Good morning. In today's newsletter, we dive into the nuances of any deal for Elon Musk to invest in TikTok. Also: the wildfires' toll on Hollywood; a scoop on a big fund-raising round for an A.I. coding start-up; and the C.E.O.-less media empire. (Was this newsletter forwarded to you? Sign up here.)
What a plan B might look likeAs TikTok faces a countdown to a potential ban in the United States, Chinese officials are reportedly weighing an unexpected plan B: letting Elon Musk take over the popular video platform. On paper, such an arrangement makes sense, given Beijing's existing ties to and trust in the world's richest man. But beyond whether this might actually happen, there are a host of other questions that would need to be resolved for it to work. The latest: Chinese officials have debated whether the tech mogul should be allowed to invest in or buy TikTok's American operations to satisfy a U.S. law requiring the app's sale, according to Bloomberg and The Wall Street Journal. It's unclear whether Chinese officials have spoken with Musk or ByteDance, TikTok's parent company. TikTok has called the reports "pure fiction." There's a logic to such a move:
There are still a lot of unknowns. Beijing would prefer to look strong in standing up to Washington, especially as Trump — who despite opposing a TikTok ban has spoken of escalating a trade fight — prepares to take office. The Journal adds that some discussions to date have concluded that a better course of action might be to let TikTok get banned and then negotiate with Trump. Because the law only prevents ByteDance from updating TikTok, such negotiations would give it and the White House time to reach an accord. It's also unclear how Musk would finance a deal. One possibility is his borrowing against his Tesla shares, which have soared since Trump's victory. (It's an option he considered — but didn't take — when he moved to buy Twitter.) And a deal might raise questions about Musk's closeness to Trump and where his loyalties lie. The Tesla chief has already drawn criticism from right-wing figures like Steve Bannon, who have accused him of prioritizing his business interests.
An Israel-Hamas cease-fire deal appears imminent, Qatar says. Mediators have "managed to minimize a lot of the disagreements between both parties," paving the way for a breakthrough that would halt the monthslong war and see the release of hostages, a spokesman for the Qatari Foreign Ministry said. Investors cheered the development, sending stocks in the region higher and helping to stifle a rally in oil prices. The former special counsel says Donald Trump would have been convicted in the election case. Jack Smith's report, which was released overnight despite efforts by the president-elect's legal team to block its release, argued that Trump had been spared prosecution essentially by winning re-election. Smith resigned last week, making the report a stinging rebuke — but little more — of Trump's efforts to overturn the 2020 election results. Trump's team reportedly contemplates a drip-drip approach to tariffs. One idea being floated is using the International Emergency Economic Powers Act to introduce a schedule of graduated monthly tariffs rather than a single huge blow against trading partners. Trump has vowed to impose tariffs on his first day in office, a threat that has weighed heavily on world leaders and markets. Hollywood on holdA week later, the Los Angeles area wildfires continue to rage, fed by strong winds that have put some areas under an elevated state of alert. Here's the latest: More than 100,000 people have been displaced and whole neighborhoods destroyed, stoking a growing housing crisis. About 24 have been killed. The economic toll has now surpassed $250 billion, AccuWeather estimates, a figure that seems to climb daily. This being Southern California, the entertainment industry has been hit especially hard. Bob Iger, Disney's C.E.O., told The Times's Brooks Barnes he had taken on a new role: heading the entertainment giant's relief efforts. As of Monday, 64 Disney employees had lost their homes and hundreds more, including Iger, had been evacuated. The entertainment industry is a major regional employer with about 27 percent of the nation's film and television workers employed in Los Angeles County, according to one study tabulated after the crippling 2023 Hollywood strikes. Work at many studios has halted as executives, agents and talent focus on the destruction of their homes and neighborhoods. The good news: Almost all Los Angeles studio infrastructure is safe. Sony Pictures, Paramount Pictures, Netflix, Warner Bros. and Universal Pictures are either far from the blazes, or have been largely untouched by the fires. But the industry is split on whether to continue business as normal. Yesterday, most studios were open, and The Recording Academy announced that the Grammys would air on Feb. 2 as planned. The Academy of Motion Picture Arts and Sciences extended the Oscar nominee voting period, but said the March 2 ceremony date was still on. That's after studios last week postponed film premieres, and shows including "Jimmy Kimmel Live!" aired reruns. Will the fires accelerate the decline of the Los Angeles film business? States like Georgia and Illinois have dangled billions in tax breaks to lure productions away from Hollywood. And live-action films are virtually all shot outside the region these days. In response, Gov. Gavin Newsom last year proposed that the state double tax incentives for filming to $750 million annually. Confronted with such destruction, some industry players are asking tough existential questions. "It has become a business where the edifices are based in Los Angeles, but much of the work happens in other places," Terry Press, a veteran movie marketer and a past president of CBS Films, told The Times. She added, "Wouldn't you go to where the work is? And what will that mean for the vibrancy of this community?" Exclusive: An A.I. coding start-up raises $105 millionInvestor fervor for all things artificial intelligence is showing no sign of stopping even as the technology emerges as a flashpoint in trade wars. The latest example: Anysphere, whose Cursor product helps developers automate their code writing, has raised about $105 million, DealBook's Michael de la Merced is first to report. The new round values Anysphere at $2.5 billion, a roughly sixfold jump from what it commanded in May. A flood of investor interest in A.I. continues to push up valuations and round sizes. In recent months, OpenAI raised $6.6 billion at a staggering $157 billion valuation. Last month, the data company Databricks raised $10 billion at a $62 billion valuation. Anysphere's new round was led by Thrive Capital, which invested in OpenAI and Databricks, and Andreessen Horowitz. Benchmark also participated. Backers point to how quickly Cursor's user base has grown. Anysphere now has more than $100 million in annual recurring revenue, according to Michael Truell, the company's co-founder and C.E.O. Miles Grimshaw, a partner at Thrive who helped lead the new investment round, said that virtually every portfolio company at his firm used Cursor. (Anysphere is also used by developers at about half of the Fortune 1,000 list of companies, Truell added.) "We've never seen a company achieve such broad and rapid adoption, let alone one so deeply technical," Martin Casado, a partner at Andreessen Horowitz who is on Anysphere's board, added in a statement. Automated code writing is becoming a highly competitive sector. Other companies, including Codeium, Poolside and Sourcegraph, offer competing products; Microsoft's GitHub also offers Copilot for helping craft code. But Truell and Grimshaw pointed to Anysphere's ambitions, including an update to its Tab autocomplete feature that allows Cursor to predict up to the next 10 minutes of a user's lines of code. Tech moguls have bigger hopes for the technology: Mark Zuckerberg, the chief executive of Meta, said recently on "The Joe Rogan Experience" that his company would begin automating some code writing. An aspiration is to have A.I. write all code for its apps. The C.E.O.-less conglomerateIt isn't every day that a company announces its C.E.O.'s departure without naming an interim or a replacement. Yet that's what IAC did yesterday, saying that Joey Levin is leaving the company to oversee the spinoff of Angi as the home services platform's executive chairman. IAC isn't naming a replacement for Levin: The remaining C-suite executives will report up to Barry Diller, IAC's chair. What might be at play? It is how IAC operates. Diller's media empire is an unusual holding company that buys businesses, tries to improve them and then spins out the best ones. Its businesses, including Dotdash Meredith and Care.com, are essentially run as individual entities with their own C.E.O.s. IAC has done this before. When a previous IAC chief, Greg Blatt, stepped down in 2013 to become chairman of Match Group — which was also spun out — the company didn't immediately name a replacement either. It appointed Levin as C.E.O. in 2015. Here's what Levin wrote about Diller in an internal memo: "He has never seen a plan ambitious enough. He has never seen a product good enough or a story well enough told. And he has gotten so many of us to think bigger and better as a result." We hope you've enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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Tuesday, January 14, 2025
DealBook: TikTok’s Musk option?
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