TechCrunch : What is an encryption backdoor?

What is an encryption backdoor?

Talk of backdoors in encrypted services is once again doing the rounds after reports emerged that the U.K. government is seeking to force Apple to open up iCloud’s end-to-end encrypted (E2EE) device backup offering. Officials were said to be leaning on Apple to create a “backdoor” in the service that would allow state actors to access data in the clear.

The U.K. has had sweeping powers to limit technology firms’ use of strong encryption since passing a 2016 update to state surveillance powers. According to reporting by the Washington Post, U.K. officials have used the Investigatory Powers Act (IPA) to place the demand on Apple — seeking “blanket” access to data that its iCloud Advanced Data Protection (ADP) service is designed to protect from third-party access, including Apple itself.

The technical architecture of Apple’s ADP service has been designed in such a way that even the tech giant does not hold encryption keys — thanks to the use of end-to-end encryption (E2EE) — allowing Apple to promise it has “zero knowledge” of its users’ data.

A backdoor is a term typically deployed to describe a secret vulnerability inserted into code to circumvent, or otherwise undermine, security measures in order to enable third parties. In the iCloud case, the order allows U.K. intelligence agents or law enforcement to gain access to users’ encrypted data.

While the U.K. government routinely refuses to confirm or deny reports of notices issued under the IPA, security experts have warned that such a secret order could have global ramifications if the iPhone maker is forced to weaken security protections it offers to all users, including those located outside the United Kingdom.

Once a vulnerability in software exists, there is a risk that it could be exploited by other types of agents, say hackers and other bad actors wanting to gain access for nefarious purposes — such as identity theft, or to acquire and sell sensitive data, or even to deploy ransomware.

This may explain why the predominant phrasing used around state-driven attempts to gain access to E2EE is this visual abstraction of a backdoor; asking for a vulnerability to be intentionally added to code makes the trade-offs plainer.

To use an example: When it comes to physical doors — in buildings, walls, or the like — it is never guaranteed that only the property’s owner or key holder will have exclusive use of that point of entry.

Once an opening exists, it creates a potential for access — someone could obtain a copy of the key, for example, or even force their way in by breaking the door down.

The bottom line: There is no perfectly selective doorway that exists to let only a particular person pass through. If someone can enter, it logically follows that someone else might be able to use the door too.

The same access risk principle applies to vulnerabilities added to software (or, indeed, hardware).

The concept of NOBUS (“nobody but us”) backdoors has been floated by security services in the past. This specific kind of backdoor typically rests on an assessment of their technical capabilities to exploit a particular vulnerability being superior to all others — essentially an ostensibly more-secured backdoor that can only be exclusively accessed by their own agents.

But by very nature, technology prowess and capability is a movable feat. Assessing the technical capabilities of unknown others is also hardly an exact science. The “NOBUS” concept sits on already questionable assumptions; any third-party access creates the risk of opening up fresh vectors for attack, such as social engineering techniques aimed at targeting the person with the “authorized” access.

Unsurprisingly, many security experts dismiss NOBUS as a fundamentally flawed idea. Simply put, any access creates risk; therefore, pushing for backdoors is antithetical to strong security.

Yet, regardless of these clear and present security concerns, governments continue pressing for backdoors. Which is why we keep having to talk about them.

The term “backdoor” also implies that such requests can be clandestine, rather than public — just as backdoors aren’t public-facing entry points. In Apple’s iCloud case, a request to compromise encryption made under the U.K.’s IPA — by way of a “technical capability notice,” or TCN — cannot be legally disclosed by the recipient. The law’s intention is that any such backdoors are secret by design. (Leaking details of a TCN to the press is one mechanism for circumventing an information block, but it’s important to note that Apple has yet to make any public comment on these reports.)

According to the rights group the Electronic Frontier Foundation, the term “backdoor” dates back to the 1980s, when backdoor (and “trapdoor”) were used to refer to secret accounts and/or passwords created to allow someone unknown access into a system. But over the years, the word has been used to label a wide range of attempts to degrade, circumvent, or otherwise compromise the data security enabled by encryption.

While backdoors are in the news again, thanks to the U.K. going after Apple’s encrypted iCloud backups, it’s important to be aware that data access demands date back decades.

Back in the 1990s, for example, the U.S. National Security Agency (NSA) developed encrypted hardware for processing voice and data messages that had a backdoor baked into it — with the goal of allowing the security services to intercept encrypted communications. The “Clipper Chip,” as it was known, used a system of key escrow — meaning an encryption key was created and stored by government agencies in order to facilitate access to the encrypted data in the event that state authorities wanted in.

The NSA’s attempt to flog chips with baked-in backdoors failed over a lack of adoption following a security and privacy backlash. Though the Clipper Chip is credited with helping to fire up cryptologists’ efforts to develop and spread strong encryption software in a bid to secure data against prying government overreach.

The Clipper Chip is also a good example of where an attempt to mandate system access was done publicly. It’s worth noting that backdoors don’t always have to be secret. (In the U.K.’s iCloud case, state agents clearly wanted to gain access without Apple users knowing about it.)

Add to that, governments frequently deploy emotive propaganda around demands to access data in a bid to drum up public support and/or put pressure on service providers to comply — such as by arguing that access to E2EE is necessary to combat child abuse, or terrorism, or prevent some other heinous crime.

Backdoors can have a way of coming back to bite their creators, though. For example, China-backed hackers were behind the compromise of federally mandated wiretap systems last fall — apparently gaining access to data of users of U.S. telcos and ISPs thanks to a 30-year-old federal law that had mandated the backdoor access (albeit, in that case, of non-E2EE data), underscoring the risks of intentionally baking blanket access points into systems.

Governments also have to worry about foreign backdoors creating risks for their own citizens and national security.

There have been multiple instances of Chinese hardware and software being suspected of harboring backdoors over the years. Concerns over potential backdoor risks led some countries, including the U.K., to take steps to remove or limit the use of Chinese tech products, such as components used in critical telecoms infrastructure, in recent years. Fears of backdoors, too, can also be a powerful motivator.

>>> Weekend Papers Summary

FINANCIAL TIMES
-JD Vance has criticized Europe's "threat from within" as more serious than the threat posed by Russia and China. In a speech at the Munich Security Conference, Vance criticized the cancellation of a recent election in Romania, the prosecution of an anti-abortion protester in the UK, and the exclusion of far-right and far-left German politicians. European officials were alarmed by Vance's attempts to link US security backing for the continent to his comments about freedom of speech and democracy. Germany's defense minister Boris Pistorius labelled the criticism as "unacceptable" and compared Europe's situation to what is happening in autocracies. EU chief diplomat Kaja Kallas was surprised by Vance's "lecturing."
-European leaders at the Munich Security Conference faced threats from both east and west, including the looming threat of an aggressive Russia and confirmation of their worst fears about the direction of the US under Donald Trump. Trump announced direct talks with Putin on an end to Russia's war, while his secretary of defense Pete Hegseth stated that Ukraine's territorial integrity was an "illusory goal" and there would be no NATO membership for Kiev and no US support for its future defense against Russia. Promises of peace bought through appeasing an aggressor with its European victim's territory will do little to reassure those who have observed Russia's preparations for further war. Mark Rutte, NATO's secretary-general, has been blunt in describing the challenge Europe faces, stating that they must prepare for war.
-Hamas released three more Israeli men from captivity in Gaza after the ceasefire nearly collapsed. The Israelis were handed over to the International Committee of the Red Cross in Khan Younis, a heavily destroyed city and Hamas stronghold. The men were taken hostage during the Palestinian militant group's assault on Israel on October 7, 2023, which killed around 1,200 people. Hamas fighters displayed weapons and uniforms captured from Israeli military bases during the cross-border raid. Israel is scheduled to release over 350 Palestinian prisoners later under the ceasefire terms. The agreement nearly collapsed earlier this week after Hamas claimed Israel was violating the ceasefire by blocking entry into Gaza.
-Berkshire Hathaway, owned by Warren Buffett, has reduced its stakes in some of the US's largest banks in the last three months of 2024. The conglomerate sold nearly three-quarters of its position in Citigroup, selling 40.6mn shares worth over $2.4bn. Berkshire also continued to sell shares of BofA, an investment that dates back to the financial crisis when Buffett intervened. Berkshire had cut its stake by a further 95mn shares since mid-October, when its ownership position fell below a 10% reporting threshold. The sales in the weeks following reduced Berkshire's stake in BofA to about 8.9%.
-Trump's recent 25% tariff on steel and aluminum imports has thrown a company into crisis, including Tompkins Products, a Detroit-based family business that uses imported cold drawn aluminum bar for US auto industry components. The move will make Tompkins' main input more expensive, unless they can source everything from their US supplier. Trump has also imposed additional tariffs on China and Canada and Mexico, and announced a plan for new, "fair and reciprocal" measures on trade. Businesspeople are warning that this new trade war could drive up costs, disrupt supply chains, hurt profits, and make products more expensive for American consumers. Ford CEO Jim Farley believes the impact on the automotive sector would be catastrophic, with a 25% tariff across the Mexico and Canadian border blowing a hole in the US industry. Ken Griffin, the billionaire founder of hedge fund Citadel, believes Trump's "bombastic rhetoric" has sparked CEOs and policymakers to question America's dependence on America as a trading partner.
-Second-home ownership in Europe has reached unprecedented levels, with 15% of households in the EU owning a second home, according to a 2014 survey by the European Central Bank. Despite protests and restrictions, buyers continue to seek second homes, and none of the interventions have been a silver bullet for reconciling homeowner desires with local community needs. The situation is exacerbated by local hostility and increasing costs. Both buyers and business models are adapting and changing to meet the changing needs of the market.
-Hedge fund Citadel has placed a £305M bet against GSK, marking the largest short position against the company in over a decade. The bet, worth 0.51% of the company's stock, was disclosed by billionaire Ken Griffin's hedge fund. GSK's shares have risen 11% in the last month due to the drugmaker raising its long-term sales forecast and a rare £2bn stock buyback. However, GSK has lagged rival pharmaceutical companies due to its failure to excite investors about its pipeline of new medicines and vaccines. In the past five years, GSK shares have fallen 15% compared to the S&P 500 pharmaceutical index.
-Blackstone Group has put First Eagle Investment Management up for sale for over $4B to offload a large stake it has owned for a decade. The buyout groups, Blackstone and Corsair Capital, have hired Morgan Stanley to lead the sale process. First Eagle generates about $500M of annual earnings before interest, taxes, depreciation, and amortization, and is expected to fetch a valuation of over $4B. The company, founded in Dresden to finance local businesses, is best known as an early training ground for investor George Soros. The acquisition was financed with leverage and has pulled dividends from First Eagle.
-Uber has filed a lawsuit in California accusing rival food delivery service DoorDash of anti-competitive practices. The San Francisco-based company claims DoorDash coerced restaurants into working exclusively with it by threatening penalties or demoting them in the DoorDash app. Uber is seeking unspecified damages and a judgment that would force DoorDash to change its business practices. The lawsuit opens a new front in the battle between the companies for market share in the competitive food delivery services market that accelerated during the Covid-19 pandemic. DoorDash Drive enables restaurants and takeaway chains to operate their own branded apps and websites but has all delivery logistics handled by DoorDash.
-The Democratic Republic of Congo is urging the National Basketball Association (NBA) to end its ties with Rwanda, citing its support for rebels in the country's east. The NBA has been urged to consider whether its affiliation with Rwanda aligns with its commitment to social justice and respect for human rights. Rwanda's capital Kigali hosts all four Basketball Africa League championships, with several Rwandan entities being affiliate sponsors. The NBA has also written to Formula One motor racing about a Rwandan bid to host a Grand Prix and European football clubs to end their sponsorship deals with Visit Rwanda.
-Danielle Sassoon, the top federal prosecutor in Manhattan, has resigned following an order from Donald Trump's administration to drop the corruption prosecution of New York City mayor Eric Adams. Sassoon, who took over as US attorney for the Southern District of New York in December, was charged with accepting illegal foreign campaign contributions and doing official favors on behalf of Turkey's government. Trump denied involvement in the decision and said he knew nothing about it.

NEW YORK TIMES
-The Department of Justice has dropped corruption charges against New York's mayor, Eric Adams, after Manhattan's acting U.S. attorney resigned. Emil Bove III, who had ordered Manhattan federal prosecutors to seek the case's dismissal, was compelled to sign the motion himself, along with two other Washington prosecutors. Bove's reason for dismissing the case was that it would hinder Adams's ability to cooperate with the Trump administration's immigration policies. This was an unusual rationale for dismissing a criminal case, which is typically evaluated based on facts and law.
-New York City is facing a crisis of confidence in Mayor Eric Adams, prompting civic leaders and elected officials to pressure Gov. Kathy Hochul to remove him from office. The move was deemed necessary after the prosecutor overseeing a federal corruption case revealed a corrupt deal between Adams and the Justice Department. Hochul, a Democrat, is seeking views from her advisers, but five sources say she favors a deliberative approach and has not yet determined if Adams poses an urgent threat to the city's governance.
-The Trump administration has accelerated plans for widespread workforce cuts across the government, with agencies like the Environmental Protection Agency and the Agriculture Department among the latest to be hit with layoffs. The administration has focused on an estimated 200,000 probationary workers, who do not receive the same protections as many other federal employees. The Energy Department has been the hardest hit, with around 1,000 probationary employees being informed they would be losing their jobs. The administration has emphasized the importance of creating a more effective and efficient federal government that serves all Americans.
-The Trump administration has increased security requirements for migrant child sponsors, potentially making it harder for minors crossing the border to be released from federal custody and reunited with family members in the US. This move is similar to the first Trump administration's policy, which aimed to tighten vetting processes for those living with migrant children. Immigration activists argue that these requirements have fueled overcrowding in federal shelters and detention facilities. The Office of Refugee Resettlement now requires fingerprinting of all adult members of a household where a child is to live in the US.
-A federal judge denied eight former inspectors general who were fired by President Trump immediate reinstatement to their jobs, citing their lawyers' argument that their emergency request had wasted the court's time. The ruling marks a rare victory for the Trump administration in lawsuits following its attempts to slash the federal workforce, freeze funding, dismantle agencies, and install officials loyal to the president. Judge Ana C. Reyes criticized the case more on procedural grounds and allowed it to proceed on a less urgent schedule.
-Hamas has released three Israeli hostages from captivity in Gaza, extending a fragile cease-fire with Israel. The Palestinian captors forced the Israelis to give speeches in Hebrew against a backdrop of Hamas leaders' portraits. The hostages appeared frail and gaunt, with rifle-toting militants and Palestinian Islamic Jihad members nearby. The militants displayed pictures of Matan Zangauker and his mother, Einav Zangauker, alongside an hourglass and the message "Time is running out." However, the gunmen did not force the hostages to thank their captors, which shocked Israelis who saw the show of gratitude as psychological torture.
-German Chancellor Olaf Scholz accused Vice President JD Vance of unacceptable interference in Germany's upcoming elections. Scholz accused Vance of supporting a party that downplays Nazi atrocities and urged German leaders to drop their firewall and allow the Alternative for Germany (AfD) to enter their federal government. Scholz accused Vance of violating a commitment to never allow Germany to be led by fascists who could repeat the horrors of the Holocaust. He stated that a commitment to never again is not reconcilable with support for the AfD. Scholz's statement came at the Munich Security Conference.
-OpenAI's board of directors rejected a $97.4B bid by Elon Musk and a consortium of investors to acquire control of the artificial intelligence company, escalating a feud between Musk and OpenAI's CEO, Sam Altman. Bret Taylor, the board's chairman, stated that OpenAI is not for sale and the board has unanimously rejected Musk's attempt to disrupt competition. OpenAI sent a letter to Marc Toberoff, the lawyer representing Musk and the investors, stating the offer was not in the best interests of the company's mission of building AI that benefits humanity. Musk's bid was seen as interference in Altman's plan to change OpenAI's corporate structure, which aims to shift control to OpenAI's investors, including Microsoft.
-Intel is working with the Trump administration to turn over the operation of its chip-making plants to Taiwan Semiconductor Manufacturing Company (TSMC). The company is looking into splitting its manufacturing business from its semiconductor design and products business. Frank Yeary, the interim executive chairman of Intel, has spoken with administration officials and leaders of TSMC about a deal that would separate Intel's ailing manufacturing business from its semiconductor design and product business. TSMC, which produces an estimated 90% of the world's most advanced semiconductors, would assume control of Intel's manufacturing business and take a majority stake in the business alongside a consortium of investors that could include private equity firms and other tech companies. The plan is expected to help Intel pull out of a yearslong slump.

NEW YORK POST
-Luigi Mangione, the accused killer of UnitedHealthcare CEO Brian Thompson, expressed gratitude to his fans in his first public statement released two months after his arrest. The statement was featured on a new website created by the murder suspect's legal defense team to combat misinformation and offer updates on the multiple cases levied against him for the high-profile assassination in the Big Apple. Mangione, who is being held at Brooklyn's Metropolitan Detention Center, thanked his supporters for their support, which has transcended political, racial, and class divisions. He thanked everyone who took the time to write and looked forward to hearing more in the future. The statement comes just days after Mangione accepted nearly $300,000 in donations raised by more than 10,000 donors supporting his cause. Mangione is currently being held at Brooklyn's Metropolitan Detention Center.
-Mayor Eric Adams is facing pressure to resign and Gov. Kathy Hochul faces pressure to oust him for being beholden to President Trump after the Justice Department dropped his criminal case. This situation comes as Hizzoner has become increasingly isolated from once-loyal allies, with some turning against Adams and others wrestling with the choice to continue supporting the second black leader of the Big Apple. Hochul is said to have started having behind-the-scenes conversations on booting Adams from City Hall, after consulting state officials about his future. The Rev. Al Sharpton is also convening a meeting of top black elected officials in New York City and the state to weigh their next move. Democratic pundits argue that black leaders are still torn because Adams is the second black mayor, and that they are not going to spend political capital on him.
-The rising cost of eggs due to the bird flu outbreak may lead to price hikes on beef and veal products due to shrinking herd levels. Supply chain expert Joe Camberato suggests that there is a perfect storm driving up beef and veal prices. The lack of rainy storms has caused chaos in the cattle industry, with droughts and abnormally dry conditions affecting ranchers and slaughterhouses. Dry conditions reduce the amount of grass available for grazing, making farmers more reliant on feed. As demand for feed grew, prices became inflated, piling on new costs for ranchers and forcing them to shrink their herds. The New World Screwworm, discovered in Mexican cattle herds, further hampering supply. As of January, US cattle herds had shrunk 1% from the year before, hitting a 64-year low. As of this month, Washington resumed cattle imports from Mexico, but President Trump has threatened to levy hefty tariffs on the neighboring country, potentially keeping cattle prices high.

WSJ : Why There Is No Relief Ahead for High Used-Car Prices

Why There Is No Relief Ahead for High Used-Car Prices
Factory disruptions three years ago are coming back to haunt the auto market

Used-vehicle shoppers are finding stubbornly high prices at the dealership lot—if they can find a car at all.

Used-car and truck prices rose 2.2% from December to January, while new-car prices were flat, according to the Labor Department. It was a significant factor keeping overall inflation stuck at 3%, raising questions this week about whether the Federal Reserve will cut interest rates this year.

Prices on both new and used vehicles have come down from their 2022 peak, when vehicles were in short supply because of supply-chain problems. The inflation was more pronounced on used cars, though, and they remain pricier than they had been before the pandemic relative to new vehicles.

Car dealers and analysts say higher used-car prices will stick for a while. A number of factors are depressing inventory on preowned vehicle lots, likely extending a seller’s market.

“It is hard to find used cars,” Pete DeLongchamps, senior vice president at Group 1 Automotive GPI -0.57%decrease; red down pointing triangle—one of the U.S.’s biggest car dealer groups—said at a Detroit conference this month. “It is gonna be like that for the next two years.”

A big part of the problem traces back to the pandemic-era vehicle shortages. Three years ago, carmakers pulled way back on lease deals in favor of outright purchases, which generally are more profitable. Now there is a hangover effect: a shrinking pool of leased cars being turned in at the end of their terms, a main source of supply for used-car lots.

The number of vehicles coming back to dealers with expiring three-year leases will drop 23% this year, to a decade low, according to Cox Automotive. It isn’t expected to bounce back until 2027, forecasts show.

“It is a massive contraction of that key segment of vehicles that gets put into the used-car marketplace,” said Jeremy Robb, a Cox analyst who follows the used market.

Another factor contributing to tighter supplies: Lease customers are less likely to return their vehicles at the end of their term, Robb said. With used-car prices remaining sticky, the predetermined price to simply purchase the vehicle at the end of the lease is often a good deal relative to its market value.

The supply pinch has kept prices elevated. The average price of a three-year-old used car sold wholesale was nearly $28,000 in early February, up 45% from the same time in 2020, according to Cox data. The average price consumers paid for new cars rose 25% over that span, to $48,641.

New vehicles are widely available now that factories are humming again. Dealers had a 63-day supply of new cars on their lots or in transit to stores at the end of January, up from 26 days at the same time in 2022, according to research firm Wards Intelligence.

Meanwhile, used-car supply has tightened over the same period, to 48 days from 57 days, according to Cox.

Thin stocks and higher prices for preowned cars have coincided with higher interest rates and auto-insurance premiums, making it harder for consumers to afford the monthly costs associated with vehicle ownership.

Many consumers are opting to keep their older car longer instead of looking for an upgrade, said Tom Maoli, owner of Celebrity Motor Car, a dealership group based in New Jersey. “They are spending more money on repairs, but their monthly payments are less,” he said.

Dealers have had to work harder, and in some cases pay more, to get used cars for their lots. Three-year-old cars are the lifeblood of so-called certified-pre-owned programs, in which manufacturers offer warranties and other assurances on used vehicles.

For AutoNation, a publicly traded dealer group, used-car supply “has continued to be a challenge,” particularly for more-expensive models, Chief Executive Michael Manley told analysts Tuesday.

One upshot for used-car shoppers who are trading in an old ride: They might get paid more.

Group 1’s DeLongchamps said earlier this month that his company’s dealerships have wide latitude in their offers for trade-in cars so they can restock their preowned lots.

“We would much rather overpay for a trade with a customer that we do business with every day,” he said.

>>> Barron’s Weekend Summary

Cover:
-Reducing alcohol consumption has become an all-season trend, particularly among the young, raising the possibility of an age waterfall effect where older drinkers are replaced by younger, more moderate ones, draining booze sales. Shares of companies that were once staples are spilling, with some adding to decade-long losses, like Anheuser-Busch InBev and Molson Coors Beverage, which contended with a flood of craft beers and then a shift to cocktails. Diageo, maker of Johnnie Walker Scotch whisky, is down 36% over two years, while Brown-Forman has lost more than 50%. Boston Beer's stock price quadrupled in spring 2021 but now faces a 24% loss due to a hard seltzer craze. Constellation Brands, which sells Corona and Modelo beers in the USA, had been a growth holdout but its latest quarterly report showed flat sales and shares plummeted 17% in a day. Some Wall Street investors see select buying opportunities in alcohol stocks, while others say to stay away.

Interview:
-No update

Tech Trader:
-The US is expected to win the artificial intelligence race against China due to rapid advancements in chip companies and AI models. The Trump administration is looking to relax energy regulations to alleviate energy bottlenecks, which have become the main hurdle in building large AI data centers. Global investors are willing to fund a massive AI infrastructure buildout with projects like Stargate. However, a significant threat looms on the horizon: tariffs. President Trump foreshadowed such tariffs last month, stating that the US would impose tariffs of 25%, 50%, or even 100% on chip imports to increase domestic semiconductor manufacturing. Vice President JD Vance vowed the Trump administration would implement policies to ensure AI systems and AI chips are made domestically. The threat, specifically around chip tariffs, remains and investors should be aware of the risks.

The Trader:
-The stock market has been able to weather inflation data well, with the NASDAQ Composite advancing 2.2%, the Dow Jones Industrial Average gaining 0.7%, and the S&P 500 index rising 1.4%. However, the S&P 500 has been stuck in a trading range for the past four weeks, never trading much lower than 5920 to the downside or much above 6120 to the upside. The initial breakout is tentative, and a follow-through is needed to keep it alive. The election win by President Donald Trump has created chaos in Washington, with investors still trying to figure out tariffs and how DOGE's rampage through the federal bureaucracy will impact the bottom line of companies receiving government spending. The consumer price index rose a hotter-than-expected 3% year over year in January, making more interest rate cuts less likely and raising the specter that inflation could become a bigger problem if the central bank does move again.
-Southwest Airlines stock has not reached the same level as its peers, with the company missing earnings forecasts four times in the past 10 quarters and sales expectations half the time. This has led to a 13% drop in the stock, reaching $29.93. However, Southwest is taking steps to execute more consistently and efficiently. The company announced Tom Doxey as its new chief financial officer, replacing Tammy Romo, who plans to retire. Argus Research analyst John Staszak has upgraded the stock to Buy from Hold, with a $35 price target, implying a 17% gain.

Features:
-President Donald Trump announced that tariffs on car imports to the US would start around April 2, with Mexico, Japan, Canada, and South Korea being the most importers. Ford CEO Jim Farley warned that the tariffs would have a significant impact on the auto industry, causing billions of dollars in profits to be wiped out. Trump also signed an executive order imposing 25% tariffs on imports of steel and aluminum, causing shares of car makers General Motors, Ford, and Tesla to fall. The tariffs, which take effect on March 12, could lead to higher car prices for consumers. Trump has previously announced tariffs that have not taken effect, such as 25% tariffs on goods from Mexico and Canada after stronger border controls were agreed upon.
-President Donald Trump has suggested that US military spending could be cut in half, leading to a drop in shares of defense firms. Trump's comments came during a news conference addressing the potential outcome of talks with Russia and China. He expressed his desire to cut the military budget in half, with one of the first meetings he wants to have with President Xi of China and President Putin of Russia. Lockheed Martin's stock dropped $10 on the news, leaving shares down almost 1.6% on Thursday at $434.72. The S&P 500 and Dow Jones Industrial Average rose 1% and 0.8%, respectively. Shares of General Dynamics, Northrop Grumman, and L3Harris Technologies fell 2.1%, 3.4%, and 0.3%, respectively. Shares of smaller defense firms Huntington Ingalls Industries, Kratos Defense & Security, and AeroVironment were down 1.6%, 7.9%, and 3.8%, respectively. Boeing stock closed down 0.4% on Thursday. The US currently spends roughly $1 trillion annually on national defense, which is about 3.4% of current GDP.

Europe:
-President Donald Trump has launched a global trade war, with some countries responding to new 25% import taxes on steel and aluminum products. The European Union has reacted by promising countermeasures, while the US has signed executive orders for the tariffs, which will take effect on March 12. Canada Prime Minister Justin Trudeau described the tariffs as "entirely unjustifiable" and said the country's response would be clear and firm. The UK may take a softer, more diplomatic approach, citing government sources calling for "cool heads" to avoid escalating trade tensions. Other countries are likely to respond with countermeasures or statements in the coming days. Trump has also announced tariffs on Canada, Mexico, and China, which China retaliated against by placing its own tariffs on certain American goods. Hong Kong is set to file a complaint with the World Trade Organization, claiming the US has ignored its status as a separate customs territory.

Emerging Markets:
-No update

Commodities:
-Oil prices could drop and inflation could ease if President Donald Trump fulfills his campaign promise to end the war in Ukraine. Trump and Russian President Vladimir Putin agreed on a productive phone call to open talks to end the three-year war. Ukrainian President Volodymyr Zelensky also discussed brokering a reliable peace. The violence has killed or wounded over 1 million people. The end of the war would impact markets, with Brent and West Texas Intermediate prices dropping to $70 a barrel. JP Morgan analyst Natasha Kaneva forecasts that Brent and WTI will drop to the mid-$60s level by year's end due to a cease-fire and faltering global demand. Cheaper crude could help the Federal Reserve in its inflation fight, but Gavekal Research analyst Will Denyer said Ukraine cease-fire talks should cheer investors concerned about inflation. Lower oil prices could also impact the earnings of publicly listed energy majors, although shares in Chevron and Exxon Mobil were flat on Thursday.

Streetwise:
-Pacific Gas and Electric (PG&E) stock is currently trading at its biggest discount in years. PG&E, California's largest distributor of necessities, covers roughly the northern two-thirds of the state. The company has pleaded guilty or settled or paid fines for its involvement in blazes so fierce, destructive, and deadly that they have names like the Camp Fire in 2018; Kincade and Easy in 2019; Zogg in 2020; and Dixie in 2021. Patti Poppe took over in January 2021, six months after the company emerged from bankruptcy. She estimates that the company has reduced its fire risk by more than 90%, covering some lines and burying others, while taking down trees and putting up stronger poles. Small fires are still common, but PG&E has installed hundreds of cameras and other monitoring devices to put out them early.

9to5 : Potential new iPhone 17 Pro camera design shown in 3D renders

Potential new iPhone 17 Pro camera design shown in 3D renders

The next generation iPhone is expected to arrive later this year, but there are already plenty of rumors about it – especially when it comes to design and cameras. Previous rumors have suggested that the iPhone 17 Pro models will have a new rear camera design with a different bump. Now 3D renders shared by Jon Prosser show what the final version of the new phones might look like.

Rumored iPhone 17 Pro camera design shown in video
In a new video on the Front Page Tech channel, Prosser showed renders based on information from his sources. Contrary to what previous renders have shown, Prosser claims that the arrangement of the three lenses on the back of the iPhone will be the same, but that doesn’t mean that the design won’t change. Instead of a square-shaped bump, the iPhone 17 Pro will have a wide “camera bar” on the back.

The bar shown in the renders is much taller than what we’ve seen in previous renders. The three lenses are still on the left, while the LED flash, microphone, and LiDAR sensor are now on the right. Previous renders suggested that the three lenses would be aligned horizontally.

A recent leak revealed a potential back part of the rumored iPhone 17 Air, which has a wide rear bar for the camera that extends from one side of the phone to the other.

Prosser also says that previous reports misinterpreted the rumors about the back of the phone having a “two-tone” appearance. According to him, the back of the iPhone 17 Pro will still have a single shade of color, but the camera bar will have a much darker tone. Sources also told him that the iPhone 17 Pro will be lighter than current models.

Of course, it’s always important to take these rumors with a grain of salt. While Prosser has shared correct information about upcoming Apple products in the past, he has also shown alleged renders of products such as a new Mac mini and iPhone 14 that turned out to be wrong.

Even so, all the rumors suggest that Apple is definitely considering some changes to how the iPhone’s rear camera looks. Whether it will be horizontally aligned or keep the current arrangement with a large wide bar, we don’t know for sure. We’ll probably have to wait a bit more until we see things like the first cases made for the iPhone 17 lineup.

But what about you? Which rumored design do you prefer? Let us know in the comments section below.

Wired : Elon Musk’s Toxicity Could Spell Disaster for Tesla

Elon Musk’s Toxicity Could Spell Disaster for Tesla
Staggering sales drops, swastika-daubed EVs, companies culling fleet models, and fan-forum owners selling their cars—Elon Musk's alt-right antics are seriously impacting his electric car business.

Elon Musk’s toxicity among many Europeans is such that even owners of Tesla news websites have ditched Muskmobiles for other EV brands. Jon Gibbs of Birmingham, England, runs what he calls the “world’s biggest Tesla inventory site." Tesla-info, Gibbs says, stores the “largest database of new and used Tesla motors in the world.” He used to own one himself—but he now drives a BMW iX electric SUV.

Likewise, Tim Kraaijvanger of the Netherlands, founder of Tesla360.nl, a Dutch everything-Tesla site, recently sold his Model Y and bought a Polestar instead. Both entrepreneurs pin their car switch on Musk’s support for European far-right political parties, and his inauguration rally arm gestures.

“While Musk might get away with a [Nazi-like] salute in some parts of the world, European markets reject such behavior,” Kraaijvanger tells WIRED. “World War Two still casts a long shadow." He may be right. Tesla sales are in free fall in Europe right now. Last month, Norway—where EVs overtook internal combustion vehicles in total market share in 2024—recorded a biting 37.9 percent slump. At the same time, Tesla sales in France fell by a thumping 63.4 percent. And it gets even worse: In Spain, Tesla sales plummeted by 75.4 percent.

Kraaijvanger, founder of online marketing firm Stormachtig, started Tesla360.nl in 2020, then rolled out a German version three years later. He has owned several Tesla cars and, later this year, planned to upgrade to the refreshed $59,990 Model Y Juniper. Offloading his current Model Y has cost him dearly: “I received only about half of the [Tesla’s] original new price when selling it,” he revealed. “But I do not wish to be associated with [Musk’s] ideology.”

He has yet to ditch his URLs, but then running websites is mainly anonymous. On the other hand, driving a Tesla on public roads is becoming increasingly problematic in Europe. Social media is rife with images of Teslas vandalized with Swastikas and expletives. Dealerships are also being targeted. Vandals sprayed graffiti on a Tesla car showroom in The Hague in early February, defacing the building with “No to Nazis” and sweary anti-fascist slogans.

On a grander scale, the English campaign group Led by Donkeys recently teamed up with Germany’s Center for Political Beauty to beam an image of Elon Musk making the inauguration salute onto Tesla’s gigafactory in Berlin, with the word “Heil” projected next to the lit Tesla logo. “This is who Elon Musk really is,” stressed Led by Donkeys across their well-followed social media accounts. “Don’t buy a Tesla” urged the activists.

Startup crowdfunded group Everyone Hates Elon has been distributing anti-Tesla stickers in London with left-wing outlet Novara Media reporting that “hundreds” of Tesla owners have returned to their parked EVs to find them defaced with hard-to-remove roundels featuring a grinning Musk plastered with a Hitler-aping toothbrush mustache and the request not to “buy a Swastikar.”

Some Tesla owners are themselves defacing their cars, with the “I Bought This Before We Knew Elon Was Crazy” bumper sticker being a particular favorite. “I have seen massive uplift in sales across Europe,” Matthew Hiller of Hawaii-based Mad Puffer Stickers tells WIRED. “Leading the way are buyers from France, Norway, and the UK,” he adds. “I used to want a Tesla until Elon turned into a full-on fascist,” claims Hiller on his otherwise fish-themed store. He figures there’s a “lot of disgruntled Tesla owners out there” and claims to have sold thousands of sticker sets across the world.

“I went so far as to test drive a Tesla in 2023, but at that time, [Musk’s] purchase of Twitter was complete, and I saw what he was doing to the platform,” says Hiller. “Skewing the algorithm to favor alt-right voices, promoting disinformation, banning people he didn’t like. Using his influence to wade into politics really turned me off buying a Tesla—it’s a MAGA hat on wheels.”

Musk’s “salute” has boosted Hiller’s sales. “It has been a sustained 500 sales a day since the salute,” he says. “That moment broke through all the usual Elon noise. Even the [MAGA-lite folks] who only casually pay attention to what is happening in the government woke up at that moment and were like ‘Holy shit, what have we done?’”

Another of Hiller’s most popular stickers for Tesla owners states that the driver is now a member of the “Anti Elon Tesla Club.” She might not have yet bought such a sticker, but Tesla shareholder Karen Róbertsdóttir of Reykjavik, Iceland, should perhaps become at least an associate member. “The Tesla groups over here in Iceland used to never have the sort of ‘I can’t buy a Tesla because of Elon’ stuff you’d see in the States—but now it’s everywhere, and the people I talk to elsewhere in Europe are seeing the same thing,” she wrote over the weekend on Tesla’s YouTube channel.

“I’ve defended you guys so much over the years, and you make great products, but even I can’t stick up for you anymore,” she stated.

Róbertsdóttir, now a software developer for Icelandic air traffic control company Isavia, started her tech career as founder of Iowa-based Celadon Applications. This 2009 startup developed software for electric vehicles. A long-time Tesla stockholder, one of her resolutions was put to the vote at Tesla’s annual shareholder meeting in 2023, calling on Tesla’s board to release a succession plan for Musk and other “key persons” whose behavior could create a risk for the company and shareholders.

“When people look at this company,” she said at the meeting, “they see the company as a synonym for its CEO.” (The board recommended rejecting the resolution, and it was duly voted down.)

While some shareholders have already voted with their feet—in January, Dutch civil service pension fund ABP sold its €782 million stake in Tesla, for instance—most still seem unbothered by Musk’s trolling, or his apparent takeover of the US government's executive branch with the help of young coders. Musk’s “pedo guy” comments against a British cave rescue diver, successfully defended in a 2019 defamation trial, didn’t ruffle that many shareholder feathers, but it’s harder to ignore sales cull calls.

In late January, Poland’s sports and tourism minister Sławomir Nitras lobbied for a Tesla boycott. “There is no justification for any reasonable Pole to continue purchasing Teslas,” he said.

In Germany, where Musk has caused outrage by endorsing far-right political party Alternative for Germany (AfD), going so far as to appear as a surprise video guest at the party's national election campaign launch last month, several companies have cut ties with Tesla. Drugstore chain Rossmann, with 4,700 stores across Europe, has replaced Tesla in its electric fleet with other EV brands, citing the “incompatibility” of its corporate values and Musk’s ideology.

German energy company LichtBlick revealed an uncoupling from Tesla on a LinkedIn post. “We are pulling the plug on Tesla vehicles in our fleet,” said the announcement, with the firm’s real estate head, Kevin Lütje, clarifying that “Elon Musk’s support of Donald Trump and his recommendation to vote for a right-wing populist and right-wing extremist party … is in no way compatible with LichtBlick’s values.” He stated that “climate protection and electromobility are extremely important to us, but in the future we will be relying on providers other than Tesla.”

Such boycotts benefit Tesla’s rivals. “We have seen an increase in people writing to us and switching to Polestar in recent months,” Polestar’s German CEO Michael Lohscheller tells WIRED. Lohscheller called Musk’s endorsement of AfD “totally unacceptable.”

There are many reasons for Tesla’s waning fortunes in Europe—including stale model line-up (Geely’s Gothenburg-developed Zeekr 7X SUV has more bells and whistles than a Model Y) and expense (a Model 3 costs €39,990 in Europe, while many better EVs are biting into this price point)—but Musk’s steady descent from real-life Tony Stark to MAGA power broker seems to be a key reason for Tesla’s current precipitous fall from grace.

Tesla sales dropped 13 percent across the whole European Union in 2024, according to data from the industry body ACEA, and just like in Spain and France, in many key markets the fall is still steeper. According to the German Federal Motor Transport Authority, Tesla registered only 1,277 new cars in Germany in January, a year-on-year drop of 59.5 percent.

Tesla was contacted for this piece and did not respond, but there seems to be no light at the end of the tunnel for Tesla sales in Europe. A recent survey by Dutch news outlet EenVandaag got responses from 432 Tesla drivers. Some “31 percent are either contemplating selling their car or have already done so,” the survey found. Forty percent of owners felt embarrassed to own a Tesla. By any measure, these are statistics that no car company wants to own.

CrunchBase : The Week’s Biggest Funding Rounds: Robotics And Legal Tech Top Boun

The Week’s Biggest Funding Rounds: Robotics And Legal Tech Top Bounce-Back Week

The past few weeks were slow when it came to big rounds, but this week was quite the bounce-back. More than a half dozen startups raised $100 million or more, as investors went big on robotics and legal tech.

1.Apptronik, $350M, robotics : Although robotics funding remained relatively unchanged last year, some humanoid robot startups certainly have seen massive cash from investors. Add Apptronik to that list, as the Austin, Texas-based AI-powered humanoid robotics company locked up a $350 million Series A co-led by B Capital and Capital Factory, with participation from Google. Founded in 2016, Apptronik had previously raised $28 million, per the company. The robotics startup will use the fresh cash to develop its humanoid robot designed for industrial work, Apollo. The company, which competes with Tesla, has partnered with NASA and Nvidia, and has developed 15 robotic systems, including NASA’s humanoid robot Valkyrie.

2. Harvey, $300M, legal: It was just seven months ago San Francisco-based artificial intelligence legal tech startup Harvey made this list after it raised a $100 million Series C led by GV with participation from the likes of OpenAI, Kleiner Perkins and Sequoia Capital at a $1.5 billion valuation. It’s back again with a $300 million round led by Sequoia that values the startup at $3 billion, per a report. Harvey develops AI tools that help legal pros with research, document review and contract analysis. Founded in 2022, the company has raised $506 million, per Crunchbase.

3. QuEra Computing, $230M, quantum: Everyone wants to know when quantum computing will seemingly become a real thing. That has not stopped investors from putting more cash into quantum-related startups. This week SoftBank’s Vision Fund unit and Google Quantum AI both took part in a whopping $230 million round for Boston-based neutral-atom quantum firm QuEra Computing. Neutral-atom quantum computing has lower error rates than other quantum systems. Founded in 2018, the company has raised $247 million, per Crunchbase.

4. Abcuro, $200M, biotech: The big biotech raise of the week (there seems to always be one) went to Newton, Massachusetts-based Abcuro. The startup, which is developing therapies for the treatment of autoimmune diseases and cancer through cytotoxic T cells, closed a $200 million Series C led by New Enterprise Associates. Founded in 2015, the company has raised nearly $415 million, per Crunchbase.

5. Chestnut Carbon, $160M, climate: Climate tech has been slow recently. But that did not stop Chestnut Carbon from locking up a $160 million Series B from several investors, including existing investor Canada Pension Plan Investment Board. The New York-based startup develops new forests on marginal crop and pasture lands, granting verified carbon credits to its corporations. Founded in 2021, the company has raised $360 million, per Crunchbase.

6. K2 Space, $110M, space: Torrence, California-based K2 Space, a satellite platform developer, locked up a $110 million Series B co-led by Altimeter Capital and Lightspeed Venture Partners. Founded in 2022, K2 has raised $180 million, per the company.

7. Eudia, $105M, legal: Palo Alto, California-based Eudia, an AI legal tech startup, closed a $105 million Series A led by General Catalyst as it came out of stealth.

8. EnCharge AI, $100M, semiconductor: With AI being all the rage, chips seem to be the talk of tech right now. EnCharge AI, a startup developing analog in-memory-computing AI chips, raised a Series B of more than $100 million led by Tiger Global. Founded in 2022, EnCharge has raised more than $144 million, per the company.

9. Newleos Therapeutics, $94M, biotech: Boston-based Newleos Therapeutics, a biotech startup developing multiple treatments for anxiety, social anxiety, substance use disorders and cognitive impairment, locked up a $93.5 million Series A led by Goldman Sachs Alternatives. This is the company’s first announced round, per Crunchbase.

10. Bambusa Therapeutics, $90M, biotech: Boston-based Bambusa Therapeutics, a biotech startup developing bispecific antibodies for immunological and inflammatory disorders, raised a $90 million Series A led by new investor RA Capital Management. Founded in 2024, the company has raised $105 million, per Crunchbase.

Big global deals
The largest deal of the week outside the U.S. came from the Middle East.
  • Saudi Arabia-based Tabby, a payments and shopping app, raised a $160 million Series E.

WSJ : The Inside Story of How Altman and Musk Went From Friends to Bitter Enemie

The Inside Story of How Altman and Musk Went From Friends to Bitter Enemies
The two tech titans are in the meanest fight in business. The stakes couldn’t be higher.

On the first full day of the second Trump presidency, Elon Musk was in the White House complex when he got word that his nemesis was about to hold a press conference with the president. He turned on the television and watched as OpenAI’s chief executive, Sam Altman, and a beaming Donald Trump touted a $500 billion investment in AI infrastructure called Stargate.

Despite having rarely left the president’s side over the preceding few months, Musk was blindsided by the announcement, according to people familiar with the matter.

Musk fumed to aides and allies about the announcement, claiming Stargate’s backers didn’t have the money they needed. The deepest cut was Altman’s success navigating Trump-world, via a carefully coordinated series of recent meetings in Palm Beach and phone calls with the White House, while keeping the plan secret from the president’s “first buddy.”

Altman and Musk co-founded OpenAI in 2015, but their relationship soured when Musk left in 2018 following a power struggle. It worsened when Musk responded to the launch of ChatGPT by launching his own rival startup, xAI.

This week the feud went nuclear when Musk followed the Stargate unveiling with his own bombshell: a hostile $97.4 billion bid for the assets of the nonprofit that controls OpenAI. A decade after joining forces, they are now fighting for control of the very thing that brought them together in one of the highest-stakes and most personal fights in recent business history. The outcome could determine everything from the future of a world-changing technology to who will help set the nation’s technology agenda with a new president.

This article is based on conversations with more than a dozen people familiar with Altman and Musk’s relationship over the years, as well as OpenAI and Musk’s business and political decisions.

In many ways, Sam Altman, 39, and Elon Musk, 53, couldn’t be more different.

While Musk was beaten up and verbally abused as a child, Altman was a teacher’s pet whose parents routinely told him he could be whatever he wanted to be. Where Musk was often abrasive, Altman tended to tell people what they wanted to hear. And while Musk is an engineer, steeping himself in the details of rocket and battery design, Altman is a technology-obsessed intellectual, reading widely across philosophy, science and literature and penning essays on how society should organize itself.

But both have a strikingly similar taste for power.

For years, the millennial Altman looked up to the Gen X Musk as a hero, a real-life Tony Stark who provided a counterexample to the country’s technological stagnation that Altman railed against when he was president of the startup accelerator Y Combinator. Altman met Musk years earlier when Y Combinator partner Geoff Ralson introduced them, and helped arrange for Altman to tour Musk’s SpaceX rocket factory.

Altman’s time leading Y Combinator—from 2014 to 2019—put him at the epicenter of power in Silicon Valley. He became known as a fixer with an unrivaled Rolodex who could call in favors for the startups he invested in, or punish investors who crossed them. His special talent was raising money, which he would do by arriving in his signature uniform of jeans and sneakers, curl his small frame up cross-legged in a conference room chair, and unspool a vision so grandiose, compelling and earnest that it often seemed like investors were powerless to keep from funding his projects.

In early 2015, Musk and Altman began having regular dinners each Wednesday in the Bay Area. Their conversations tended toward the apocalyptic: how the world might end, how they might prepare for it, to where they might have to flee. A likely cause, they agreed, would be artificial intelligence that grows smarter than humans and impossible to control.

That May, Altman suggested they create a “Manhattan Project” to develop artificial general intelligence, or AGI, that is as smart as humans at most tasks. They wanted to ensure Google, which had a huge lead in developing the technology, didn’t end up deciding what it would mean for the human race.

By the end of the year, Musk and Altman joined forces to create a new, nonprofit AI lab called OpenAI backed by up to $1 billion, which Musk pledged to supply the lion’s share of. Musk and Altman would lead it as co-chairmen.

A couple months before OpenAI was announced, Altman and Musk appeared together on stage at a Vanity Fair conference, both stuffed awkwardly into blazers, Altman’s sneakers as loud as ever, and agreed with each other on various topics, including the wisdom of “nuking Mars” (to heat it up and create an atmosphere).

Their relationship began to disintegrate in 2017, after OpenAI researchers realized they would need far more money than a nonprofit could raise to develop advanced AI. The management team agreed to explore some kind of transition to a for-profit company, according to internal emails submitted in court documents. But they couldn’t agree on how to structure it. According to one of the emails, Musk demanded majority control and to be CEO.

Altman’s successful move to block his mentor would mark the beginning of their rupture. He convinced another co-founder, Greg Brockman, to back him over Musk. Brockman reeled in OpenAI’s chief scientist, Ilya Sutskever, to also back Altman.

Brockman and Sutskever wrote in an email to Musk that since OpenAI was founded “to avoid an AGI dictatorship,” it seemed like “a bad idea to create a structure where you could become a dictator if you chose to.” Within hours, Musk wrote back that “this is the final straw.” By early 2018, he had left the company, and Altman took over leadership.

Over the next few years, OpenAI continued to quietly focus on research. Then on Nov. 30, 2022, it released a new product called ChatGPT. “this is an early demo of what’s possible (still a lot of limitations—it’s very much a research release)” Altman wrote on X.

That research release turned out to be one of the most successful and transformative consumer-technology products of the century, in the company of the iPhone, Facebook and TikTok. As shocked as the rest of the world that AI had gone mainstream and upset that he wasn’t part of it, Musk began publicly criticizing OpenAI for moving too fast and not taking safety seriously. He signed an open letter calling for a six-month pause on AI development.

Within a few months, Musk launched his own for-profit, open-source artificial-intelligence company, xAI, but its technology and market impact have lagged well behind OpenAI. Musk hoped he would become a serious rival to Altman, but didn’t even become a nuisance.

In 2024, he attacked Altman in a new venue: court. After suing OpenAI and its CEO that February, he withdrew the suit in June, refiled it in August, and amended it in November. His primary complaint was that Altman had allegedly violated their original agreement that OpenAI would prioritize the public good over profit.

“The perfidy and deceit are of Shakespearean proportions,” Musk’s lawyers declared. Altman said Musk was bitter he left before the company succeeded.

As Musk’s legal attacks escalated, Altman watched with growing alarm as Musk grew closer and closer to Donald Trump, campaigning by his side and spending hundreds of millions of dollars to support him.

The OpenAI CEO was a lifelong Democrat who once said Trump’s principles represented an “unacceptable threat to America.” His company had few ties to Trump and his circle of advisers and began trying to work its way in.

Musk proved a formidable obstacle. His hatred of his former protégé was so well-known at Mar-a-Lago that people close to Trump were wary of passing on Altman’s entreaties.

So Altman tried to work around Musk. In December, he greenlighted a technology partnership between OpenAI and the defense startup Anduril, whose co-founder Palmer Luckey is one of the tech industry’s most notable Trump supporters. Musk expressed frustration to some associates about the deal.

More recently, Altman tried to connect OpenAI to a Trump family member. He unsuccessfully lobbied Republican-aligned venture firm 1789 Capital to invest—it is led by financier Omeed Malik, and Donald Trump Jr. joined the firm in November. A spokesman for 1789 declined to comment.

Altman’s advisers told him that to avoid unpleasant run-ins with Musk at Mar-a-Lago, he should schedule meetings with Trump allies elsewhere in Palm Beach.

One of those meetings was with Howard Lutnick, co-head of the presidential transition. Altman told him OpenAI was committed to investing billions of dollars into U.S. data centers.

Altman presented it as a potential signature Trump initiative. The project, known inside OpenAI as Stargate, had been in the works for years.

Altman first mentioned Stargate to OpenAI’s board in 2023 as a way to vastly increase the computing power his company could tap to develop and operate AI.

He originally brought the idea to Microsoft, asking it to invest upward of $100 billion. But, in the wake of an episode in 2023 when Altman was ousted from the CEO perch for five days, the tech giant balked.

Altman soon found partners. One was SoftBank, the Japanese conglomerate whose outspoken chief, Masayoshi Son, is known for making huge bets on charismatic entrepreneurs. Altman had known him since his Y Combinator days.

The second was Larry Ellison, a longtime friend of Musk’s who was hung out to dry when xAI pulled out of a Texas data-center project that Ellison’s company, Oracle, was working on. Altman agreed OpenAI would take it over. The project grew into the foundation for Stargate.

Beyond their deep pockets and technological capabilities, Son and Ellison brought Altman another advantage: Both had relationships with Trump dating back years.

In December, Son played golf with the president-elect at Mar-a-Lago and announced his intention to invest $100 billion in U.S. infrastructure projects alongside Trump and Lutnick. Their press conference effectively previewed Stargate without making any of the details public—which ensured Musk still didn’t know about OpenAI’s involvement.

Son also met with Ellison at his nearby estate.

Four days before the inauguration, Ellison helped broker a call between Altman and Trump to discuss the initiative. As Altman sketched out his ambitious plans to invest in AI infrastructure in the U.S., Trump peppered him with questions about the building process, drawing on his years of experience building hotels, casinos and golf courses.

Altman came to the inauguration festivities, but he didn’t sit with other tech CEOs alongside Musk. He told others he wanted to avoid any kind of public run-in with Musk.

The next day, Altman and his partners arrived at the White House, where they more fully explained their plans for Stargate to Trump. Trump told the group he wanted to go ahead with the announcement. The new president loved that they were aiming to invest $500 billion during his term—a number sure to make headlines.

Announcing that figure was a risk. Stargate needed outside money and key investors hadn’t finalized their specific commitments. But Altman had achieved his goal of blindsiding Musk.

The head of the new Department of Governmental Efficiency fumed to aides about how the partners didn’t really have the funding lined up for the project. He called the project “fake” on X—shocking some Trump allies with the tech billionaire’s public break from the president.

Musk was already plotting a counter move, and had been considering making a bid for the nonprofit that controls OpenAI since early January. By the middle of the month, his team had begun engaging with potential co-investors for a bid.

Musk said he was inspired to make the bid in part because OpenAI was in the midst of becoming a for-profit company and he believed Altman planned to undervalue the assets of the nonprofit, which would become an independent charity with a stake in the for-profit.

But Musk’s more primal message for the investors: Let’s go to war with Sam Altman.

Altman was at the Paris AI Summit when news of Musk’s $97 billion bid was reported by The Wall Street Journal. He scrambled to come up with a response, telling employees in a Slack message that this was yet another one of Musk’s tactics to derail OpenAI.

On X, he tweeted at Musk: ‘No thank you but we will buy twitter for $9.74 billion if you want.’ That’s a tiny fraction of the $44 billion Musk spent to acquire Twitter in 2022.

Musk later in the week said he’d abandon the bid if Altman keeps Open AI non profit.

On Friday, OpenAI said in a letter to Musk’s lawyer that the company and the board reject the $97.4 billion proposition.

“OpenAI is not for sale, and the board has unanimously rejected Mr. Musk’s latest attempt to disrupt his competition,” said Bret Taylor, chairman of OpenAI’s board. “Any potential reorganization of OpenAI will strengthen our nonprofit and its mission to ensure AGI benefits all of humanity.

OpenAI’s rejection “comes as no surprise,” said Musk’s lawyer, Marc Toberoff.

Musk had said he wanted to save the company from the dangerous direction in which his co-founder had taken it. “It’s time for OpenAI to return to the open-source, safety-focused force for good it once was,” he pronounced. “We will make sure that happens.”

Altman responded with his signature brand of nice-guy savagery: “Probably his whole life is from a position of insecurity,” he said on Bloomberg TV. “I feel for the guy. I don’t think he’s a happy person. I do feel for him.”