WEBVTT - Elon Loses (Again) in Delaware, Might Gain New Tesla Customers 0:00:03.080 --> 0:00:08.200 Bloomberg Audio Studios, Podcasts, radio news. 0:00:16.079 --> 0:00:18.960 Well, Elon Musk is now the richest person on the planet. 0:00:19.320 --> 0:00:22.200 More than half the satellites in space are owned and 0:00:22.280 --> 0:00:24.200 controlled by one man. 0:00:24.560 --> 0:00:27.320 Starting his own artificial intelligence company. 0:00:27.520 --> 0:00:31.240 Well, he's a legitimate, super genius, legitimate, he says. He's 0:00:31.280 --> 0:00:34.160 always voted for Democrats, but this year it will be different. 0:00:34.200 --> 0:00:35.160 He'll vote Republican. 0:00:35.400 --> 0:00:37.919 There is a reason the US government is so reliant 0:00:37.920 --> 0:00:38.320 on him. 0:00:38.520 --> 0:00:41.199 Elon Musk is a scam artist and he's done nothing. 0:00:42.720 --> 0:00:45.479 Anything he does, he's fascinating people. 0:00:53.240 --> 0:00:57.480 Welcome to Elanank, Bloomberg's weekly podcast about Elon Musket's Tuesday, 0:00:57.520 --> 0:01:02.320 December third. I'm your host, David Papatapolis. Now, Elon Musk 0:01:02.480 --> 0:01:06.120 loves himself a good lawsuit. He's always suing someone or 0:01:06.160 --> 0:01:10.120 getting sued by someone, and these cases are constantly percolating 0:01:10.160 --> 0:01:13.000 in the background, but this week they take center stage. 0:01:13.120 --> 0:01:16.759 Late yesterday, News broke to the Delaware court yet again 0:01:16.920 --> 0:01:21.520 has struck down his ginormous Tesla pay package. Meanwhile, JP 0:01:21.640 --> 0:01:24.279 Morgan decided the best to walk away from a separate 0:01:24.319 --> 0:01:27.440 suit it had brought against Musk, who in turn decided 0:01:27.480 --> 0:01:29.440 it was time to re up an old suit he 0:01:29.440 --> 0:01:32.960 had filed against rival Sam Altman and his company Open Ai. 0:01:33.480 --> 0:01:36.199 All is fair in love and war and law, fair, 0:01:36.480 --> 0:01:37.840 as Elon likes to call it. 0:01:38.480 --> 0:01:40.560 After that, we're going to get into the way politics 0:01:40.640 --> 0:01:44.080 is reshaping the Musk customer base something of a fascination 0:01:44.240 --> 0:01:47.080 of ours here at Elon Inc. To talk about all this. 0:01:47.440 --> 0:01:51.400 I am joined in the studio by our old pal 0:01:51.480 --> 0:01:54.320 Sarah Friar. Hey, Sarah, Hey, you picked a hell of 0:01:54.360 --> 0:01:56.880 a week to come to New York. It is cold here, Sarah, 0:01:57.040 --> 0:01:58.400 love it okay. 0:01:58.200 --> 0:01:58.600 Very good. 0:01:58.760 --> 0:02:04.240 We also have our regulars Max Chafkin and Dana Hall. Hey, Max, Hey, David, 0:02:04.600 --> 0:02:08.160 Dana Hello, Hello, Hello. And on the bat phone, we 0:02:08.240 --> 0:02:11.680 have a special update coming from Bloomberg's man in Delaware, 0:02:11.720 --> 0:02:14.240 our courts reporter Jeff Feely. 0:02:14.840 --> 0:02:18.919 Jeff, Hello, sir, Good morning. All So, Jeff, we're gonna. 0:02:18.720 --> 0:02:22.600 Start with you and this ruling that came last night 0:02:22.840 --> 0:02:26.440 on the Musk pay package. Tell us what exactly did 0:02:26.480 --> 0:02:30.680 the judge there, Chancellor Kathlyn McCormick rule last night. 0:02:31.680 --> 0:02:35.240 She's judge Kate. He just judged Kate down here. She 0:02:35.440 --> 0:02:40.440 ruled for the second time that must pay was the 0:02:40.480 --> 0:02:44.920 result of a tainted process and that it should not 0:02:45.040 --> 0:02:48.720 be reinstated, even though there was a second shareholder vote 0:02:49.200 --> 0:02:54.800 overwhelmingly ratifying the idea that he deserved the largest compensation 0:02:55.000 --> 0:03:00.320 award in US corporate history. And she also awarded the 0:03:01.040 --> 0:03:04.240 legal fees of three hundred and forty five million dollars 0:03:04.760 --> 0:03:08.720 to the lawyers who represented the loan Tesla shareholder who 0:03:08.760 --> 0:03:12.600 took issue with this. With this pay package, they had 0:03:12.639 --> 0:03:17.720 been asking for stock in the neighborhood of five billion dollars. 0:03:17.880 --> 0:03:23.359 They pointed to the fifty five billion dollar pay package 0:03:23.400 --> 0:03:27.400 as the load star that they were comparing themselves to 0:03:27.600 --> 0:03:32.359 and hoping to be awarded upon. But the judge, following 0:03:33.040 --> 0:03:36.400 the guidance of the Delaware Supreme Court, found that that 0:03:36.600 --> 0:03:42.160 would be an unfair windfall and cut back their feet 0:03:42.480 --> 0:03:45.440 only to three hundred and forty five million dollars. 0:03:45.480 --> 0:03:46.920 Woo, Who poor them. 0:03:47.080 --> 0:03:50.320 I doubt Greg Vala, who's the lead lawyer, was crying 0:03:50.320 --> 0:03:51.600 in his beer last night. 0:03:52.080 --> 0:03:54.840 I would think that the number on that pay package 0:03:54.880 --> 0:03:58.480 bounces all around. As we last understood it, what was 0:03:58.520 --> 0:04:00.000 the approximate number two? 0:04:00.600 --> 0:04:02.520 What did we I think we in the story said 0:04:02.520 --> 0:04:06.560 that it had definitely bounced beyond fifty five you know, 0:04:06.600 --> 0:04:11.800 again because Tesla's stock, you know, it's so volatile, it 0:04:11.960 --> 0:04:13.280 just goes all over the place. 0:04:13.480 --> 0:04:16.080 I thought it had gotten max to like around one 0:04:16.160 --> 0:04:19.360 hundred billion or so, giving some work, Well. 0:04:19.440 --> 0:04:22.279 The numbers we used in the story were that when 0:04:22.279 --> 0:04:25.360 the stock option grant was made, they were worth two 0:04:25.440 --> 0:04:29.000 point six billion, and by the time the trial went 0:04:29.080 --> 0:04:31.160 on they were up to fifty six billion. 0:04:31.720 --> 0:04:36.080 So as of Monday one hunt, according to the Bloomberg story, 0:04:36.080 --> 0:04:38.159 one hundred and one point five billion. Oh yeah, which 0:04:38.200 --> 0:04:40.560 is obviously that the stock price of Tesla has gone 0:04:40.600 --> 0:04:42.240 way up over the last month or so. 0:04:42.560 --> 0:04:44.760 Yeah, there we are, now, Jeff, hadn't there been a 0:04:44.880 --> 0:04:50.720 sense that the new shareholder vote, done with greater transparency 0:04:50.920 --> 0:04:54.560 and so on and so forth, had addressed fully or 0:04:54.600 --> 0:04:59.719 at least some of Judge Katie's concerns. Apparently not, But 0:04:59.760 --> 0:05:01.400 I but I thought there was that sense out there 0:05:01.400 --> 0:05:02.760 that had been the case. 0:05:03.680 --> 0:05:07.040 Well, I mean, look, the reality is this was a 0:05:08.160 --> 0:05:12.520 novel question of law in terms of could you basically 0:05:12.800 --> 0:05:18.160 use a second shareholder vote to and affect correct problems 0:05:18.760 --> 0:05:24.120 with the pay process and the problems that Judge Katie 0:05:24.160 --> 0:05:28.520 had identified the first time around, just rampant conflicts of 0:05:28.560 --> 0:05:32.400 interest had not really been addressed. I mean, you know, 0:05:32.440 --> 0:05:37.800 there were some cosmetic changes, but the process itself was tainted. 0:05:38.200 --> 0:05:40.960 And Jeff on that the rampant conflicts of interest. Basically, 0:05:41.040 --> 0:05:43.760 this board is just too much in bed with Elon Musk. 0:05:43.839 --> 0:05:46.200 That's the idea, and that is exactly right. 0:05:46.400 --> 0:05:47.240 I'd just like to know. 0:05:47.400 --> 0:05:50.880 I mean, Tesla's own proxy made it very clear to 0:05:50.960 --> 0:05:55.680 shareholders that there was no certainty that this revote was 0:05:55.720 --> 0:05:57.480 going to change the outcome of the case. I mean 0:05:57.520 --> 0:06:00.800 they said it plain as day. A special noted that 0:06:00.920 --> 0:06:04.279 even a favorable ratification vote by stockholders may not fully 0:06:04.320 --> 0:06:07.280 resolve this matter. We cannot predict with certainty how a 0:06:07.360 --> 0:06:10.240 revote will where I will vote to ratify the performance 0:06:10.279 --> 0:06:14.000 award would be treated under Delaware law under these novel circumstances. 0:06:14.360 --> 0:06:16.799 So these risk factors were all laid out in the proxy. 0:06:16.880 --> 0:06:19.680 I think what happened was that Musk kind of did 0:06:19.720 --> 0:06:22.680 this like marketing campaign to all of the retail shareholders 0:06:22.680 --> 0:06:24.760 and got them whipped up into this frenzy so that 0:06:24.839 --> 0:06:27.080 they think that this is like a direct democracy that 0:06:27.120 --> 0:06:30.159 they voted to ratify it again. And therefore it would 0:06:30.200 --> 0:06:33.960 sail through. And they're completely ignoring the precedent of Delaware 0:06:34.040 --> 0:06:37.280 law and the process in Delaware. And that's why you're 0:06:37.320 --> 0:06:40.760 seeing so many people upset today. And you know, like 0:06:40.960 --> 0:06:44.360 Tesla's obviously going to appeal, but Tesla's ow proxy made 0:06:44.360 --> 0:06:46.400 it very clear that they were taking a novel approach 0:06:46.440 --> 0:06:47.240 to trying to resolve. 0:06:47.440 --> 0:06:51.920 So, Jeff, when Tesla appeals, how does that appeal process work? 0:06:52.880 --> 0:06:55.240 They've already filed their notice of appeal. 0:06:55.040 --> 0:06:57.520 They did, and so they filed that to whom and 0:06:57.600 --> 0:07:00.000 how exactly does that work? And what would the timeline 0:07:00.200 --> 0:07:00.719 that look like? 0:07:01.360 --> 0:07:04.000 All right, So, the Delaware Supreme Court is where this 0:07:04.120 --> 0:07:07.480 case goes, and unlike the US Supreme Court, they don't 0:07:07.560 --> 0:07:11.040 choose their cases any lower court ruling. They have to 0:07:11.240 --> 0:07:14.119 hear the appeal of So it's headed to the five 0:07:14.280 --> 0:07:17.920 members of that court, and it's going to take the 0:07:17.960 --> 0:07:20.280 better part of a year for all the processing to 0:07:20.320 --> 0:07:20.920 get done. 0:07:21.120 --> 0:07:23.880 Hey, Jeff, can I ask a dumb question. Isn't Tesla 0:07:23.880 --> 0:07:24.679 based in Texas? 0:07:24.720 --> 0:07:24.960 Now? 0:07:25.160 --> 0:07:25.520 It is? 0:07:26.160 --> 0:07:27.800 So, at what point. 0:07:27.560 --> 0:07:31.520 Does that have an effect on what the company tries 0:07:31.560 --> 0:07:34.000 to do with Elon Musk's pay Okay? 0:07:34.040 --> 0:07:38.320 Well, so, because they were a Delaware company when this 0:07:38.520 --> 0:07:42.760 package in two eighteen was negotiated, they're still covered by 0:07:42.800 --> 0:07:47.280 Delaware law for this case. If they decide, you know, 0:07:47.400 --> 0:07:50.600 if they lose on appeal, the likelihood is they're going 0:07:50.680 --> 0:07:53.880 to run to the new Business Court in Texas and 0:07:54.920 --> 0:07:59.920 you know, basically create a whole new package in Texas, 0:08:00.080 --> 0:08:02.120 and it's probably going to be the same package that 0:08:02.120 --> 0:08:05.680 they proposed here at Delaware, and the likelihood is it'll 0:08:05.720 --> 0:08:12.760 sail through like you know, bacon or in Greece decision. 0:08:13.760 --> 0:08:16.720 I don't know that bacon and grease sales. But anyway, Sara, 0:08:16.840 --> 0:08:18.640 you were. 0:08:18.480 --> 0:08:22.040 Does that mean that Musk's plan to just move all 0:08:22.120 --> 0:08:26.680 of his lawsuits to Texas, like anything that we ever 0:08:26.720 --> 0:08:29.520 do to challenge Musk in the court of law will 0:08:29.560 --> 0:08:30.240 be heard there. 0:08:30.480 --> 0:08:31.200 That's going to work. 0:08:31.840 --> 0:08:35.200 Well, there is a provision in the law where corporations 0:08:35.320 --> 0:08:40.120 can decide where their litigation is going to be. They're 0:08:40.120 --> 0:08:45.040 called you know, basically forum clauses, and yes, those are 0:08:45.080 --> 0:08:49.360 considered legal. If Elon and the Tesla board decide that 0:08:49.520 --> 0:08:53.600 all litigation against Tesla will be heard in Texas, there's 0:08:53.640 --> 0:08:55.959 really not much that shareholders can do about it. 0:08:56.760 --> 0:09:00.679 So then why take the step of appealing to the 0:09:01.000 --> 0:09:03.240 to the top court in Delaware if in the end 0:09:03.320 --> 0:09:05.079 you just know you're going to go to Texas. 0:09:05.559 --> 0:09:08.240 Well, I can tell you it's pretty easy. I mean, 0:09:08.320 --> 0:09:10.679 we just mentioned that the guy is worth more than 0:09:10.720 --> 0:09:14.400 one hundred billion dollars, so picking up the tab for 0:09:14.520 --> 0:09:18.079 another appeal in Delaware it'n't exactly going to leave him 0:09:18.120 --> 0:09:22.679 eating dog food out of cans. So I think he's appealing, 0:09:23.640 --> 0:09:26.280 you know, basically because he can. 0:09:27.120 --> 0:09:30.600 I mean, it's an interesting test of the like Elon 0:09:30.720 --> 0:09:34.400 Musk ability to just sort of force things make, you know, 0:09:34.480 --> 0:09:37.360 try to try to essentially avoid the law or ignore 0:09:37.400 --> 0:09:40.040 the law, you know, go on Twitter and say this 0:09:40.080 --> 0:09:41.760 is this is bs, I'm not going to do it, 0:09:42.040 --> 0:09:45.480 and then the ability of like courts to assert their authority. 0:09:45.520 --> 0:09:48.760 I mean, over the last month, we've seen all of 0:09:48.800 --> 0:09:53.280 these kind of very optimistic projections by like Tesla shareholders 0:09:53.280 --> 0:09:57.280 that somehow Trump is going to drastically shift, you know, 0:09:57.360 --> 0:10:00.320 basically the dollars and cents of this company. And I 0:10:00.320 --> 0:10:02.559 feel like this this case, although it's not going to 0:10:02.720 --> 0:10:06.400 change that much, it just shows that like you cannot 0:10:06.760 --> 0:10:09.720 you know, reality and the reality of the justice system 0:10:09.720 --> 0:10:10.720 will assert itself. 0:10:11.040 --> 0:10:13.320 Well, I mean, remember this is the judge that forced 0:10:13.440 --> 0:10:17.319 Musk to buy Twitter. That history has sort of been 0:10:17.360 --> 0:10:20.680 revised now into something Musk always wanted to do, to say, 0:10:20.720 --> 0:10:23.520 free speech. But as we remember while on this podcast, 0:10:24.480 --> 0:10:25.960 it was really Judge Katie. 0:10:26.040 --> 0:10:28.040 Yeah, for a guy who's been winning and winning and 0:10:28.080 --> 0:10:30.560 winning of late. And you know he, as we've said 0:10:30.559 --> 0:10:33.640 perhaps in the past, when he tangles with Judge Katie, 0:10:33.679 --> 0:10:34.400 he loses. 0:10:34.760 --> 0:10:39.560 As my friend Dana Hall has very evocatively said, you know, 0:10:40.000 --> 0:10:44.360 he's he was teflon Elon. Nothing stuck to him. He 0:10:44.559 --> 0:10:46.240 slid like bacon on greef. 0:10:49.520 --> 0:10:51.319 You're making me hungry here, Pheely. 0:10:51.280 --> 0:10:54.640 I know, I know. Anyway, he's got some dents in 0:10:54.720 --> 0:10:58.720 his armor here, and she's pretty much the only one 0:10:59.200 --> 0:11:01.440 who was held his feet to the legal fire. 0:11:01.559 --> 0:11:05.040 You got to give her some credit, absolutely, mister Peeley. 0:11:05.120 --> 0:11:06.400 We will let you go, sir. 0:11:07.000 --> 0:11:09.240 We'll have you back on soon when there's a new 0:11:09.280 --> 0:11:10.559 twist and turn in the case. 0:11:10.840 --> 0:11:18.400 Listen, everybody have a wonderful day, Dana. 0:11:18.600 --> 0:11:20.560 So let's zoom the lens back out for a second. 0:11:20.679 --> 0:11:24.840 In general, on lawfair as a whole, Elon loves to 0:11:24.880 --> 0:11:29.520 talk about the term. What exactly is the definition of 0:11:29.600 --> 0:11:31.920 lawfair as we understand it, what's kind of. 0:11:31.920 --> 0:11:35.280 This combination of law and warfare? And I think the 0:11:35.320 --> 0:11:38.800 coinage comes from two thousand and one, after the September 0:11:38.840 --> 0:11:41.160 eleventh attacks, when the idea is that you could sort 0:11:41.200 --> 0:11:43.959 of weaponize the law to go after your adversaries. 0:11:44.200 --> 0:11:46.760 And Musk loves this term. 0:11:47.040 --> 0:11:49.720 He has often said that Donald Trump is a victim 0:11:49.760 --> 0:11:52.800 of lawfair, that he himself is a victim of law fair. 0:11:52.960 --> 0:11:55.320 If you do a search of his posts on X, 0:11:55.400 --> 0:11:58.920 it's like lawfair, lawfair, law fair. When when he hosted 0:11:59.360 --> 0:12:02.160 Trump on in August, he kept kind of trying to 0:12:02.160 --> 0:12:05.320 steer the conversation to like, hey, like, we're both victims 0:12:05.360 --> 0:12:08.400 of lawfair. So it's just something that he is constantly 0:12:08.440 --> 0:12:12.160 harping on. But the big irony is that he himself 0:12:12.240 --> 0:12:14.960 is so litigious. I mean, he is right now trying 0:12:14.960 --> 0:12:17.959 to sue Sam Altman into oblivion, and he is often 0:12:18.120 --> 0:12:21.480 the plaintiff in a lot of cases. And so I 0:12:21.520 --> 0:12:24.199 just think it's fascinating to look at how Musk himself 0:12:24.200 --> 0:12:27.040 has kind of weaponized the law. He has so much money, 0:12:27.080 --> 0:12:29.600 he can hire the best law firms, he can go 0:12:29.679 --> 0:12:32.560 for broke and oftentimes that's how law works, right, Like, 0:12:32.600 --> 0:12:37.839 the richest people have the resources to litigate beyond their adversaries. 0:12:37.920 --> 0:12:40.160 And you're seeing that play out over and over and 0:12:40.160 --> 0:12:43.000 over again, and so I just think there's sort of 0:12:43.040 --> 0:12:45.520 a wider frame here, Like right now Musk is saying 0:12:45.559 --> 0:12:48.839 that he is a victim of the lawfair against him 0:12:48.840 --> 0:12:51.920 in Delaware Chancery Corps, and he's clearly whipping all of 0:12:51.960 --> 0:12:55.600 his fans and retail shareholders into agreeing with him. At 0:12:55.600 --> 0:12:58.280 the same time, look at what he's doing, suing not 0:12:58.320 --> 0:13:01.640 just open ai, but now Microsoft to over open aies 0:13:01.720 --> 0:13:05.240 you know, nonprofit versus for profit status plans, and and 0:13:05.360 --> 0:13:07.960 how how many times Musk has been in lawsuits. 0:13:08.040 --> 0:13:10.360 Yeah, so Max tell us a little bit about that 0:13:10.640 --> 0:13:13.560 freshly opened Musk suit against open Ai. 0:13:13.760 --> 0:13:15.880 Well, he filed the suit, then he dropped it, then 0:13:15.880 --> 0:13:19.679 he refiled. And the latest twist is an injunction asking 0:13:19.720 --> 0:13:24.439 the court to stop open AI's plan to change its 0:13:24.440 --> 0:13:27.400 status from a non for profit or this very complicated 0:13:27.840 --> 0:13:30.440 legal status that had had where there was a non 0:13:30.440 --> 0:13:33.200 for profit that owned the for profit to a more 0:13:33.360 --> 0:13:36.040 conventional for profit, which it's trying to do because it's 0:13:36.040 --> 0:13:39.560 trying to raise, you know, buckets of money, and Elon 0:13:39.679 --> 0:13:43.160 Musk's suit is basically asked in the court to stop that, 0:13:43.640 --> 0:13:46.280 and it's and the arguments it's megan, they're kind of interesting. 0:13:46.720 --> 0:13:49.040 There's a few different ones, but couple of which are 0:13:49.040 --> 0:13:53.319 basically anti trust claims. I trust, yeah, yeah, based on 0:13:53.760 --> 0:13:57.120 a couple of factors. One is interlocking directors. To me, 0:13:57.200 --> 0:14:00.440 the most interesting one is this idea of the interlocking directors, 0:14:00.440 --> 0:14:03.440 which would be a violation of federal antitrust law. 0:14:03.720 --> 0:14:05.760 You have Sam help me out there for. 0:14:07.760 --> 0:14:08.200 AI. 0:14:08.480 --> 0:14:10.240 So this is this is a thing that has come 0:14:10.320 --> 0:14:13.640 up in discussions around Microsoft and anti trust and open 0:14:13.679 --> 0:14:15.920 Ai and anti trust and various FTC things. 0:14:15.920 --> 0:14:17.480 But basically, like there are. 0:14:17.400 --> 0:14:20.560 Legal issues with a director serving on the board of 0:14:21.000 --> 0:14:23.560 companies that are doing business together, which is a case 0:14:23.720 --> 0:14:27.720 for open ai where you had Reid Hoffmann simultaneously serving 0:14:27.720 --> 0:14:31.280 on the board of open Ai and Microsoft. He's now anyway, 0:14:31.440 --> 0:14:33.440 and so a bunch of issues like that. And then 0:14:33.680 --> 0:14:38.200 there's also a complaint about open Ai suggesting to venture 0:14:38.200 --> 0:14:42.360 capitalists that they not invest in Elon Musk's company, which 0:14:42.520 --> 0:14:45.640 my understanding is something that is not all that unusual. 0:14:45.680 --> 0:14:47.840 Sarah may have a better sense of this is not 0:14:47.880 --> 0:14:50.760 something that's entirely unusual in the world of venture capital, 0:14:51.080 --> 0:14:54.480 although you know, perhaps it does raise some raise some 0:14:54.600 --> 0:14:58.720 legal issues. Basically Elon Musk doing everything you can to 0:14:58.840 --> 0:15:01.960 mess with you know, a competitor and and really the 0:15:02.000 --> 0:15:04.840 strongest competitor in the in the world of AI. 0:15:05.040 --> 0:15:07.080 What's so interesting about this case to me is like, 0:15:07.840 --> 0:15:10.320 usually when there's a lawsuit, you can get a sense 0:15:10.360 --> 0:15:13.200 of who is who's the big doug and who's like 0:15:13.280 --> 0:15:15.920 fighting for their life right. Usually it's like a David 0:15:15.960 --> 0:15:19.360 versus Goliath kind of situation. In this situation, you know 0:15:19.400 --> 0:15:22.000 that you've got the richest man in the world who 0:15:22.120 --> 0:15:27.520 has his own AI company suing his I guess co 0:15:27.600 --> 0:15:29.840 founder is one way to put it. Of Open Ai, 0:15:30.440 --> 0:15:35.800 who has also created this extremely powerful, influential AI company 0:15:35.840 --> 0:15:37.239 that's that wants. 0:15:37.000 --> 0:15:39.440 To conjunction with Microsoft. 0:15:38.840 --> 0:15:43.520 In conjunction with an extremely powerful big tech company which 0:15:43.560 --> 0:15:48.400 wants to completely reconfigure like the data center infrastructure in 0:15:48.400 --> 0:15:50.360 the United States. It's going to cost them billions upon 0:15:50.440 --> 0:15:52.120 billions of dollars, are going to need a lot of 0:15:52.120 --> 0:15:55.840 government support, and so this lawsuit is interesting, but it's 0:15:55.880 --> 0:15:58.480 also interesting in the sort of wider lens of like 0:15:59.240 --> 0:16:01.960 Musk is now sitting at the right hand of the president, 0:16:02.440 --> 0:16:06.280 Altman needs the government to be behind him one hundred 0:16:06.280 --> 0:16:09.400 percent on his data center build out to fulfill open 0:16:09.440 --> 0:16:13.040 AI's ambitions. So this not for profit debate is kind 0:16:13.080 --> 0:16:18.400 of like a hiccup in the grand scheme of things, 0:16:18.040 --> 0:16:23.600 in both of these men having like these intense ambitions 0:16:23.640 --> 0:16:25.360 for AI taking over. 0:16:26.000 --> 0:16:29.120 I do think Elon Musk's position has gotten a lot stronger, 0:16:29.200 --> 0:16:32.480 and not only because he's revived this lawsuit, but because, 0:16:32.480 --> 0:16:36.240 as Sarah says, he's in a position to have a 0:16:36.400 --> 0:16:40.360 huge impact on AI policy and open ai and not 0:16:40.400 --> 0:16:43.520 just AI policy, but anti trust policy, lots of policies 0:16:43.760 --> 0:16:46.520 that potentially impact you know, not just open AI, but 0:16:46.640 --> 0:16:49.120 like any company that he competes with. And so you 0:16:49.160 --> 0:16:50.960 have this suit on one side, and then on the 0:16:51.000 --> 0:16:53.400 other side, you know half a dozen things that the 0:16:53.400 --> 0:16:57.200 Trump administration could or couldn't do that would have an 0:16:57.200 --> 0:17:00.880 effect on this market and potentially could benefit and must We. 0:17:00.840 --> 0:17:04.800 Should note that his AI company, Xai, all the while 0:17:05.040 --> 0:17:06.520 is growing quite a bit, is it not. 0:17:06.800 --> 0:17:09.560 They've built out this massive data center in Memphis, Tennessee 0:17:10.000 --> 0:17:14.000 that they call Colossus. They have all these Nvidia GPUs. 0:17:14.160 --> 0:17:16.639 They've hired a bunch of people. I don't know what 0:17:16.640 --> 0:17:19.320 the current valuation is, but they yeah, no, it's I 0:17:19.359 --> 0:17:21.960 mean it's a real company. It's small, but it is 0:17:22.080 --> 0:17:24.920 not something to be taken lightly. Like Elon moves very. 0:17:24.720 --> 0:17:28.760 Fast and in the market of AI, like what matters 0:17:28.880 --> 0:17:31.639 is the capital, Like you just need money, Like the 0:17:31.800 --> 0:17:34.520 tech is kind of open source at this point, you 0:17:34.600 --> 0:17:39.760 just need buying and sometimes like appearing it's super capital 0:17:39.800 --> 0:17:44.480 intensive industry, super capital intensive, Like it's getting more efficient, right, 0:17:44.680 --> 0:17:50.239 but the amount of of compute power necessary to do 0:17:50.359 --> 0:17:54.440 an energy and energy to do the kind of analysis 0:17:54.520 --> 0:17:58.840 that AI needs to do, it's only getting getting exponentially 0:17:59.280 --> 0:18:02.639 heavier as AI develops, and it's going to continue in 0:18:02.680 --> 0:18:07.000 that direction. As AI gets more efficient, they're just going 0:18:07.080 --> 0:18:08.919 to try to make it do more things, which is 0:18:08.920 --> 0:18:11.520 going to cost more and require more. Like even if 0:18:11.560 --> 0:18:15.680 like every energy plant in the entire United States ran 0:18:15.760 --> 0:18:18.800 it full capacity, like it wouldn't fulfill the need of 0:18:18.800 --> 0:18:21.600 this industry. But then there's also just like the idea 0:18:21.640 --> 0:18:23.879 that if you are a competitor of Musk, which is, 0:18:24.720 --> 0:18:31.280 to be clear, a lot of the entire business America. Yeah, 0:18:31.280 --> 0:18:33.960 if you're if you're in if you're in EVS, if 0:18:33.960 --> 0:18:36.919 you're Jeff Bezos, if you're you know, a rival in 0:18:36.960 --> 0:18:40.719 social media, if you're you have to be scared of 0:18:40.760 --> 0:18:44.560 this open Ai lawsuit and also must proximity to Trump, 0:18:44.640 --> 0:18:48.320 And like what that might mean for who Trump decides 0:18:48.440 --> 0:18:49.760 to have a grudge against the other. 0:18:49.800 --> 0:18:52.320 Thing is like this lawsuit doesn't have to succeed in 0:18:52.320 --> 0:18:55.080 a conventional sense for it to hurt open Ai. Like 0:18:55.840 --> 0:18:59.199 just slowing down open Ai is potentially a win for 0:18:59.240 --> 0:19:02.399 Elon must because open Ai, yes, it's very successful. But 0:19:02.480 --> 0:19:05.119 Sarah kind of hinted at this, none of these companies 0:19:05.160 --> 0:19:08.840 are making money. Open Ai is losing huge amounts of money, 0:19:08.840 --> 0:19:12.119 burning billions of dollars, and that's part of the reason 0:19:12.200 --> 0:19:15.439 they're trying to go for profit, because they're trying to 0:19:15.440 --> 0:19:18.240 create additional things they can offer investors to keep the 0:19:18.280 --> 0:19:21.879 capital spigot flowing. So, you know, anything Musk can do 0:19:22.520 --> 0:19:26.240 to slow open Ai down is going to help his company, 0:19:26.240 --> 0:19:29.000 which is at effectively an earlier stage. But you know, 0:19:29.080 --> 0:19:31.720 really all these companies are at an early stage, So 0:19:31.720 --> 0:19:33.679 so despite the fact that open as a lead, you know, 0:19:33.720 --> 0:19:36.200 he can kind of like start to try to bring 0:19:36.240 --> 0:19:37.720 his company up to parody. 0:19:37.960 --> 0:19:39.400 Got it okay? Now? Dan? 0:19:39.680 --> 0:19:44.840 Meanwhile, JP Morgan decided, I believe sometime in the last 0:19:44.840 --> 0:19:47.680 few days, to drop a lawsuit it had brought against 0:19:47.800 --> 0:19:48.560 Musk tell us. 0:19:48.600 --> 0:19:50.879 What happened there, Yeah, I mean this was sort of 0:19:50.960 --> 0:19:55.360 a suit from twenty twenty one where JP Morgan was 0:19:56.080 --> 0:19:58.520 claiming that Tesla owed them one hundred and sixty two 0:19:58.560 --> 0:20:02.639 million dollars tied to like stock warrant transaction and it 0:20:02.680 --> 0:20:04.520 was over a strike price. It was such a small 0:20:04.520 --> 0:20:07.280 amount of money, which is crazy because like I always 0:20:07.280 --> 0:20:10.000 think of Elon in terms of billions, not millions, and 0:20:10.040 --> 0:20:11.919 this one seemed relatively small. 0:20:12.080 --> 0:20:14.719 If it ain't fifty billion, what is It's nothing? 0:20:15.000 --> 0:20:17.320 Yeah, Anyway, they agreed to drop the lawsuit. 0:20:17.440 --> 0:20:18.840 And I think you have to think about like the 0:20:18.920 --> 0:20:22.359 judiciary as a whole, like which courthouses are all these 0:20:22.440 --> 0:20:26.440 suits heard in, and like why Tesla has moved to Texas. 0:20:26.520 --> 0:20:29.240 And I think that anytime there's a change in administration, 0:20:29.359 --> 0:20:31.600 you just start to see a lot of litigation wrap 0:20:31.720 --> 0:20:35.159 up because people think about the cost benefit analysis of 0:20:35.200 --> 0:20:38.800 continuing to litigate under a new administration when there could 0:20:38.840 --> 0:20:41.760 be new judges appointed in different courtrooms and. 0:20:41.840 --> 0:20:44.200 Max, you know, it's also just the calculus, as Danager said, 0:20:44.200 --> 0:20:46.000 it just a few million dollars or I don't know 0:20:46.000 --> 0:20:49.040 how many millions, But yeah, is it worth pursuing that 0:20:49.160 --> 0:20:51.840 when against the next president's first budy? 0:20:51.920 --> 0:20:53.480 But it's not, and it's not I don't even think 0:20:53.480 --> 0:20:53.760 it's that. 0:20:53.880 --> 0:20:56.520 I think it's that, you know, JP Morgan wants those 0:20:56.560 --> 0:20:58.679 one hundred and sixty two million dollars, but it very 0:20:58.760 --> 0:21:01.760 much also wants future fees that Elon Musk could pay 0:21:01.920 --> 0:21:02.760 and you know, in the. 0:21:02.920 --> 0:21:05.879 In the's, but it also presumably one of those future 0:21:05.920 --> 0:21:07.400 fees at the time it suited him. 0:21:07.440 --> 0:21:10.040 No, no, But my point is like I'm not saying 0:21:10.040 --> 0:21:14.040 you shouldn't pay your professional services providers, but businesses choose 0:21:14.080 --> 0:21:17.000 to not pay their professional service to providers all the time. 0:21:17.280 --> 0:21:19.600 And there are lawsuits just like this that are effectively 0:21:19.600 --> 0:21:22.600 like negotiations over how much money are going to be paid? 0:21:23.000 --> 0:21:24.600 Is he going to pay more in the future. And 0:21:24.680 --> 0:21:27.640 in the reports about this settlement, part of the reason 0:21:28.040 --> 0:21:30.159 that they're the rational for dropping is that there are 0:21:30.200 --> 0:21:32.280 future commercial arrange. 0:21:32.640 --> 0:21:35.439 Yeah, there's some kind of settlement agreement. Yeah, there's like 0:21:35.480 --> 0:21:37.160 an undisclosed settlement agreement. 0:21:37.400 --> 0:21:37.720 Okay, so. 0:21:40.560 --> 0:21:43.439 Yeah, yeah, they're saying that it's I forget the exact wording, 0:21:43.440 --> 0:21:46.800