuperating.

The House approved a bill to avoid a government shutdown. Congressional Democrats and the Trump administration agreed on a funding package that will run through Dec. 11 and includes extra money for farmers and school lunches. The plan still needs approval from the Senate and President Trump.

Tesla promises cheaper batteries and a $25,000 car. At the company’s “battery day” event yesterday, Elon Musk said the carmaker was working on less expensive, more powerful batteries — but cautioned that they required advances his team had yet to achieve. They could lead to a far cheaper electric vehicle, in three years’ time.

The F.D.A. dampened hopes for an imminent coronavirus vaccine. The agency is poised to announce stricter guidelines for giving emergency authorization to a treatment. That could push clearance of a Covid-19 vaccine to after the November elections, a far longer timeline than what President Trump has suggested.

Advertisers struck a deal with Facebook, Twitter and YouTube over harmful content. The pact established common definitions of content like hate speech and allowed for external auditors to monitor the system. Big advertisers like Unilever and Mars said the changes persuaded them to resume ad spending on those platforms.

The lender has priced its first Equality Progress Sustainability Bond. It’s a new take on environmental, social and governance finance meant to fund projects that support Black and Hispanic communities.

The $2 billion bond was inspired by the billionaire Robert Smith, who called for Corporate America to help reduce racial wealth inequality. The bank received more than $4 billion in orders, over half of which came from investors focused on sustainability and E.S.G.

The backdrop: While such E.S.G. bonds have taken off in recent years — aided by the business world’s growing interest in social issues — Bank of America executives believe this could set a template for financing focused on racial justice.

• Other companies addressing racial inequality include Netflix, which moved $100 million to banks that serve Black communities.

The details: Proceeds from Bank of America’s bond will be directed toward several areas, including affordable housing initiatives; investments in “minority depository institutions”; and direct investments in Black-owned businesses and in venture and private equity funds that back Black-owned companies.

• The project is being led by John Utendahl and Anne Finucane at Bank of America. Joint leads on the deal included Siebert Williams Shank, Loop Capital and Ramirez & Company.

Steven Davidoff Solomon, a.k.a. the Deal Professor, is a professor at the U.C. Berkeley School of Law and the faculty co-director at the Berkeley Center for Law, Business and the Economy. Here, he looks at the legal wrangling over WeChat in the United States.

President Trump’s Aug. 6 executive order banning downloads of TikTok on U.S. platforms also applied to WeChat, and the fates of the Chinese-owned apps have diverged. But what happens to WeChat has implications for TikTok.

After the executive order, an organization known as the WeChat Users Alliance sued to challenge the ban. A day before the ban was scheduled to go into effect, a federal judge in the Northern District of California granted an injunction halting the order, pending a full trial on its merits.

The government is almost certain to appeal, but the circuit court judge was clever in protecting the injunction from reversal. Magistrate Judge Laurel Beeler declined to rule on whether Mr. Trump had the power to ban WeChat on national security grounds. Instead, the judge held that the order violated WeChat users’ First Amendment rights.

First Amendment cases require government restrictions be narrowly tailored, content-neutral and not reflect government preferences. The judge said there was insufficient evidence to justify the ban and suggested narrower alternatives, like banning the app from government devices.

I’m skeptical that the Supreme Court will allow the injunction to stand, for three reasons. First, the judge issued a national injunction, and the Supreme Court has been particularly critical of allowing one judge to enjoin a law across the whole country. Second, Chief Justice John Roberts in particular has been wary of allowing injunctions to decide the merits of a case. And finally, the national security concerns are real.

Nonetheless, this order will buy WeChat time — and time is what both WeChat and TikTok want right now.

WeChat’s victory is good news for TikTok, because it shows that the U.S. courts can provide some respite. So, if TikTok’s deal with Oracle falls through, it can argue in a California court that the government is violating due process in its varying demands for divesting the app’s U.S. operations. In other words, there are more legal battles to come in a war that seems likely to last for the rest of the year.

As companies try to bring workers back to their desks, Britain shows how the best-laid plans can be thwarted.

Britain’s U-turn illustrates how quickly things can change. After weeks of urging workers to return to the office, a rise in cases prompted Prime Minister Boris Johnson to impose renewed restrictions and suggest that people work remotely if possible. London’s financial giants adopted more cautious measures. That could reverse a trend that saw the offices of JPMorgan Chase and Goldman Sachs return to about 30 percent capacity in recent weeks.

Barclays asked several hundred workers who had returned to stay home, while HSBC said it was pausing its plans to bring people back.

• Goldman and Citigroup emphasized in internal memos that their London offices were safe for employees who needed to work there, but urged workers to check with their managers if they had concerns about returning. Others, like JPMorgan, are waiting for further guidance from officials.

U.S. banks and hedge funds are still ramping up their return-to-work plans, with traders in particular being brought back, The Times’s Kate Kelly reports. And deal makers are increasingly feeling the urge to hit the road — or risk losing business to rivals who have resumed in-person meetings.

Wells Fargo’s chief executive, Charlie Scharf, stoked outrage when comments he made this summer about the bank’s difficulty reaching diversity goals were reported by Reuters late yesterday. “While it might sound like an excuse, the unfortunate reality is that there is a very limited pool of black talent to recruit from,” he said in a memo to staff.

The old excuses don’t work anymore. Corporate advisers have repeatedly told DealBook that, when it comes to diversity, excuses like the one used by Mr. Scharf no longer fly. Among other things, they’ve told executives to think outside their typical recruitment requirements, for example by looking to human resources and legal teams for candidates for executive and board-level roles.

“Not only is this an excuse, but it’s plain laziness,” tweeted Dantley Davis, Twitter’s chief design officer. “I know way too many people in positions of power that spend more time surfing or playing ultimate frisbee on a weekday than building relationships with Black professionals.”

The first presidential debate is next Tuesday (Sept. 29), moderated by Chris Wallace of Fox News. The topics to be discussed include:

• The Trump and Biden records

• The Supreme Court

• Covid-19

• The economy

• Race and violence in cities

• The integrity of the election

On these themes, what questions would you ask the candidates? Let us know at dealbook@nytimes.com and include your name and location. We might include your response in a future newsletter.

Deals

• KKR is near a deal to buy 1-800 Contacts for more than $3 billion. (PR Newswire)

• United Wholesale Mortgage plans to go public through a merger with a Gores Group-run SPAC at a $16 billion valuation. (WSJ)

Politics and policy

• Congress gave the Pentagon $1 billion for coronavirus medical equipment. The money was instead spent on jet engine parts and body armor. (WaPo)

• Judy Shelton, President Trump’s nominee to the Fed board, is a champion of free markets — except when it comes to her backyard. (NYT)

Tech

• Amazon has reportedly limited how rival device makers buy ads on its site. (WSJ)

• Palantir’s latest I.P.O. prospectus shows just how little control shareholders have over the data-mining company. (TechCrunch)

Best of the rest

• Jeff Bezos is launching Bezos Academy, a free preschool for children from low-income families. (Forbes)

• A private equity financier who played a major role in the college admissions bribery scandal has pleaded guilty. (Los Angeles Times)

• The latest must-have for wealthy home buyers: “Amazon rooms” to store packages as they arrive. (Hollywood Reporter)

We’d love your feedback. Please email thoughts and suggestions to dealbook@nytimes.com.