I know your commitment to free speech. I respect that because I think it's a integral it's the foundational thing of democracies really, But I also know your opposition to anti semitism. You've spoken about it and tweeted about it.
That was Israelly, Prime Minister, bb NET and Yahoo talking to Elon Musk at a Tesla factory two months ago. A lot has happened since then, and much of it has been fairly disastrous for Elon's social media platform of choice X. The fallout continues for Elo Musk after the billionaire and Dawson anti semitic.
Post scrative advertisers like Disney, Apple, and IBM have pulled their ads from the social media site X.
Yesterday, Musk and I claims he's anti Semitic.
He also threatened a Thermo nuclear lawsuit against a media watchdog company, Bill.
Elon Musk is now the richest person on the planet.
More than half the satellites in space are owned and controlled by one man.
Starting his own artificial intelligence company.
Well, he's a legitimate, super genius and legitimate. He says He's always voted for Democrats, but this year it will be different.
He'll vote Republican.
There is a reason the US government is so reliant on him.
Alon Musk is a scam artist and he's done nothing.
Anything he does, He's fascinating people.
Welcome to Elan, Inc. Where we discuss Elon Musk's vast corporate empire, his latest gambits and antics, and how to make sense of it all. I'm your host, David Papodopolis. Last Thursday night, we released an emergency podcast after Musk went further in amplifying and agreeing with anti Semitic ideas than he ever had before. The fallout from those posts is ongoing. Musk has rejected accusations of bigotry, but advertisers are still fleeing the site, and his CEO, Linda Yakarino,
is feeling the heat. Here with the Today to discuss the latest in all things acts and another wild development in the tech world, the power Struggle. At OpenAI. Are our regular muscologists, Sarah Friar, who oversees our coverage of Silicon Valley's biggest companies. Hello, Max Chafkin, senior reporter at Bloomberg BusinessWeek, Hey, Hey Max. And Danahull, who covers Tesla and has also been writing about the reaction to Elon's controversial comments.
Always a pleasure.
Okay, So, Sarah, the past few days have been action packed. Give us a bit of a refresher on what Elon said last week that people found so objectionable.
Well, he was responding to a tweet that espoused of a very racist theory about Jewish people that was actually tied to I'm not going to repeat it again. You can listen to our emergency episode. But he said that is the actual truth, and then it caused this, this backlash and really shock from all of his his supporters and also his advertisers. Even the White House put out of statement saying that this wasn't something that they were
aligned with. And furthermore, Linda Yakarino, who is the CEO of X and who is supposed to be in this job to bring back advertisers to the platform, basically had to ignore it. Had to ignore what he said and change the subjects to retaliation against a research group. So that's where we are today, all.
Right, Max, So in the last few days now, what has Elon's response been. Well, so, the.
Most interesting thing about this to me is that Elon Musk typically in these situations. Somebody says a racist thing, they apologize, and Elon Musk has not apologized, which is very much in character for Elon Musk. He's very much a you know, never back down kind of fellow. What he's done is, as Sarah said, denied the sort of central allegation. He's deny that he's anti Semitic, and he's had some sort of help from some of his buddies. But what he's largely tried to do is sort of
changed the subject. He's attacked Media Matters.
And what has Media Matters done here?
Media Matters, before this tweet, had put out a report alleging that X, the platform formerly known as Twitter, was showing ads next to anti Semitic content, and then Elon Musk tweets this thing, which really I would say reinforces the problem that Media Matters is counting out because it's not just like as Media Matters saying there were some
anti Semites on this platform. The call is coming from inside the house, So that totally reinforces the problem with Media Matters is report and I think is part of what kind of kicked off the cascade of essentially advertiser boycott.
This cuts it just before we go through the media matter Lawsuitdan give us the exact lineup in the exact rundown who has broken now and called off advertising with X Well, I just want.
To back up for one moment and make the point that Musk is blaming this on the media, that you know, media matters, this research group and journalists like us have made this into a Maelstrom. But I want to be very clear that pretty quickly after Musk did this tweet, the American Jewish community came out with a very strong statement that said elon Musk's agreement agreement with the user promoting elements of the Great Replacement theory isn't the truth.
It is the deadliest anti Semitic conspiracy theory in modern US history and motivated the Pittsburgh synagogue shooting. Like he was called out by pretty significant organizations, then the media wrote about it, Then the advertiser boycott started happening, and so that's where we are today. But I just think it's disingenuous to sort of blame this on reporters when you have some pretty large and significant organizations calling him out for the tweet in the first place.
One other thing, which is that he one way he tried to cover up the damage, or to do a little bit of damage control was by sort of redirecting this to the Israeli Palestinian crisis. So he's essentially trying to say I could not be an anti Semite because I'm incredibly pro Israel, which just to say that is not those two things are not necessarily are not necessarily mutually exclusives.
And also we haven't seen him enforced that. And also it was this moment where you saw a lot of Jewish leaders who normally would probably have criticized him, say hey, that's great that you're doing that, and they sort of seem to prioritize Elon Must's power and influence over the conversation, over any personal anti Semitism or racism he may be espousing. And that just goes to show how much control this man has and how it's very difficult for people to make an enemy of him.
For all.
Right, but Dan, can you give me that rundown of companies that have pulled advertising for Max Pause?
This is what I believe they're calling it. Sarah backed me up here. I believe it's Apple, Disney, IBM are the big three.
Those are the big ones. There are a few banks, a few communications companies, a lot of companies that already had a pause in place that are just continuing that pause. The sixty percent drop in advertising revenue that Musk has talked about, it doesn't seem to be reversing, all right.
So now let's get into this. You know, must describe that I believe as a thermonuclear lawsuit against Media Matters. It that the lawsuit has dropped Max.
And it says what the lawsuit says that Media Matters report was contrived.
It doesn't stipulated.
Yeah, It doesn't say that Media Matters made up these adjacencies. It says that Media Matters refreshed their Twitter feeds.
So many times.
They are they cherry they cherry picked? Yeah, And I'm not sure. Look, I'm not a legal scholar. I don't know if this is gonna hold up in court or not. But I would say that the goal here, I don't think is to extract a settlement from Media Matters. It's to basically respond to this general swirl of allegations in the most aggressive way possible. And also, you know, I think, unfortunately, to kind of create a chilling effect, to make it more difficult for nonprofits and yes, journalists.
By the way, the Center for Countering Digital Hate was already facing legal complaints from X earlier this year. This is a pattern. He said he would go after the ADL of the Anti Defamation League as well. They ended up having a somewhat of a truce. And this is just a company that has made their API, which researchers
used to that's an application programming interface. But what it means is that the way that researchers used to look at the content on X to figure out if there was misinformation spreading ahead of an election, to figure out what was going viral, what was happening in global conversation, Now that costs at a minimum forty two thousand dollars a month, which is incredibly unaffordable for any nonprofit to even hold X accountable in the way that they used to.
So all of this to say, X would prefer that the only data that we believe about that company comes from the company itself.
So we believe that this attempt to essentially enforce them or have something of a chilling effect on the media will be successful.
Max.
I think the way that media chilling effects worth it's not like a one to one thing. No, I don't think it's going to be successful because in certain ways, the lawsuit actually confirms certain aspects of the Media Matters port.
I mean, he doesn't.
The lawsuit doesn't dispute that these were real so greenshots. It doesn't dispute that there were, you know, anti Semites on this platform. It disputes that Media Matters was overstating the likelihood that you would see an anti Semitic ad next to that. And I don't think it's going to have an immediate chilling effect. But when you see like a cascade of things like this, you know it doesn't. It doesn't make people more anxious to call out discrimination
and so on. And honestly, I think it's it's kind of a clever way for him to respond to these allegations without apologizing for them, because he almost can't apologize for them because this is sort of important to his like right wing persona, like a lot of his fans would be really disappointed if he said, no, I totally misspoke. I need a moment of reflection. He doesn't want to do that, so this is a way to kind of zig.
What strikes me is that it's kind of like with politics, you know how, like the politician does something bad and then the surrogates rally to the defense. You're seeing that play at now, Like so Elon creates this horrific news cycle last week, never apologizes, the board doesn't apologize, and believe me, like they had ample opportunity to. No one
puts out a statement. But then you see like Bill Eckman ride to the rescue over the weekend, and then yesterday Sam Teller, elunch chief former chief of staff, puts out a tweet. I spent nearly five years as Elunch chief of staff, and that time I never observed a trace of anti Semitism. He goes on, and then, like you know, Elon responds thanks Sam with a heart emoji.
This is all a distraction from what's actually happening at this company, which is that they've really reduced their content moderation rules because Elon Musk says he wants anyone to speak freely, and in order to fix it, they're relying on this community notes.
Tool, which citizen journalists basically thousands.
Of people who just rate tweets and explain why they're wrong or add context where needed and Bloomberg actually has an investigation out today showing that this system is incredibly slow. It can take hours for viral misinformation to get a label put on it because it's this voting process that takes place. And then it's also really inconsistent, and it allows for repeat offenders who would have been banned under the prior Twitter regime to continue to post at their pleasure.
Okay, Sarah, So earlier on you reminded us that X's revenue, its advertising revenue is down roughly sixty percent since Elon took over the company. We've had additional advertisers pull out. Now you know how much damage has been done and how existential is this? I mean listen, Elon himself in the recent past has thrown out the word bankruptcy. Those are his words. And how does Linda Yakarino turn this around?
Well, a lot of damage has been done to the revenue model. That said, they think that they can eventually replace it with the subscription business of paying for ex premium that is still not reaching even a fraction of the users that they would need for it to reach, or to replace the revenues that they've lost from advertisers. Linda Yakarino. Oh my goodness, I don't know where where I start. I thought that she would last a few weeks, maybe before she realized.
Oh wrong, Sarah, I was so wrong.
She's in it to win it. She's in it for the long haul. I am. I'm actually, you know, impressed with her ability to withstand, you know, all the pressures of this job and still survive in the role. Her main goal seems to be to not get fired. She's she is incredibly devoted to espousing whatever Musk wants her to. So she was also part of this weekend spin of turning this anti semitic tweet backlash into a backlash over the media matters and bogus reports from journalist.
What I love about this, though, is honestly she is trying. Her plan as far as I can tell, which Sarah was alluding to, is that they're going to just tack right. They see twenty twenty four election is coming. You got
a nice size conservative audience on X right now. I mean you know that we can we could have a debate about how big the audience is overall and what engagement is like, but it's definitely clear that you've got a lot of right wingers are spending a lot of time there, and so her plan seems to be to use this and to and to sell advertisements to you know,
political action committees and I guess candidates and nonprofits. Again, this is not a huge market, and Apple and these advertisers that are pulling out are huge advertisers, and it seems exceedingly unlikely that you would actually you would actually be able to make up the difference. On the other hand, maybe they don't need to because it's a much smaller company. They've laid off, you know, a huge amount of the staff costs the lower and you know you have this
like trickle of the debt of subscribers. I'm just trying to give you the Linda, you know, the best case scenario from Linda's pot of view.
Andrew Tate is going to like is going to advertise right like these right wing influencers are offering to sort of pay money.
Okay, but two things right wing influencers hate being on a platform where there are no left wing woke people to troll, and if there aren't any then they'll be bored. And the other thing is all of these advertisers who are pulling out and making this big statement of you know, we don't endorse anti Semitism. It's not that big of a deal for their balance sheets to pull out of Twitter advertising. It's not that effective. They have Meta, they
have Google, they have these other places to advertise. They don't need to be on Twitter. They were on Twitter because of the relationships and where it counts for Elon Musk in his government contracts, in his relationships with bankers. People aren't pulling up.
Okay, welcome back. So somehow X isn't even the biggest news story in the tech world right now. Open Ai a company that Elon started with Sam Altman before he would leave in a twenty eighteen power struggle Max, what exactly has it been facing? For the love of god, what is going on here?
Open ai is pretty much the hottest thing, or was until a few days ago, pretty much the hottest.
Thing in tech.
Open Ai created chat GPT, the the chatbot that that many people are very excited about, many companies are very excited about. And Microsoft, you know, one of the world's largest companies, has essentially put at the center of its of an entire like.
Corporate overhaul effort.
We should say, first of all, open Ai was co founded by Elon Musk or Elon Musk played a key role in the creation of the of this startup, was the main funder early on, and for years open AI's CEO Sam Altman, who was kind of Musk's partner in the in the creation of the of the entity, was going around saying this technology is so amazing, it could end the world, Like we really need to be careful here because Ai could take over and the robots could
somehow decide to annihilate the human race. And Elon Musk actually played a big role in kind of pumping.
Up this idea.
Now, I don't think that open AI's senior management, I don't think Microsoft, I don't think Sam Altman ever really took seriously the idea that open Ai was its little chatbot that can write an email for you, was going to turn around and annihilate the whole human race.
But that is the very argument that they apparently made here.
But crucially, unfortunately for Sam Altman, some open ai board members, I think, do really buy into that idea. And we had this amazingly sudden coup that happened on Friday where a number of open ai board members. Open ai was governed by a nonprofit. It's kind of a weird structure.
Voted Sam Altman off the island, fired him, and they were able to do so, strangely, without consulting any of the venture capitalists who I invested in this thing, and without consulting with Microsoft, which had put thirteen billion dollars into this thing.
You know, it's funny because I grew up journalistically in Latin America and I witnessed a lot of coups. Some worked, some didn't. This has got to be the worst coup I've seen since the two thousand and two attempt to ousto Goo jobs. It's been pretty bad. And right now as we speak, Sarah Friar, there's a mutiny going on inside open a open ai correct.
Yes, About ninety percent or above of the existing employees that open ai have signed a petition, by the way, including the chief scientist who is on the board, pushing out Sam Altman and Greg Brockman. These people have all signed this memo saying that if they aren't reinstated, they're out of there. Which is it? It's wild? Right?
Are all?
Is Microsoft going to end up acquiring open ai for like zero dollars, and you know the rest of this is in their hands. Are these leaders who were ousted going to come back and try to say businesses running as usual?
It is.
One of the craziest, Like people have compared it to like Steve Jobs getting kicked out of Apple and brought back, or Jack Dorsy is getting kicked out of Twitter and brought back. Those two situations happened over a matter of years. This is happening in a matter of days. So we're all not sleeping that much.
But I do think he played some role, right, which is what I want to get at, because you know, we don't ultimately know all should be revealed at some point, but you know, to a certain degree, Yeah, it is interesting without really knowing anything.
God, it seems like his fingerprints would be all over this. I mean, you told us the other day, Max that they Musk that Elon Musk Samultman rivalry was a top twenty Musk rub I had it. I think I.
Underrated it, right, I mean, clearly this was a bigger, more consequential rivalry than I had even at Yeah, last week we talked about Elon Musk going on the Lex Friedman podcast and he said a few things that kind of anticipated this. He brought up ilias suit Skiver, the chief scientist uh and and basically took credit for hiring him, and heaped a lot of praise on him, and and also made a kind of complaint about Sam Altman open AI. He said, open a I was supposed to be open source,
and now it's profitable. He's been complaining for years that this is like a startup worth billions of dollars that he founded as a nonprofit. And what we saw with the board, right was this effort to take this startup, take this thing that Microsoft is so excited about, that venture capitalists are so excited about, and wrestle it back to its nonprofit roots, which you know, does two things for for Elon Musk. One is it validates this thing that he's been saying he can he can claim to
be right, which he loves to do. And also it kind of does him a favor because Elon Musk just launched this kind of haphazard chant of Rock. Yes, I'm saying, and I regret to say, I know that Grock has its defenders and everything like that, but basically this thing Rock was assembled in a matter of months, there's Yeah, I'd say there's a little excitement among Elon's fans, but I don't think it's exactly caught fire. But now all of a sudden you have this utter crisis at the
leading player. I mean, I think that could only help Elon Musk, either in terms of recruiting or just in terms of getting people to try a different chatbox.
Right now, one other thing on this, Sarah, do we have any sense right because indeed, as maxis said here, Elon played a role in the founding of open Ai.
He was the co founder. He put one hundred million of his own money into it. He tried to take full control at some point and that didn't work out. But he was very passionate about trying to prevent AI from getting out of control. And of course this narrative of like, we've got to prevent AI from taking over is also somewhat self serving because it's like the only one who can save you from it is me.
We should also say, for future feud watching potential Musk weighing in here, Musk, you know, hinting darkly that there must have been something going on that the public needs to know about. That is a big problem for Microsoft, which is like really trying to just clean up this mess, and it's a big problem for the venture capitalists who
invested in open Ai. I mean, part of what makes this whole thing so wild is that is that, like overnight, this incredibly valuable startup that all of these very powerful people were sort of banking on is getting taken apart.
Right, It's amazing, Max, this thing went from apparently a value of eighty six billion dollars to perhaps zero in seconds. It's one hundred percent, right, It's a staggering if it really goes down this way.
Yeah, it's not going to go down to zero, but at least I don't think it will.
That's the thing, Max, This tension, these relationships, they all go way back. Elon Musk has known Sam Altman forever. Sam Altman, by the way, was in the first Y Combinator class with Emmett Sheer, who's now the CEO taking over maybe on an interim basis, we don't know for open Ai.
All these here, Sarah Emmit, Sarah Sheer is just simply sitting in that position, keeping it warm until I think, as you once said, until Elon Musk takes that seat.
Oh gosh, Yeah, Thanksgivings coming up. One thing I'm grateful for is that that Elon Musk didn't end up getting that CEO role over the weekend.
Hey, note that we're recording this on Tuesday afternoon, and this is a very quickly developing story. The latest here is that Altman is apparently now in talks to return to open Ai Crazy times. So before we head into our final segment here, we should mention that the SpaceX starship launch that we previewed last week did indeed happen on Saturday, and alas ended in flames. The flames, though, came a little later than the last time on these things went up in space, so Elon is a touch
closer to that Mars colony he's dreaming of. If you want to know what's at stake with the launch and all those going forward, picture to check out last week's spot. Thanksgiving is just two days away, everyone, and our thoughts here at least as always turned to the Musk family table. In the past, it's been a pretty raucous and wild event. Max. Paint us a picture here. What's it going to be like this year?
I feel like all Thanksgiving dinners to some extent are exercises in like avoiding politics, and you're just trying to like sit there with your family just.
Like hoping head down, just can't avoid it. And so I mean, I imagine it's kind of the same situation, except it's all of them just hoping that Elon will, like you do, not go on a wokeness rant, which I again like that feels like a common Thanksgiving tableau kind of brings everyone down, And I imagine that could that's you know, almost inevitability, and the real the only question is how do they kind of steer away from it?
Well, listen, the one thing that I'm hoping for this Thanksgiving is so that Sarah Friar can get some rest and that there isn't some like enormous open ai slash x news on Thursday morning.
Okay, let's help.
All Right, that's it. Thanks for listening to Elon, Inc. And thanks to our panel Sarah, Dana Max.
Great to be here, have a great week.
Thanks all.
This episode was produced by Stacy Wong, Naomi Shaven and Rayhan Harmancia are senior editors. The idea for this very show also came from Rayhon Blake Maples handles engineering, and we get special editing assistant from Jeff Gropat. Our supervising producer is Magnus Hendrickson, Thanks a bunch of Angel Rascio and to BusinessWeek editor Weber as well. The Elon Inc. Theme is written and performed by Taka Yasuzawa and Alex Sugiira. Sage Bauman is the head of Bloomberg Podcast and our
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