Boris Johnson’s bruising no-confidence vote

This is an audio transcript of the FT News Briefing podcast episode: Boris Johnson’s bruising no-confidence vote

Marc Filippino
Good morning from the Financial Times. Today is Tuesday, June 7th, and this is your FT News Briefing.

[MUSIC PLAYING]

You know the feeling when you’ve paid the full price for something, a really high price, and then after you’ve bought it, the price drops? Yeah, Elon Musk knows that feeling pretty well right now. Big Tech companies are pulling out all the stops to protect one of their favourite practices. But first, Boris Johnson just barely made it through a no-confidence vote last night. We’ll talk about what’s next for the British prime minister. I’m Marc Filippino, and here’s the news you need to start your day.

[MUSIC PLAYING]

Last night, lawmakers in Boris Johnson’s own Conservative party decided that he could stay on as UK prime minister. But considering how close the confidence vote was, Johnson can hardly call it a win. The vote was called out of frustration with Johnson’s handling of the economy and getting caught up in the partygate scandal, where he violated coronavirus pandemic lockdown rules. Here’s the FT’s political editor, George Parker.

George Parker
Well it’s a remarkable thing, isn’t it? Over 40 per cent of your own MPs to consider you not worthy of holding the office of prime minister. Makes it very hard for any prime minister to go to the country and ask people to support him when 40 per cent of your own MPs don’t do it. So Boris Johnson’s authority has been badly damaged. Now, of course, Boris Johnson has said this clears the air, that it leaves him in a position where he can now concentrate on the problems facing the country. The real problem is that discipline has broken down his party. Rancour is in the air, recriminations. And there’s a poison now running through the bloodstream of the Conservative party. Once that’s in the system, it’s very hard to get out of it. So previously, when conservative leaders have survived votes like this, the very fact that the vote has happened in the first place, places normally weaken them to such a point that they rarely survive more than a few more months in office.

Marc Filippino
Yes, so George, I’m not a hundred per cent sure what happens next. Could another no-confidence vote get called soon?

George Parker
Well, that’s a good question. The current rules say that you can only hold a confidence vote every year. So theoretically, Boris Johnson, under the existing rules, is safe from this kind of a challenge for another year. But the people who set the rules, the grandees of the Conservative party, have said that they could change the rules in an afternoon, if necessary, to safeguard the interests of the party. So I don’t think the prime minister can be sure that he’s got another 12 months of breathing space at all. Boris Johnson needs to get back on to the front foot very quickly indeed. He needs to get a grip on the economy, which at the moment is sliding, the British economy is sliding into a recession. And also, he needs to show that he’s listening to people in the party and also showing that he’s actually learnt something from the partygate affair and he genuinely is sorry. I think lots of conservatives MPs don’t really think that Boris Johnson thinks he did anything wrong. And that’s quite a problem for Boris Johnson.

Marc Filippino
George Parker is the FT’s political editor.

[MUSIC PLAYING]

Elon Musk seems less and less enthusiastic about his $44bn deal to buy Twitter, and he seems to be trying to build an escape hatch. His lawyers have written a letter to Twitter saying the social media company hasn’t given Musk enough information about the number of spam and fake bot accounts on its platform.

Ortenca Aliaj
This is essentially just very clever manoeuvring from Musk.

Marc Filippino
The FT’s Ortenca Aliaj is covering the high-speed corporate drama.

Ortenca Aliaj
Musk has offered to pay $54.20 per share for Twitter. Its stock price is currently trading at $39.28, so it’s significantly below where Musk’s offer is. So whether he wants to walk away or whether he wants to reprise the deal, neither of those options are easy. I mean, there is this sort of watertight legal agreement that basically says Twitter can force Musk to go through with a deal even if he doesn’t want to. And that being said, there’s also a $1bn break fee that Musk would have to pay. But if he decides that he no longer wants to buy Twitter, he can’t actually just walk away. There has to essentially actually be a refusal from the banks that said that they would provide his financing to provide that financing any more. That’s probably the only way he can actually walk away.

Marc Filippino
So Ortenca, what’s your take on what’s going on? I mean, is the deal gonna happen or does it look like it’s off?

Ortenca Aliaj
Well, it’s just, I think it’s just a total circus. You announce a deal, what, six, seven weeks ago. You sign a contract, you say you’re going to buy this company, you give them the price. You say you don’t want to do due diligence. You want to get this moving as fast as possible. And then you hit the brakes on an issue that has actually been there for a long time. This is not the first time that Musk has complained about bots on Twitter. The fact that this is coming up now is obviously questionable, but you can also sort of see where he’s coming from in the sense that there’s been a tech rout. Tesla shares, his other company, are also down. And, you know, he probably doesn’t want to pay 44 billion for a company that he no longer thinks is worth that.

Marc Filippino
Now, what’s Twitter saying? Has the board responded at all?

Ortenca Aliaj
Twitter is holding strong. Twitter is saying, no, we’re gonna keep you to your word. We’re going to make you buy this company. And that makes complete sense from Twitter because, hey, look someone wants to buy you at $54 and you’re currently worth, I don’t know, $39 a share. Then, if Musk actually finally does walk away from this deal, I think the presumption is that those shares are gonna sink and it’s actually probably going to make them a target for other buyers and not at the same price.

Marc Filippino
Ortenca Aliaj is the FT’s mergers and acquisitions correspondent.

[MUSIC PLAYING]

So, say you’re planning a flight and you do an online search. And let’s face it, it’s probably gonna be on Google. One of the first things that’s gonna pop up is Google’s flight finder. That’s because Google makes money when people click on its own search results. Same goes for other online products and services. Now, US lawmakers are preparing to vote on a bill that would stop this practice, which they’re calling “self-preferencing”.

Kiran Stacey
It’s generally the idea that you use one of your products to give an unfair advantage to another product.

Marc Filippino
That’s the FT’s Kiran Stacey.

Kiran Stacey
So the classic of this, the case that, you know, Microsoft fought for a long time, was Microsoft automatically loading its web browser on Windows and not letting you load other things very easily.

Marc Filippino
Kiran’s been following the legislation and says Big Tech’s lobbyists have been coming out swinging. Not just Google, but also Amazon, Apple and Facebook’s parent company, Meta.

Kiran Stacey
So CCIA is one of the big industry groups here. They’ve taken out $10mn worth of ads since the beginning of the year. That’s a lot of money on one campaign to spend and that’s just one of the groups. Usually companies will do a lot of their Washington lobbying using these industry groups, but on this occasion they’re really putting their heads above the parapets individually as well. So Google and Amazon, in particular, have been personally calling around. One person told me every single office in the Senate, everybody is getting these phone calls right now. Everybody is hearing from these companies.

Marc Filippino
Kiran, what’s their argument against the bill?

Kiran Stacey
My goodness. I’ve never seen so many different arguments from so many different angles levied against something. (laughs) What am I? In fact two of my sources in the Senate used exactly the same phrase to me, which is that these companies are throwing spaghetti at the wall. Probably their strongest argument, actually, is that consumers quite like a lot of this. Consumers tend to like Google Maps and they quite like the fact that if you key in a particular location, it gets you straight to Google Maps. It kind of cuts out middleman. Then we get to slightly more tangential arguments. There are arguments, for example, of hey, why are you just carving out these five companies that would be hit by this bill? Why aren’t you going after the actual physical retailers? People like Target. There are other slightly, I hesitate to say, obscure arguments, but unusual arguments. There is one particular one that, hey, if you do this, you’re gonna let Chinese companies in. But the fact is, the industry doesn’t like the whole package, so it will keep using these arguments as long as they think they’re getting traction.

Marc Filippino
So Kiran, reining in Big Tech is actually one of these rare issues that unites Democrats and Republicans, which is kind of amazing considering how polarised US politics is. So, if the bill passes and I should say that there is no guarantee that it will, what kind of impact would it have on Big Tech companies?

Kiran Stacey
It’s difficult to tell how much of an impact this would have. It probably is much more impactful on the longer term than it is on the shorter term. But I think we can take one thing from this. If the tech companies themselves didn’t believe that this was going to have an impact on how their businesses operate, they wouldn’t be fighting as hard as they are against them. They certainly wouldn’t be fighting as hard as they are publicly against them. It’s clear that they make money from doing this kind of thing. It’s difficult to tell how much because they don’t break it down in that way. But they must be making big money to be spending this amount of money trying to defeat this bill.

Marc Filippino
Kiran Stacey is the FT’s Washington correspondent. Thanks, Kiran.

Kiran Stacey
Thanks, Marc.

[MUSIC PLAYING]

Marc Filippino
Before we go, Africa is known as a place that has a thriving financial technology industry. And now we have rare news of an African tech company doing a tech deal in the US. Digital payments company MFS Africa is buying a US tech company called Global Technology Partners. The deal is supposed to solve a problem for MFS customers. They want to use global sites like Netflix and Amazon, but those sites don’t take digital payments from Africa. The deal will allow MFS to use prepaid cards so customers can binge watch as much as they want. One industry expert says there’s more pent-up demand for things like Netflix on the continent than people think.

[MUSIC PLAYING]

You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

[MUSIC PLAYING]

This transcript has been automatically generated. If by any chance there is an error please send the details for a correction to: typo@ft.com. We will do our best to make the amendment as soon as possible.