TheChek News Flow

President’s assertion runs counter to decades of policy and undermines deterrence, say former military and diplomatic officials

President Trump’s assertion that the U.S. must own Greenland for defense contradicts decades of U.S. policy and undermines its global network of bases, experts say.

The U.S. operates over 128 foreign bases in at least 51 countries without owning the land, relying on bilateral agreements with host nations.

Critics argue that Trump’s stance on Greenland weakens alliance solidarity and American credibility, posing a threat to the 32-country NATO alliance.

President Trump’s assertion that the U.S. must own Greenland to expand its defenses there runs counter to decades of policy and undermines the deterrence of its global network of bases and alliances, say former American military and diplomatic officials.

Trump has said the U.S. should have full control of the island, a semiautonomous Danish territory that is larger than Alaska. In recent days, he has said the U.S. needs to own it to assure Arctic and U.S. security.

“When we own it, we defend it. You don’t defend leases the same way. You have to own it,” Trump said Friday. “And we’ll have to defend Greenland. If we don’t do it, China or Russia will.”

But military officials and diplomats say the U.S. has built the world’s most formidable assembly of overseas military bases without owning foreign soil.

The Defense Department manages or uses more than 128 foreign bases in at least 51 countries, according to a Congressional Research Service report from 2024. Independent analyses have said the total number, including smaller facilities, could top 750 installations in 80 countries and territories. Many date to World War II and the Cold War.

In almost all cases, land is provided by host countries under bilateral agreements, without a change of ownership. Host countries generally permit the U.S. to build and operate facilities, as spelled out in detailed diplomatic documents.

“We don’t need ‘ownership’ in order to conduct all the operations we would like to do,” said retired Navy Adm. James Stavridis, a former supreme allied commander of the North Atlantic Treaty Organization.

Overseas bases are the backbone of America’s global defense posture, which a Defense Department document describes as “the fundamental enabler of U.S. defense activities and military operations,” which also advances U.S. strategic interests, according to the Congressional report. Of 1.3 million active-duty U.S. military personnel, almost 13% are based overseas, according to the Defense Department.

The biggest U.S. overseas military installations are in Japan, Germany and South Korea. Those countries and other allies not only provide land but also contribute to U.S. operating costs.

According to the Pentagon, more than 53,000 active-duty troops are stationed in bases across Japan and more than 36,000 are in Germany. Landstuhl Regional Medical Center there is the Pentagon’s largest overseas medical facility, treating servicemembers from across the hemisphere. The adjacent Ramstein Air Base employs more than 12,000 service members and civilians on approximately 4,000 acres.

Over the past 15 or so years the Pentagon has shifted away from running its own large overseas installations to using sites belonging to allies and partners, an approach dubbed “places, not bases,” according to the Congressional report.

The Guantánamo Naval Station in Cuba is an exception where the host country deems U.S. presence illegitimate. The facility was established under open-ended diplomatic agreements struck decades before the 1958 communist revolution. But even there, the U.S. doesn’t own the land.

Greenland, located just north of eastern Canada, is a crucial gateway to the Arctic Ocean. It also sits beneath the flight paths of potential intercontinental ballistic missiles fired from parts of Russia or China.

Danish leaders have said Greenland isn’t up for grabs and any decisions about the island’s future lies primarily with its 57,000 residents.

The U.S. since the 1940s has considered Greenland crucial to national security and during the Cold War had 17 bases on the territory. The U.S. now operates just one base there, a Space Force facility focused on tracking potential missile attacks.

Denmark, a founding member of NATO, has said it is open to discussing an expanded U.S. footprint on Greenland. Copenhagen last year also bowed to pressure from Trump and pledged to significantly boost its own Arctic military presence.

“Greenland, and the sovereign state Denmark, have always been courteous and responsive hosts going back many decades,” said Stavridis.

Richard Fontaine, who served as a foreign-policy adviser to former Republican Sen. John McCain, among other diplomacy-related positions, said Trump’s argument that “you don’t defend leases” amounts to a “No One Washes a Rental Car theory of international relations.” In other words, a country only defends or cares about its own territory, but not that of other countries.

“That makes sense for private property but not for nations,” said Fontaine, who now runs the Center for a New American Security, a think tank in Washington. He said that the U.S. is committed to defending many allies without owning their territory.

Trump defended Israel last year, Fontaine noted as an example, and many allies have fulfilled pledges to defend the U.S. “The whole point of alliances is mutual defense of one another’s territory,” he said.

U.S. Air Force Gen. Alexus Grynkewich, NATO’s supreme commander, said on Sunday in Sweden that allies are expanding joint Arctic activities and “military cooperation in this region has never been stronger.” He declined to “comment on the political dimensions of recent rhetoric.”

Former U.S. Ambassador to NATO Ivo Daalder said Trump’s stated desire to take Greenland “poses a grave threat” to the 32-country alliance.

“Merely suggesting that the U.S. can only be secure if it owns Greenland raises fundamental questions about its willingness to defend countries that it doesn’t own,” said Daalder.

Daalder was one of 14 former diplomats and national-security officials from both parties who on Friday published a letter praising Denmark as a staunch ally and criticizing Trump’s posture on Greenland.

“Far from strengthening U.S. security, musing about taking Greenland only weakens Alliance solidarity, undermines American credibility as a trusted ally, and diminishes deterrence,” the letter says.

Greenlanders Begin to Take Trump’s Calls for the Island Seriously

Administration officials have been scornful of such thinking, reflecting a fundamental shift in American foreign policy that was set out most starkly last month in a new national-security strategy. Its fifth paragraph says that after the Cold War, “American foreign policy elites convinced themselves that permanent American domination of the entire world was in the best interests of our country. Yet the affairs of other countries are our concern only if their activities directly threaten our interests.”

The document is being seen as a playbook for U.S. action. White House deputy chief of staff Stephen Miller said on CNN last week that the U.S. “is the power of NATO” and that for the U.S. to secure the Arctic region and defend NATO interests, “obviously Greenland should be part of the United States.”

Even serving politicians from Trump’s own party have denounced that position.

Sen. Thom Tillis (R., N.C.) said on Wednesday in the Senate that Miller’s assertion of a need to own Greenland “is absurd.” Tillis, the Republican leader of the bipartisan Senate NATO Observer Group and a Trump supporter, lauded Denmark’s contribution to the U.S.-led war in Afghanistan as exemplary.

“This nonsense on what’s going on with Greenland is a distraction” for Trump, Tillis said, praising the president. “And the amateurs who said it was a good idea should lose their jobs.”

Microsoft warns that China is winning AI race outside the west

DeepSeek’s technology is being rapidly adopted across Africa and beyond, tech group’s research shows

Microsoft has warned that US AI groups are being outpaced by Chinese rivals in the battle for users outside the west, as China combines low-cost “open” models with hefty state subsidies to gain an edge.

Brad Smith, Microsoft’s president, told the FT that the rapid adoption of Chinese AI start-up DeepSeek’s technology in emerging markets such as Africa underscores the competition American firms face around the world. 

“We have to recognise that right now, unlike a year ago, China has an open-source model, and increasingly more than one, that is competitive,” he said. “They benefit from subsidisation by the Chinese government. They benefit from subsidies that enable [them] to basically undercut American companies based on price.”

His comments come as new research from Microsoft found that the release of DeepSeek’s R1 large language model a year ago helped accelerate the uptake of AI worldwide, particularly in the global south, due to its “accessibility and low cost”. 

That has also led to China overtaking the US in the global market for so-called “open” AI models, which are often free to use, modify and integrate by developers. 

In contrast, US tech groups such as OpenAI, Google and Anthropic have instead focused on maintaining full control of their most advanced technology, profiting from it through customer subscriptions or enterprise deals.

Microsoft’s research, which is based on usage data from the tech group’s products, estimated the Chinese group has an 18 per cent share of the AI market in Ethiopia and 17 per cent in Zimbabwe. 

Smith said African countries would need broader investment from “international development banks” or “lending facilities” in order to build data centres and subsidise electricity costs.

“If we rely on private capital flows alone, I don’t think that will be sufficient to compete with a competitor that is subsidised to the degree that Chinese companies often are, especially in those parts of the world,” he said. 

However, Bright Simons, vice-president at the IMANI think-tank in Ghana and an expert on AI, said there was no “scientifically rigorous way” to determine whether DeepSeek was forging ahead in Africa, but that open-source Chinese AI systems offered cheap alternatives.

“Africans can’t afford very expensive solutions apart from open source, so you have to go to [Meta’s] Llama or Chinese options,” he said. They were also using homegrown small language models, such as Masakhane, a pan-African model, and the South African InkubaLM, he said.

Microsoft’s research also found that in countries where US technology products are limited or restricted, DeepSeek had gained a considerable lead, with a 56 per cent market share in Belarus, 49 per cent in Cuba and 43 per cent in Russia. 

DeepSeek shocked Silicon Valley when it introduced its powerful AI reasoning model R1 last year, which it claimed was trained at a lower cost with less computing power.

DeepSeek is expected to release its long-awaited new AI model before the lunar new year holiday.

Microsoft’s research showed that AI adoption is currently concentrated in developed countries, with nearly a quarter of the global north using AI in the fourth quarter of 2025, compared to 14 per cent of the global south, and 16 per cent globally. 

Smith said the growing gap was a “cause for concern” and cautioned that “if we don’t address a growing AI divide, it’s likely to perpetuate and broaden the great economic divide between north and south”.

He noted that this was a key battlefront in the US’s competitive race with China, and said more investment was required from private companies to build data centres and provide skills training, as well as investment from governments and financial institutions.

“What we do have is, as American companies, a stronger reputation for trust. We have access to better chips than the Chinese companies do . . . [but] you always have to compete on price,” he added.

Smith warned that a lack of attention to the uptake of AI in regions like Africa, with young, fast-growing populations, could lead to the rise of systems that are not aligned with democratic values.

“If American tech companies or western governments were to close their eyes to the future in Africa, they would be closing their eyes to the future of the world more broadly, and I think that would be a grave mistake,” he added.

Billions from a million: the London VC that hit the jackpot with Revolut

Balderton Capital led $75bn fintech’s first funding round and retains substantial stake even after cashing out $2bn

Balderton Capital has cashed out roughly $2bn of its Revolut stake over the past year, cementing its early £1mn investment in the fintech as one of the most lucrative bets in European venture history and capping an exceptional year for the London firm.

The stock sales, including $1bn worth that people familiar with the matter say was announced at Balderton’s annual meeting in November and other deals earlier in the year, come as Revolut sits at a $75bn valuation and edges towards a public listing that could come as early as this year.

Revolut, founded and led by Nikolay Storonsky, has been by far the best deal in Balderton’s 25-year history — a period in which it has raised a total of $5.7bn to invest.

The firm’s fifth fund, in which the UK neobank holding sits, has returned the initial $305mn raised from investors more than 25 times over, according to people familiar with the matter, and retains a significant chunk of its previous stake of more than 10 per cent.

“The best companies keep unlocking new opportunities and we knew with Revolut that Storonsky was an entrepreneur who was going to do just that,” said Daniel Waterhouse, a Balderton partner who sat on Revolut’s board for several years. “He had the capacity to take this in many different places.”

Balderton’s Revolut windfall, which has offered its institutional investors some much-needed cash returns, has been reinforced by a flurry of positive news elsewhere in its portfolio, from energy group Fuse reaching a $5bn valuation in December to fintech GoCardless’s $1.1bn sale last month.

Other recent successes include UK autonomous driving group Wayve, which is in talks to raise up to $2bn in a funding round, and German spy drone maker Quantum Systems, which has tripled its valuation to €3bn since Balderton first invested in May.

Balderton last year secured another windfall as it joined fellow VC backers of Turkey’s Dream Games, maker of the popular mobile app Royal Match, in selling a stake to private equity group CVC at a $5bn valuation just five years after its initial investment.

The London firm led Revolut’s earliest investment round in 2015, contributing £1mn of a £1.5mn total that valued the start-up at £6.7mn including the new capital, according to people familiar with the terms.

“Europe had a relative advantage in fintech,” said Tim Bunting, a former Goldman Sachs partner who joined Balderton and brought in the original Revolut investment. “Whereas Europe had already lost in certain verticals to the US, fintech was a real chance.”

That helped make fintech “the big thing” for Balderton’s fifth fund, accounting for almost half the total invested — an unusually large “tilt” towards a single sector that has not been repeated by the firm. “It was a hunch,” Bunting said, even though at the time it was still widely seen as “a gamble that consumers would trust start-ups” with their cash.

“I don’t think there was any doubt in our minds that the opportunity was going to be great” for European fintech start-ups, added Waterhouse.

Storonsky’s original pitch demonstrated the scale of his ambition and his detailed understanding of payments infrastructure — but also his “functional” style, with a presentation that contained “zero bullshit and zero window dressing”, according to Waterhouse. “That’s one of the reasons he’s been so successful.”

A private share sale last year gave Revolut a roughly $75bn valuation. Balderton, which participated in the sale, declined to comment on fund returns.

With many VC firms having overextended themselves during the Covid-era financing boom and at a time of relatively few public listings to provide liquidity to early start-up investors, Balderton’s backers have welcomed its ability to generate returns.

In 2025, according to people close to the firm, Balderton distributed billions of dollars to investors in Fund V and its $375mn Fund VI, raised in 2017 — with more returns still to come from its remaining stakes in Revolut and others.

Robert Greenwood, senior investment director at the British Business Bank, which has backed several Balderton funds since 2017, said that while it was too early to fully assess the investments, there were “strong indicators” that they would “perform well over the longer term”.

“Our first direct commitment to Balderton’s Fund VI in 2017 is performing comfortably in the upper quartile relative to its peer group, including in respect of realised returns,” he said.

Balderton’s origins date back to 2000, when it was created as the European unit of Silicon Valley investor Benchmark Capital. Benchmark had made a huge return from a 1997 bet on eBay that remains one of the most lucrative deals in VC history, and later went on to back Uber, Twitter and Snap. However, by the mid-2000s it had become clear that Benchmark “didn’t have global ambitions”, Bunting said.

The two groups separated, with Balderton’s partners naming themselves after the street in London’s Mayfair where their office was located at the time.

Because of the split the firm’s fifth fund was Balderton’s hardest to raise as it had to win over investors without the patina of Benchmark.

One vestige of the Benchmark era is that Balderton operates as an “equal partnership”, unlike most VC firms. The investing partners responsible for each fund have an equal vote and all get the same benefit from a successful investment, regardless of who sourced the deal or sits on the board.

The firm now operates out of a renovated stable near London’s tech hub of King’s Cross and has evolved in some ways — in 2021 it launched a growth fund to back more mature start-ups. But other than Wayve, it has not followed the VC stampede to back highly priced AI model developers such as Europe’s Black Forest Labs or Mistral.

Similarly, Balderton has not yet been tempted by the moves of some rivals to raise huge new funds to invest in start-ups across all stages of development, or to open multiple offices across continents.

“The core is stick to your knitting,” said Bunting.

The Revolut bet a decade ago has helped Balderton stay in the top tier of European VC firms alongside the likes of Index Ventures and Accel. But the six-partner business must fight to keep its position as a small partnership focused on Europe at a time when international investors raising megafunds are competing to back top start-ups.

“The tech industry is prone to oscillate wildly,” said Waterhouse. “A lot of people get sucked into the hype and the drama. We are pretty good at staying balanced.”

Local brands weaken European luxury groups’ grip in US and China

Shoppers in the industry’s biggest two markets opt for domestic alternatives to long-dominant old guard

On a bitterly cold evening in Beijing, many of the western luxury boutiques at the high-end WF Central mall are almost empty. But at Chinese jeweller Laopu Gold, half a dozen customers try on necklaces and rings as keen sales associates hover.

“Some brands are very special, like Louis Vuitton and Chanel,” said Linda, a 41-year-old Beijinger browsing in the store. However, she added, China now had some “very good” local brands that were catching her attention. “They fit my taste, and they are a bit less expensive.”

Since listing in Hong Kong in 2024, the jeweller’s shares are up more than 800 per cent, giving it a market capitalisation of HK$120bn (US$15bn). Investors are betting that a Chinese company focused on the domestic market, at a time when most western luxury brands’ sales are falling in China, has plenty of room to grow.

There is a growing amount of evidence that shoppers in the luxury industry’s two biggest markets — the US and China — are turning to local alternatives to the European brands that have long dominated the market.

Linda, who was wearing a Tiffany HardWear bracelet and carrying a Chanel handbag, said she had been moderating her purchases from international luxury groups over the past year, and instead turning to Chinese brands. 

Homegrown brands such as Laopu Gold, cashmere specialist Icicle and bag maker Songmont are redefining what a modern Chinese luxury brand can be.

Meanwhile, in the US, sales of American heritage brands Ralph Lauren and a revitalised Coach have been growing by double digit percentages in recent quarters — a stark turnaround after years of both brands being regularly discounted.

“The key to the luxury industry’s longevity is convincing Gen Z that investing in these products is worthwhile, but . . . many of them are choosing local brands — in China but also in the US,” said Claudia D’Arpizio, head of luxury at consultancy Bain.

She added that a vanguard of “insurgent” brands were producing original, on trend designs to shoppers at more affordable prices than top European labels, which have raised their prices significantly over the past few years.

“We can call it local pride but I would say really these brands are better at interpreting heritage and local taste,” said D’Arpizio.

Laopu’s sales were up an annual 233 per cent in mainland China in the first half of its current financial year, according to HSBC © VCG/Getty Images

At Laopu, designs include pendants and earrings in the shape of abacuses and Hulu gourds — an important Chinese symbol of good fortune and prosperity.

A gold and pavé diamond “Hulu” pendant, one of the brand’s most popular designs according to a sales assistant, retails for about Rmb20,000 ($2,800), whereas a gold and pavé diamond Cartier Love necklace costs €6,500. 

“We’re watching Chinese brands gain the kind of negotiating leverage in top malls that used to be reserved for global luxury brands,” said Alexis Bonhomme, chief executive of brand consultancy Trinity Asia.

The price point is paying off at a time when the Chinese government is nudging consumers towards buying from domestic brands and consumer spending is subdued.

Laopu’s sales were up by 233 per cent in mainland China in the first half of its current financial year compared with a year ago, according to HSBC, with sales per boutique in the country much higher than at western peers and traditional Chinese jewellers.

“We think that Laopu’s success has stemmed from unlocking demand from a new segment in the high-end jewellery market and by not trying to be the next Cartier,” said Erwan Rambourg, head of luxury at HSBC.

Bonhomme said Laopu was also attracting young buyers among a mix of customers who would also buy from global and traditional Chinese jewellers.

“Laopu is one of the first Chinese jewellery brands to build a luxury-like feeling not just selling gold, but turning heritage craft into repeatable retail,” he added.

While the new entrants are intensifying competition in China’s subdued luxury market, US shoppers are buying more at home — instead of on jaunts to Europe — as the dollar weakens and aspirational middle-class consumers look for value. 

Ralph Lauren, which sponsors the US Olympic team and the US Open tennis tournament, has run splashy ad campaigns designed to elevate the brand by evoking a nostalgic, cinematic vision of Americana.

One industry executive said many consumers were connecting with the brand’s vision as the US entered a more conservative, inward-looking cultural phase.

The company’s latest holiday ad campaign could be a list of greatest hits of an idealised America: a twin prop plane dips across a mountainous Utah skyline; dirt bikes, horses, and pick-up trucks kick up dust; a bevy of multi-ethnic, pouty models wander fields dressed as gentleman cowboys in tuxedos, shearling coats and wide-brimmed hats. 

Executives have spent almost a decade working to elevate the Ralph Lauren brand and take greater control of its distribution, but the goal is still to cater to a wide range of customers and price points. 

“Our storytelling is really designed to appeal broadly, including to the more value-sensitive consumers,” chief executive Patrice Louvet said on a November earnings call.

Bag maker Coach has recently resurrected itself from the mall discount bin, winning over Gen Z shoppers — particularly in the US — with popular bags such as the Tabby, which has been a hit since it launched in 2019 and has a starting price of about $350. Chief executive Todd Kahn said in September his goal was to build Coach, owned by US apparel group Tapestry, into a $10bn brand. 

Coach’s “point of market entry is the 18-to-27-year-old”, Tapestry’s chief growth officer Sandeep Seth told investors in November, adding that in the US alone over the next decade, “25mn women are going to turn 18, and they are all going to make their first major handbag purchase . . . this provides a huge opportunity to grow by expanding that market.”

Beijing-based Songmont, which was founded in 2013, has a similar price point and draws on “the rich cultural heritage of the Orient” for the shapes of its handbags and high-concept retail spaces in a handful of Chinese cities.

Minimalist ready-to-wear label Icicle, which is based in Shanghai and has design studios in both China and France, has 240 stores across China. It is now looking to increase its presence in France since opening a flagship in Paris in 2019, and showed its first collection at Paris Fashion Week in 2025. 

“I think this is very healthy from a competitive standpoint,” said D’Arpizio. “We always say this is a cultural and creative industry. It is strange then to say that there is only one culture in the world, which is the European culture that is conquering everyone.”

Job losses in European car parts sector top 100,000 in two years

Auto suppliers such as Bosch among those to have announced large lay-offs in 2025

European car parts suppliers have announced more than 100,000 job losses in the past two years as they suffer from low demand for vehicles and fierce competition from Chinese rivals.

Figures compiled by European trade body Clepa and shared with the FT show that parts suppliers announced 50,000 job losses in 2025, following 54,000 in 2024, in a sign of continued distress for the struggling sector.

“It is a quite unprecedented situation with over 100,000 jobs announced to be cut in the past two years . . . we haven’t stopped the bleeding,” said Benjamin Krieger, secretary-general of Clepa.

During the pandemic years of 2020 and 2021, suppliers announced a total of 53,700 job cuts, but demand in Europe has remained significantly below pre-pandemic levels, with limited uptake for new electric vehicles. The sector’s poor performance has led many car companies to cut output across the continent, hitting parts makers.

The industry also faces stiff competition from Chinese companies that are increasing their share of car sales in the European market. “The dragon in the room is China. They have technically well-made vehicles coming to the market at an extremely low price,” Krieger added.

Bosch, the world’s largest auto supplier, announced in September it would cut 13,000 jobs by 2030 after saying it faced an annual cost gap of €2.5bn, leading to protests from employees last month.

After parts makers Valeo, Forvia and Schaeffler announced plans in 2024 to cut thousands of jobs, last year saw the announcement of further job cuts at Continental’s automotive parts division, since spun off under the brand Aumovio.

Arnd Franz, chief executive of Stuttgart-based Mahle, told the FT it was “hard to say” whether the sector had hit the bottom or whether it would continue to face challenges in 2026.

The supplier announced measures to cut 1,000 jobs in November, mostly in Europe and North America.

“We had much more positive expectations for 2025,” said Franz, but said that sweeping US tariffs by President Donald Trump had led to slower than expected demand for car parts.

The pressure on the industry would mean “we will see a wave of consolidation in the next two, maybe even three years, and capacity adjustments”, he added.

Valeo chief executive Christophe Périllat was more blunt, warning last November that the industry faced a “Darwinian transformation”, adding that more European jobs would be lost unless Brussels protected the sector from Chinese competition.

While uptake of EVs has been slower than anticipated in Europe, the move away from petrol and diesel cars has steadily increased pressure on European suppliers which has focused on the production of combustion engines.

The European Commission is considering proposals to protect the sector by introducing “made in Europe” protections for key industries, which would ensure that a certain threshold of parts are made on the continent.

Parts makers such as Valeo have called for the threshold to be about 75 per cent, in order to maintain the status quo, but the proposals have been opposed by carmakers who fear a blow to their competitiveness if they are forced to use more expensive European components. The measures are expected to be unveiled at the end of January.

Krieger insisted that European companies would be able to compete with their Chinese counterparts if they were all producing within the EU.

“We are sure the Chinese and Europeans would be competitive under the same framework conditions, if the same rule book applies to everyone,” he added.

When robots meet commercial reality

Implementing automation systems requires a lot of planning, time and money

“The ChatGPT moment for general robotics is just around the corner,” Nvidia’s Jensen Huang said in January last year. This January he said the ChatGPT moment for physical AI was “nearly here”.

ChatGPT was the fastest-growing consumer app in history, according to a report from UBS, reaching 100mn monthly active users within two months of launch. If that sort of explosive adoption is what Huang meant by a “ChatGPT moment” then I think we have much longer to wait.

There have, of course, been advances in the deployment of robotics over the past year, not least the steady and impressive progress of self-driving cars. But there have also been some retreats. US supermarket chain Kroger, for example, announced in November it would close three of its eight robotic warehouses, which pick and dispatch orders to customers. At the same time, it said it was expanding its relationship with gig economy companies like Instacart and DoorDash, which marshal self-employed humans to act as “personal shoppers” for customers.

It’s tempting to ask who needs automation when you can just have a low-paid gig worker nip to the shops for you. Although that’s not entirely fair, the story does offer an insight into what happens when robots meet commercial realities.

First, while “adopting” generative AI as a business can be as quick and simple as paying a monthly subscription to OpenAI or Anthropic, implementing robotic systems generally requires planning, time and money. The Kroger warehouses (powered by technology from UK company Ocado) required huge amounts of expensive kit. In a low-margin business like selling groceries, that means you need to forecast demand very accurately in order to maximise utilisation.

“It’s a bit more like a factory set-up: it needs to have minimum throughput to make money,” Tom Andersson, a warehouse automation expert at research company STIQ, told me. “In the end, you need to have a really good business case for why you do automation, and when you do those business cases — because sometimes these projects can take three years in the planning — if your forecast is wrong at that point it will be tricky.”

That is not to say that automation in the grocery sector is a non-starter. The business case for Ocado’s automated warehouses in the densely populated UK, for instance, seems to stack up better. In the Netherlands, an online grocery company called Picnic has made headway with a similar approach. And plenty of supermarket chains have invested in automation further up the supply chain. Walmart has increased revenues by more than $150bn over the past five years, yet its headcount has come down slightly over the same period. It is still a vast employer, though, with more than 2mn staff on its books.

Robot enthusiasts believe a new breed of humanoid robots will make further inroads into physical work. One of the great advantages of building robots that look like humans is that — in theory — you can slot them seamlessly into workplaces that are already built for humans. That could make the deployment of robots more gradual and flexible, and less of an enormous upfront bet.

But even if humanoids do achieve human-level capabilities this year, as Huang predicts, there will still be practical problems for businesses to consider. First, to deploy AI-powered humanoid robots alongside humans in the workplace, you need to be confident they are safe. In a white-collar setting, a hallucinating chatbot might make up a number or reference and damage your reputation or your bottom line. In a blue-collar setting, a malfunctioning humanoid could be physically dangerous.

Second, humanoid and canine robots just don’t have much stamina for now, because of limitations with battery technology. As James Pikul, associate professor of mechanical engineering at the University of Wisconsin-Madison has written, the Boston Dynamics robot Spot can only operate for about 90 minutes before it needs to recharge. By way of comparison, it is common for human staff in factories and warehouses to work 10-hour shifts with a couple of breaks.

What does all this add up to? There is every reason to believe that automation will continue to increase in a range of physical settings. But technologists and investors should take care not to conflate technical breakthroughs with commensurate transformations of the real economy. As Kroger’s retreat shows, just because a technology exists and works does not mean it will always be commercial to deploy it. In other words, the fact a job can be automated doesn’t necessarily mean it will be automated.

Openreach needs to make full fibre broadband work

BT’s infrastructure company cannot retreat on its plans for a national digital network

Deep in the bowels of the Faraday Building, the main telephone exchange for the City of London since 1902, lead-lined cables carrying thousands of copper wires still protrude from walls. The red metal packed into them is extremely valuable but some are no longer working and the rest will soon be obsolete.

Their replacements are thin cables containing 864 glass fibres, each of which can be spliced into 32 strands. These run from equipment racks in exchanges such as Faraday, through BT’s underground ducts and up telephone poles before being connected directly into offices and homes. The last step will be to strip the copper from the network and sell it for more than £1bn.

The pace at which this has happened is a salutary contrast to BT’s historic reluctance to abandon copper and deploy full fibre broadband. The company is investing £15bn through its Openreach division to reach 25mn premises (about 80 per cent of the total) with full fibre by the end of this year.

“We’ve built faster than anyone could have envisaged,” says Katie Milligan, deputy chief executive of Openreach, as we toured the Faraday building and its nearby operations. It is not alone in suddenly turning the UK into Europe’s fastest growing full fibre broadband market: alternative network providers (altnets) such as CityFibre have invested billions more.

Openreach’s attempt to replace its historic advantage in copper with a new one in fibre is a remarkable operation. It involves blowing fibre optic cables along its ducts with air compressors and stringing fibre from poles to houses. The company has persuaded the government to limit the ability of flat freeholders to block cabling work for higher-speed services.

But no good deed goes unpunished and competition for territory among Openreach, Virgin Media 02 and the altnets has been intense and costly. “I cannot tell you how crazy a market it is out there,” says Karen Egan, head of telecoms at Enders Analysis. The altnets suffered £1.5bn net losses in 2024, while Openreach lost a net 828,000 customers in that year.

The rivalry was unleashed by the telecoms regulator Ofcom in 2021. It capped the wholesale price that Openreach could charge retail providers such as TalkTalk for services carried over copper for the final stretch from street cabinets, but let it charge more for full fibre connections. Altnets were encouraged to take on Openreach by using its ducts and poles.

This has been good for consumers: prices have been squeezed by cut-price offers, especially in areas with several network operators. But it has taken a toll on the altnets, with G.Network being sold to a distressed debt firm this month. Openreach now wants greater freedom to cut its wholesale prices in the most competitive areas but keep them higher in others.

Clive Selley, Openreach chief executive, has talked of scrapping its plans to extend full fibre to 30mn premises by 2030 if Ofcom fails to reform the rules. That sounds more like a lobbying position than a real threat since BT would then have failed to match its reach in copper. You cannot claim to be a national operator if you only get 80 per cent of the way there.

The UK has a related challenge. The saying goes that “if you build it, they will come” but not enough have. Only 38 per cent of homes and businesses that could now connect to full fibre through Openreach have done so, while the altnets achieved only 15 per cent take-up by the end of 2024, according to Enders.

This could be because consumers are confused. The broadband industry spent so long advertising fibre to the cabinet as “fibre broadband” that many people do not grasp the difference in speed and reliability between that and full fibre to premises. Even businesses that know can be reluctant to change because of old devices such as alarms that rely on copper.

The UK’s transition from copper to fibre is thus a balancing act. Openreach has to keep building while remaining exposed to competition from Virgin Media 02 and altnets. Customers need to switch to make the industry’s investment repay. That is not only a regulatory challenge but one of better marketing to more people.

Success should be possible: the UK has advanced a long way in five years and it now needs to finish the broadband job. Once a network of fibre optic cables is in place, it could remain for 50 years or more: some of the copper in the Faraday building dates back a century. One day, it will pay off.

For a monopsonistic buyer such as the Department of Defense, profitability looks like an opportunity in disguise

Donald Trump is not a man to give something away without getting something back. Hence, the US president’s call for a 50 per cent increase in the country’s military budget next year — to $1.5 trillion — comes with a stern warning to “underperforming” defence contractors to rein in their generosity to shareholders and executives.

Restricting private companies’ ability to pay dividends, buy back stock and remunerate their senior employees may horrify those who believe in the power of free markets. But, for his latest squeeze, Trump seems to have identified a target with some juice.  

Big US defence companies tend to be more profitable than their European rivals. On average, in the decade to 2024, the operating margins of Lockheed Martin, Northrop Grumman, General Dynamics, RTX and L3Harris were well above 12 per cent. By contrast, European companies BAE Systems, Thales, Leonardo and Rheinmetall barely managed to get above 8 per cent. 

There are various reasons for this gap — including that US defence contractors have been busy for the past 10 years, while Europe’s military spending slowed to a trickle. The two sets of companies have started to converge, and Rheinmetall in particular benefits from German rearmament.

But, for a monopsonistic buyer such as the US Department of Defense, that profitability must look like an opportunity in disguise. So must a look at where the companies have chosen to deploy their cash.

Over the decade to 2024, US companies’ capital expenditure was equivalent to about a quarter of their cash flow from operations according to Lex calculations using S&P Capital IQ numbers. Shareholder returns, in the form of dividends and share buybacks, were more than three times greater than these investments.

In Europe, meanwhile, capital expenditure was about half of cash flow from operations. And they returned to shareholders, mostly through dividends rather than share buybacks, only about half as much as they invested.

How companies deploy their war chests is their own choice in normal times. Investing more in the business depends on what’s already there in the way of facilities, as well as varying levels of visibility on future contracts and revenue streams. Should the aim be to get better pricing or faster deliveries, there may also be more market-friendly ways to achieve it than via executive order.

But Trump’s push underscores the fact that defence is an odd market to begin with: for larger or more sophisticated products, there is often only one seller and one buyer. That is a recipe for friction. But an alliance is probably more productive than a tug of war.