"Kites rise highest against the wind, not with it"
- Sir Winston Churchill
Tick-Tock on TikTok
The clock is ticking for TikTok as the U.S. government has extended the deadline of January 19 for ByteDance to divest its U.S. operations by 75 additional days.
ByteDance has argued that forced divestiture infringes on its constitutional protections...ironic considering similar protections are absent for U.S. companies operating in China. With divestiture imminent, the question becomes: Who should take over? Elon Musk and Larry Ellison have been named so far. President Trump also floated the idea of the U.S. government owning a 50% stake. We'll cover that in a bit.
TikTok's U.S. assets are estimated to be valued at $375 billion, but a forced divestiture might price them closer to $100 billion. Take a look at the following graphics to understand how influential TikTok has become in the U.S.
The U.S. government taking an ownership stake introduces many issues, such as incentivizing risky behavior with an implicit safety net of the federal government. A more sustainable approach to capture some value from this massive platform is normal taxation.
The implications of a forced divestiture could set a dangerous precedent where U.S companies operating in foreign countries are subject to similar treatment. A successful divestiture keeping as many parties happy as possible must be the ultimate goal.
Meme of the week
Executive Order References
The new president has signed a lot of executive orders on his first few days in office. I'm not going to give my opinions on any of them, but I wanted to provide the threads and resources I found most helpful:
MindBranches is an X account that creates AI-enhanced diagrams to help people understand complex concepts quickly. I've found this creator's X page to be extremely useful for getting quick downloads of important information ahead of meetings and conversations. You'll find concepts, books, models, and more on this creator's page. I highly recommend checking it out!
@MindBranches on X
Stargate
OpenAI has announced the Stargate Initiative, a $500 billion project to build AI infrastructure in the U.S. over the next four years. Backed by SoftBank, Oracle, MGX, and OpenAI, the initiative sees SoftBank as the financial leader and OpenAI handling operations. Masayoshi Son, SoftBank’s founder, will chair the initiative, which has raised concerns from investors like Gavin Baker, who questioned the return on such a massive investment.
The project highlights the debate over whether AI should be open-source or controlled by a few companies with government backing. Critics fear this could stifle innovation, while proponents argue it’s necessary to compete globally.
With the U.S. spending vastly more than China on capital expenditures and paying higher energy costs, the question arises whether the U.S. can catch up, especially without cheap energy sources like nuclear power. The future of AI and automation could depend on overcoming these challenges and reclaiming manufacturing through advanced technologies. Take a look at the following charts to truly understand what we're up against with China.
To me, it's abundantly clear that the U.S. needs to get on the nuclear wave fast. The newest generation reactors are extremely safe, with reports that they are meltdown-proof. Safety is of course the number one concern.
Alongside the strategically important national power infrastructure is another concept I'd like to briefly touch on. Back when the U.S. was deindustrializing, we didn't need the power increases that countries like China demanded. Back then, humans were still needed for production. The reason it was offshored is because the cost of U.S. human labor was so much higher than that of China and other countries.
But now, in the world of AI and automation, manufacturing can be done with almost zero human labor. It makes a lot of sense to bring manufacturing back to the US now.
I wouldn't be doing you justice if I didn't mention DeepSeek. Chinese engineers open-sourced the new DeepSeek AI model last week and it has gone viral. My key takeaways here are:
China developed some remarkable technological advancements to combat their lack of access to Nvidia chips
Open source is the best way to scale and the future of all top (non government use) models
U.S. investors who have been pouring money into companies that produce closed-source models are in for a rude awakening
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