Bytes: Week in Review - SpaceX and xAI merge, Nvidia and OpenAI's funding relationship and U.S. TikTok's rough start
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What does the SpaceX and xAI merger mean for the future of AI?
SpaceX plus XAI equals what exactly? From American Public Media, this is Marketplace Tech. I'm Stephanie Hughes.
It's Friday, time for Marketplace Tech Bytes Week in Review. Today, a look at NVIDIA's changing investment relationship with OpenAI, plus a stormy start for the new U.S. version of TikTok. But first, SpaceX, one of the world's largest rocket companies, announced this week it's buying XAI, a two-and-a-half-year-old artificial intelligence startup. Both companies are controlled by Elon Musk. The new company is reportedly valued at $1.25 trillion. It means the chatbot Grok, the satellite internet company Starlink, and the social media firm X are all going to coexist under the same rocket hangar.
How does Elon Musk's control impact the new AI venture?
I asked Paresh Dave, senior writer at Wired, what adding these companies together equals.
It equals a nice cozy home for XAI, which is losing a lot of money. And so Elon needed a way to sort of continue growing AI and developing the Grok chatbot. And this is sort of a cozy home where he can stash XAI within this big... what we think, at least on an adjusted profit basis, is a profitable venture in SpaceX because their Starlink business has been doing really well. And, you know, the business of putting rockets into space is also pretty good.
In his post about the deal, Musk talks up the need to develop space-based data centers to power AI. Does this merger get us any closer to that?
It does in the sense that to be successful, I was speaking to an investor recently who's really studied this idea of space data centers. And their point was to be successful, Starship needs to be successful. And that's the really big rocket that Elon Musk has been working on. They've launched it about a dozen times, a couple of successes, but there's still a lot to learn. And right now, estimates are that each of those rocket launches maybe cost over 100 million dollars. It's a lot of money that they need. And yes, while they have some money coming in the door from the Starlink business, there's an opportunity through an IPO to raise even more money. And it doesn't hurt to have that sort of AI business and the Rocket business together to raise even more money.
Yeah. So let's talk about that IPO. SpaceX is expected to go public this year. You know, so now you have a reportedly profitable rocket company wrapped around an AI company that's been burning through money, also getting in trouble for some of the things that Chatbot has been doing.
What challenges does OpenAI face with its funding from NVIDIA?
How does this acquisition complicate the SpaceX IPO?
Investors, I think, if anything, they're going to kind of be pleased with this because one of the biggest frustrations that we've heard over the years from Tesla, SpaceX, X investors, has been Elon is doing too much. He's taking on too much. He's not spending enough time with this company or this company. Kind of wrapping them together, Elon can kind of put away those concerns because it's hard to understand what he's doing when he's combined all the companies together. Like, is he going to buy up the Boring Company and put that inside SpaceX in a couple of years to reduce those distraction concerns even more?
Yeah. So I was wondering that, you know, when I think about all the things Elon Musk has to keep an eye on, you know, not just these two, but also Tesla, Neuralink, the Boring Company, I just feel tired. You know, I know he's the world's richest man and he has help, but I do wonder, is this him trying to simplify things? It could be.
It certainly simplifies some of the issues that have continued to dog him. And he has the benefit that some of the core investors of these companies are the same across the board. Tesla's unique because it's been public the longest. And so it'll be hard to sort of combine Tesla with anything, which is why Tesla and XAI continue to sort of have this like arm's length relationship while sharing data. And, you know, using the technology, they're kind of, you know, kept separate. But these other companies, very similar base of investors, it makes sense for Elon to bring them together, at least in his head.
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Chapters
8 chapters
1
What does the SpaceX and xAI merger mean for the future of AI?
0:01–0:52
2
How does Elon Musk's control impact the new AI venture?
0:52–2:45
3
What challenges does OpenAI face with its funding from NVIDIA?
2:45–4:32
4
What are the implications of NVIDIA's stalled investment in OpenAI?
4:32–6:01
5
How could the SpaceX IPO be affected by the xAI acquisition?
6:01–7:42
6
What issues are plaguing the new U.S. version of TikTok?
7:42–9:21
7
How does TikTok's cloud infrastructure affect its performance?
9:21–10:09
8
What does the future hold for TikTok after its rocky start?
10:09–10:25