TheChek News Flow

Allies discuss ways to ‘toughen up’ key sanction as Moscow circumvents limits on seaborne crude

The US-led price cap on Russia’s oil sales is being almost completely circumvented, according to western officials and Russian export data, forcing countries to explore ways to reinforce one of their key economic sanctions against Moscow.

One senior European government official said “almost none” of the shipments of seaborne crude in October were executed below the $60-a-barrel limit that the G7 and its allies have attempted to impose.

“The latest data makes the case that we’re going to have to toughen up . . . there’s absolutely no appetite for letting Russia just keep doing this,” the official said.

EU officials have held discussions in recent days on reinforcing the cap, including options for strengthening enforcement or clamping down on Russia’s access to the used oil tanker market.

Concerns among western officials are backed up by official Russian statistics on oil sales in October, which Moscow says shows the average price received was above $80 a barrel. While Russian economic statistics have been questioned during the war, the level recorded is the basis for how much Moscow taxes oil exports.

The jump in Russian prices has dealt a blow to G7 efforts to limit the funds flowing to the Kremlin to fund its full-scale invasion of Ukraine, and comes as Kyiv has made only limited progress in its counteroffensive.

G7 members and Australia introduced the price cap measures for crude oil last December, aiming to squeeze Russia’s revenues by cutting off access to western services like shipping and insurance unless traders abided by the $60 limit.

While the measures enjoyed some early success, Russia has proved adept at countering them, building up its so-called “shadow fleet” of ageing oil tankers to circumvent western markets, for example.

The average price of Urals, Russia’s main export grade, moved above the $60 limit this summer as oil prices rallied due to supply cuts by Saudi Arabia and Moscow with the wider Opec+ cartel, but a substantial portion continued to trade below that level.

But by late September the FT reported that almost three-quarters of all seaborne Russian crude flows travelled without western insurance in August, a key sign that more were starting to circumvent the cap.

In October, only 37 of the 134 vessels that shipped Russian oil held western insurance and officials say the number operating below the cap is now likely to be much lower.

European officials are concerned that some western insurance providers have been given false declarations from Russian oil companies or traders, which must provide written assurances the crude is priced below $60. One mechanism by which this has been achieved previously is by inflating shipping costs.

Western officials say they remain committed to the price cap, even as they acknowledge few barrels still trade below it.

A US Treasury official said the goal was not just an effort to “make as many barrels of oil as possible travel under the cap”, but also “to change Russia’s incentives in a way that makes it make hard choices”. Shifting to selling oil largely without western insurance and shipping has caused “great cost” to the Kremlin.

Jeffrey Sonnenfeld, a professor at the Yale School of Management who has advised the US Treasury on the price cap, said longer journeys for Russian oil tankers, higher insurance premiums, additions to port capacity and new capital expenditures had added about $36 a barrel to the cost of Russian oil sales, limiting Moscow’s profits.

G7 members have already started to step up enforcement of the cap. Last week the UK sanctioned Paramount Energy & Commodities DMCC, a Dubai-based trader, saying it had been “used by Russia to soften the blow of oil-related sanctions”.

The US Treasury department this month requested information from 30 ship management companies about 98 vessels it suspects of violating the cap, a person familiar with the matter said. The request was first reported by Reuters.

Of the 30 ship management companies contacted, 17 of them were in G7 price-cap coalition countries. Six were in the UAE, with others in India, Turkey, China, Hong Kong and Indonesia, a person familiar with the matter said.

The price Russia is getting for its oil is still below Brent, the crude benchmark which averaged $89 a barrel in October.

But Russia has been able to reduce the discount offered on its oil from as much as $40 a barrel earlier this year to less than $10 a barrel last month.

The price cap was designed to keep Russian crude flowing in global markets, as G7 members tried to avoid a supply crunch and price spike that would benefit Moscow.

Western policymakers facing elections are also keen to keep prices in check to help tame inflation. US President Joe Biden, who faces a probable re-election battle against former president Donald Trump next year, has vowed to try and keep pump prices down in the world’s largest oil consuming country.

Russia has also placed restrictions on exports of refined fuels, blaming domestic shortages but raising fears Moscow could weaponise oil supplies.

Broadcaster teams up with casino group Penn to launch an app designed to crack duopoly of DraftKings and FanDuel

Over the course of more than two decades with ESPN, anchor Scott Van Pelt has endeared himself to viewers by commentating on the iconic 18th hole at the US Masters golf tournament and delivering breaking news on the broadcaster’s flagship SportsCenter programme.

In an advert released to promote Tuesday’s launch of ESPN Bet, the Disney-owned sport network’s betting venture with casino group Penn Entertainment, Van Pelt, known affectionately by viewers as SVP, pumps his fist as a notification flashes up on his phone declaring him a “winner!”

The 15-second commercial is a glimpse into why Penn agreed to pay ESPN $150mn a year to secure a 10-year licensing deal, wagering that its broadcast stars and 200mn-strong monthly audience will help crack the duopoly of DraftKings and FanDuel, which together control more than two-thirds of the $9bn US online sports betting market.

“People that think this battle has been fought and won are way ahead of where I think the market is,” said Steve Bornstein, ESPN’s former chief executive who runs betting data group Genius Sports’ North America division. “Obviously there are some very dominant players . . . but we’re still in the go-go growth stage, the market is not calcified.”

For ESPN, Penn offers expertise in the gambling sector and the technology to power the new app, which the casino group acquired in its $2bn takeover of Canadian gaming app theScore in 2021. Penn also operates more than 40 bricks-and-mortar casinos.

Penn will pump an additional $150mn a year into marketing ESPN Bet, which is launching in 17 states.

ESPN Bet is not the only latecomer hoping to break into a market which has rapidly consolidated in the five years since the US Supreme Court overturned a 1992 law banning sports betting. In August, sports merchandise company Fanatics launched its betting app in four states, hoping an offer of a free sports jersey after placing $50 worth of bets would attract fans.

But “first-mover advantage”, combined with the fine-tuned technology used by DraftKings and FanDuel, mean “it’s going to be pretty difficult for any other companies to break 10 per cent market share”, predicted Chad Beynon, a gaming industry analyst at Macquarie Group. In the 26 US states, as well as Washington DC, where sports betting is legal, companies that have launched even just months after the legalisation date found it “incredibly difficult to acquire customers”, noted Beynon.

Since the start of the NFL season, Fanatics and its sister app PointsBet, which the sports merchandise group acquired for $150mn last year, have been downloaded 371,000 times by smartphone users, the fourth highest for any sports betting app over the period, according to JMP Securities. But the Fanatics app has so far failed to achieve higher than a 3.5 per cent market share in any state.

“Ultimately, we’re a second mover . . . we embrace that as permission to frankly move more methodically,” acknowledged Matt King, chief executive of Fanatics betting app, who previously ran FanDuel between 2017 and 2021. He added that “the quest for short-term market share bumps” had historically led betting apps “to light a lot of money on fire”.

By next spring, Fanatics will have migrated all of the PointsBet customers over to its app, enabling customers in as many as 20 states to access the new app. “Our view is let’s take time to get our product right,” added King.

But Penn does not have the luxury of time to make a success of ESPN Bet. Three years into the partnership, ESPN can activate a termination clause on the arrangement if the app fails to gain significant market share. ESPN Bet “needs to come out of the gates firing”, said Bernie McTernan, a senior analyst with Needham & Co. The deal also grants ESPN the ability to eventually become a significant shareholder in Penn.

In investor meetings, Penn and ESPN executives have talked up a Jefferies survey of more than 1,400 casual sports bettors, which showed that 53 per cent were open to trying ESPN Bet and 25 per cent expected to make it their primary betting platform, according to people familiar with the matter.

On Tuesday, Penn will send a prompt to the 2mn customers on its Barstool sportsbook to download the ESPN Bet app. But the bigger hope is that the app will appeal to ESPN users who use the sport networks to check scores but currently “have to leave ESPN’s ecosystem” to place a bet, Jay Snowden, Penn’s chief executive, explained at a launch event this month.

Snowden has previously pointed to the success of the UK’s Sky Bet, which uses broadcaster Sky Sports’ brand identity and now has the same parent company as FanDuel, as a blueprint for ESPN Bet. “There’s only one worldwide leader in sports so this was the opportunity of the century,” said Snowden.

ESPN Bet branding will be rolled out across ESPN’s TV shows in the coming months. On the app, ESPN’s hosts, such as Van Pelt, will recommend bets for users.

Since sports betting was legalised, Disney has toyed with the idea of launching an ESPN betting brand as a means of returning the broadcaster, which generates $2.9bn in annual profits, to growth, but chief executive Bob Iger was initially cautious.

Iger said on an earnings call in 2019 that he doubted ESPN would be “getting into the business of betting” any time soon. But in his second stint as Disney chief executive, that position has changed as ESPN considers selling some of its 80 per cent stake to a strategic partner which can help it prosper in the streaming era as revenues from cable subscriptions fall.

Sports betting was always ESPN’s “manifest destiny”, said John Kosner, a former ESPN executive in charge of its digital products but who now runs industry consultancy Kosner Media. “What it means to be the worldwide leader in sports is different in 2023 than it was in 2013,” explained Kosner.

ESPN held advanced talks with major sports betting operators, including Caesars Entertainment and DraftKings, with whom it had promotional agreements that did not prove successful, according to a person familiar with matter. “It seemed like we were on the 10-yard line . . . for several years with a bunch of different people,” said an executive close to the talks.

ESPN chief executive Jimmy Pitaro opted for Penn as a partner after first meeting Snowden at the sports network’s headquarters in Connecticut earlier this year. Reflecting on the meeting, Snowden said: “It was very clear to Jimmy that this isn’t something that ESPN wants to do, this is something that ESPN has to do because sports fans are demanding it.”

But the entrance of Disney — the entertainment giant behind Mickey Mouse and Pixar animation studios — into gambling, a product linked to addiction, is not without risks. “I’m not sure we’ve heard the end of people complaining about gambling in the States,” warned a former senior ESPN executive. “There are going to be negatives because there are people dead set against it, there’s certainly problem gambling.”

However, the prize for new entrants is a tantalising one. The US sports betting market is set to grow a further 60 per cent by 2027, achieving annual gross gaming revenues of nearly $18bn, according to industry consultancy Eilers & Krejcik Gaming.

Will the US sports betting industry remain a duopoly in the long term? “Forever is a long time,” said David Katz, an analyst at Jefferies. The two dominant players “cracked the code” of in-game accumulator bets, the most profitable and popular product, added Katz. “But there’s going to be some next big thing and whether FanDuel or DraftKings get there first, or whether it’s somebody else, I think is a fair question,” he said.

For a long time after its launch in 1979, ESPN “was not taken seriously” as a sports network, recalled Kosner, formerly of ESPN, but it flourished into the world’s biggest and “the rest is history”. “I wouldn’t bet against ESPN Bet either.”

A strange quirk of production delays and scheduling has meant Apple has not updated any iPad model this calendar year, for the first time ever.

Apple analyst Ming-Chi Kuo says he expects the company will aggressively catch up in 2024, updating the entire lineup with new models of iPad Air including a larger 12.9-inch size option, iPad Pro with OLED displays, updates to iPad mini and a new generation of the cheapest entry-level iPad.

Despite delivering updates to the entire lineup, the analyst is not particularly optimistic about unit sales. Kuo currently anticipates total iPad shipments of around 52-54 million units, a minor increase of the estimated 50 million units shipped this year, and still far below the 2022 pandemic peak of 63 million.

In calendar order, Kuo first expects the iPad Air lineup to be updated in the first quarter of 2024. This includes an update to the existing 10.9-inch size, and a new 12.9-inch model. The existence of a 12.9-inch size corroborates previous supply chain rumors. Kuo says the iPad Air will still use LCD display panels, albeit upgraded with a new oxide backplane. Apart from the new screen size option, expect chip upgrades for better performance.

In the second quarter, the iPad Pro is on track for a new generation launch. The new iPad Pro models will feature a redesigned chassis, the latest M3 chip, and an OLED display for the first time in Apple tablet. OLED should be a significant upgrade over mini-LED, in both display quality and power consumption.

In the second half of the year (likely fall), Apple will then refresh the lower end of its tablet lineup with new versions of iPad mini, and the base model iPad (11th-generation). The current cheapest iPad on sale, iPad (9th generation), will finally be discontinued before the end of 2024. That will complete the Lighting port transition for the iPad lineup.

Layoffs. Ego-shattering down rounds. Startup failures. We review the tech carnage of 2023 and why some investors think 2024 could be worse.

f 2022 was a year of shock and denial for tech founders and investors as stocks collapsed, 2023 was a year of acceptance of their harsh new reality.

Startups slashed headcount. Founders swallowed their pride and accepted ego-shattering down rounds just to survive. Venture capitalists cut ambitious targets for the size of their next funds and made tough choices about which startups in their portfolios they would keep supporting—and which ones they would leave to die. They soured on many of the sectors they had once celebrated, such as fintech, cryptocurrency and the creator economy. And big swaths of Silicon Valley had a momentary panic attack with the collapse of Silicon Valley Bank earlier in the year.

But what made 2023 more extraordinary was that the party music got louder in one corner of tech—artificial intelligence—even as it fell silent throughout the rest of the industry. Money poured into OpenAI, Anthropic and other AI startups from venture capitalists and big tech companies such as Microsoft, Amazon and Google. “The only people that had a good time [this year] were early-stage AI companies,” said Immad Akhund, founder and CEO of fintech startup Mercury.

THE TAKEAWAY

Despite a boom in the AI sector, tech startups had a brutal year, with widespread layoffs, funding struggles and outright business failures.

The split-screen realities between the AI sector and everything else baffled even seasoned Silicon Valley veterans. “You have a boom and a downturn running in parallel,” said Peter Wagner, a longtime venture capitalist who was a managing partner at Accel before launching his own fund, Wing Venture Capital, in 2013. “I can’t think of a time that’s happened.”

Still, the euphoria over AI couldn’t drown out the steady drumbeat of layoffs, distressed sales and startup implosions, such as that of logistics company Convoy. Startups scrambled to get profitable quickly by slashing spending, while big companies similarly turned to cost cutting as their growth stalled. That led to an astounding number of job cuts—almost a quarter of a million of them in tech, many of them from big companies like Meta Platforms, Amazon and Microsoft, according to layoffs tracker Layoffs.fyi. That figure was up 50% from last year.

For younger companies, the root cause of their suffering—rising interest rates—cut them off from the cheap capital that had sustained them for so long. Any hopes for a near-term resurgence in the initial public offering market were dashed by the underperforming IPOs of Instacart and Arm. And while inflation eased as the year progressed, rising tensions with China and the conflicts in Ukraine, Israel and Gaza helped keep the specter of a recession alive.

“In this year, you’ve had the confluence of changing geoeconomics, interest rates going up, the rise of inflation, and you have now two hostile conflicts,” said Paul Kwan, a managing director at venture capital firm General Catalyst and the former head of West Coast technology banking at Morgan Stanley. “Stop and think: When was the last time you had all those factors?”

As bad as it got this year, worse pain may lie ahead, investors and founders say. Many investors believe the carnage in the startup sector will increase as companies that haven’t raised money since 2021 simply run out of cash. An intensification of the Middle East or Ukraine conflicts, for example, could turn those into global black swan events—a term investors use for unpredictable, momentous occurrences that can reshape economies and societies.

“We are just seeing that reality kick in,” said Avlok Kohli, CEO of AngelList, a startup that connects companies with investors. “We are going to see a lot more [startup] shutdowns coming up.”

A Landslide

This year’s numbers show just how brutal things were in the startup sector.

In total, U.S. startups raised $126 billion in the first three quarters of 2023, according to financial data firm PitchBook, a significant decline from the $195 billion raised in the same period in 2022 and $239 billion for the same period in 2021. The third quarter was the slowest period for fundraising since early 2018. About 20% of financings in that period were down rounds, compared to just 6.5% in the third quarter of 2021, according to data from Carta, which sells financial software to startups.

At least those companies are alive. Many others can’t say the same. Zume Pizza, a startup that raised $445 million from investors to automate pizza making with robots, as well as pet health company Fuzzy, real estate startup Zeus Living and healthcare startup Olive AI were all among this year’s startup casualties.

Two companies competed for the biggest megaflop of the year. Convoy, which had raised nearly $1 billion in funding and once garnered a valuation of $3.8 billion, wound down its operations in October, wiping out its investors (the logistics business Flexport acquired its technology assets earlier this month). Then there was former real estate titan WeWork, which filed for bankruptcy protection in November. The company’s biggest backer, SoftBank, lost more than $14 billion on its investment, according to the Japanese conglomerate’s recent earnings report. WeWork, at least, has hopes of living on after it reorganizes.

“If you’re a founder who was only able to get funding because it was this period of 2021 where everyone was feeling pretty flush, I think you’re feeling really scared right now,” said Chrissy Farr, a health tech investor at early-stage venture firm Omers Ventures.

Of the startups that use Carta’s software, 543 shut down in the first three quarters, compared to 467 for all of last year. And the numbers keep climbing: In the third quarter, the number of Carta startups to fold reached 212, the highest peak yet.

“The consensus is that we will all lose companies,” said Karen Page, a general partner at B Capital Group, a venture firm formed by Facebook co-founder Eduardo Saverin, and a former executive at cloud software company Box. “That’s the nature of the beast.”

One sign of the turmoil: Martin Pichinson, a co-founder of Sherwood Partners, which specializes in restructuring failing startups, said his business is booming, and he expects it to get even bigger in the coming year. He has doubled the headcount of his firm to 40 to handle an increase in demand for Sherwood’s services.

“This is the great awakening,” he said. “We are now in a new era.”

For their part, venture capitalists faced fundraising struggles of their own. Venture firms raised only $42.7 billion in the first three quarters of this year, less than a quarter of the record $172.5 billion they raised last year, according to PitchBook. The limited partners who supply those funds have retreated, largely because they found themselves overallocated to private investments when the stock market tanked, a phenomenon known as the denominator effect. In some cases, the LPs were disappointed with VC returns and with how VC managers handled their money.

Either way, the lack of LP interest forced many venture firms to rethink and refine their strategies, cut headcount and perform triage on their portfolios, leaving the weaker companies to fend for themselves. “This is basically a landslide” of startup shutdowns, said Pichinson. Venture “firms are realizing that cash really is king and it has to be protected.”

The transformation of Tiger Global Management, the hedge and venture fund that once shook up VC with its frenetic deal-making pace, is an especially stark illustration of the new mood in startup investing. After participating in more than 350 VC deals in 2021, Tiger inked only 37 this year, according to PitchBook. Those deals were largely small checks or follow-on investments in their strongest companies, such as enterprise software firm Databricks, which earned a valuation of $43 billion in September, up from $38 billion in 2021.

Tiger’s slowdown was likely the result of fundraising challenges. The New York firm reportedly cut its fundraising target for its upcoming megafund twice this year, a sign that it had inaccurately predicted demand from its LPs, the institutions and wealthy individuals that invest in venture funds. Embattled venture firms may end up cutting staff, just like their startup counterparts.

The tech industry’s job losses were at their worst at the start of the year. In January, 90,000 workers across 275 tech companies were laid off, according to Layoffs.fyi. But the layoffs continued for the rest of the year, including some at once high-flying tech unicorns.

In the past month, non-fungible token marketplace OpenSea, which was valued at $13.3 billion in 2022, cut 50% of jobs; wholesale marketplace Faire, valued at $12.4 billion in 2021, cut 20%, or 250 workers; and Flexport, valued at $8 billion in early 2022, axed 20% of its workforce, a total of 660 people. Unfortunately, the sizable job cuts at Meta, Google, Qualcomm and LinkedIn made it harder for some people laid off from startups to find a soft landing at bigger employers.

Reasons for Optimism

Still, many of them did find new jobs.

The overall number of tech industry jobs in the U.S.—including technical and nontechnical jobs such as marketing and legal positions—was around 5.6 million in October, comparable to the number at the start of the year and roughly 6% higher than in October 2021, according to an analysis of U.S. Bureau of Labor Statistics data by the Computing Technology Industry Association, a tech trade group. The data suggest that hiring by tech companies, including those that laid off workers in some parts of their business, outpaced job eliminations overall.

It’s possible that some of the laid-off workers found their way to the booming AI sector. AI startups raked in cash, raising $25 billion in the first half of the year alone, according to data provider Crunchbase. That was down slightly from the same period the prior year, according to Crunchbase, when some financings at the tailend of the bull market occurred.

The vibrancy of AI, among other things, has helped founders and venture investors, many of whom are naturally inclined toward positivity, to hold onto their optimism. The companies getting started now in the furnace of hard times will likely end up more resilient than those founded during the record bull run, when it was far easier to launch and scale a company, founders and investors say.

“When you don’t have that capital availability, you’re forced to do things in a more grounded way,” Wing’s Wagner said.

To survive in this market, he advises startups to be pragmatic. “Manage expenses, capitalize the company on terms that fit the current world if you have capital available and [don’t] get emotional about last-round valuation,” he said.

Sánchez faces vote to win new term as Spain PM amid growing anger over amnesty deal

Conservatives and judges say Socialist leader’s pact with Catalan separatists damages country’s rule of law

Spain’s acting prime minister Pedro Sánchez is on course to secure a new term in a parliamentary vote on Thursday as anger grows over an amnesty deal for Catalan separatists that has become the price for the Socialist leader to retain power.

The speaker of Spain’s Congress of Deputies said a two-day process leading to Sánchez’s expected confirmation would begin on Wednesday, almost four months after an inconclusive election in July in which his party finished second.

Late on Monday the Socialists published the official text of an amnesty law for Catalan separatists, which is a precondition for Sánchez to secure the votes he needs from smaller parties to reach a 176-seat majority.

The amnesty will end the prosecution, prison terms and other penalties facing pro-independence leaders and supporters who backed a bid by Catalonia to break away from Spain that culminated in a referendum in 2017.

The plan has sparked fury among conservatives and traditionalists in the Socialist party, who accuse Sánchez of cynically granting special treatment to separatists at the cost of trashing the rule of law.

The amnesty is likely to benefit more than 500 people, spanning those in criminal cases and others facing administrative penalties such as bans from public office, said one official in the Catalan independence movement.

Its most high-profile beneficiary is expected to be Carles Puigdemont, head of the hardline Together for Catalonia party, who six years ago led the push for an unlawful referendum and a futile declaration of independence. He has since been living in Belgium as a fugitive from Spanish justice.

The proposed amnesty has drawn condemnation from prosecutors, judges, lawyers, police officers and Spain’s main business lobby, the CEOE. Tens of thousands of people took to the streets of cities across Spain in protest against the plan on Sunday.

Fears that the amnesty law is opening the way for parliament to interfere in court decisions prompted an extraordinary statement from Spain’s supreme court on Monday. Its government chamber emphasised the need to “guarantee judicial independence from all institutions” and underscored the courts’ duty to safeguard “equality in the application of the law”.

The text of the amnesty law says it will cover not only people who helped organise the referendum in 2017 but those who committed crimes with a “profound connection” to the independence bid, including public order offences and the misuse of public funds. It specifically excludes intentional acts “resulting in death”.

Lawyers were surprised by the period of time covered by the amnesty law, stretching from the first day of 2012 — the year when a pro-independence majority took control in the Catalan regional parliament — until November 13 2023.

Who benefits from the amnesty will be decided by judges on a case-by-case basis, with public prosecutors and the individuals themselves able to argue for their crimes to be erased.

José Ignacio Torreblanca, head of the Madrid office of the European Council on Foreign Relations, a think-tank, said the publication of the law would only heighten anger over the amnesty plan.

“There’ll be two very tense days in parliament on Wednesday and Thursday. It’s going to be very rough. I think we’re going to hear terrible things and that, logically, is going to stir people up.”

The company formerly known as Twitter is preparing to roll out a “major update” to its algorithm, according to a recent post by X owner Elon Musk. While today the app’s For You feed surfaces popular and trending posts from its broader network alongside highlights from those you follow, the new algorithm will surface posts from smaller accounts, Musk said.

The posts and accounts will include those outside users’ “friends and follows” network, he noted, meaning the change will attempt to expose users to new accounts they may find interesting but haven’t yet discovered. It would also allow smaller creators the opportunity to be discovered by a wider audience, which fits into Musk’s plan to turn X into a creator platform.

Over the past several months, X has targeted creators with features like support for long-form posts, that extend the character limit to 25,000 for paying subscribers, the ability to upload two-hour videos, and, importantly, the opening of an ad revenue-sharing program that has now paid out nearly $20 million to creators, according to statements last month made by X CEO Linda Yaccarino.

The larger idea is to allow creators to build their audience on X and then monetize their posts through a combination of ad revenue sharing and subscriptions, where fans can pay for exclusive content. Other features have also been designed with the one-on-one fan-to-creator connection in mind, including support for receiving message requests from subscribers, and more recently, the addition of audio and video calling features, which could turn X into an alternative to Cameo, in addition to being basic social features.

To date, however, creators’ embrace of X is uncertain. While there are some building small audiences on X, more often than not, creators looking to monetize turn to larger platforms like YouTube, TikTok, and Instagram to reach their followers and a wider audience. But an X algorithm change, if successful, could potentially give smaller creators greater reach on X — which, in turn, could increase X usage and improve discoverability. Or at least that’s likely the working theory here. Whether or not it will work is another matter entirely, given X’s alleged dwindling traction in the year since Musk took over and the rise of new startup competitors, including Bluesky, Post, Spill and others.

Musk noted on Friday, Nov. 10, that the recommendation algorithm update would roll out in the next few days — which would mean this week — and would be made open source as it undergoes continuous improvement.