Twitter’s latest suspensions could prove particularly costly.Credit…Jim Watson/Agence France-Presse — Getty Images
Musk triggers a new uproar
Elon Musk is facing a growing backlash from lawmakers on both sides of the Atlantic, with threats of fines and sanctions, after Twitter suspended the accounts of at least eight journalists without warning, including those belonging to The Times’s Ryan Mac, CNN’s Donie O’Sullivan and The Washington Post’s Drew Harwell. Not only could this raise the regulatory heat on Twitter, and possibly Mr. Musks’ other companies, it could also hurt his push to get reluctant advertisers back onto the platform.
The suspensions have triggered a wave of protests. News organizations, including The Times and CNN, have demanded that Musk explain his rationale. Supporters of the journalists argued on Twitter that Mr. Musk’s latest move was overly punitive.
One big question: Will Mr. Musk’s silencing of prominent voices on Twitter have any knock-on effects for his other companies, including Tesla and SpaceX, which is a big recipient of government funding and projects?
E.U. lawmakers may go on the offensive. Vera Jourova, European Commission vice president, said the move violated the E.U.’s Digital Services Act and the Media Freedom Act. “There are red lines. And sanctions, soon,” she tweeted on Friday. The recently ratified Digital Services Act serves as a kind of rule book on moderating content for firms operating in the bloc. It goes into effect next year, and carries a fine of 6 percent of global revenues for companies that run afoul of the rules.
Last night, Lori Trahan, a Democratic congresswoman from Massachusetts and a member of the House committee on electronic communications and the internet, also expressed dismay over Mr. Musk’s move. She said she had received assurances this week from the company that it had no intention of retaliating against journalists or independent researchers who cover Musk and Twitter critically. “Less than 12 hours later, multiple technology reporters have been suspended. What’s the deal, @elonmusk?,” she tweeted.
The moves came a day after Twitter suspended more than two dozen other accounts. Included in that sweep was an account belonging to Jack Sweeney, the 20-year-old college student behind @elonjet, which tracked the movements of Musk’s private plane. It’s not fully clear why the journalists’ accounts were suspended, but each had written about the plane-tracking account or tweeted about it.
The billionaire tech mogul, who has described himself as a free speech absolutist, introduced a new red line this week after he claimed that a car carrying one of his children was accosted by a “crazy stalker.” The rule: Any Twitter user who publishes the live location or other personal information of someone else — known as “doxxing” — will be taken offline.
In a Twitter Spaces discussion, Mr. Musk defended the decision to block the journalists. “You doxx, you get suspended, end of story,” he said, and then abruptly left the call.
It’s unclear how long the suspensions will last. Mr. Musk on Friday polled his 121 million followers, asking them to vote on when accounts that shared his location should be reinstated. As of 8:30 a.m. Eastern time, nearly 60 percent had voted “now.”(The poll will run for another 15 hours.)
HERE’S WHAT’S HAPPENING
Global markets extend their losses after Thursday’s big sell-off. As of 8 a.m. Eastern, S&P 500 futures were 0.9 percent lower, and European stocks were down nearly as much. Investors are growing increasingly concerned about pledges by central banks to continue raising interest rates to combat inflation, moves that could raise the odds of recession. On Thursday, the S&P 500 closed 2.5 percent lower.
Netflix has reportedly reimbursed some advertisers after missing viewership targets. To lift flagging subscriptions,the streaming giant launched a discounted ad-supportedoffering last month. But some of its advertisers aren’t seeing the viewer numbers that Netflix had promised, Digiday reports, citing advertising agency sources.
A cost of living crisis spurs labor strikes across Europe. Nurses in the U.K. (for the first time ever), public transport personnel in London and Rome, teachers in Hungary and trade unions in Belgium are among the workers who have called for or carried out work stoppages this week to demand better pay and working conditions. Inflation is at 10 percent in the euro zone, and above that in the U.K.
A U.S. regulator can now inspect Chinese companies listed in the U.S. In a first, the Public Company Accounting Oversight Board said it can begin to audit these firms, which Beijing previously shielded from oversight on national security grounds. The development removes (for now) the threat that they could be delisted from U.S. stock markets for failing to meet disclosure rules.
Who’s already flipped on FTX?
Ryan Salame, the former co-C.E.O. of the bankrupt crypto exchange FTX, was thrown into the spotlight after he tipped off Bahamaian authorities that his business partner Sam Bankman-Fried was using client funds to cover losses at FTX’s trading affiliate Alameda Research. Who is he?
Salame rose quickly through the ranks. The 29-year-old former accountant at EY had less than two years of crypto experience before joining Alameda as a trader in 2019. He transferred to FTX two years later to jointly lead the company.
But despite his elevated role, Salame never seemed to crack S.B.F.’s inner circle. And he seemed to be caught off guard when the business abruptly went bust last month. He reportedly vomited when he learned of FTX’s problems.
His short time at FTX was lucrative. He showered $23 million in campaign donations on Republicans during the midterm election and bought five restaurants in Lenox, Mass., near where he grew up. But it’s unclear if all of the money was his: FTX lent Salame $55 million, according to bankruptcy documents. Some Democratic lawmakers, including Rep. Ben Sherman of California, now say they’ll look into whether Salame violated campaign finance laws.
The indictment of S.B.F. is unusually vague for a financial fraud of this kind, legal experts told DealBook. That suggests prosecutors are still looking for others with inside knowledge of the operation to explain what happened. “The very sweeping charges show they have confidence in their case, but there is no smoking gun in the indictment,” said Renato Mariotti, a partner at Bryan Cave who prosecuted securities and commodities fraud at the Justice Department.
The government has hinted that some ex-employees are talking, and speculation has focused on Caroline Ellison, the former head of Alameda.
But it’s unclear how much Bankman-Fried’s associates know about the inner workings. FTX’s new C.E.O., John J. Ray III, told senators this week that many former executives were unaware of precisely how the business unraveled, leaving a long list of creditors owed billions.
What next? Salame, who turned to officials days before the company collapsed, is unlikely to have provided evidence to prosecutors without a deal. That doesn’t necessarily mean he will escape prosecution, but it could help him get a shorter sentence. “The judge is going to ask who cooperated,” Sid Mody, a partner at O’Melveny & Myers, told DealBook.
The views from the top
At the invitation-only Yale C.E.O. Summit run by Jeffrey Sonnenfeld, a professor at Yale’s School of Management, this week, 100 American C.E.O.s and heads of boards were asked to weigh in on the biggest business news stories. The poll was about as scientific as a show of hands, but it still offers a telling glimpse at how top leaders view current events. On Thursday, we shared their views about Twitter, which were mostly pessimistic. Here are a couple of other poll results that caught our attention.
On China: Eighty-six percent of respondents said business leaders should play a role in improving U.S.-China relations; 47 percent said their own company had begun to reduce its business reliance on China.
On the metaverse: Twenty-five percent said they saw commercial value in their company using the so-called metaverse this year. That rose to 74 percent when they were asked about business opportunities in the metaverse five years hence.
On Elon Musk: Ninety-eight percent said he overpaid for Twitter, and 79 percent felt he had become a detriment to the value of the enterprises he runs.
“There will always be some for whom a bag of cash is always worth the risk. It is essential that these people understand that they will get caught.”
— Roberta Metsola, the president of the European Parliament, on the growing Qatari-E.U. bribery scandal that’s ensnared four people, including Eva Kaili, a European parliamentarian from Greece, in what Belgian authorities say was a cash-for-favors scheme involving the World Cup host nation.
Weekend read: ChatGPT and the “disruptive economics” of A.I.
OpenAI, the research company behind ChatGPT, the artificial intelligence chatbot that’s drawing rave reviews for its ability to write jokes, spit out fully functioning code and explain dense scientific concepts, is expecting a boom in business interest. According to Reuters, OpenAI forecasts $200 million in revenue next year, and $1 billion by 2024. Many experts are betting that the technology behind ChatGPT, and other bots like it, will be used for more practical (and lucrative) tasks like reading contracts and drafting sales emails.
Ajay Agrawal, the co-author of “Power and Prediction: The Disruptive Economics of Artificial Intelligence,” and a professor at the University of Toronto, spoke to DealBook about the technology and its implications for workers and business. (The interview has been edited and condensed.)
Explain the economic potential of the technology that underpins ChatGPT.
In economics, the way we think of any new technology is to take away all the magic and fun and ask one question: What does it reduce the cost of? A.I. reduces the cost of prediction. ChatGPT makes predicting language and producing writing cheaper.
How is this changing one of your jobs — teaching?
Until about two weeks ago, assigning an essay was a legitimate way to test a person’s cognitive ability to write. Now, it’s much easier to write and harder to check for plagiarism because the bot doesn’t copy passages. As we’ve been preparing for exams, my colleagues and I have been running questions past ChatGPT. It’s gotten at least a B on each exam, sometimes an A.
Does this have the potential to affect workers beyond writers and teachers?
Yes. Everyone should be thinking how this is going to change their jobs, and how their organizations should operate when people don’t have to do the writing. Remember the first time you saw email? People only thought about how it would impact postal carriers, but it actually changed the way we communicate as a species. In 50 years, looking back, this moment we’ve just witnessed, when a machine can write like a human, will mark a major shift.
What’s your favorite book of 2022?
We’ve been asking our sources, our colleagues and our bookworm friends about their favorite books of 2022. We would like your suggestions too, and to hear why a particular title moved or inspired you. Please email us at [email protected]. We plan to publish a special DealBook “favorite books of 2022” newsletter later this month, and we hope to include reader recommendations.
THE SPEED READ
Amazon signed a deal with Games Workshop to make films set in its Warhammer 40,000 universe, as the tech giant looks to spend $1 billion a year to create movies to release in theaters. (Bloomberg)
TikTok’s efforts to cut ties with its Chinese parent ByteDance have stumbled, as U.S. lawmakers push the Biden administration to get tougher on the app maker over security concerns. (WSJ, Bloomberg)
The Senate passed an $858 billion military spending bill, along with a seven-day spending bill to avoid a government shutdown this weekend. (Bloomberg)
Japan overturned its pacifist postwar security strategy, committing to one of the world’s biggest defense budgets to counter an increasingly aggressive China. (FT)
The U.S. put 36 Chinese companies on an export ban list, stepping up its bid to prevent Beijing from accessing advanced and sensitive technologies in areas such as semiconductors. (NYT)
Best of the rest
Donald Trump launched a $99 NFT collection, a series of digital cards picturing him as a superhero and a “Top Gun”-style pilot. (NYT)
Harvard University named the government professor Claudine Gay as its next president, making her the second woman and first Black person in the role. (WSJ)
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