TheChek News Flow

Summary

The Centers for Disease Control and Prevention (CDC) is issuing this Health Alert Network (HAN) Health Advisory about a recently confirmed outbreak of Ebola disease in Uganda caused by the Sudan virus (species Orthoebolavirus sudanense) and to summarize CDC’s recommendations for U.S. public health departments and clinicians about case identification, testing, and biosafety considerations in clinical laboratories.

Currently, no suspected, probable, or confirmed Ebola cases related to this outbreak have been reported in the United States, or outside of Uganda. However, as a precaution and because there are other viral hemorrhagic fever (VHF) outbreaks in East Africa, CDC is sharing best practices for public health departments, public health and clinical laboratories, and healthcare workers in the United States to raise awareness about this outbreak.

On February 5, 2025, CDC issued a https://wwwnc.cdc.gov/travel/notices/level2/ebola-uganda" target="_blank">Travel Health Notice Level 2: Practice Enhanced Precautions for people traveling to Uganda. Currently, CDC has not issued any interim recommendations to health departments for post-arrival risk assessment and management of travelers, including U.S.-based healthcare workers, arriving from Uganda. CDC recommends that travelers monitor themselves for symptoms of Sudan virus disease (SVD) while in the outbreak area and for 21 days after leaving. Travelers should also self-isolate and contact local health authorities or a clinician if they develop symptoms (early “dry” symptoms may include fever, aches, pains, and fatigue and later “wet” symptoms may include diarrhea, vomiting, and unexplained bleeding).

*Link: https://www.cdc.gov/han/2025/han00521.html

The last time Poornima Ramarao spoke to her son, a 26-year-old software engineer named Suchir Balaji, was on his birthday, Nov. 21. He was on a backpacking trip with a few friends on Catalina Island, right off the coast of Los Angeles. It was a quick call. Ramarao wanted to let him get back to celebrating with his friends. “I blessed him, but my blessing didn’t protect him,” Ramarao tells Fortune.

After Balaji returned the next day, he spoke with his parents one more time—a brief call with his father, who told Fortune his son sounded normal, despite what would soon happen. But after not hearing from Balaji for a few days, Ramarao began to worry. On Nov. 25, she went to his home by San Francisco’s Hayes Valley neighborhood and knocked on the door but didn’t get a response. She still had not heard from him the next day, and decided to go to the police department and file a missing person’s report. When the cops finally gained entrance to his apartment, they brought out Balaji’s body on a stretcher. He had died from a gunshot wound to the head.

San Francisco medical examiners initially ruled Balaji’s death a suicide, although many questions persist for his parents––and for the wider public. Because Balaji was not just a software developer, but a former researcher at OpenAI who had gone to the New York Times just a few months before to decry what he viewed as the AI’s company’s illegal copyright violations. At the time of his death, Balaji was prepared to testify as a witness at a landmark lawsuit brought by the newspaper against the artificial intelligence behemoth.

Since Balaji’s death, Ramarao and her husband, Balaji Ramamurthy, have been looking for answers. Ramarao made a January appearance on The Tucker Carlson Show to express concerns about how her son’s case has been handled by authorities. And on Jan. 31, she and Ramamurthy filed a lawsuit against the San Francisco Police Department, demanding it release its full report into their son’s death.

Balaji himself has become a symbol of fears about OpenAI’s creeping power and his death a source of rampant conspiracy theories, spurring online speculation, prodding tweets from Elon Musk and elected officials, and even a memecoin launched by an anonymous figure allegedly raising funds to support the parents’ legal effort.

But beneath the most salacious headlines is the tragic death of an exceptionally gifted programmer and researcher, described by family and friends who spoke with Fortune as a prodigy with a firm moral compass. His parents are still searching for closure.

“We will take this to the public,” Ramarao says. “We will be taking it everywhere. We will even send it to President Trump.”

Before Balaji left OpenAI last August, he had spent four years among the company’s top researchers, having helped develop its flagship GPT-4 large language model, the underlying technology to the commercial blockbuster ChatGPT. That vantage point helped build his view that OpenAI was breaking the law by making copies of online content.

OpenAI was Balaji’s first job out of college, a prodigious leap that was, for his parents, completely expected. From the time he was little, Ramarao knew her son was exceptionally smart. At two years old, Balaji was already showing an interest in programming. “He would take us to Barnes and Noble and show us the Java book section,” Ramarao recalls.

Balaji grew up in Cupertino, Calif., the heart of Silicon Valley and home of Apple. By 11, he was programming on his own—a skill he used to playfully torment his friends. One remembers Balaji’s idea of a middle school prank: writing code that deleted a friend’s Skyrim save file. (Skyrim, a popular video game, usually sees its players pour hundreds of hours into their games.)

Before starting at UC Berkeley as an undergrad, Balaji took a gap year to work at the online forum Quora as a software engineer. While other new employees hired out of high school struggled, one coworker who spoke with Fortune says that Balaji fit right in. “He was mature beyond his years,” says the coworker, who spoke on the condition of anonymity to protect their privacy. They remember that Balaji had a knack for reading people at the poker table. “He always took our money,” the coworker says.

Even at the brainy mecca of Berkeley, Balaji stood out. One friend recalls being in a computer science class with him, and in a famously difficult midterm, Balaji got one of the highest scores without studying: “Something insane, like, four standard deviations above the mean,” says the friend, who like most of the acquaintances who spoke with Fortune did so on the condition of anonymity to protect their privacy given the conspiracy theories that have proliferated. “I thought, ‘Who is this guy?’” the friend tells Fortune. “I’m not his intellectual equal by any means.”

Balaji was also one of a select few accepted to Berkeley’s Accel Scholars Program, a mentorship program founded by elite Silicon Valley venture capital firm Accel supporting young software engineers looking to pursue careers in tech. “He was a really brilliant, thoughtful person with a lot of confidence and courage,” said Amit Kumar, the Accel partner who founded the program. “In a university full of outliers, he stood out in terms of raw intellectual horsepower…He would have been great at anything he applied himself to.”

Balaji was drawn to the frontier technology of artificial intelligence, interning at the rapidly growing startup Scale AI in 2019 while he was in college. One friend who worked with him says Scale seemed to hope he would return. Balaji became drawn to OpenAI, where he’d also interned. Its cofounder, John Schulman, directly recruited Balaji out of college for a full-time job.

Balaji would spend his first four years out of college with OpenAI, helping gather digital data to train the company’s growing neural network. Still, he would later tell the New York Times that he viewed his work as a research project, not as the foundation for OpenAI’s later smash hit, ChatGPT. Over time, three friends tell Fortune that Balaji seemed to become disillusioned slowly, sharing memes to communicate his displeasure with OpenAI’s trajectory. One friend says that Balaji disagreed with OpenAI’s approach to achieving artificial general intelligence, the north star for the AI sector. The friend remembers Balaji complaining that OpenAI, which began as a non-profit lab and has gradually evolved into a commercial enterprise, was too focused on software sales and wasn’t willing to invest enough on the research side. Balaji joked to several friends that AGI, or artificial general intelligence, stood for “adjusted gross income.” They don’t remember Balaji bringing up concerns with OpenAI’s approach to copyright.

When he quit OpenAI, some longtime friends were surprised, while others felt it had been coming. Balaji left in August 2024, the same month that Schulman also made his high-profile exit. All the friends and family that Fortune spoke to said that Balaji’s first few months out of OpenAI were surprisingly normal, as he advised at least one AI startup and rode his Yamaha motorcycle around San Francisco, contemplating what he’d do next.

No one that Fortune spoke to, including his parents, knew of his plans to become a public advocate for what he viewed as egregious legal violations by his former employer.

Ramarao never expected her son to speak out against OpenAI, especially in such a public way. She had gotten the sense he wasn’t happy with OpenAI at the time he’d left. But when the New York Times article came out, it caught her off-guard.

“He just said, ‘It’s unethical, and I feel it’s wrong,’” says Ramarao. “‘We need to speak up.’”

In a series of interviews, Balaji told New York Times tech reporter Cade Metz that he believed OpenAI would cause more societal harm than good, making the case that the company was violating copyright laws based on his own intricate understanding of how its models are trained. Metz published his article in October, with Balaji posting a detailed essay on his personal website the same day laying out his case that OpenAI was breaking fair use laws.

Balaji isn’t the first former OpenAI employee to speak out against the company. A group of nine had come forward to the New York Times just a few months before, alleging a culture of recklessness and deteriorating safety protocols, accelerated by the dramatic firing, and immediate return, of cofounder and CEO Sam Altman the year before.

Unlike the other group of OpenAI employees, Balaji wasn’t divulging any previously unknown inside information about the company—a distinction that has caused some to take issue with his classification as a “whistleblower.” And one intellectual property lawyer, who spoke with Fortune on the condition of anonymity because of the conspiracy atmosphere around the death, says Balaji’s own analysis “misunderstands the law in some fundamental ways.” Another, the intellectual property attorney Bradley Hulbert, tells Fortune that Balaji’s post reads like “the argument of a really smart non-lawyer who read up on the subject but does not have a thorough understanding.”

But Balaji’s decision to come forward still served as a potent alarm against OpenAI’s seemingly unstoppable momentum—here was one of its young, phenom engineers helping explain to the public how the technology actually worked and the harms it could cause. The New York Times, which has sued OpenAI alleging unauthorized use of millions of its articles by the company to train its AI models, even named Balaji as a witness in its ongoing lawsuit against OpenAI. Balaji’s testimony, reckons Hulbert, would likely have been used “for color” to help the newspaper make its case to a jury,

Even though Balaji had been secretive about his life-changing decision, people who knew him weren’t surprised. His former coworker at Quora, who hadn’t spoken to Balaji since their time at the company years earlier, remembers following the news. “I always felt he had a good head on his shoulders,” they tell Fortune. “He knew what was right and what was wrong.”

And while it may have seemed impulsive to go to the New York Times without even telling his parents, friends say that Balaji wouldn’t have made the choice without his characteristically methodical consideration.

“He seemed like he was making all these impulsive decisions, but no––they’re impulsive to people who aren’t in the loop or to those he’s not specifically talking about these decisions to,” one close friend who’d previously worked with him said. “I saw him as someone who was very systematic and thoughtful, kind of about everything.”

Balaji had a crew of ten close friends from high school. They kept an active group chat where they shared memes, and ever since the pandemic, went on two backpacking trips a year together. One friend, who was on the final Catalina trip before Balaji’s death, remembers that they would all joke together about Balaji’s decision to go public.

They were all big fans of Dune and would compare his action to a famous war in the books—a crusade against computers that ends with the elimination of AI in the story’s universe. “Anytime we talked about it, it would be in a joking manner,” says the friend, who spoke on the condition of anonymity to protect their privacy.

Even so, Ramarao knew that her son’s very public revelation would come with consequences. She remembers even thinking that as she looked at his picture, stoic and shrouded in shadows, in the New York Times. “My mother’s instinct was very strong,” says Ramarao. “I really felt something grave was going to happen to my son. And he just kept assuring me: ‘Mom, it’s just my opinion. I haven’t done anything wrong.’”

About a month after the New York Times story came out, Balaji was dead. It’s not clear how long Balaji’s body was in the apartment before it was discovered on November 26. From the day she learned of his death, Ramarao had already begun to feel that her son’s case was not being properly investigated.

Her lawyers lay out the case in their lawsuit against the police department, filed on Jan. 31. According to the complaint, a representative from the city’s Office of the Chief Medical Examiner (OCME) informed Ramarao 40 minutes after they found his body that Balaji had died by suicide. The lawsuit alleges that no officer or examiner asked her any questions about her son, even when she informed them he had been a whistleblower against OpenAI. The representative also told her she would not be allowed to see his body, and that his face had been “destroyed” when a bullet went through his eye. The gun was registered to Balaji. He had bought it in January 2024.

A spokesperson for the San Francisco Police Department told Fortune that “no evidence of foul play was found during the initial investigation,” but that the investigation remains open as of Feb. 7. The OCME declined comment.

Harboring doubts, Ramarao decided to hire an independent examiner named Dr. Joseph Cohen, a forensic pathologist, to conduct a private autopsy in the middle of December. According to the lawsuit, Cohen determined that the bullet’s trajectory, which went through his mid-forehead, was “atypical and uncommon” in suicides, also noting a “contusion” to the back of Balaji’s head.

Dr. Cohen did not respond to several requests for comment.

After receiving Cohen’s report in mid-December, Ramarao sent a letter through her lawyers to the police department, OCME, and the San Francisco Office of the City Administrator, asking for a criminal investigation into Balaji’s death, describing it as “troubling.” According to January’s lawsuit, they never received a formal response, but police officials “informally” informed Ramarao’s lawyers that detectives had briefly reopened the investigation to review the building’s closed-circuit recordings and then closed the investigation once again. (The police department told Fortune that the investigation has “remained open since its inception.”) Ramarao’s lawyers have tried to get access to the police incident report, without luck.

According to a person with direct knowledge, who was granted anonymity to discuss non-public information, the city’s attorney’s office is going to come out with a a letter soon with detailed facts that are consistent with a suicide. The OCME and police reports are expected in the same timeframe.

In the meantime, Ramarao has become increasingly convinced that her son was murdered. She says that her lawyers directed her to another investigator, Dr. Dinesh Rao, formerly the chief forensic pathologist in the Legal Medicine Unit at Jamaica’s Ministry of National Security. Rao, who spoke to Fortune from India, says that he has not visited Balaji’s apartment. Still, he was able to analyze photos taken from the apartment and sent to him by Ramarao.

In Rao’s 28-page initial report reviewed by Fortune, he raises a number of questions: Was there a suicide note? Did police take fingerprints at the scene? Based on the limited photographic evidence, he also pointed to anomalies, including hair that did not seem to belong to Balaji, as well as blood spatter that did not seem consistent with suicide.

Barring a more complete report from the police, which her lawyers are still demanding, Ramarao has taken her limited evidence on a public awareness campaign. On Dec. 29, she posted on X that Balaji’s death was a “cold blooded [sic] mu*d*r declared by authorities as suicide,” demanding an FBI investigation. The post received nearly three million views and a response from Elon Musk. “This doesn’t seem like a suicide,” he replied. (Elon Musk, who was a cofounder of OpenAI but who left in 2018 and now runs a competing company, has a longstanding feud with OpenAI’s Sam Altman over the company’s nonprofit status, and the two often spar on social media.)

The conspiracy flames spread when she appeared on Tucker Carlson’s online show in January, in an hour-plus-long episode. “He believed [that] AI––currently without any regulation––is a harm to humanity,” she tells Carlson. “He stood up for a cause, and he lost his life for a cause. He’s a martyr.”

The interview stirred even more outrage, with Rep. Ro Khanna (D-Calif.) echoing her call for an FBI investigation the same day, likely spurred when Carlson sent Khanna a text during the episode. “My heart breaks for Suchir Balaji’s family and his mother, Poornima Ramarao, who I spoke to recently,” Khanna said in a statement shared with Fortune. “She provided me with information that inspired me to speak out. They deserve to have their questions answered.” A spokesperson for Khanna declined to share whether they had additional information about any active investigations. An FBI spokesperson said the bureau cannot confirm or deny the existence of any investigation.

Ramarao told reporters shortly after Balaji’s death that she wasn’t “pointing fingers” at OpenAI. Since then, her efforts to make sense of the inexplicable tragedy have collided with a teeming online world of conspiracy theories all too eager to latch onto grief and uncertainty. As Ramarao has pushed for answers, a rash of baseless speculation has thrived alongside the proceedings.

When asked for comment, an OpenAI spokesperson forwarded a statement the company posted on X on January 16, which said that it had reached out to the San Francisco Police Department to offer its assistance if needed. “Suchir was a valued member of the team and we are still heartbroken by his passing,” read the post.

A spokesperson for the New York Times declined to comment.

While Ramarao has jumped to extreme conclusions, Balaji’s friends remain uncertain. Balaji’s last days were the backpacking trip to the Catalina Islands with four other friends from his high school crew—a three-night hike on a trail that was a favorite of theirs. Two friends who spoke with Fortune say they didn’t notice anything amiss with Balaji. They didn’t really talk about work, which was normal for them. When OpenAI came up, they made the same jokes about Dune.

Balaji buying a gun earlier in the year also did not seem out of the ordinary, at least according to one friend. Two others in their high school crew also own firearms for recreation and self-defense and they knew that Balaji had one as well, says the friend. But they’re still haunted by countless questions.

“The thing about moving on is that you need to be able to make some sense of the whole situation,” one of the friends tells Fortune. “With this constantly in the news, it’s been kind of hard to find that.”

Unlike Ramarao, the two friends say they don’t have an opinion of what happened but still want to see a more thorough investigation. One tells Fortune that they never even got a call from the police asking for additional information.

Still, they say that Balaji did seem to be looking toward the future. They were planning another backpacking trip together, this time to Alaska. At the time of his death, he was working on a new project, likely focused on AGI. It may have been a startup, or a nonprofit. Friends didn’t know specific details, and it’s likely they may never have the full picture.

“My thoughts on the matter are that you can never really tell with these sorts of things,” one friend tells Fortune. “Maybe he was [depressed], maybe he wasn’t. I think from all of the times that I’ve known him, or all of the time that I’ve known him, there was nothing abnormal about Suchir, until his passing.”

Until the police release their final report, which is expected by the end of February, it will be impossible to find any closure. That has not stopped online speculation, which has fed off by Ramarao’s quest for answers, about Balaji’s death—a similar phenomenon to the Boeing whistleblower who was found dead by suicide in March.

Daren Firestone, an attorney who works regularly with whistleblowers, tells Fortune that it is common for them to experience loneliness and doubt. It’s partly why he advises his clients to stay anonymous and go through official channels such as government tip lines. “It creates enormous pressure on somebody and a feeling of isolation,” he says. “And if you’re isolated and you feel the world is against you, that can be challenging for even the most robust minds.”

The last day that Ramarao saw her son was Nov. 7, a couple of weeks before his death. They talked about his career plans and went for a hike together in Union City, Calif. where his parents live. “I still remember his body language,” Ramarao tells Fortune. “He was very proud of what he was doing. There was no fear. I wish he had some fear. He could have survived today.”

Data-mining software company Palantir Technologies may be in the right place at the right time as Elon Musk’s Department of Government Efficiency looks to disrupt federal hiring and spending practices.

Shares soared 34% over the past week, closing at $110.85 on Friday, after the company reported strong fourth-quarter earnings and upbeat yearly guidance late Monday.

Palantir is known for putting its AI-powered platforms to work in the defense and intelligence sectors, but it has also been expanding in the commercial space recently. Those gains and its inclusion in the S&P 500 index helped shares surge 340% last year.

In fact, the 64% jump in Palantir’s US commercial revenue last quarter outpaced its 45% gain in government revenue, fueling investor enthusiasm.

The quarterly results prompted Bank of America to raise its price target on Palantir stock to $125 from $90 and reiterate its buy rating.

“The company sees the world ripe for an AI and technology revolution,” analysts said in a note on Tuesday. “We see PLTR enabling and leading this revolution in both Commercial and Defense markets.”

Meanwhile, Musk’s DOGE is looking to slash the federal workforce and spending in moves reminiscent of his takeover of Twitter in 2022.

His team of young DOGE engineers is reportedly bringing beds into government buildings, staking out territory with sticky notes, and questioning workers on their usefulness.

“While not a consensus view, we think the Department of Government Efficiency (DOGE) could be a major opportunity for government efficiency enablers,” BofA said.

If DOGE ushers in an era of commercial-like contracting, digital-first development requirements, and open-architecture requirements, then Palantir’s line of businesses and approach to government contracts are “already in line,” analysts added.

Palantir executives were similarly bullish during a conference call with analysts late Monday after reporting fourth-quarter earnings.

Chief Technology Office Shyam Sankar said DOGE will bring meritocracy and transparency to government, which fits with Palantir’s business.

“The commercial market is meritocratic and transparent, and you see the results that we have in that sort of environment. And that’s the basis of our optimism around this,” he added. “I think the work that we’ve done in government, it’s deeply operational, it’s deeply valuable, and we’re pretty excited about exceptional engineers getting in there under the hood and being able to see that for a change.”

After trying to dismantle the US Agency for International Development, DOGE is expected to take on some of the biggest areas of government spending.

On Friday, President Donald Trump said he instructed Musk to “check out” the Pentagon, which has a 2025 budget of $850 billion.

For his part, CEO Alex Karp said Palantir loves disruption, which helps expose things that aren’t working.

“There’s a revolution. Some people get their heads cut off,” he told analysts on Monday. “It’s like, we’re expecting to see really unexpected things and to win basically. That’s what we’re going to do.”

MicroStrategy lost money in each of the last four quarters, yet the company has never been worth more.

On Wednesday, the company announced its fourth-quarter earnings for 2024, posting a 3% decrease in revenue and a $671 million net loss that helped it dodge a multibillion-dollar tax bill. Yet, the company has doubled down on its Bitcoin strategy, in part by adding more Bitcoin to its coffers than ever before and by rebranding from MicroStrategy to “Strategy,” with a new logo incorporating the Bitcoin symbol.

“It ties our identity much more closely to Bitcoin and all of the positive aspects of the Bitcoin network in the world,” Saylor said of the rebrand on Wednesday’s earnings call.

The company’s shares fell about 4% Thursday following the release of its earnings results, before rebounding Friday. While its stock has come down to $336 a share as of Friday from an all-time-high close of $473, the dip is merely a drop in the bucket compared to its recent performance. Thanks to executive chairman Michael Saylor’s audacious bet on Bitcoin, the company’s stock has rocketed more than 560% over the past year and boasts an eye-popping market cap of about $85 billion, greater than that of companies like Airbnb, Intel, and Capital One.

The company announced Wednesday that it added $20.5 billion worth of Bitcoin in the fourth quarter of 2024 alone, marking its biggest ever quarterly increase of its Bitcoin holdings. In January alone, Strategy has made four Bitcoin purchases, with two, on Jan. 21 and Jan. 27, worth $1.1 billion each.

Its total holdings of the cryptocurrency now stand at about $30.4 billion. The company owns about 2% of all Bitcoin in circulation, and its holdings have nearly doubled to 471,000 coins from 252,200 in the third quarter of 2024.

“We are a Bitcoin treasury company and we are growing. We are built on an asset, Bitcoin, which is growing 50% a year, and we are growing with that asset,” Saylor said on the company’s third-quarter earnings call for 2024.

Yet, Strategy’s market value defies logic, skeptics say.

Strategy’s market cap stands at just under double the value of its Bitcoin holdings’ market value, or its net asset value (NAV), and that gap is difficult to explain, said Carnegie Mellon University finance professor Bryan Routledge.

“There’s no rational explanation for that difference,” he told Fortune.

MicroStrategy did not respond to multiple requests for comment from Fortune.

The best- and worst-case scenarios

Strategy’s core business still involves business intelligence software and some cloud computing. Yet the company’s EBITDA, a measure of profitability that shows how much of its earnings come from its business operations, has been negative since at least the second quarter of 2023, said Jason DeLorenzo, the founder of registered investment adviser Ad Deum Funds. (EBITDA stands for “earnings before interest, taxes, depreciation, and amortization.”)

Among its past or current customers, Strategy counts hotel chain Hilton, the fast-food chain KFC, and pharmaceutical company Pfizer, according to its website.

Still, Saylor is more focused on the company’s Bitcoin strategy. Through its “21/21 plan,” the company plans to buy $42 billion worth of the cryptocurrency over the next three years, funded equally by sales of equity and fixed-income securities.

“If Bitcoin grows in excess of 21%, if that happens, MicroStrategy’s capable of BTC (Bitcoin) gains in excess of $10 billion a year within four years,” Saylor said on the company’s third-quarter 2024 earnings call.

The company’s shares are attractive to some because they provide a way to speculate on Bitcoin without having to buy the asset directly or buy an ETF linked to the value of the asset. Yet, by putting money into Strategy, investors face a double whammy of risk, Routledge said.

“You’re not just facing Bitcoin risk. You’re facing whatever is driving this difference between the net asset value and the price of the shares,” he said. “That extra component is an extra source of risk,” he said.

In the best-case scenario, Strategy’s market cap would come back into line with the value of its Bitcoin assets and Bitcoin would remain at a high price. In this case, an investor could short expensive Strategy shares and buy cheaper Bitcoin directly, profiting from an arbitrage opportunity when Strategy’s shares fall back in line with the value of its Bitcoin holdings. Yet cashing in on this disconnect for now, though, could be difficult, Routledge added.

“I don’t know whether that difference is going to get better or worse before it comes back to a one-to-one connection,” he said. “There’s this famous quote, I think it’s from John Maynard Keynes, that is, ‘the market can stay irrational longer than you can stay liquid.’”

Saylor’s Bitcoin strategy has previously taken the company to the brink before and survived. On Oct. 13, 2022, with Bitcoin’s price having collapsed to a two-year low, Strategy’s holdings at the time were worth $26 million less than the debt he was obligated to pay, Fortune reported at the time. Although the price of Bitcoin recovered in 2023 and exploded in 2024, Strategy came close to a possible disaster, but Saylor came out on top.

Yet, in the worst-case scenario, Strategy’s Bitcoin emphasis may put it in a bind. If the price of Bitcoin drops and the company needs to dip into its reserves to cover its debts, it will still have to convert Bitcoin to dollars, incurring both fees and taxes that could reduce its value by about a quarter, said DeLorenzo.

And if Strategy sells a majority of its Bitcoin too quickly, it risks reducing the overall value of the cryptocurrency because the market may not have enough liquidity to maintain its value in light of a major sale, DeLorenzo said. Any drop Bitcoin’s price would also reduce the value of the company’s overall holdings.

“I think that MicroStrategy itself is built on a house of cards based on Bitcoin,” he said.

Michael Saylor and Strategy

Founded in 1989 by Saylor and two MIT classmates, the newly renamed Strategy was once all-in on data analytics. As a business analytics pioneer, the upstart software company helped early customers like McDonald’s parse massive amounts of data to make business decisions.

The company and its young founder, Saylor, who was only 24 when he started the company, quickly rose to become one of the biggest beneficiaries of the late ‘90s tech boom. In 1998, Strategy went public and Saylor became a billionaire on paper almost overnight.

Saylor became known for his lofty ambitions and even loftier predictions. He also garnered a reputation as a man who wasn’t afraid to flaunt his wealth. He famously owns several yachts, including one which was featured in the 2015 movie Entourage.

Yet, in 2000, the company ran into trouble when it announced that its revenue for 1999 was more than 25% less than it previously claimed. Saylor’s personal fortune collapsed by $6 billion as a result, the biggest single-day loss for an individual in history up to then. Saylor paid out $8.28 million later that year to settle a case brought against him, his cofounder Sanju Bansal, and a former chief financial officer by the Securities and Exchange Commission. The SEC accused Saylor’s company of materially overstating its revenues and earnings between the time the company went public in June 1998 until March of 2000. He did not admit to wrongdoing.

The multi-billionaire CEO’s Bitcoin ambitions are just the latest big bet he’s made on a burgeoning technology. In 2012, he wrote a best-selling book, The Mobile Wave: How Mobile Intelligence Will Change Everything, predicting the mobile computing trend brought on by smartphones and other portable devices. Inside of Strategy, Saylor also helped build out two successful businesses the company later sold, including Alarm.com, which lets homeowners and businesses monitor their security systems using the internet.

After saying in 2013 that Bitcoin’s “days are numbered,” Saylor changed his mind on the cryptocurrency during the pandemic. In 2020, Saylor began to worry that the Fed’s policies could stoke inflation, eating into the value of Strategy’s cash holdings.

“We just had the awful realization that we were sitting on top of a $500 million ice cube that’s melting,” he said in an interview at the time with crypto media outlet CoinDesk.

After an initial $250 million purchase in 2020, the company’s stock jumped 10% and Saylor never looked back. He has since led Strategy to accumulate billions of dollars worth of the token. He says he will never sell.

Practice is ‘efficient’ way to pay IHT, experts say

Tax advisers are urging wealthy Britons to consider life assurance as a way to reduce inheritance tax and help future generations pay the levy, a practice that has until now flown under the radar.

Wealth managers told the Financial Times that they expected “whole of life” cover set up in a trust to become much more popular as a result of chancellor Rachel Reeves’ expansion of the inheritance tax regime in the Autumn Budget.

Life assurance held in a trust means the policy sits outside of the person’s estate and is therefore not subject to standard rate inheritance tax at 40 per cent. Whole of life cover pays out a guaranteed amount of money to beneficiaries upon death and can be used to foot an estate’s IHT bill.

Life assurance covers for an entire life, whereas life insurance is restricted to a set term.

Tax experts said the practice was an “efficient” way to pay IHT, because beneficiaries cannot access most other assets until the executors have probate, before which the IHT bill needs to be settled.

Hazel Bowen, a senior wealth planner at Canaccord Wealth, said this life assurance practice was a lesser-known, “secret” way to mitigate IHT, and that the changes to the tax regime in the Budget had been “fairly seismic”.

As life assurance was “a standalone contract with you and the provider, it will not be impacted by future Budget announcements or tax changes”, she added.

Ian Dyall, head of estate planning at wealth manager Evelyn Partners, said life insurance helped “get around the cash flow issue” when the policyholder’s beneficiaries are met with the tax bill.

“It’s definitely increasing in importance in advisers’ minds,” he added. “We’re doing a lot more training around it.”

In her October Budget, Reeves announced that unused pension pots would be included in estates from April 2027 and subject to IHT. She also set out a crackdown on loopholes in the regime that mean some landowners would be hit with a 20 per cent levy from next spring.

From April 2025, wealthy foreigners who have been in the UK for more than 10 of the past 20 years face paying IHT on their worldwide assets, plus a period of exposure to the levy even after they have left the country.

Catrin Harrison, senior associate at Charles Russell Speechlys, a law firm, who advises clients on trusts and estate planning said: “Insurance brokers are inundated with new clients at the moment and are racing against the clock to get cover in place before the April tax changes.”

Many of her clients who have decided not to leave the UK immediately, despite recent reforms to the non-dom regime, were using life assurance to mitigate the potential risk of an unexpected inheritance tax liability.

“The life insurance companies are one of the winners from the changes to the non-dom regime,” added Tim Stovold, head of tax at Moore Kingston Smith, an accountancy firm. “The fear of losing a chunk of the family’s wealth to IHT is dealt with by insuring the problem away”.

Paying monthly premiums on a life assurance policy also reduces the amount that would otherwise be left in the estate and ultimately subject to the 40 per cent IHT rate.

Dyall said Reeves was “unlikely” to crack down on the practice because “it is an efficient way to pay the tax and so the government is getting its money. It also means people are free to do with their money as they wish knowing that, upon death, there’ll be money to pay the IHT bill.”

Ian Cook, a chartered financial planner at Quilter Cheviot, said that life assurance in trust would “definitely spring back into vogue” as a result of Reeves changes to the IHT regime around pensions and agricultural land.

“I’m going to be encouraging clients to look at taking life insurance, more so than ever before,” he added.  

The Treasury did not immediately respond to a request for comment.

Giorgio Armani, Prada Group’s Patrizio Bertelli and Tod’s Group Diego Della Valle, as well as the Del Vecchio family, among others, were contacted by fraudsters this week.

MILAN – A pool of high-profile Italian entrepreneurs — including several fashion players, such as Giorgio Armani, Prada Group’s chairman and executive director Patrizio Bertelli and Tod’s Group chairman Diego Della Valle, among others — have been targeted by a gang of scammers, according to media reports.

People close to the entrepreneurs have been allegedly contacted this week by fraudsters pretending to be representatives of the Ministry of Defense, requesting to be urgently put in touch with the businesspeople and asking for huge sums of money to help the government pay ransoms for Italian journalists caught in captivity in different areas of the world.

According to media reports, only one unidentified entrepreneur, not operating in fashion, has fallen victim to the scheme, reportedly wiring about 1 million euros to a Hong Kong-based bank account.

The criminal ring has allegedly also used AI software in some instances to reproduce the voice of Italy’s Minister of Defense Guido Crosetto and is said to have reassured the entrepreneurs that the Bank of Italy would repay the loan in due time.

As of Sunday, three targeted businesspeople had registered a complaint with law enforcement for the fraud attempt. Milan prosecutors Marcello Viola and Giovanni Tarzia have begun an investigation and Crosetto publicly addressed the case, posting about the scam scheme on X.

In addition to the fashion businesspeople, the scheme targeted the Del Vecchio family, behind the eyewear giant Essilorluxottica; Massimo Moratti, chairman of Saras SpA, an Italian energy company with operations in petroleum refining, marketing, transportation and power generation, as well as the former president of Milan-based soccer team Inter; Marco Tronchetti Provera, executive vice president and chief executive officer of the Pirelli Group; the Aleotti family, behind big pharma company Menarini; the Beretta family, who controls the namesake Italian firearms manufacturing company, and the Caltagirone family, who operates in real estate development and media, as well as top management at supermarket chain Esselunga.

Sonos Finally Hits the Hard Reset Button

App fiasco still hurting sales, but new CEO is charting a way out of speaker-maker’s jam

Sonos SONO -7.47%decrease; red down pointing triangle Chief Executive Tom Conrad’s job would be hard enough if he just had to sell expensive speakers. Selling the idea that his speaker company can finally master the software game is a heavier lift.

That, however, is the task at hand for the new CEO. Conrad was named to the post last month, succeeding longtime chief Patrick Spence who took the company public in 2018. The switch confirmed that Sonos is still reeling from a disastrous update to its app in May of last year, which left many customers who shelled out for premium speakers unable to use their products.

Fiscal first-quarter results from Sonos on Thursday confirmed that the damage has lingered. Revenue fell 10% year over year to $550.9 million for the December-ending quarter, while operating income plunged 40% to about $48 million. One particularly telling stat is that the company’s unit sales for the second half of the calendar year fell 14% from a year earlier to about 2.7 million products sold—the fewest for that period since 2016. And that was with the company’s first-ever entry into the premium headphone space.

Those headphones, called the Sonos Ace, should have been a valuable expansion opportunity for a company long confined to home-based speakers. But the launch that took place about a month after the app rollout turned out to be “the worst time possible,” Sonos Chief Financial Officer Saori Casey admitted on the company’s earnings call on Thursday. She also noted that the initial sales of headphones to retailers a year earlier will skew comparisons for the company’s June-ending quarter this year. Analysts now expect Sonos’s revenue to fall 3% for the fiscal year ending in September after an 8.3% drop last year.

Can the new boss eventually turn things around? Sonos is still a strong name in premium audio, despite the damage done to the brand by last year’s app fiasco. And Conrad has extensive experience in product design, software and music platforms, having co-created Pandora and served as the chief technology officer there for 10 years. He has hit the ground running despite the “interim” label on his title as the company conducts a formal search before naming a permanent replacement for Spence. Sonos announced a restructuring effort before its earnings release this past week that will cut the size of its workforce by 12%.

Cuts that extensive can be demoralizing for a company already deep into an extended rough patch. But last year’s botched app rollout also revealed a company with significant structural weaknesses, which means painful changes were also necessary. Conrad said on Thursday’s call that his reorganization of the company’s product teams “revealed organizational layers and redundancies that were not serving us,” adding that the cuts included about half a dozen vice presidents.

“Stepping back, we are impressed by management’s ability to rip costs out of the model,” Erik Woodring of Morgan Stanley wrote in a note to clients on Friday. He kept his sell rating on the stock though, citing “a tough demand backdrop and elevated uncertainty” that hangs over Sonos.

Indeed, only 38% of analysts rate Sonos as a buy, compared with 73% before the app rollout last year, according to FactSet data. And while the stock has picked up some gains over the past few months, it is still down 22% since the new app launched compared with a 16% rise for the S&P 500 in that time.

“The worst seems to be behind Sonos, but they are still early in their transformation,” wrote Brent Thill of Jefferies on Friday. This speaker maker still has a lot of noise to cut through.

The EU needs the courage to imagine a different digital economy

Trump’s tech oligarchs are afraid of Europe’s regulatory power — as they should be

In the turmoil unleashed by Donald Trump’s return to power, Europeans should not lose sight of one striking feature of the tech oligarchs surrounding him: their naked demand that he gets the EU off their backs. However flattering — unlike many Europeans, they see the EU as a force to reckon with — this is also dangerous. Europe worries about being uncompetitive; it should worry about being subordinated.

The task for all Europeans as they gather at the Paris artificial intelligence summit this week, and in their approach to the digital economy in general, is not to bring a knife to a gunfight. Two instincts that come naturally to European politicians should be avoided: a desire to avoid an economic war with the US as much as possible, in the vain hope of staying close to the status quo ante; and a desire to have what the US has, attempting to copy the particulars of its digital success rather than build what is best for Europe.

Doing the latter requires the courage to imagine a different digital economy than the one now on offer, and the resolve to do what it takes to achieve it.

In Davos last month, Spain’s Prime Minister Pedro Sánchez set an example when he accused social media companies of concentrating power and wealth in the hands of a few “at the expense of our social cohesion, our mental health and our democracies”. Call it Europe’s fentanyl: a social, health and civic crisis that must be addressed.

It is also a security crisis. Elon Musk has built businesses in satellite communication, connected cars, social media, payments, neural-to-digital interface technology and artificial intelligence. Don’t ignore this very specific choice of sectors. Ask instead what could go wrong when they are all controlled by a person willing to intervene heavily in national politics.

Sánchez wants the EU to do three things: require platforms to match every user account to an official ID (without losing public pseudonymity), open up their feed algorithms to check they aren’t breaking the law and hold executives personally accountable for breaches. This is the approach — using the law to stop harmful digital behaviour, once upon a time just called “governing” — that Europe pioneered with privacy legislation and its later big laws on digital markets, digital services and AI. It has abruptly fallen out of fashion.

Unfashionable does not mean misguided. As the legal scholar Anu Bradford points out in a recent article, Europe’s innovation lag has more to do with market fragmentation, lack of risk capital and rigid labour rules than with how it regulates the products themselves. That is why the European Commission’s belated embrace of a “28th regime” of easy-to-navigate corporate, bankruptcy and labour law for innovative businesses anywhere in the EU can be a game-changer, if done right. 

Of course, regulation can impose costs. But as important is that it influences the kind of technology that is developed. New Oxford university research shows that European privacy rules tilted AI research towards data-saving techniques and away from the data-intensive deep learning.

Until a few weeks ago, that would have looked like dooming Europe to lose the AI race. DeepSeek might have changed things. The bigger point is that there is not just one technology on offer. The same researchers suggest that European tech overcame the initial cost of privacy regulation precisely by evolving more privacy-compliant technologies.

But to achieve a digital economy to their liking, European leaders need to do two more things. First, brace themselves for the consequences as Big Tech plays tough. This can range from punitive action from the Trump administration to withdrawing services. But, as recently demonstrated by Brazil (with X) and indeed the US itself (with TikTok), governments can actually shut down social media without the sky falling in. The EU may want to prepare itself for life without some of the most problematic services, just in case.

Second, acquire the means to thrive without them. A forthcoming report led by Francesca Bria for Bertelsmann Stiftung is set to advocate a “EuroStack” — a comprehensive European alternative for all layers in the internet’s technological “stack”, from the raw materials and physical infrastructure to the cloud and software running the internet of things.

This requires fixing the shortcomings that hold back investments in European tech at the moment, as well as regulatory change. But, above all, it requires a consensus that another digital world is possible: not just a copy, but an alternative to the current “stack” run by oligarchs around a US president who does not wish Europe well.

Computer-generated voice of Guido Crosetto persuaded at least one victim to pay €1mn for hostage ransom

Italy’s business elite has been roiled by a scam that used an artificial intelligence-generated voice mimicking Italian defence minister Guido Crosetto to ask tycoons to wire millions to overseas bank accounts to help pay ransoms to free Italian journalists kidnapped overseas.

The scam targeted some of Italy’s most powerful business barons, including Pirelli chair Marco Tronchetti Provera, fashion designer Giorgio Armani, Prada co-founder Patrizio Bertelli, Tod’s owner Diego Della Valle, former Inter Milan owner Massimo Moratti and members of the billionaire Beretta and Menarini families, a person with knowledge of the investigation said.

While many were immediately suspicious, at least one was persuaded to transfer €1mn to overseas bank accounts, after being falsely reassured that he would be reimbursed by the Bank of Italy later for the payment. So far, three Milanese businesspeople have filed formal complaints to the city’s prosecutor’s office, including one who fell victim to the scam.

Authorities familiar with the case say the fraud involved multiple rounds of calls from people posing as Crosetto’s staff and the apparent use of AI to convincingly simulate Crosetto’s voice. Targets were told that Prime Minister Giorgia Meloni’s government needed their help to rescue Italian journalists kidnapped in the Middle East. 

“The voice of the minister was reproduced,” a defence ministry official said. “It was asking for money to pay ransom for Italian journalists kidnapped in the world. The fake Crosetto said, ‘I cannot pay with ministry money, but you will get the money back from the Bank of Italy’. It was a hoax. It was not true.”

Investigators said the calls appeared to come from telephone numbers belonging to the defence minister’s staff — which they believed had been cloned.

The scammers moved just weeks after Meloni’s government negotiated a high-profile hostage swap in which a young Italian journalist, Cecilia Sala, was freed from Tehran’s notorious Evin Prison, in exchange for Rome returning an Iranian engineer wanted in the US for a scheme that provided sophisticated US drone technology to Iran’s Revolutionary Guards.

Crosetto first sounded the alarm of “a serious ongoing scam” in a social media post last week, saying he wanted to raise public awareness so that “no one runs the risk of falling into the trap”.

The minister said he first discovered the fraud after being contacted by a prominent entrepreneur whom he had not previously met and who had transferred a large sum to a bank account detailed by a fake “General Giovanni Montalbano” after speaking to someone that the businessman was convinced was Crosetto himself. 

Crosetto said he later received calls from several other top entrepreneurs that had been contacted by people purporting to be members of his staff trying to organise the rescue of Italian journalists in the Middle East.

The Bank of Italy on Friday warned that fraudsters were improperly using its name and logo to promise that the central bank would reimburse money that wealthy entrepreneurs invested as contributions to the fake rescue scheme. 

“Banca d’Italia is in no way related to any of these requests,” the statement said, as it warned people not to respond and report such overtures to relevant authorities.

Italy’s business elite are not the first to be targeted by scams preying on wealthy individuals eager to do discreet favours for a government seeking to rescue hostages.

A decade ago in France, more than 150 corporate chiefs, heads of state, ambassadors and religious leaders were contacted in an audacious scam when a man claiming to be then French defence minister Jean-Yves Le Drian requested millions of euros for top-secret government operations, including freeing French journalists held hostage in Syria. 

Though most sensed something awry, the scammers managed to collect $85mn, including nearly $20mn from the late Aga Khan, leader of the world’s Ismaili Muslims. The ringleader Gilbert Chikli, a Franco-Israeli, was convicted on multiple counts of fraud in 2020 and sentenced to 11 years in prison.

Price hikes have moved the Happiest Place on Earth out of reach for many Americans, alienating parkgoers and worrying executives

Yvonne Kindell spent years contemplating a trip to Walt Disney DIS -1.10%decrease; red down pointing triangle World. This November, she finally got a chance to take her family of four.

The trip left Kindell, a bank compliance officer from Bear, Del., with sticker shock—especially after recent price increases. Two days of park tickets ran to $1,123. Passes that let them skip the line on popular rides: $208. A meal with costumed characters, including Donald and Daisy Duck: $219. Two Mickey Mouse bubble wands: $60.68.

“It was really stressful for me thinking all the time about how much we were spending,” Kindell said—even though she and her husband, a driver at a warehouse, weren’t paying for it all themselves. Her parents covered the cost of lodging and airplane tickets for her children, aged 10 and 4. Her total came to $3,000.

She’s not planning to go back.

The Happiest Place on Earth has long felt like one of the most expensive spots on the planet for many Americans—but the allure of a magical family vacation kept visitors streaming in. Then, as postpandemic demand soared, Disney put price hikes into overdrive, putting vacations at its theme parks out of reach for many American families. Attendance growth has slowed over the past few years, and even some families that were once regulars are canceling their pilgrimages.

One-day adult passes to Disneyland broke the $200 mark for the first time in October. It now costs $206 on the most popular days at the theme park, more than $100 more than the price of admission on the lowest-cost day.

Five years ago, the skip-the-line feature FastPass was free. Now visitors choose from three different tiers of Lightning Lane passes for the privilege—the most expensive reaching $449 a person a day. Doing without Lightning Lane can mean spending an hour or more waiting in line for the most popular rides, eating up visitors’ vacation time.

Some inside Disney worry that the company has become addicted to price hikes and has reached the limits of what middle-class Americans can afford, according to people who have worked on park pricing. Internal discussions over whether Disney parks may be losing their grip on the hearts and wallets of families with young kids have become more frequent, some of those people said.

Starting in late 2023, the company’s own surveys of Walt Disney World and Disneyland guests found that the number of them planning return trips had ticked sharply down. Disney’s domestic parks attendance increased 1% in the fiscal year ending in September, down from the prior year’s 6% growth. Per-person spending on tickets, food and merchandise at domestic parks increased 3% in each of the company’s past two fiscal years and rose 4% in the quarter ending in December.

The division that includes Disney’s theme parks, known as Experiences, has grown in financial importance in recent years. It represented 70% of Disney’s overall operating income in the 2023 fiscal year, up from 41% in 2019 and 34.5% in 2018.

The unit’s income of $3.1 billion for the final three months of 2024 was flat year-over-year. At the U.S. theme parks, attendance declined 2%, and operating income fell 5% year-over-year, in part because of the impact of hurricane closures on Walt Disney World.

For a two-parent family with two young kids, a typical four-day visit to Walt Disney World, including a stay at a value-priced, Disney-owned hotel, cost $4,266 in 2024, according to Touring Plans, a data provider that helps vacationers plan theme park visits. That cost, before food and transportation costs, is up from $3,230 five years earlier, adjusted for inflation.

Nearly 80% of the increase came from new costs for services and add-ons that were once free, such as line-skipping features, while the remaining rise came from Disney raising prices for parks passes faster than the U.S. rate of inflation, Touring Plans data show.

Disney said that the Touring Plans numbers for the cost of a typical four-day visit were exaggerated and didn’t take into account the range of value options available. A four-day trip for a family of four in the fall could cost as little as $3,026 before food and transportation costs, the company said, and guests don’t need Lighting Lane passes to have a great time.

Hugh Johnston, Disney’s chief financial officer, said at a December investor conference that the company has tried to hold prices steady for lower-priced offerings at the parks and that most of the price increases were concentrated among premium packages or during high-demand dates. The company has to be “smart about pricing,” he said, especially at the lower end of the market.

“We want to be able to tap in to those families and build the habit of coming to Disneyland or Disney World, not one time, but multiple times,” Johnston said.

Tourism experts and some Disney executives say the company risks alienating future customers and pricing out young families.

“Disney has really started to eat its own seed corn,” said Touring Plans Founder Len Testa.

Out of reach

Prices have come a long way since Walt Disney originally envisioned the parks as affordable playgrounds for families, where visitors could imagine themselves entering the dreamlike world of Disney’s animated movies.

Continual price increases have been core to Disney’s parks strategy for decades and have long prompted internal debate. Chief Executive Michael Eisner, who ran Disney for 20 years starting in 1984, more than tripled the price of Disneyland admission during his tenure to about $60, but also presided over a massive expansion of the parks business and the construction of new hotels.

When Eisner tried to raise the price of parking early on from $1 a day (about $3.04 in today’s dollars), he met stiff resistance from some board members, who argued that it was counter to Walt Disney’s vision.

Parking now costs $30 a day or more at the parks.

Multiday trips to Walt Disney World—especially those including nights at a Disney-owned hotel—have fallen out of reach for many Americans, according to an analysis prepared for The Wall Street Journal by Touring Plans.

Disney said that its theme parks are within financial reach for middle-class families and that it offers a range of price offerings for different products, as well as year-round promotions, to keep it that way. It adjusts prices to manage attendance and is itself contending with the growing cost of operating the parks due to inflation.

The majority of respondents to guest surveys at Walt Disney World say it offers a good to great value for the price paid, Disney said.

“The number-one thing we hear from the millions of guests who visit our parks each year is how much a Disney vacation means to them, and we intentionally offer a wide variety of ticket, hotel and dining options to welcome as many families as possible, whatever their budget,” said Josh D’Amaro, chairman of Disney’s Experiences division, which includes the parks, in a written statement. “We also know that in inflationary times it’s especially important to give families ways to save on their visits.”

For many visitors, a trip still represents a quintessential American vacation that’s well worth the cost, even if it keeps rising. For these superfans, there’s no substitute for riding classic roller coasters like Space Mountain or posing for family photos with beloved characters from the Marvel, Pixar and Star Wars franchises.

Doug Damoth, who lives in Brooklyn and works in facilities management for a university, started taking his daughter to Walt Disney World when she was 2 years old, in 1992. Now, he and his wife, who grew up watching classic-era Disney films in the 1960s, take their 7-year-old grandson about every other year.

“It’s this connection to the old world,” Damoth said. “You have fun and you don’t have to worry about anything.”

Disney’s rivals, including Universal Studios and smaller theme park operators like Cedar Fair and SeaWorld, have also raised ticket prices to capitalize on postpandemic demand. For Disney, “there’s concern that maybe they’ve pushed it as far as they can,” said Doug Creutz, who covers the company for the investment bank TD Cowen.

Dan McCarty used to take his family of four to Walt Disney World at least once a year, but since the pandemic has opted for European trips instead. Last year they sold their membership in Disney Vacation Club, a timeshare program at Disney resorts, and spent three weeks sightseeing in the Netherlands.

“The cost value is just out of order and not worth it,” said McCarty, a software engineer from central North Carolina.

New add-ons

When Bob Iger took over as CEO in 2005, he continued Eisner’s investments in theme park expansion. U.S. ticket prices rose, usually in line with inflation, according to Disney parks executives and analysts.

During the pandemic, Iger’s successor, CEO Bob Chapek, set in motion a strategy to capitalize on parks demand once the restrictions eased.

Chapek and D’Amaro, the Experiences chairman, introduced an online reservation system that limited the number of days annual passholders could visit, favoring guests who spent more on daily tickets and merchandise.

Disney eliminated some perks that used to be gratis, like the Magical Express airport shuttle and the FastPass ride-scheduling system. It said only about a third of hotel guests were using the airport service when it was canceled.

The company started selling new add-ons, including one called Genie+, the original name of the paid line-skipping service now known as Lightning Lane Multi Pass. A Disney spreadsheet exposed in a hack of its internal Slack communication system this summer indicated that the Genie+ passes generated more than $724 million in pretax revenue between October 2021 and June 2024 at Walt Disney World alone.

Chapek was pilloried online for what the Disney faithful viewed as nickel-and-diming. Still, fans kept coming and the parks division set quarterly earnings records for income and revenue.

By the time Iger returned to the company in November 2022 after Chapek’s ouster, he was worried that a company once known for magical family vacations was earning a reputation for price gouging.

Shortly after returning, Iger called a meeting at Disney’s Burbank, Calif., headquarters, and asked D’Amaro to come up with a list of things the company could do to win back the goodwill of fans, according to people familiar with the meeting.

The company could offer discounted parking, or more days during the off season with lower-priced tickets, the parks chief suggested. It could also freeze the theme parks’ regular rounds of price hikes, but that could deprive Disney of hundreds of millions of dollars in revenue.

Iger chose to bring back free overnight parking at Walt Disney World Resort hotels and off-peak ticket promotions, the people said. Regular price hikes continued. Iger declined to be interviewed for this article through a spokeswoman.

Growth engine

A year later, Disney began to have serious concerns about the rising cost of visiting the parks, according to former employees involved in the discussions. The results of surveys asking whether Walt Disney World and California theme park guests intended to return soon showed that fewer Mickey Mouse devotees were planning return trips.

The issue was raised with Iger, according to people familiar with the matter, but parks were still booming. The Experiences division had become the company’s primary profit engine in 2022, replacing the declining cable TV business.

Internally, teams that worked on pricing, promotions and consumer feedback debated through the spring of last year how to improve the “intent to return” survey results, people involved in the discussions said.

By the summer of 2024, Disney began warning investors that attendance was softening, a trend consistent across the theme park industry. The company’s share price fell sharply in August when Disney said revenue was slowing at the parks because of consumer uncertainty that it expected to continue for a few quarters.

In recent months, Disney has announced limited-time offers for $50 kids tickets, the return of discount dining plans for some Disney resort hotel guests, free in-park photo packages and a fresh round of hotel room promotions.

Johnston, Disney’s CFO, in December called the summer weakness in demand “a hiccup” and said that consumers had recovered. A host of new attractions and major expansions announced at a fan event this year will allow Disney to raise prices further without tamping down demand, he said.

There is a broader sense among U.S. families that experiential vacations are becoming unaffordable, according to a recent survey of more than 2,000 U.S. households conducted by Harris Poll for the Journal.

The survey found that 74% of respondents believe that experiences like cruises, amusement parks and visits to Disney resorts have become financially out of reach. The poll indicated that lower-priced nature-focused vacations are gaining ground on pricier resort and theme park trips.

Among those who reported that they’ve cut back on Disney vacations, the biggest reason was cost—59% said a Disney experience had become too expensive, compared with 27% who said they weren’t interested and 14% who said they didn’t have time.

Disney said the Harris Poll’s survey was “flawed and misleading” and unfairly cast Disney in a negative light.

A June survey of 2,000 families by online loan marketplace LendingTree found that 45% of those who visited Disney resorts with children in tow went into debt to afford the trip.

This fall, Disney sent its own post-visit surveys to members of the company’s Disney Vacation Club timeshare program with 47 pages of questions, mostly about visitors’ household finances and travel habits.

One survey asked visitors how likely they were to be “receiving / managing an inheritance” or to experience the “loss of family member or loved one” over the next five years.

A generous inheritance was the only way Melissa Buckley of Cedar Lake, Ind., could afford a trip to Walt Disney World in December. Buckley, who works in procurement for the oil industry, had been saving up to take her family of four there for about a decade, but unexpected bills kept getting in the way.

They left at dawn the day after Christmas to drive to Orlando, with snacks packed in a cooler in the trunk. Their total budget, including four days of park passes, line-skipping add-ons, one restaurant meal a day and accommodations for two parents and two kids, aged 9 and 7, was nearly $6,000.

“There’s no way we could afford this from our savings alone,” said Buckley.