Latest / The Fourcast / What Musk’s $1.25 trillion SpaceX xAI merger is REALLY about - explained

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What Musk’s $1.25 trillion SpaceX xAI merger is REALLY about - explained · The Fourcast

0:00
He spells it out, which is, you know, first data centers in
0:02
space, then stuff on the moon, then Mars and the light of
0:06
consciousness extended everywhere.
0:08
And that's the vision. And if you just take a look at
0:11
what's going on down here on Earth right now, it seems a bit
0:14
more like someone is combining a lot of his very costly ventures
0:19
together and hoping that some magical synergies will emerge.
0:22
This is a race between the US and China.
0:27
Yes, these companies are big, but they have one thing in mind,
0:31
which is not just to beat each other, but also to beat, you
0:36
know, the world's second biggest superpower.
0:38
Should we have concerns that so much power potentially is in one
0:43
man's hands and that man is Elon Musk?
0:49
Hello and welcome to the forecast, Elon Musk.
0:51
SpaceX has acquired his AI startup, merging his two most
0:55
ambitious companies into a trillion dollar entity, the most
0:58
valuable private company the world has ever seen.
1:02
And he says this is only the beginning, describing the merger
1:05
as the start of a new book in a mission to build space based
1:09
data centres, harness the power of the sun and scale AI far
1:13
beyond anything possible on our planet Earth.
1:15
But behind the cosmic ambition lies a bigger question.
1:18
Is this trillion dollar valuation grounded in reality or
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is it another example of Musk's ability to bend markets,
1:25
investors and public attention, don't forget, to his unique
1:29
vision. Well, to discuss it all, we're
1:30
joined by our economics correspondent, the Channel 4
1:33
News Heliot Ebrahimi and Jacob Silverman, who's author of
1:36
Gilded Rage, Elon Musk and the Radicalization of Silicon
1:40
Valley. Jacob, were you expecting this?
1:42
Because there was sort of chatter about Musk doing
1:45
something along these lines, wasn't there?
1:47
And it's not like he hasn't merged his companies but before.
1:49
Yeah. I think there was some reporting
1:52
the last week that he had been looking for some kind of
1:55
internal tie up between some of his companies.
1:57
And as you said, I think this is something that Musk has done
2:01
before, most recently last year when he combined X&X AI.
2:05
So his social network and his AI company, both money losers of
2:10
the AI company, of course, drains a lot more resources.
2:14
So this does seem to be in line with his tendencies.
2:17
It's just doing something on a far bigger scale perhaps than
2:20
we've seen him do before, and really concentrating, as you
2:24
said, his interests into one big entity.
2:28
Yeah, you you've both made the point about the XAI aspect of
2:32
this being sort of loss making it losing billion dollars a
2:35
month. I think what Jacob said, it's
2:39
quite interesting, you know, this is a pattern and by the
2:42
way, it's not always successful. He also requested Tesla
2:46
investors agree to invest in X AI and 57% of them said they
2:52
didn't really fancy it. Although he's managed to
2:55
persuade them, now he is forever trying to conglomerate, as you
3:01
said, Kieran, get get his this power base together because he
3:05
thinks that essentially if you merge these technologies, you
3:11
are going to win the AI race. Now whether that is smokescreen,
3:16
you know, whether that is kind of a call to legitimacy just by
3:21
saying, look, we're, we're we're by being bigger, we're going to
3:25
by owning the future. It gives him some kind of
3:30
foundation, essentially to say that it's justified that you
3:34
bring together a business that has NASA contracts, that has EV
3:39
cars, that has a AI compute and bring it all together and launch
3:45
it into Mars. Yeah, Jacob, I mean, he's
3:48
competing in the AI sphere with Google, with Meta, with open AI.
3:54
There's this rush to build data centres, isn't there?
3:58
Is it? The only way that Elon Musk can
4:01
compete in the AI sphere is to sort of loop it in with SpaceX,
4:05
which actually is valuable, is attracting investment and is
4:08
making money. Well, I think the capital
4:11
expenditures, expenditures, excuse me, with AI have gotten
4:14
so huge that the promises and sort of ideas surrounding him
4:18
have also had to scale in proportion.
4:20
I mean, we weren't really hearing about data centers in
4:23
space before sometime last year. And now it seems to be the
4:28
latest way forward. And I find it a little dubious,
4:32
but this is seems to be must latest promises that somehow
4:35
this can't be done down here on Earth, it can only be done in
4:37
space. But by the way, he's not the
4:39
only one, right? You've got Jeff Bezos up there.
4:42
You've got NVIDIA investing. You've got the former boss of
4:45
Google, Eric Schmidt. Everybody seems to be looking at
4:50
space as a cheaper alternative. Why?
4:53
Because apparently you've got 24/7 solar power you can use.
4:58
You've got the ability to create data centres without water,
5:05
perhaps without citizens, without politicians, you've got
5:08
less regulations. And this race that we've got at
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the moment where various companies are spending hundreds
5:17
of billions of pounds trying to build out AI data centres
5:21
without really the infrastructure in place.
5:24
That is the problem. The infrastructure, the energy
5:26
needs, the water needs, they're not in place.
5:29
And so these companies are looking for easier, cheaper
5:33
answers. So is he there and Jacob sort of
5:36
going for first mover advantage as the guy that puts data
5:43
centers in space? So while everyone else is
5:45
scrabbling around trying to acquire land and energy and
5:48
water down here on planet Earth, Musk's vision is is rather more
5:52
intergalactic. Yeah, I think he's trying to
5:54
leverage what he has with SpaceX, which is that right now
5:58
they are the leader in in putting stuff in space in, you
6:01
know, launching satellites in particular.
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And they can do it more cheaply than a lot of their competitors,
6:06
including Jeff Bezos's Blue Origin.
6:08
Bezos has talked about putting infrastructure in or
6:11
manufacturing in space actually for a number of years.
6:14
So it is kind of this potential first mover advantage.
6:17
What needs to happen though is the cost of putting a kilogram
6:21
of any material in space or just putting the stuff in space needs
6:24
to go way down. There needs to be a lot of
6:26
innovation in how you run a data center, how you replace it's
6:30
hardware every five years perhaps.
6:32
But it is this dream of them being 1st and being kind of
6:35
beyond the strictures of Earth so that, as Helia said, they can
6:38
access unlimited solar energy perhaps.
6:41
Heli, just on that point then, I mean, is it potentially if not
6:45
now obviously, but in future going to be cheaper to have data
6:50
centers in space, going to be more financially viable to do it
6:54
up there down here? That is the claim that you save
6:58
both on the energy corset so that in terms of cooling gets
7:02
easier, and some of the reports by different consultancy firms
7:07
claim that it would be 50% cheaper.
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And of course you don't have part of the infrastructure
7:13
around water that you would need here on lowly planet Earth.
7:18
But of course, all of this feeds Kieran into Musk's kind of
7:22
rather grandiose vision of him self, you know, not just
7:27
creating data centres that, as he put in his blog post, is
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going to serve, you know, the citizens of Earth, but is
7:34
actually going to help create self, you know, serving the
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civilizations that will ultimately end up in Mars.
7:42
So it is this really big big ideas.
7:47
Yeah, you can't. You can't fault the ambition,
7:49
Jacob, can you? But I mean, I don't know, it
7:52
feels like this is all happening so quickly.
7:54
And then today, here we are talking about what?
7:56
Maybe factories on the moon Jacob.
7:58
Yeah, it could seem a little grandiose, certainly.
8:01
And also just like, ripped from the sci-fi novels of must Youth,
8:06
which has always been away. He's seen the world or the
8:09
universe, the cosmos. I mean, he has long said he
8:11
wants to name his city on Mars, Terminus, after an Isaac Asimov
8:16
novel or series of novels. And I would encourage people
8:20
actually to go to the SpaceX website and read the blog posts
8:24
that Hell he was referring to because he spells it out, which
8:27
is, you know, first data centers in space, then stuff on the
8:30
moon, then Mars and the light of consciousness extended
8:34
everywhere. And, you know, there the that's
8:37
the vision. And if you just take a look at
8:40
what's going on down here on Earth right now, it seems a bit
8:43
more like someone is combining a lot of his very costly ventures
8:47
together and hoping that some magical synergies will emerge.
8:52
But if if you peel away, hell yeah, some, some of this, the
8:56
space stuff is it's actually quite a cool headed business
9:00
decision because you you've got the XAI which which is losing
9:05
money folded in with SpaceX, which is going to float
9:08
publicly, we think sometime this year that can sort of 1 can
9:12
subsidise the other. SpaceX needs AIAI needs SpaceX,
9:17
doesn't it? And, you know, his other
9:20
businesses, people like, you know, companies like Tesla,
9:23
which he wants to work with XAI as well.
9:27
He wants XAI to be making, you know, operational AI programmes
9:32
within those cars as well. He wants Tesla to move into a
9:36
robotics firm. Yeah.
9:37
I mean, clearly there is a industrial use case from a
9:43
capital perspective. You know, there's been lots of
9:45
talk about the huge funds. I saw a report that was
9:49
suggesting that, you know, there are 10 start AI startups that
9:55
saw just last year alone their valuation increase by a trillion
10:00
dollars. That's, you know, companies
10:03
including Open AI. These are AI startups.
10:07
So these are huge amounts of valuation being added to this
10:12
company. I mean, in fact, even just in
10:14
this deal alone, I would tell you that SpaceX, he's he's upped
10:20
the valuation just from December, it's gone up by 200 or
10:24
so billion dollars for Spacex's value.
10:28
So the kind of money you're talking about is huge.
10:31
The kind of cap X required to, you know, build out the
10:38
infrastructure is huge. And so all of these businesses
10:42
at the moment, all of these companies are busy trying to
10:47
create some kind of circular financing, some ways of bringing
10:52
money in. And by bringing money into an
10:56
enlarged Group, A super company that's going to list on the
11:00
stock market and raise all of this cash, it also not only does
11:05
it give that company money to spend and it kind of starves the
11:10
ecosystem and his rivals from getting some of that capital.
11:15
Because he wants to compete, doesn't he?
11:17
In the AI field? But he hasn't got the capital in
11:20
X AI to do it, has he? Well, I think exactly.
11:24
And I think that there is a, there is a feeling within tech
11:27
bosses in the US that it's winner take all.
11:31
And therefore you should do everything you can to, to, to
11:36
build out as fast as you can to go towards AGI as fast as you
11:42
can because the gains are going to be so massive.
11:45
So it doesn't matter if you inflate the industry along the
11:49
way. It doesn't matter if there's a
11:50
whole lot of market turmoil because there will be one or two
11:55
companies at the end who will, you know, reap the rewards.
11:59
And if it's winner take all, Jacobs isn't it?
12:01
I mean, Elon Musk gonna want to be the winner.
12:04
Oh yeah, that's absolutely his motivation.
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And I think as, as we're getting at here, that the winner is
12:11
going to come at least the the notion, I the popular notion
12:14
among a lot of these startups and these big income and tech
12:16
companies is that the winners coming by just spending the most
12:19
money and scaling the infrastructure as much as
12:22
possible. I mean, there has been some
12:23
questioning within the AI industry that, you know, is just
12:26
scaling LLM's the the sort of current models we have the way
12:29
to go. But that certainly seems to be
12:31
what what must thinks. And he I think also the point
12:36
about how SpaceX was valued at 800 billion before just in
12:41
December, now 1 trillion now shows also how this kind of
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scaling is working, which is that the more often he does
12:49
these deals, including just raising capital every couple
12:52
months, it seems for for AI purposes in some of these, in
12:55
some of his companies, every time he gets to kind of pump up
12:59
their value and say they're worth more.
13:00
And this is also part of kind of circular economy that Musk has
13:04
made, made for himself what's been called the Muskani.
13:06
I mean, he's always kind of, if not merging things, then doing
13:09
deals between his companies frequently now raising capital,
13:12
especially for X AI. And each time is, you know,
13:16
there's more money being spent, more money being raised, but
13:18
also a higher valuation on paper for for these companies.
13:22
But you can't just make up numbers.
13:24
I mean, if you're going to float, can't.
13:26
Can't you query? If you're going to float this
13:28
new super company, hell yeah. Surely there has to be some sort
13:31
of basis in reality for I know AI everyone is over inflating
13:35
left right and centre but I don't know what you think.
13:38
Listen, I think there the, the problem you have at the moment
13:42
is there is so much investor appetite in AI that you get this
13:49
kind of real sense of fear of missing out and that blinds
13:54
people to what those valuations mean.
13:57
What, what, what are you looking for?
13:58
Are you looking for profits? Well, all of these companies are
14:01
potentially going to fail. Are you looking for growth?
14:04
And then what kind of growth are you talking about and what are
14:07
the hurdles? And a lot of investors in the
14:10
current wave have been, you know, pushing aside red flags
14:15
really because they're so desperate to be involved and be
14:19
included on some of these big name tickets because because the
14:24
gains that we're talking about, you know, the way these
14:27
companies talk up, you know what NVIDIA is going to mean.
14:32
I mean, there are there are VC firms that think, well, if we
14:38
don't buy in, we're going to miss out completely.
14:41
And I think the same is true. Or this is this is what Musk
14:44
would obviously like you to believe, that if you are not
14:47
investing here, that you are not going to be part of this new
14:51
industrial revolution, this AI revolution, which is going to
14:55
completely change the economy. But the the more Elon Musk
15:01
merges his various enterprises, Jacob, are you investing in any
15:06
one of those companies in reality or are you now in future
15:10
just whether it's you know, Tesla or SpaceX just investing
15:14
in Elon Musk? I think it's the latter.
15:16
And you know, this is certainly a move towards what's been
15:18
called Musk Corp or Musk Inc, you know, just one large Musk
15:22
mega Corp. And given how involved he's
15:25
always been in his companies, you know, spread across 5 or 6
15:28
of them at, at any given time, at least it's always been about,
15:31
I think for a lot of his investors investing in Musk.
15:34
And that's why also we see a lot of the same investors investing
15:38
across the Musk companies. I mean, this is venture
15:40
capitalist, certain financiers who are friends with Musk and
15:43
also the Middle Eastern sovereign wealth funds,
15:45
especially Saudi Arabia and Qatar and and a number of these
15:49
entities have repeatedly kind of ponied up for mosque or a
15:53
multiple rounds of XAI for example and it.
15:56
And he's building, he's building data centers out there, too.
16:00
Yeah. And so I think this is very much
16:02
about, you know, using those resources that and sort of that
16:06
that strength of personality and celebrity that only he can seem
16:09
to bear bring to bear on these mega projects.
16:12
Do you think do you think that's going to carry through when he
16:15
floats this mega company if it happens this this summer, then
16:20
Jacob, that force of personality or investors looking for
16:24
something else? Well, I, I think there's a
16:26
question of when will the music stop?
16:28
And there have to be some major returns and actual innovations
16:31
here. I mean, the same might be said
16:33
for some of the other AI companies, especially like Open
16:36
AI, which is committed to spending more than a trillion
16:38
dollars on data center infrastructure, but doesn't
16:41
necessarily have that money and doesn't have to show signs of
16:44
having that kind of revenue ahead.
16:45
So Musk can kind of carry on this kind of dance longer, I
16:49
think especially as he does these these mergers and he has
16:52
such a wide portfolio of interests.
16:55
But eventually, some of these returns will will finally have
16:58
to materialize, and he has been able to push the ball down the
17:01
road with things like full self driving.
17:04
His promises keep changing, but you know, just this week he said
17:08
that there will be. Dating quite a lot.
17:10
Yes and just. Right.
17:11
I mean, like news that he fails his own metrics quite often.
17:15
Yeah, but he does seem to get forgiven by his investors, which
17:20
is. Extraordinary.
17:20
It is extraordinary. And, you know, he said just this
17:23
week we're gonna have data centers in space within two to
17:25
three years. I mean, last month he was saying
17:27
in five years is any of this stuff going to happen?
17:30
And especially some of these major investors like the Middle
17:33
Eastern sovereign wealth funds kind of get tired of this
17:36
eventually because they will need their returns even as they
17:39
want the kind of influence over must that they can have already.
17:42
Yeah, if you're talking about actual market performance, we've
17:46
got some Tesla car sales numbers didn't be in Europe recently and
17:49
they were down at 42% in France, year on year to January, they
17:53
only sold 661. Yeah, there.
17:56
Was some worrying numbers if you're an investor in Tesla,
17:59
aren't they? Yes, yeah.
18:01
But I mean, it's no longer an EV firm, Kieran.
18:04
It's now going to be a robotics firm and a taxi firm.
18:09
So. So, you know, don't worry about
18:11
that. I mean, BYD, obviously when it
18:14
comes to Tesla, he's had a real encroachment into the top spots
18:19
by Chinese BYD, especially in Europe.
18:23
And then you've had all of these tax subsidies taken away in
18:27
Trump's presidency and that has really damaged Tesla.
18:31
But he is trying to pivot now to robotics to I can't remember
18:36
what his what is his robot called exactly?
18:40
Do you? Think he's giving up on cars,
18:42
Sir Jacob? Do you think he's all robots?
18:44
Now, well, this is The thing is, I mean, he seems so committed to
18:47
Tesla, but now, you know, suddenly it's robots.
18:50
And I mean, the few demonstrations we've seen of
18:53
optimists have been unimpressive.
18:55
And a number of them we've, there's been confirmed reporting
18:58
that these were basically remote controlled by human operators.
19:01
I mean, they're the, I think Musk is running out of runway
19:06
and promises he can make in, in some ways.
19:09
And I think that the point about the, the BYD cars is very
19:12
important. The Huawei and other Chinese
19:13
brands. And we had the CEO Ford talking
19:16
about how he bought one of the Chinese cars, I believe a Huawei
19:21
or BYD had it brought to the US and he loved it and felt rather
19:24
jealous of it. And as you said earlier, the
19:27
numbers are, are, aren't there. I mean, the, the, the sales are
19:31
dropping around the world. And you know, this is also about
19:34
must politics, which is, you know, Tesla was how he was
19:37
reaching a lot of consumers and also his sort of soft
19:41
underbelly. And now he has alienated a lot
19:43
of people, especially in Europe where he is very active in kind
19:47
of right wing agitation. And people would rather buy cars
19:51
that are cheaper and better and don't come with that kind of
19:54
political baggage attached. If we're talking about
19:58
competition with China, and then you look at a company like
20:01
SpaceX, which is now going to be even bigger, it's unique, isn't
20:06
it? SpaceX there's, there's nobody
20:07
else doing what SpaceX is doing. Yeah.
20:10
And I think that's one of must remaining strengths, which is
20:12
that the the US government, certainly the Department of
20:15
Defense needs SpaceX for its launch capabilities and and has
20:18
subsidized it to to that extent and given it a lot of contracts.
20:22
What might be a little weaker about SpaceX, and this is again,
20:25
speaks to the kind of person Musk is and trying to fulfill
20:28
these science fictional fantasies, is the amount of
20:30
money that's been invested in Starship and this plan to
20:33
eventually go to Mars. I mean, he's kind of ignored or
20:36
at least not emphasized the core business of basically satellite
20:40
launch and putting cargo into space, which they do pretty
20:43
well. But also, you know, in favor of
20:47
of paying a lot of money and pouring a lot of resources into
20:49
this dream of making a massive Starship that can take us deeper
20:53
into the cosmos. But it's interesting, Karen,
20:55
that, you know, he's really infiltrated the, the kind of
21:01
NASA contract space, you know, when, when SpaceX was first
21:06
formed, they undercut rivals. They bid really cheaply, you
21:10
know, back in 2002 or 2000 and sorry, 2008 and, and now all of
21:18
these contracts. I mean, it's very hard to
21:20
imagine how NASA could have the capabilities to ferry their
21:24
equipment and their astronauts to the Space Center without
21:27
SpaceX. So these are companies that are
21:30
using, you know, government contracts, taxpayer money
21:36
essentially to to help them grow, to help them develop.
21:42
And then of course, they become very powerful, very dominant.
21:46
And it's very hard for governments then to pull
21:50
themselves out of these relationships.
21:54
So, so let's let's go big picture, you know, about like
21:57
what, what on earth is he actually up to or what in space
22:02
is he actually up to, you might say in this scenario?
22:04
Because is he this visionary that is able to see into the
22:10
future in the way that nobody else can?
22:12
Or is he just a sort of a risk taker and a gambler?
22:16
Which is it? Well, I would say, I would say
22:19
more the latter, but also he is someone who kind of drags us
22:21
into his vision of the future. I mean, because of especially
22:26
now the amount of resources he can deploy.
22:28
You know, Musk has put more satellites into space than
22:30
anyone. And a lot of that now supports
22:33
Starlink, this this global communications network that he
22:37
has done a lot to hype and that, you know, provides a useful
22:41
service to some. But it is maybe not the kind of
22:45
innovation he has claimed it to be.
22:47
But again, we are often kind of being forced to play by must
22:50
rules. So if he wants to put a million
22:53
satellites in the space, despite whatever native consequences
22:56
there might be, but that's the that's the new promise, then we
22:59
might, given his power and tremendous resources, just have
23:02
to follow along and watch as he enacts that.
23:05
It's interesting. I when I interviewed Jason
23:09
Jensen Huang from the NVIDIA boss, asked him about Musk, he
23:15
was very kind of diplomatic on saying, you know, he doesn't
23:18
agree with his politics necessarily, but that as a
23:22
technologist he is a visionary. So I think within the tech
23:27
community, he's seen as a visionary.
23:30
He clearly knows how to leverage his celebrity to exert as much
23:38
power and influence as possible. I mean, I remember when he
23:42
originally bought X, which was Twitter for $44 billion, people
23:48
were thinking, you know, what is this all about?
23:51
And there's obviously an argument to say it was about
23:54
political power. But it's clearly also this idea
23:58
that the technologies of the future where computers
24:02
important, where AI is important, where data is
24:05
important, bringing all of these things together helps your
24:10
business grow. So you are able to train your
24:15
chatbot, you're able to train Grok on this vast, um, data that
24:21
is created by users on X. So the the synergies that he is
24:25
able to create and and and take advantage of basically are huge.
24:34
You, you mentioned Grok Helly and we obviously had that
24:37
scandal in the past few weeks about image generation on Grok
24:41
and that that's just one small aspect of his empire and it was
24:47
very problematic for. Him and there's pushback, by the
24:50
way, here there's pushback here, there's pushback in France where
24:54
there's been a raid, there's a there's pushback even in the US.
24:57
So it's not that he's completely unencumbered, but you know, his,
25:03
his power, our base is, is extraordinary.
25:06
Yeah, but but at the same time, we were talking about something
25:10
much bigger potentially here, aren't we?
25:11
I mean, you know, you said it's the the biggest private company
25:15
in the world that he's about to to to create Jacob.
25:17
I mean, should we have concerns that so much power potentially
25:21
is in one man's hands and that man is Elon Musk?
25:25
Certainly. And I think we've seen some
25:27
pretty negative consequences already.
25:29
And, you know, I think no one needs that much money or power.
25:34
And there are uniquely distorting effects from having
25:37
so much wealth. I mean, we could talk about the
25:41
2024 election alone. And I think actually the point
25:44
about Musk buying Twitter slash X for $44 billion and people
25:48
kind of thinking, what is he going to do with this is a good
25:51
one. Because we saw what he ended up
25:53
doing with it, which was that it helped him essentially win the
25:55
2024 election and become this enormous propagandists on behalf
26:00
of of far right issues and, and often, you know, spread false
26:04
information and some horrible lies about people.
26:07
So, you know, that is a way in which Musk has unique
26:11
capabilities and I think ones that might be, you know, harmful
26:14
to democracy. And I don't think in in a lot of
26:17
ways, the costs of Musk are necessarily worth the the
26:22
supposed societal benefits. And I think that's what people
26:24
are starting to see now. But with a $1.2 trillion
26:28
company, or however big it might be, by the time it goes public
26:31
this summer, he'll have a lot that he'll be able to do.
26:35
And Kieran, I mean, these are questions at the moment that are
26:37
particularly pertinent because given everything that is
26:41
happening in geopolitics where Europe is having to re evaluate
26:47
its relationship with the US again, that discussion about do
26:53
we just become takers of America?
26:56
Tech infrastructure is even more important because if we have
27:01
problems with some of these companies, European countries
27:06
have very little leverage in reality.
27:09
And there's been lots of talk through the years, I remember of
27:13
Europe creating their own versions, creating alternatives.
27:17
But fundamentally, we are now doing an AI, exactly what we did
27:22
with social media companies and search engines, where we are a
27:26
taker of US technology, US tech infrastructure.
27:31
I mean, one example that I think of all the time is something
27:37
that we have a lot of data on in this country, in the UK is
27:42
health. Because the NHS brings all of,
27:46
you know, the populations, countries, data together.
27:49
I mean not perfectly by the way, but it does theoretically bring
27:53
our whole country's health record together, which is an
27:58
incredible source to train AI on.
28:02
And during COVID, the government gave another U.S. company,
28:06
Palantir, the contract to help us with some COVID contracts and
28:13
they and Palantir did it for a pound.
28:16
But by the way, two years later, once the pandemic was over, we
28:20
were signing over multi £100 million deals with Palantir to
28:27
do different NHS contracts and not just NHS.
28:30
It then escalated to be MOD contracts as well.
28:34
And in that way we are we are opening ourselves making us more
28:39
susceptible in fields possibly where we have the ability to
28:44
have home grown talent, but we haven't invested there.
28:48
Not really, but to be honest, I don't think they they need to,
28:51
you know, there's a lot lacking in, you know, perhaps in the
28:55
European tech scene. And I think Hellio was getting
28:58
at, you know, this, this kind of dependency that that is
29:01
unfortunately the case, the same kind of dependency that maybe
29:03
the Department of Defense here in the US has on Musk, you know,
29:06
Europe has on a lot of US tech companies.
29:09
But, you know, I, I think we don't need necessarily European
29:12
CEO's talking about going to the moon or Mars, but we we, you
29:16
know, we do need viable alternatives and, you know, a
29:20
kind of homegrown text scene and the kind of regulations and laws
29:23
and enforcement that European countries want for themselves.
29:26
I mean, we did see a little bit of that today with French
29:30
authorities rating that the ex office in Paris because the Grok
29:33
chatbot has been creating sexualized images of people
29:37
without their consent. So, you know, it will be up to,
29:40
I think to Europe to and to European countries about what
29:43
kind of future they want to create there and how to how to
29:45
get there. But you know that that thought
29:49
is in the air now just as Europe is trying to think more about
29:52
its own self-defense and its role in NATO and its
29:54
relationship with the United States.
29:56
That same kind of re evaluation of its relationship with US tech
29:59
companies and US billionaires is ongoing, I think.
30:03
And you mentioned it earlier, Jacob, about Musk Inc and about
30:07
that potentially being where we're headed here, that all the
30:10
various Musk entities get folded into one with him at the top of
30:15
it. I mean, how soon do you think we
30:18
could be seeing something like that?
30:19
And that's not a given either, is it?
30:21
There are obstacles before you can get someone like that.
30:23
Yeah. I think there's one question
30:24
about first, Tesla is the one publicly traded company at the
30:27
moment in his portfolio that might have to stay sort of
30:32
nominally independent that way. But I don't see much reason why
30:36
all of his other companies might be combined together.
30:38
I mean, what what do we have left with the Boring Company?
30:41
Neuralink, you know, some of his smaller interests, Neuralink
30:44
could be lumped in with robotics and AI.
30:48
So I think Musk is someone who likes a lot of control, of
30:51
course, like a lot of lot of billionaires, and has long seen
30:55
his own role as kind of centralizing all these interests
30:58
together. So, you know, if the investors
31:01
are on board for another round or two of this, I think by next
31:04
year you could see most of us non Tesla companies be just, you
31:08
know, under SpaceX or under someone X company.
31:12
And where would that sit then? Hellier in terms of the pantheon
31:15
of big, powerful, great companies in the world right
31:18
now. Well, at the moment NVIDIA is
31:21
the world's biggest company listed company.
31:25
I think that's on about four and a half trillion dollars.
31:29
So you have Microsoft, which had a bit of a stumble last week.
31:35
You have Google, Alphabet, the owner of Google.
31:40
So these are huge, vast companies.
31:44
And I think it's back to that idea of there being a race.
31:49
And this isn't just a race between companies, private
31:54
companies or listed companies. This is a race between the US,
31:58
US and China. And the anxieties that lots of
32:03
companies feel in the US about losing out to China as a tech
32:09
behemoth, as an AI behemoth. And when we're talking about,
32:13
you know, being able to conglomerate data, you know, the
32:17
best in class is really the Chinese government.
32:21
No one really competes with that.
32:23
So yes, these companies are big, but they are all all, they have
32:28
one thing in mind, which is not just to beat each other, but
32:32
also to beat, you know, the world's second biggest
32:35
superpower. Yeah, quite.
32:38
And potentially to have more power than the governments that
32:40
we elect, right, Jacob? Yes.
32:42
And I think that is 1 concerning thing of course, about the power
32:46
of tech companies and the geopolitical role they play.
32:48
Now. I think one important
32:49
distinction also here that we should note is that most of the
32:53
companies we're talking about are the competitors to Musk are
32:55
publicly traded. Not all of them like open AI, of
32:58
course, but these, these most valuable companies in the world.
33:01
And because of the way public markets work and for example,
33:05
SEC filings here in the US, we know more about what these
33:08
companies do and the profits they they generate and, and
33:12
where they get their revenue from.
33:13
And if we have some giant Musk Corp that's privately held,
33:17
which is where we are right now, we know a lot less about how his
33:22
business empire operates. And, and is it making money?
33:25
You know, is it, is it making profits?
33:27
So that is a little bit of of a different animal I think than
33:32
you know, the comparisons to NVIDIA or Google or Microsoft
33:35
are really important, but also that that distinction I think
33:38
will make it a different kind of operator.
33:39
There will have to be a prospectus care and there will
33:42
have to actually be, you know, line items about where the
33:46
revenue is coming from, about what the margin is, about who
33:50
the customers are. All of that detail will be, you
33:54
know, a level of transparency we haven't seen before.
33:58
And even today's deal, you know, the scant information about it
34:03
and that if it's if this company becomes listed, will change.
34:07
Well, let's let's end where we started them with the with the
34:11
prospect, you know, this new merged company actually being
34:15
listed. I mean, there's going to be a
34:16
lot of hype around that isn't that.
34:18
It's going to be one of the the biggest things that the market
34:21
has seen for quite some time. Yeah, I I was curious when I was
34:25
reading about this merger yesterday on Bloomberg, I
34:28
believe just on the news site and right below the the news
34:31
article about it, there was an opportunity to Click to find out
34:34
how to invest in SpaceX. How how I could, you know, buy
34:37
shares. And so I think that is very
34:39
indicative of what you were saying.
34:40
This is going to be a sort of mass consumer event of course
34:44
and but also a big market event. But you know because of must
34:47
celebrity and the kind of public facing nature of him and his
34:51
companies, this is going to be more than just you know another
34:54
big M&A. Would you compare it hellier to
34:57
sort of the early 2000s when we we saw some of the big tech
35:00
companies go public then? Well, I mean, we, we are
35:03
definitely in a bubble, which is what you're alluding to.
35:09
I think the the question here is, you know, it's always you
35:14
get that same kind of comparison, which is, you know,
35:18
can you be in a bubble and can the bubble burst?
35:20
But still the technology is transformative and the survivors
35:27
of that burst bubble make such significant gains that everyone
35:31
needs to be invested. And I think that is the problem
35:36
we have at the moment is that even though you've had all of
35:40
the all of the chief executives and founders from these AI
35:44
companies all concede themselves that there is an AI bubble.
35:49
You are still having money flowing into this this sector.
35:53
You are still having both VC money flowing and you're still
35:56
having the idea of these mega IPOs.
36:00
I mean, to raise $30 billion.50 billion dollars on the stock
36:05
market is a huge quantum of money.
36:08
I think the next biggest was Saudi Aramco on something like
36:12
$29 billion. And by the way, they were quite
36:15
a simple company. They had, you know, oil revenue
36:18
and you could see that. So investors knew what they were
36:20
buying into here year. I think it's about when does as
36:25
Jacob was saying, when does the music stop?
36:27
Do they get to IPO before there is some real market volatility?
36:33
Because that changes the the the equation completely are?
36:37
You in the predictions game, Jacob, do you like?
36:40
Do you like the prediction? Only as a as a hobby I guess
36:44
it's not one of monetized yet on these new prediction markets I.
36:48
Was going to ask you when the music is going to stop.
36:51
You know, I, I've been, I'm a skeptic and I guess I've been
36:56
wondering that about Musk. I mean, I think some of his
36:59
based on his own personal behavior, I mean, he has been,
37:02
of course, more erratic and can he sort of maintain some of the
37:05
alliances and, and the veneer at least of legitimacy that he
37:10
needs? But I think we'll probably get
37:12
to some kind of public offering this summer and see where we
37:15
might proceed from there. But, you know, in the next few
37:18
years, some of his fantastical predictions will finally have to
37:20
come true and start returning revenue, and I think that's when
37:24
the music does stop. Jacob Silverman, author of
37:27
Gilded Rage, Elon Musk and the Radicalisation of Silicon
37:30
Valley. That was really interesting.
37:31
Thank you so much. I'm Helia Ebrahimi, our
37:33
economics correspondent here at Channel 4 News as well.
37:36
You've been listening to the forecast.
37:38
See you again soon.