Musk vs. regulators
Elon Musk remains perhaps the most consequential figure in President-elect Donald Trump’s orbit, with a commission for cutting government spending headed by him and Vivek Ramaswamy — widely known by its acronym, DOGE — promising huge reductions.
Federal regulators have become prominent targets for Musk and his allies. But those agencies are continuing to scrutinize the tech billionaire’s interests, raising questions about conflicts.
“The SEC is just another weaponized institution doing political dirty work,” Musk posted on X on Thursday, joining a flurry of right-wing attacks on the agency. The impetus for the ire: an appeals court ruling that Nasdaq can’t require diversity on the boards of companies that list on the exchange, a longtime bugbear of conservatives.
Ramaswamy wrote on X of the commission: “When an agency like the SEC is so repeatedly & thoroughly embarrassed in federal court for flouting the law, it loses its legitimacy as a law enforcement body.”
That comes after Musk took aim at the I.R.S. last month, when he polled his X followers about what to do with the tax authority’s budget. The overwhelming response: “Deleted.”
But the S.E.C. is renewing scrutiny of Musk. He disclosed on X that the regulator had given him an offer to settle an inquiry into unspecified charges. A letter from Alex Spiro of Quinn Emanuel Urquhart & Sullivan, Musk’s lawyer, claimed that the agency had given them 48 hours to accept or face punishment, as part of an “improperly motivated campaign.” Spiro’s letter also revealed that the commission had reopened an investigation this week into Neuralink, Musk’s brain-implant start-up.
CNBC reports, citing an unnamed source, that the agency had given Musk more than 48 hours to respond.
Musk also faces a legal deadline for his charitable giving. The Times reports that Musk’s charitable foundation was $421 million short of the amount it was legally required to give away in 2023. He has until the end of the year to pay out — or face a sizable financial penalty. (Musk’s organization has repeatedly failed to meet a law requiring private foundations to disburse 5 percent of their assets every year.)
Worth noting: Musk can distribute more money the following year as a make-good.
That said, Musk has Trump’s support against his critics, at least for now. In an interview with Time magazine, the president-elect said of his self-proclaimed first buddy, “I think that Elon puts the country long before his company.”
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In other Musk news: Here’s how and why some Democrats, including Representative Ro Khanna of California and Senator John Fetterman of Pennsylvania, are trying to get on Musk’s good side.
HERE’S WHAT’S HAPPENING
Donald Trump hints at support for dockworkers weighing a strike over automation. The president-elect signaled his backing of the International Longshoremen’s Association in a meeting with the union’s leaders on Thursday and ahead of a potential work stoppage. Trump’s support could help dockworkers win concessions from management over the use of semi-automated cranes; failure to reach a new labor contract could lead to a resumption of a strike that shut East and Gulf Coast ports in the fall.
President Biden commutes the sentences of nearly 1,500 people. The move represented the most commutations by a president in a single day and came soon after he pardoned his son, Hunter Biden, who had been convicted of illegal gun possession and tax evasion. Biden also pardoned 39 people convicted of nonviolent crimes, and has come under pressure to use his authority before President-elect Donald Trump takes office.
President Emmanuel Macron of France names a centrist as his new prime minister. Macron appointed François Bayrou, a longtime ally, as he seeks to stabilize the government of Europe’s second-biggest economy. France has been engulfed in political turmoil after Michel Barnier, Bayrou’s predecessor, was forced to step down last week when Parliament rejected his deficit-cutting budget.
Trump’s Big Board day
Donald Trump’s electoral victory lap went to Wall Street on Thursday, as the president-elect rang the New York Stock Exchange’s opening bell. Corporate leaders were on hand, showing once again that C.E.O.s want to be seen as publicly supportive of the administration — and are hoping it will bolster their businesses.
Seen and heard: Among those on hand to celebrate Trump at the Big Board, as well as his again being named Time magazine’s person of the year, were Bill Ackman of Pershing Square, Brian Cornell of Target, Jane Fraser of Citigroup, Michael Miebach of Mastercard, David Solomon of Goldman Sachs and Hans Vestberg of Verizon. They joined Jeff Sprecher, the C.E.O. of Intercontinental Exchange, which owns the N.Y.S.E., and Lynn Martin, the exchange’s president.
Marc Benioff, the C.E.O. of Salesforce — and owner of Time — publicly congratulated Trump for being named person of the year. “This marks a time of great promise for our nation. We look forward to working together to advance American success and prosperity for everyone,” Benioff wrote on X, using the hashtags “#Leadership” and “#FutureOfAmerica.”
(Apart from the N.Y.S.E. event, Sundar Pichai of Google was said to have planned to meet with Trump at Mar-a-Lago last night, while Amazon followed Meta in planning to donate $1 million to Trump’s inaugural fund.)
It wasn’t just a photo op for the C.E.O.s. On hand for the bell-ringing, and presumably for schmoozing, were several of Trump’s picks to lead crucial government regulators, including Scott Bessent (Treasury), Doug Burgum (Interior), Robert F. Kennedy Jr. (Health and Human Services), Kelly Loeffler (Small Business Administration) and Howard Lutnick (Commerce).
Some of those potential overseers offered their thinking on business policy. Kennedy, for instance, told Jim Cramer of CNBC that he believed that GLP-1 weight-loss drugs “have a place” in combating obesity — a seeming shift from his previously harsher stance on the treatments.
Corporate leaders’ bets on a more business-friendly administration may be bearing fruit. At the Big Board, Trump reiterated his pledge to cut the corporate tax rate to 15 percent from 21 percent, at least for companies that make goods in the United States. “We’re going to give tremendous incentive like no other country has,” he said.
Meanwhile, The Wall Street Journal reports that Trump advisers have asked whether the president-elect could drastically cut down banking regulation, including by scrapping the Federal Deposit Insurance Corporation.
The media industry preps for M.&A.
Warner Bros. Discovery pleased investors on Thursday with its plans to hive off its traditional TV networks from its faster-growing streaming and studios business. Shares of the company, which have struggled since its market debut in 2022, jumped about 15 percent.
The move, which follows what is becoming accepted wisdom on Wall Street, is intended to send a message to potential suitors that Warner Bros. Discovery is open to do deals along those lines, DealBook’s Lauren Hirsch and The Times’s Benjamin Mullin report.
The starting gun went off in October, when Comcast said it was exploring a spinoff of its cable networks into a new company. Analysts expect the as-yet-unnamed company to go on a shopping spree, buying up smaller cable networks.
Then last month, the telecom mogul John Malone reorganized his media empire. That included selling his Liberty Broadband business and spinning off Liberty Live, a major shareholder in the Ticketmaster owner Live Nation. Some of Malone’s investors think that another merger — between Liberty Live and Live Nation — is in the offing.
And Paramount, which owns MTV and Nickelodeon, is expected to have a new owner in David Ellison of Skydance. Some bankers say that he may use his access to billions in capital for deals to grow Paramount’s relatively small streaming business.
Donald Trump’s election win has helped propel hopes for more deals. Media chiefs expect the president-elect’s antitrust regulators to allow far more M.&A. than President Biden’s enforcers, including Lina Khan of the F.T.C.
Among them is David Zaslav of Warner Bros. Discovery, who told analysts last month that the new administration may offer “an opportunity for consolidation that may be quite different, that would provide a real positive and accelerated impact on this industry that’s needed.”
But that isn’t a given. Trump’s picks to lead antitrust enforcement — Gail Slater at the Justice Department and Andrew Ferguson at the F.T.C. — have said they will continue to scrutinize the tech giants, like Amazon, that may be buyers of media companies.
Some antitrust experts believe Slater and Ferguson will carefully examine media companies that they believe have a liberal bias. Remember that Trump opposed AT&T’s acquisition of Time Warner during his first term, a stance many attributed to his frustrations with CNN, which Time Warner owned.
The split over venture capital’s future
Silicon Valley’s venture capital firms have helped fund American innovation for decades. But the contrasting approaches of two of the industry’s biggest names — Benchmark Capital and Andreessen Horowitz — have spurred a debate about the future of the industry, The Times’s Erin Griffith writes.
Benchmark is making the case for staying small. The firm has just five partners who strike just a few deals each year and get an equal say on investment decisions. It raised a $425 million fund this year — about the same amount its funds have been since 2004.
Andreessen Horowitz represents everything Benchmark isn’t. The firm, created in 2009 by the entrepreneurs Marc Andreessen and Ben Horowitz, has 80 investment partners, offers start-ups help with public relations, sales and recruiting executives, and publishes newsletters and podcasts.
It now manages some $44 billion, and has become a registered investment adviser so it can own public stocks and cryptocurrencies.
Other firms have copied the bigger-is-better-model. This year alone, Iconiq Capital pulled in $5.75 billion, while General Catalyst raised $8 billion. Overall, the industry now manages some $1.2 trillion, up from $232 million in 2009.
And at least 19 other firms, including Sequoia, General Catalyst and Thrive Capital, have become registered investment advisers.
But there’s a question of returns. Benchmark’s first eight funds, raised and invested from 1995 to 2019, generated net returns of more than 7.5 times as much money invested. That said, while smaller firms typically get higher returns, they also experience higher rates of losses.
By contrast, bigger funds tend to have fewer losses — but fewer eye-popping returns. That raises concerns among some investors about the venture capital model: “You don’t invest in V.C. to get median returns,” Theresa Sorrentino Hajer, the head of venture capital research at Cambridge Associates, a major investor in such firms, told The Times.
THE SPEED READ
Deals
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The activist investor Starboard Value is said to have built up a stake in Riot Platforms, and plans to push the Bitcoin mining company to convert some of its computing resources into data centers for other users. (WSJ)
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BuzzFeed agreed to sell the company behind “Hot Ones,” the popular YouTube interview series, to a group including Soros Fund Management and the show’s host, Sean Evans. (NYT)
Politics and policy
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The F.T.C. used a little-enforced competition law to sue Southern Glazer, the United States’ largest alcohol distributor, for what it says are unjustifiably higher prices. (NYT)
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President-elect Donald Trump’s economic advisers are weighing whether to double the state and local tax deduction to $20,000, expanding an expensive tax break popular with residents of California, New Jersey and New York.
Best of the rest
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The C.E.O. of Klarna said the payments processor stopped all hiring a year ago, thanks to artificial intelligence, leading to a 22 percent drop in head count. (Bloomberg)
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Massad Boulos, whom Trump picked as a Middle East adviser, has been described as a billionaire and a lawyer. He may be neither. (NYT)
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“How Security Teams Protect Top Executives” (WSJ)
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