The Week in Business: Who Comes After Elon Musk?
What’s Up? (Dec. 18-24)
Vox Populi, Vox Musk
Elon Musk said that he would resign as Twitter’s chief executive once he found a successor “foolish enough to take the job.” Last weekend, after he faced backlash over unpopular content moderation policies and suspensions of high-profile users, including some journalists, Mr. Musk asked his nearly 123 million Twitter followers in a “poll” whether he should resign, saying he would abide by the results of the vote. Fifty-seven percent of the 17.5 million respondents said “Yes.” After a notable silence, Mr. Musk said on Tuesday he would step down as chief executive — though he added that he still planned to oversee Twitter’s software and server teams. Mr. Musk has shown an affinity for polls in the past. When asking for users’ input on decisions, Mr. Musk has posted “Vox Populi, Vox Dei,” which roughly means that the voice of the people is the voice of God.
Sports and the Streaming Wars
YouTube beat out bids from Apple and Amazon to acquire the rights for the National Football League’s Sunday Ticket package of games. YouTube has agreed to pay the league about $2.5 billion per year, about a $1 billion bump from DirecTV, the previous rights holder. The deal will allow people to stream nearly all of the N.F.L. games on YouTube next season. The exact timeline of the deal is unclear, but YouTube and the N.F.L. called it a “multiyear deal.” Apple recently dropped out of the race for the rights, opting instead to sponsor the 2023 halftime show — a performance by Rihanna.
Zuckerberg’s Day in Court
When a lawyer asked Mark Zuckerberg whether Meta, the parent company of Facebook, WhatsApp and Instagram, was “trying to shape the future of technology,” he hesitated and then replied: “Yes. That’s a fairly broad statement, but yes.” Mr. Zuckerberg appeared as the star witness in federal court in San Jose, Calif., on Tuesday. The case will determine whether the Federal Trade Commission will be granted an injunction to block Meta’s $400 million acquisition of Within, a company that makes a virtual reality fitness game. If the F.T.C. blocks the acquisition (originally announced in 2021), it could set a precedent for antitrust law.
What to Know About the Collapse of FTX
What is FTX? FTX is a now bankrupt company that was one of the world’s largest cryptocurrency exchanges. It enabled customers to trade digital currencies for other digital currencies or traditional money; it also had a native cryptocurrency known as FTT. The company, based in the Bahamas, built its business on risky trading options that are not legal in the United States.
Who is Sam Bankman-Fried? He is the 30-year-old founder of FTX and the former chief executive of FTX. Once a golden boy of the crypto industry, he was a major donor to the Democratic Party and known for his commitment to effective altruism, a charitable movement that urges adherents to give away their wealth in efficient and logical ways.
How did FTX’s troubles begin? Last year, Changpeng Zhao, the chief executive of Binance, the world’s largest crypto exchange, sold the stake he held in FTX back to Mr. Bankman-Fried, receiving a number of FTT tokens in exchange. In November, Mr. Zhao said he would sell the tokens and expressed concerns about FTX’s financial stability. The move, which drove down the price of FTT, spooked investors.
What led to FTX’s collapse? Mr. Zhao’s announcement drove down the price and spooked investors. Traders rushed to withdraw from FTX, causing the company to have a $8 billion shortfall. Binance, FTX’s main rival, offered a loan to save the company but later pulled out, forcing FTX to file for bankruptcy on Nov. 11.
Why was Mr. Bankman-Fried arrested? FTX’s collapse kicked off investigations by the Justice Department and the Securities and Exchange Commission focused on whether FTX improperly used customer funds to prop up Alameda Research, a crypto trading platform that Mr. Bankman-Fried had helped start. On Dec. 12, Mr. Bankman-Fried was arrested in the Bahamas for lying to investors and committing fraud. The day after, the S.E.C. also filed civil fraud charges.
What’s Next? (Dec. 25-31)
A new year — and who knows!
In the lead-up to the new year, economists and officials are trying to predict what may come next for the economy. But the future, as Fed chair, Jerome H. Powell, said this month of the possibility of a recession, is “not knowable.” That’s true in any year, and especially now, in our current economic climate. The economy has upended forecasts and defied usual patterns over the past couple of years. Historical data, which is generally useful for those who make economic predictions, has not proved a reliable guide. In 2022, the Federal Reserve raised interest rates at the fastest pace since the 1980s in an attempt to slow growth and bring price increases under control. It remains to be seen just what effect those rate changes will have in the year to come.
S.B.F. in U.S.A.
Last month, the disgraced crypto mogul Sam Bankman-Fried told The New York Times’s Andrew Ross Sorkin that he was having “a bad month.” He has had another bad month since then — he was arrested in the Bahamas and held in a notorious prison — and is probably looking at more “bad months” ahead. Mr. Bankman-Fried, who was extradited from the Bahamas to New York on Wednesday, has been charged with two counts of wire fraud and six counts of conspiracy related to securities fraud, money laundering and violating campaign finance laws. He was released on bond and will stay with his parents in California while awaiting trial. Meanwhile, his one-time colleagues Caroline Ellison and Gary Wang are cooperating in the federal criminal case against him. Other associates may follow: The U.S. attorney for the Southern District of New York urged FTX employees to come forward.
The Aftermath of FTX’s Downfall
The sudden collapse of the crypto exchange has left the industry stunned.
- A Spectacular Rise and Fall: Who is Sam Bankman-Fried and how did he become the face of crypto? “The Daily” charted the spectacular rise and fall of the man behind FTX.
- How FTX Operated: FTX called itself an exchange. But it was vastly different from stock exchanges, which are highly regulated and barred from engaging in many of the activities that the crypto company pursued.
- Political Donations: Federal prosecutors are seeking information from Democrats and Republicans about donations from Mr. Bankman-Fried and two former FTX executives.
- Ryan Salame: The former FTX executive, who told regulators about wrongdoing at the exchange and was a big Republican donor, has emerged as a central player in the scandal.
ChatGPT raises alarms
ChatGPT, an experimental chatbot, could shake up everything from big tech to homework assignments in the new year. The chat bot technology, which was released by OpenAI, an artificial intelligence lab, serves information in clear sentences. Already, Google is keeping a close eye on what happens next. The tech behemoth’s management declared a “code red” over ChatGPT, which could present an existential threat to Google’s search business. And this may be just the beginning; OpenAI is said to be working on a better model that could be released next year.
Ambulance workers in Britain went on strike, the latest workers to walk out as inflation and a cost-of-living crisis grip the country. King Charles III will appear on pound notes there. The “Avatar” sequel has so far failed to live up to high expectations at the box office.