elon musk

rocket-report:-a-new-estimate-of-starship-costs;-japan-launches-spy-satellite

Rocket Report: A new estimate of Starship costs; Japan launches spy satellite

artemis, elon musk, impulse space, Japan, launch, Momentus, NASA, orbex, Space, space launch system, spacex, starship, tiangong, tianzhou / /

A bigger tug —

One space tug company runs into financial problems; another says go big or go home.

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An H-IIA rocket lifts off with the IGS Optical-8 spy satellite.

Enlarge / An H-IIA rocket lifts off with the IGS Optical-8 spy satellite.

Mitsubishi Heavy Industries

Welcome to Edition 6.27 of the Rocket Report! This week, we discuss an intriguing new report looking at Starship. Most fascinating, the report covers SpaceX’s costs to build a Starship and how these costs will come down as the company ramps up its build and launch cadence. At the other end of the spectrum, former NASA Administrator Mike Griffin has a plan to get astronauts back to the Moon that would wholly ignore the opportunities afforded by Starship.

As always, we welcome reader submissions, and if you don’t want to miss an issue, please subscribe using the box below (the form will not appear on AMP-enabled versions of the site). Each report will include information on small-, medium-, and heavy-lift rockets, as well as a quick look ahead at the next three launches on the calendar.

The problem at America’s military spaceports. The Biden administration is requesting $1.3 billion over the next five years to revamp infrastructure at the Space Force’s ranges in Florida and California, Ars reports. This will help address things like roads, bridges, utilities, and airfields that, in many cases, haven’t seen an update in decades. But it’s not enough, according to the Space Force. Last year, Cape Canaveral was the departure point for 72 orbital rocket launches, and officials anticipate more than 100 this year. The infrastructure and workforce at the Florida spaceport could support about 150 launches in a year without any major changes, but launch activity is likely to exceed that number within a few years.

Higher fees incoming … Commercial launch companies operating from Cape Canaveral Space Force Station, Florida, or Vandenberg Space Force Base, California, pay fees to the Space Force to reimburse for direct costs related to rocket launches. These cover expenses like weather forecast services, surveillance to ensure airplanes and boats stay out of restricted areas, and range safety support. “What that typically meant was anything we did that was specifically dedicated to that launch,” said Col. James Horne, deputy commander of the Space Force’s assured access to space directorate. This is about to change after legislation passed by Congress in December allows the Space Force to charge indirect fees to commercial providers. This money will go into a fund to pay for maintenance and upgrades to infrastructure used by all launch companies at the spaceports.

Momentus is running out of money. Momentus, a company that specializes in “last mile” satellite delivery services, announced on January 12 that it is running out of money and does not have a financial lifeline, CNBC reports. The company was once valued at more than $1 billion before going public via a Special Purpose Acquisition Company (SPAC) in 2021 but now has a market capitalization of less than $10 million. Momentus has developed a space tug called Vigoride, designed to place small satellites into bespoke orbits after deploying from a larger rocket on a rideshare mission, such as a SpaceX Falcon 9. Now, Momentus is abandoning plans for its next mission that was due for launch in March. In December, the company laid off about 20 percent of its workforce to reduce costs.

Fatal blow? … Momentus may have received a potentially fatal blow after losing the US Space Development Agency’s recent competition for 18 so-called Tranche 2 satellites, Aviation Week reports. Instead, the SDA made recent satellite manufacturing contract awards to Rocket Lab, L3Harris, Lockheed Martin, and Sierra Space. On Wednesday, Momentus announced it closed a $4 million stock sale. This should keep Momentus afloat for a while longer but won’t provide the level of capital needed to undertake any significant manufacturing or technical development work. (submitted by Ken the Bin)

The easiest way to keep up with Eric Berger’s space reporting is to sign up for his newsletter, we’ll collect his stories in your inbox.

Orbex may go bigger. UK-based launch startup Orbex hasn’t yet flown its small satellite launcher, called Prime, but is already looking at what’s next, according to reports by European Spaceflight and the Financial Times. New Orbex CEO Phil Chambers, who was officially appointed earlier this month, told the Financial Times that the company was already discussing the possibility of developing a larger vehicle. Speaking to European Spaceflight, Chambers described the business model to deliver orbital launch services with Prime as “robust.” Despite this, he admitted that the small launch industry was only a small sliver of the overall launch market.

Learning to walk before running … While future growth is on Orbex’s radar, its near-term focus is completing construction of a spaceport in Scotland, launching a maiden flight of Prime, and delivering on the six flights the company has already sold. The two-stage Prime rocket, fueled by “bio-propane,” will be capable of hauling a payload of approximately 180 kilograms (nearly 400 pounds) into low-Earth orbit. But Orbex has been shy about releasing updates on the progress of the Prime rocket’s development since unveiling a full-scale mock-up of the launch vehicle in 2022. Last year, the CEO who led Orbex since its founding resigned. Its most recent significant funding round was valued at 40.4 million pounds in late 2022. (submitted by Ken the Bin)

Rocket Report: A new estimate of Starship costs; Japan launches spy satellite Read More »

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Elon Musk drops price of X gold checks amid rampant crypto scams

cloudsek, Cryptocurrency, cryptocurrency scam, cyber threat analysts, elon musk, Ethereum, Google, hacker, Mandiant, NFTs, phishing scam, Policy, Twitter, X / /
Elon Musk drops price of X gold checks amid rampant crypto scams

There’s currently a surge in cryptocurrency and phishing scams proliferating on X (formerly Twitter)—hiding under the guise of gold and gray checkmarks intended to mark “Verified Organizations,” reports have warned this week.

These scams seem to mostly commandeer dormant X accounts purchased online through dark web marketplaces, according to a whitepaper released by the digital threat monitoring platform CloudSEK. But the scams have also targeted high-profile X users who claim that they had enhanced security measures in place to protect against these hacks.

This suggests that X scammers are growing more sophisticated at a time when X has launched an effort to sell even more gold checks at lower prices through a basic tier announced this week.

Most recently, the cyber threat intelligence company Mandiant—which is a subsidiary of Google—confirmed its X account was hijacked despite enabling two-factor authentication. According to Bleeping Computer, the hackers used Mandiant’s account to “distribute a fake airdrop that emptied cryptocurrency wallets.”

A Google spokesperson declined to comment on how many users may have been scammed, but Mandiant is investigating and promised to share results when its probe concludes.

In September, a similar fate befell Ethereum co-founder Vitalik Buterin, who had his account hijacked by hackers. The bad actors posted a fake offer for free non-fungible tokens (NFTs) with a link to a fake website designed to empty cryptocurrency wallets. The post was only up for about 20 minutes but drained $691,000 in digital assets from Buterin’s unsuspecting followers, according to CloudSEK’s research.

Another group monitoring cryptocurrency and phishing scams linked to X accounts is MalwareHunterTeam (MHT), Bleeping Computer reported. This week, MHT has flagged additional scams targeting politicians’ accounts, including a Canadian senator, Amina Gerba, and a Brazilian politician, Ubiratan Sanderson.

On X, gold ticks are supposed to reassure users that an account can be trusted by designating that an account is affiliated with an official organization or company. Gray ticks signify an account is linked to government organizations. CloudSEK estimated that hijacked gold and gray checks could be sold online for between $1,200 to $2,000, depending on how old the account is or how many followers it has. Bad actors can also buy accounts affiliated with gold accounts for $500 each.

A CloudSEK spokesperson told Ars that its team is “in the process of reporting the matter” to X.

X did not immediately respond to Ars’ request to comment.

CloudSEK predicted that scams involving gold checks would continue to be a problem so long as selling gold and gray checks remains profitable.

“It is evident that threat actors would not budge from such profit-making businesses anytime soon,” CloudSEK’s whitepaper said.

For organizations seeking to avoid being targeted by hackers on X, CloudSEK recommends strengthening brand monitoring on the platform, enhancing security settings, and closing out any dormant accounts. It’s also wise for organizations to cease storing passwords in a browser, and instead use a password manager that’s less vulnerable to malware attacks, CloudSEK said. Organizations on X may also want to monitor activity on any apps that become connected to X, Bleeping Computer advised.

Elon Musk drops price of X gold checks amid rampant crypto scams Read More »

elon-musk:-spacex-needs-to-build-starships-as-often-as-boeing-builds-737s

Elon Musk: SpaceX needs to build Starships as often as Boeing builds 737s

elon musk, Mars, Space, spacex, starship / /
Ship 28, the Starship for SpaceX's next full-scale test flight, fires up one of its engines on December 29 in Texas.

Enlarge / Ship 28, the Starship for SpaceX’s next full-scale test flight, fires up one of its engines on December 29 in Texas.

SpaceX

It’s no secret that Elon Musk has big ambitions for SpaceX’s Starship mega-rocket. This is the vehicle that, with plenty of permutations and upgrades, Musk says will ferry cargo and people across the Solar System to build a settlement on Mars, making humanity a multi-planetary species and achieving the billionaire’s long-standing dream.

Of course, that is a long way off. SpaceX is still working on getting Starship into orbit or close to it, an achievement that appears to be possible this year. Then, the company will start launching Starlink satellites on Starship missions while testing in-space refueling technology needed to turn Starship into a human-rated Moon lander for NASA.

SpaceX’s South Texas team is progressing toward the third full-scale Starship test flight. On December 20, the Starship’s upper stage slated for the next test flight completed a test-firing of its Raptor engines at the Starbase launch site on the Texas Gulf Coast. Nine days later, the 33-engine Super Heavy booster fired up on the launch pad for its own static fire test. On the same day, SpaceX hot-fired the Starship upper stage once again on a test stand next to the launch pad.

With those milestones complete, ground teams rolled the booster back to its hangar for final preflight checks and reconfigurations. The ship, too, will need to be rolled back to its high bay.

SpaceX could be weeks away from having both vehicles ready to fly, but the company hasn’t released an update on lessons learned from the previous Starship test flight in November. That flight was largely successful, with apparently flawless performance from the 33 engines on the Super Heavy booster during launch. The Starship upper stage reached space before self-destructing downrange over the Gulf of Mexico. The booster exploded during a maneuver to bring itself back to Earth for a controlled splashdown at sea.

The company’s engineers will want to understand and correct whatever caused those issues. The Federal Aviation Administration then needs to approve SpaceX’s investigation into the last Starship flight before issuing a new commercial launch license. When it flies again, Starship will try to reach near orbital velocity, enough speed to travel most of the way around the world before reentering the atmosphere near Hawaii.

Verifying the performance of Starship’s heat shield tiles during reentry will be valuable learning for SpaceX, but Starship first needs to be fully successful with a launch. This is just the start for the privately funded Starship program.

Elon Musk: SpaceX needs to build Starships as often as Boeing builds 737s Read More »

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Since Elon Musk’s Twitter purchase, firm reportedly lost 72% of its value

elon musk, elon musk twitter, elon musk x, Policy / /

Going down, down, down… —

Fidelity cuts value of X stake, implying 72% drop since Musk paid $44 billion.

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A businessman places his hand on his head as he looks up and is perplexed by a chart indicating a drop in value.

Getty Images | DNY59

Fidelity’s latest valuation of its stake in X implies that Elon Musk’s social network is worth about 71.5 percent less than when Musk bought the company in October 2022.

Fidelity’s Blue Chip Growth Fund has a relatively small stake in X. A monthly update for the fund listed the value of its “X Holdings Corp.” stake at $5.6 million as of November 30, 2023. The fund’s share of X was originally worth $19.7 million but lost about two-thirds of its value by April 2023 and has dropped more modestly since then.

Fidelity cut its valuation of X by 10.7 percent in November, according to Axios. One question is whether Fidelity sold any of its stake during November, but the latest drop in value isn’t surprising given the recent Musk-related controversies that drove advertisers away from the platform.

“As of Oct. 30 the fund hadn’t sold any of its stake, but the monthly report with the updated valuation doesn’t disclose whether the size of the holding changed,” Bloomberg wrote. “Assuming the fund hasn’t reduced its holding in X, the latest report implies the value of the entire company has also fallen by 72 percent. Fidelity declined to comment.”

X’s ad woes hurt value

Based on the $44 billion that Musk paid for Twitter over a year ago, the drop in Fidelity’s valuation would make the company worth about $12.5 billion. X reportedly valued itself at about $19 billion in October, based on the value of stock grants to employees.

Since Musk took Twitter private, the company’s value and revenue are harder to determine from the outside. As Axios noted, “Fidelity doesn’t necessarily have much, if any, inside information on X’s financial performance, despite being a shareholder in the privately held business. Other shareholders may value their X stock differently.”

X’s finances were shaky enough at the end of October, the one-year anniversary of Musk’s purchase. Musk made things worse in mid-November when he posted a favorable response to an antisemitic tweet. He addressed the antisemitism controversy in a public interview on November 29, telling businesses that pulled advertising from X to “go fuck yourself.”

X has had trouble retaining advertisers throughout Musk’s tenure, due largely to his approach to content moderation. Musk eliminated most of the company’s staff shortly after becoming its owner.

X loses bid to block California law

X is dealing with new regulations on content moderation, both in Europe and the US. Musk’s company sued California in September in an attempt to block the state’s content-moderation law but last week lost a key ruling in the court case.

On Thursday, US District Judge William Shubb denied X’s motion for a preliminary injunction that would have blocked enforcement of the California content-moderation law. The state law requires companies to file two reports each year with terms of service and detailed descriptions of content-moderation practices.

Shubb rejected X’s claim that the law violates the First Amendment. “While the reporting requirement does appear to place a substantial compliance burden on social medial companies, it does not appear that the requirement is unjustified or unduly burdensome within the context of First Amendment law,” Shubb wrote.

The judge agreed with California that there is “a substantial government interest in requiring social media companies to be transparent about their content moderation policies and practices so that consumers can make informed decisions about where they consume and disseminate news and information.”

Since Elon Musk’s Twitter purchase, firm reportedly lost 72% of its value Read More »

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Elon Musk will see you in court: The top Twitter and X Corp. lawsuits of 2023

elon musk, elon musk twitter, elon musk x, Policy / /
Elon Musk holding a microphone and speaking.

Enlarge / Elon Musk speaks at the Atreju political convention organized by Fratelli d’Italia (Brothers of Italy) on December 15, 2023 in Rome, Italy.

Getty Images | Antonio Masiello

Elon Musk’s ownership of Twitter, now called X, began with a lawsuit. When Musk tried to break a $44 billion merger agreement, Twitter filed a lawsuit that gave Musk no choice but to complete the deal.

In the year-plus since Musk bought the company, he’s been the defendant and plaintiff in many more lawsuits involving Twitter and X Corp. As 2023 comes to a close, this article rounds up a selection of notable lawsuits involving the Musk-led social network and provides updates on the status of the cases.

Musk sues Twitter law firm

Musk seemingly held a grudge against the law firm that helped Twitter force Musk to complete the merger. In July, X Corp. sued Wachtell, Lipton, Rosen & Katz in an attempt to claw back the $90 million that Twitter paid the firm before Musk completed the acquisition.

Most of that money was paid to Wachtell hours before the merger closed. X’s lawsuit in San Francisco County Superior Court claimed that “Wachtell arranged to effectively line its pockets with funds from the company cash register while the keys were being handed over to the Musk Parties.”

Wachtell sought to move the dispute into arbitration, pointing out that the contract between itself and Twitter contained a binding arbitration clause. In October, the court granted Wachtell’s motion to compel arbitration and stayed the lawsuit pending the outcome.

Unpaid-bill lawsuits

While Twitter paid the Wachtell legal bill before Musk could block the payment, dozens of lawsuits allege that X has refused to pay bills owed to other companies that started providing services to Twitter before the Musk takeover.

The suits were filed by software vendors, landlords, event planning firms, a private jet company, an office renovator, consultants, and other companies. The lawsuits helped some companies obtain payment via settlements, but X has continued to fight many of the allegations. We covered the unpaid-bill lawsuits in-depth in this lengthy article published in September.

Musk sues Media Matters

Musk has repeatedly blamed outside parties for X’s financial problems, which are largely due to advertisers not wanting to be associated with offensive and controversial content that used to be more heavily moderated before Musk slashed the company’s staff.

One of the biggest ad-spending drops came after a November 16 Media Matters report that said corporate ads were placed “next to content that touts Adolf Hitler and his Nazi Party.” Musk’s X Corp responded by suing Media Matters a few days later, claiming the group “manipulated the algorithms governing the user experience on X to bypass safeguards and create images of X’s largest advertisers’ paid posts adjacent to racist, incendiary content.”

The suit was filed in US District Court for the Northern District of Texas. There aren’t any significant updates on the case to report yet.

X Corp. previously filed a similar lawsuit against the nonprofit Center for Countering Digital Hate (CCDH), claiming the group “improperly gain[ed] access” to data, and “cherry-pick[ed] from the hundreds of millions of posts made each day on X” in order to “falsely claim it had statistical support showing the platform is overwhelmed with harmful content.”

The CCDC filed a motion to dismiss X’s lawsuit on November 16, saying that its actions constituted “newsgathering activity in furtherance of the CCDH defendants’ protected speech and reporting.” The motion and case are still pending in US District Court for the Northern District of California.

Musk suit against data scrapers tossed

In July, X Corp. sued unidentified data scrapers in Dallas County District Court, accusing them of “severely tax[ing]” company servers by “flooding Twitter’s sign-up page with automated requests.” The lawsuit was filed days after Twitter imposed rate limits capping the number of tweets users could view each day.

“Several entities tried to scrape every tweet ever made in a short period of time. That is why we had to put rate limits in place,” Musk wrote at the time.

The lawsuit initially listed four John Doe defendants and was amended to raise the number of defendants to 11. This was a tough lawsuit for X to pursue because it didn’t know who the scrapers were and identified them only by their IP addresses.

X issued subpoenas to Amazon Web Services, Akamai, and Google in attempts to gain information on the John Does behind the IP addresses, but the case fizzled out. On October 30, a Dallas County judge dismissed the lawsuit “for want of prosecution” and ordered X to pay the court costs.

Elon Musk will see you in court: The top Twitter and X Corp. lawsuits of 2023 Read More »

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Musk’s X hit with EU’s first investigation of Digital Services Act violations

Digital Services Act, elon musk, Policy / /

EU investigates X —

EU probes disinformation, election policy, Community Notes, and paid checkmarks.

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Illustration includes an upside-down Twitter bird logo with an

Getty Images | Chris Delmas

The European Union has opened a formal investigation into whether Elon Musk’s X platform (formerly Twitter) violated the Digital Services Act (DSA), which could result in fines of up to 6 percent of global revenue. A European Commission announcement today said the agency “opened formal proceedings to assess whether X may have breached the Digital Services Act (DSA) in areas linked to risk management, content moderation, dark patterns, advertising transparency and data access for researchers.”

This is the commission’s first formal investigation under the Digital Services Act, which applies to large online platforms and has requirements on content moderation and transparency. The step has been in the works since at least October, when a formal request for information was sent amid reports of widespread Israel/Hamas disinformation.

The European Commission today said it “decided to open formal infringement proceedings against X under the Digital Services Act” after reviewing X’s replies to the request for information on topics including “the dissemination of illegal content in the context of Hamas’ terrorist attacks against Israel.” The commission said the investigation will focus on dissemination of illegal content, the effectiveness of measures taken to combat information manipulation on X, transparency, and “a suspected deceptive design of the user interface.”

The illegal content probe will focus on “risk assessment and mitigation measures” and “the functioning of the notice and action mechanism for illegal content” that is mandated by the DSA. The commission said this will be evaluated “in light of X’s content moderation resources,” a reference to the deep staff cuts made by Musk since purchasing Twitter in October 2022.

Community Notes and paid checkmarks under review

The information manipulation portion of the investigation will evaluate “the effectiveness of X’s so-called ‘Community Notes’ system in the EU and the effectiveness of related policies mitigating risks to civic discourse and electoral processes,” the announcement said. The transparency probe “concerns suspected shortcomings in giving researchers access to X’s publicly accessible data as mandated by Article 40 of the DSA, as well as shortcomings in X’s ads repository,” the commission said.

Musk’s decision to make “verification” checkmarks a paid feature will figure into the commission’s probe of whether the X user interface has a deceptive design. The commission said it will evaluate “checkmarks linked to certain subscription products, the so-called Blue checks.”

The investigation will include more requests for information, interviews, and “inspections,” the commission said. There is no legal deadline for completing the investigation.

“The opening of formal proceedings empowers the Commission to take further enforcement steps, such as interim measures, and non-compliance decisions. The Commission is also empowered to accept any commitment made by X to remedy on the matters subject to the proceeding,” the announcement said.

In a statement today, X said it is committed to complying with the Digital Services Act and is cooperating with regulators. “It is important that this process remains free of political influence and follows the law,” the company said. “X is focused on creating a safe and inclusive environment for all users on our platform, while protecting freedom of expression, and we will continue to work tirelessly towards this goal.”

Musk’s X hit with EU’s first investigation of Digital Services Act violations Read More »

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Judge rejects Elon Musk’s attempt to avoid testifying in Twitter stock probe

elon musk, elon musk sec, Policy / /

A loss for Elon —

Musk has to testify for SEC probe into whether he violated US securities laws.

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Illustration of a stamp that prints the word

Getty Images | Bet_Noire

Elon Musk can’t avoid testifying in an investigation into whether he violated federal securities laws, a magistrate judge said during a court hearing yesterday.

The Securities and Exchange Commission sued Musk in October to force him to testify for a third time in a probe related to purchases of Twitter stock he made before he bought the company. Musk responded in November by asking the court to block the SEC’s subpoena, claiming the agency is “harassing” him, exceeding its authority to investigate, and making “overly burdensome” demands for “irrelevant evidence.”

Musk’s arguments were rejected during a hearing yesterday in US District Court for the Northern District of California. No formal ruling has been issued yet, but a magistrate judge made it clear she will rule in the SEC’s favor if Musk doesn’t appear for testimony.

“During a hearing in San Francisco, US Magistrate Judge Laurel Beeler quickly rejected arguments by Musk’s attorney that SEC officials do not have the authority to issue subpoenas, saying the agency has broad investigative powers and that no judge would ‘second guess’ an SEC probe,” Reuters reported.

According to Reuters, “Beeler told the sides to figure out when Musk would sit for one more four-hour deposition, or she would issue an order” compelling Musk to testify. “If you don’t work it out, then it’s in San Francisco in February,” Beeler said.

SEC probing Twitter stock purchases

The SEC lawsuit said the subpoena that Musk failed to comply with is for an investigation into whether “Musk violated various provisions of the federal securities laws in connection with (1) his 2022 purchases of Twitter stock, and (2) his 2022 statements and SEC filings relating to Twitter.”

The SEC began its investigation in April 2022 after Musk acquired a 9 percent stake in Twitter and failed to disclose it within 10 days as required under US law. Musk testified twice in July 2022, but the SEC said it has obtained thousands of new documents since then and “has not yet had an opportunity to question Musk about those documents and other substantial information it has obtained in its investigation.”

The SEC told the court that its investigation into whether Musk violated securities laws “pertains to considerably more than the timing and substance of a particular SEC filing; it also relates to all of Musk’s purchases of Twitter stock in 2022 and his 2022 statements and SEC filings.”

Musk’s response complained that “the SEC has opened one investigation after another into Mr. Musk and companies related to him, often targeting its inquiries into his constitutionally protected rights.” Musk alleged that the SEC probe has focused on his political beliefs and “passion for the First Amendment,” and “reeks of McCarthyism that has no place in a free country.”

Judge “emphatically” rejected Musk argument

Beeler “emphatically” dismissed arguments put forward by Musk’s attorney yesterday, according to Reuters. “You’ve got one more four-hour deposition, one more day of depositions to survive and it’s over. It seems unlikely there’s going to be any more hassle,” Beeler was quoted as saying.

Musk’s filing also claimed that SEC enforcement staff members cannot issue subpoenas due to requirements in the Constitution’s Appointments Clause. “The issuance of an administrative subpoena demanding Mr. Musk’s testimony is an exercise of significant governmental authority of the kind that can be performed only by ‘Officers of the United States,'” Musk’s filing said. “And under Article II, such officers can be appointed only by the President, a court, or the head of a department.”

According to Reuters, Beeler “said she is inclined to take the SEC’s view on the [Appointments Clause] issue but would take a closer look before issuing her order.”

Separately, Musk last week asked the Supreme Court to terminate a settlement that requires him to get Tesla’s pre-approval for tweets or other social media posts that may contain information material to the company or its shareholders. Musk agreed to the settlement after the SEC said his August 2018 tweets claiming he had secured funding to take Tesla private were false and caused significant market disruption.

Musk’s attempts to terminate the settlement with the SEC were previously rejected by a US district court and a federal appeals court.

Judge rejects Elon Musk’s attempt to avoid testifying in Twitter stock probe Read More »

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Elon Musk told bankers they wouldn’t lose any money on Twitter purchase

elon musk, Policy, syndication, Twitter, X / /

Value destruction —

Lenders unlikely to get even 60 cents on the dollar for the bonds and loans.

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Elon Musk and a twitter logo

Elon Musk privately told some of the bankers who lent him $13 billion to fund his leveraged buyout of Twitter that they would not lose any money on the deal, according to five people familiar with the matter.

The verbal guarantees were made by Musk to banks as a way to reassure the lenders as the value of the social media site, now rebranded as X, fell sharply after he completed the acquisition last year.

Despite the assurances, the seven banks that lent money to the billionaire for his buyout—Morgan Stanley, Bank of America, Barclays, MUFG, BNP Paribas, Mizuho and Société Générale—are facing serious losses on the debt if and when they eventually sell it.

The sources did not specify when Musk’s assurances were made, although one noted Musk had made them on several occasions. But the billionaire’s behavior, both in attempting to back out of the takeover in 2022 and more recently in alienating advertisers, has more broadly stymied the banks’ efforts to offload the debt since he engineered the takeover.

Large hedge funds and credit investors on Wall Street held conversations with the banks late last year, offering to buy the senior-most portion of the debt at roughly 65 cents on the dollar. But in recent interviews with the Financial Times, several said there was no price at which they would buy the bonds and loans, given their inability to gauge whether Linda Yaccarino, X’s chief executive, could turn the business around.

One multibillion-dollar firm that specializes in distressed debt called X’s debt “uninvestable.”

Selling the $12.5 billion of bonds and loans below 60 cents on the dollar—a price many investors believe the banks would be lucky to achieve in the current market—would imply losses before accounting for X’s interest payments of $4 billion or more, writedowns that have not yet been publicly reported by the syndicate of lenders, according to FT calculations. The debt is split between $6.5 billion of term loans, as well as $6 billion of senior and junior bonds and a $500 million revolver.

Morgan Stanley, Bank of America, Barclays, MUFG, BNP Paribas, Mizuho and Société Générale declined to comment. A spokesperson for X declined to comment. Musk did not return a request for comment.

The banks have held the debt on their balance sheets instead of selling at a steep loss in the hope that X’s performance will improve following a series of cost-cutting measures. Several people involved in the transaction noted that there was no plan to sell the debt imminently, with one saying there was no guarantee the banks would be able to offload the debt even in 2024.

The people involved in the deal cautioned that Musk’s guarantee was not based on any formal contract. One said they understood it as a boastful statement that the entrepreneur had never let his lenders down.

“I have never lost money for those who invest in me and I am not starting now,” he told Axios earlier this month, when asked about a separate fundraising push by his company X.ai Corp.

Some on Wall Street view Musk’s personal guarantees with skepticism, given that he tried to back out of his agreement to buy Twitter despite a watertight contract, before relenting.

Nevertheless, the guarantee from a man whose net worth Forbes pegs at about $243 billion has helped some of the bankers make the pitch to their internal committees that they can ascribe a higher price to the debt while they hold it on their balance sheets.

Morgan Stanley, the largest lender on the deal, in January disclosed $356 million in mark-to-market losses on corporate loans it planned to sell and loan hedges. Banks rarely report specific losses tied to an individual bond or loan, and often report write-downs of multiple deals together.

Wall Street was saddled with the Twitter buyout loan at the same time they were holding a smattering of other hung bridge loans—deals they were forced to fund themselves after failing to raise cash in public bond and loan markets. The FT has previously reported on large losses tied to other hung loans at the time, including the buyouts of technology company Citrix and television rating provider Nielsen.

How the debt has been marked on bank balance sheets has been an open question for traders and investors across Wall Street, given how much X’s business has deteriorated since Musk bought the company.

Musk, already out of favor with marketers for loosening content moderation, last month lost more advertisers after endorsing an antisemitic post. In November he followed by telling brands that were boycotting the business over his actions to “go fuck” themselves, criticizing Disney’s Bob Iger in particular.

According to a report last week from market intelligence firm Sensor Tower, in November 2023 total US ad spend among the top 100 advertisers on X was down nearly 45 percent compared with October 2022, prior to Musk’s takeover.

© 2023 The Financial Times Ltd. All rights reserved. Not to be redistributed, copied, or modified in any way.

Elon Musk told bankers they wouldn’t lose any money on Twitter purchase Read More »

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Elon Musk’s new AI bot, Grok, causes stir by citing OpenAI usage policy

AI, Biz & IT, chatgpt, elon musk, GPT-3, GPT-3.5, GPT-4, grok, large language model, large language models, machine learning, Twitter, X-Com, xAI / /

You are what you eat —

Some experts think xAI used OpenAI model outputs to fine-tune Grok.

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Illustration of a broken robot exchanging internal gears.

Grok, the AI language model created by Elon Musk’s xAI, went into wide release last week, and people have begun spotting glitches. On Friday, security tester Jax Winterbourne tweeted a screenshot of Grok denying a query with the statement, “I’m afraid I cannot fulfill that request, as it goes against OpenAI’s use case policy.” That made ears perk up online since Grok isn’t made by OpenAI—the company responsible for ChatGPT, which Grok is positioned to compete with.

Interestingly, xAI representatives did not deny that this behavior occurs with its AI model. In reply, xAI employee Igor Babuschkin wrote, “The issue here is that the web is full of ChatGPT outputs, so we accidentally picked up some of them when we trained Grok on a large amount of web data. This was a huge surprise to us when we first noticed it. For what it’s worth, the issue is very rare and now that we’re aware of it we’ll make sure that future versions of Grok don’t have this problem. Don’t worry, no OpenAI code was used to make Grok.”

In reply to Babuschkin, Winterbourne wrote, “Thanks for the response. I will say it’s not very rare, and occurs quite frequently when involving code creation. Nonetheless, I’ll let people who specialize in LLM and AI weigh in on this further. I’m merely an observer.”

A screenshot of Jax Winterbourne's X post about Grok talking like it's an OpenAI product.

Enlarge / A screenshot of Jax Winterbourne’s X post about Grok talking like it’s an OpenAI product.

Jason Winterbourne

However, Babuschkin’s explanation seems unlikely to some experts because large language models typically do not spit out their training data verbatim, which might be expected if Grok picked up some stray mentions of OpenAI policies here or there on the web. Instead, the concept of denying an output based on OpenAI policies would probably need to be trained into it specifically. And there’s a very good reason why this might have happened: Grok was fine-tuned on output data from OpenAI language models.

“I’m a bit suspicious of the claim that Grok picked this up just because the Internet is full of ChatGPT content,” said AI researcher Simon Willison in an interview with Ars Technica. “I’ve seen plenty of open weights models on Hugging Face that exhibit the same behavior—behave as if they were ChatGPT—but inevitably, those have been fine-tuned on datasets that were generated using the OpenAI APIs, or scraped from ChatGPT itself. I think it’s more likely that Grok was instruction-tuned on datasets that included ChatGPT output than it was a complete accident based on web data.”

As large language models (LLMs) from OpenAI have become more capable, it has been increasingly common for some AI projects (especially open source ones) to fine-tune an AI model output using synthetic data—training data generated by other language models. Fine-tuning adjusts the behavior of an AI model toward a specific purpose, such as getting better at coding, after an initial training run. For example, in March, a group of researchers from Stanford University made waves with Alpaca, a version of Meta’s LLaMA 7B model that was fine-tuned for instruction-following using outputs from OpenAI’s GPT-3 model called text-davinci-003.

On the web you can easily find several open source datasets collected by researchers from ChatGPT outputs, and it’s possible that xAI used one of these to fine-tune Grok for some specific goal, such as improving instruction-following ability. The practice is so common that there’s even a WikiHow article titled, “How to Use ChatGPT to Create a Dataset.”

It’s one of the ways AI tools can be used to build more complex AI tools in the future, much like how people began to use microcomputers to design more complex microprocessors than pen-and-paper drafting would allow. However, in the future, xAI might be able to avoid this kind of scenario by more carefully filtering its training data.

Even though borrowing outputs from others might be common in the machine-learning community (despite it usually being against terms of service), the episode particularly fanned the flames of the rivalry between OpenAI and X that extends back to Elon Musk’s criticism of OpenAI in the past. As news spread of Grok possibly borrowing from OpenAI, the official ChatGPT account wrote, “we have a lot in common” and quoted Winterbourne’s X post. As a comeback, Musk wrote, “Well, son, since you scraped all the data from this platform for your training, you ought to know.”

Elon Musk’s new AI bot, Grok, causes stir by citing OpenAI usage policy Read More »

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After losing everywhere else, Elon Musk asks SCOTUS to get SEC off his back

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Musk v. SEC —

Musk’s last-ditch effort to terminate settlement over “funding secured” tweets.

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Elon Musk on stage at an event, resting his chin on his hand

Enlarge / Elon Musk at an AI event with Britain Prime Minister Rishi Sunak in London on Thursday, Nov. 2, 2023.

Getty Images | WPA Pool

Elon Musk yesterday appealed to the Supreme Court in a last-ditch effort to terminate his settlement with the Securities and Exchange Commission. Musk has claimed he was coerced into the deal with the SEC and that it violates his free speech rights, but the settlement has been upheld by every court that’s reviewed it so far.

In his petition asking the Supreme Court to hear the case, Musk said the SEC settlement forced him to “waive his First Amendment rights to speak on matters ranging far beyond the charged violations.”

The SEC case began after Musk’s August 2018 tweets stating, “Am considering taking Tesla private at $420. Funding secured” and “Investor support is confirmed. Only reason why this is not certain is that it’s contingent on a shareholder vote.” The SEC sued Musk and Tesla, saying the tweets were false and “led to significant market disruption.”

The settlement required Musk and Tesla to each pay $20 million in penalties, forced Musk to step down from his board chairman post, and required Musk to get Tesla’s pre-approval for tweets or other social media posts that may contain information material to the company or its shareholders.

Musk told the Supreme Court that the need to get pre-approval for tweets “is a quintessential prior restraint that the law forbids.”

In the settlement, “the SEC demanded that Mr. Musk refrain indefinitely from making any public statements on a wide range of topics unless he first received approval from a securities lawyer,” Musk’s petition said. “Only months later, the SEC sought to hold Mr. Musk in contempt of court on the basis that Mr. Musk allegedly had not obtained such approval for a post on Twitter (now X). In effect, the SEC sought contempt sanctions—up to and including imprisonment—for Mr. Musk’s exercise of his First Amendment rights.”

Musk’s court losses

In April 2022, Musk’s attempt to get out of the settlement was rejected by a US District Court judge. Musk appealed to the US Court of Appeals for the 2nd Circuit, but a three-judge panel unanimously ruled against him in May 2023. Musk asked the appeals court for an en banc rehearing in front of all the court’s judges, but that request was denied in July, leaving the Supreme Court as his only remaining option.

The 2nd Circuit panel ruling dismissed Musk’s argument that the settlement is a “prior restraint” on his speech, writing that “Parties entering into consent decrees may voluntarily waive their First Amendment and other rights.” The judges also saw “no evidence to support Musk’s contention that the SEC has used the consent decree to conduct bad-faith, harassing investigations of his protected speech.”

There is no guarantee that the Supreme Court will take up Musk’s case. Musk’s petition says the case presents the constitutional question of whether “a party’s acceptance of a benefit prevents that party from contending that the government violated the unconstitutional conditions doctrine in requiring a waiver of constitutional rights in exchange for that benefit.”

Musk argues that his settlement violates the unconstitutional conditions doctrine, which “limits the government’s ability to condition benefits on the relinquishment of constitutional rights.” He says his case also presents the question of “whether the government can insulate its demands that settling defendants waive constitutional rights from judicial scrutiny.”

“This petition presents an apt opportunity for the Court to clarify that government settlements are not immune from constitutional scrutiny, to the immediate benefit of the hundreds of defendants who settle cases with the SEC each year,” Musk’s petition said.

Musk complains about SEC investigations

Musk claims he is burdened with an “ever-present chilling effect that results from the pre-approval provision” and complained that the SEC has continued to investigate him. “In the past three years, the SEC has at all times kept at least one investigation open regarding Mr. Musk or Tesla. The SEC’s actions—in seeking contempt and then maintaining a steady stream of investigations—chills Mr. Musk’s speech,” the petition said.

As previously noted, the 2nd Circuit appeals court judges did not think the SEC investigations of Musk had gone too far. “To the contrary, the record indicates that the SEC has opened just three inquiries into Musk’s tweets since 2018,” the May 2023 appeals court decision said. The first of those three investigations led to the settlement that Musk is trying to get out of. The second and third investigations sought information about tweets in 2019 and 2021.

Although Musk has repeatedly lost his attempts to undo the SEC settlement, he prevailed against a class-action lawsuit that sought financial damages for Tesla shareholders. The judge in that case ruled that Musk’s tweets about having secured funding to take Tesla private were false and reckless, but a jury sided with Musk on the questions of whether he knew the tweets were false and whether they caused Tesla investors to lose money.

Despite the class-action suit’s failure, Tesla investors are getting some money. The $40 million in fines paid to the SEC by Musk and Tesla, plus interest, is in the process of being distributed to investors.

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Elon Musk’s Brain-chip Startup Approved by FDA for Testing on Humans

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Neuralink, Elon Musk’s brain-machine interface (BMI) company, has announced that it has received approval from the US Food and Drug Administration (FDA) to conduct its first tests on humans. The company is developing minimally invasive brain chips which it hopes to use to restore vision and mobility for people with disabilities.

Neuralink says it doesn’t have immediate plans to recruit participants, however the FDA approval marks a significant step forward after a previous bid was rejected on safety grounds.

In March, Reuters reported the FDA’s major safety concerns involved the device’s lithium battery, the potential for the implant’s tiny wires to migrate to other areas of the brain, and questions over whether and how the device can be removed without damaging brain tissue.

Musk’s BMI startup first revealed a wireless version of its ‘N1 Link’ implant working in pigs in 2020, which streamed neural data in order to track limb movement. It has since showcased its neural implants working in primates, notably allowing a macaque test subject to play Pong using only its thoughts.

N1 Link (left), Removable charger/transmitter (right) | Image courtesy Neuralink

Neuralink’s N1 Implant is hermetically sealed in a biocompatible enclosure which the company says is capable of withstanding harsh physiological conditions. The N1 Implant is implanted by a custom a surgical robot; Neuralink says this ensures accurate and efficient placement of its 64 flexible threads which are distrusted to 1,024 electrodes.

Powered by a small lithium battery that can be wirelessly charged using a compact, inductive charger, the implant is said to incorporate custom low-power chips and electronics that process neural signals and transmit them wirelessly to the Neuralink Application.

Neuralink is currently focused on giving people with quadriplegia the ability to control computers and mobile devices with their thoughts. In the future, the company hopes to restore capabilities such as vision, motor function, and speech, and eventually expand “how we experience the world,” the company says on its website.

That last bit is undoubtedly the company’s most ambitious goal, which the company has said will not only include reading electrical brain signals from paralyzed and neurotypical users alike, but also eventually the ability to “write” signals back to the brain.

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Neuralink “Show & Tell” Coming on November 30th, Hints at Thought-controlled Typing

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Elon Musk’s brain-machine interface (BMI) company Neuralink has been fairly quiet since it last showed off a live trial of the company’s implant in a macaque early last year. Although originally scheduled for October 31st, Musk says a “show & tell” update is coming on November 30th.

The event is said to take place on November 30th at 6: 00 PM PT (local time here). The company’s Twitter profile left a possible hint at this year’s update in an announcement, and it appears to be focused on text input.

The company says in its application FAQ it hasn’t yet begun clinical trials, although BMI text input may be difficult to prove in non-human subjects, so we’ll just have to wait and see.

Like many of Musk’s startups, Neuralink has some fairly lofty goals. The company says in the near-term it wants to help those with paralysis and neurological conditions and disorders and “reduce AI risk to humanity in the long term.”

Here’s a quick recap of events to bring you up to speed for Wednesday’s show and tell:

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