Kurt Wagner and Katie Roof, Bloomberg:

Elon Musk said his xAI artificial intelligence startup has acquired the X platform, which he also controls, at a valuation of $33 billion, marking a surprise twist for the social network formerly known as Twitter.

This feels like it has to be part of some kind of financial crime, right? Like, I am sure it is not; I am sure this is just a normal thing businesses do that only feels criminal, like how they move money around the world to avoid taxes.

Wagner and Roof:

The deal gives the new combined entity, called XAI Holdings, a value of more than $100 billion, not including the debt, according to a person familiar with the arrangement, who asked not to be identified because the terms weren’t public. Morgan Stanley was the sole banker on the deal, representing both sides, other people said.

For perspective, that is around about the current value of Lockheed Martin, Rio Tinto — one of the world’s largest mining businesses — and Starbucks. All of those companies make real products with real demand — unfortunately so, in the case of the first. xAI has exactly one external customer today. And it is not like unpleasant social media seems to be a booming business.

Kate Conger and Lauren Hirsch, New York Times:

This month, X continued to struggle to hit its revenue targets, according to an internal email seen by The New York Times. As of March 3, X had served $91 million of ads this year, the message said, well below its first-quarter target of $153 million.

This is including the spending of several large advertisers. For comparison, in the same quarter in the pre-Musk era, Twitter generated over a billion dollars in advertising revenue.

I am begging for Matt Levine to explain this to me.

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X on Wednesday announced a new set of terms, something which is normally a boring and staid affair. But these are a doozy:

Here’s a high-level recap of the primary changes that go into effect on November 15, 2024. You may see an in-app notice about these updates as well.

• Governing law and forum changes: For users residing outside of the European Union, EFTA States, and the United Kingdom, we’ve updated the governing law and forum for lawsuits to Texas as specified in our terms. […]

Specifically, X says “disputes […] will be brought exclusively in the U.S. District Court for the Northern District of Texas or state courts located in Tarrant County, Texas, United States”. X’s legal address is on a plot of land shared with SpaceX and the Boring Company near Bastrop, which is in the Western District. This particular venue is notable as the federal judge handling current X litigation in the Northern District owns Tesla stock and has not recused himself in X’s suit against Media Matters, despite stepping aside on a similar case because of a much smaller investment in Unilever. The judge, Reed O’Connor, is a real piece of work from the Federalist Society who issues reliably conservative decisions and does not want that power undermined.

An investment in Tesla does not necessarily mean a conflict of interest with X, an ostensibly unrelated company — except it kind of does, right? This is the kind of thing the European Commission is trying to figure out: are all of these different businesses actually related because they share the same uniquely outspoken and influential figurehead? Musk occupies such a particularly central role in all these businesses and it is hard to disentangle him from their place in our society. O’Connor is not the only judge in the district, but it is notable the company is directing legal action to that venue.

But X is only too happy to sue you in any court of its choosing.

Another of the X terms updates:

• AI and machine learning clarifications: We’ve added language to our Privacy Policy to clarify how we may use the information you share to train artificial intelligence models, generative or otherwise.

This is rude. It is a “clarifi[cation]” described in vague terms, and what it means is that users will no longer be able to opt out of their data being used to train Grok or any other artificial intelligence product. This appears to also include images and video, posts in private accounts and, if I am reading this right, direct messages.

Notably, Grok is developed by xAI, which is a completely separate company from X. See above for how Musk’s companies all seem to bleed together.

• Updates to reflect how our products and services work: We’ve incorporated updates to better reflect how our existing and upcoming products, features, and services work.

I do not know what this means. There are few product-specific changes between the old and new agreements. There are lots — lots — of new ways X wants to say it is not responsible for anything at all. There is a whole chunk which effectively replicates the protections of Section 230 of the CDA, you now need written permission from X to transfer your account to someone else, and X now spells out its estimated damages from automated traffic: $15,000 USD per million posts every 24 hours.

Oh, yeah, and X is making block work worse:

If your posts are set to public, accounts you have blocked will be able to view them, but they will not be able to engage (like, reply, repost, etc.).

The block button is one of the most effective ways to improve one’s social media experience. From removing from your orbit people who you never want to hear from for even mundane reasons, to reducing the ability for someone to stalk or harass, its expected action is vital. This sucks. I bet the main reason this change was made is because Musk is blocked by a lot of people.

All of these changes seem designed to get rid of any remaining user who is not a true believer. Which brings us to today.

Sarah Perez, TechCrunch:

Social networking startup Bluesky, which just reported a gain of half a million users over the past day, has now soared into the top five apps on the U.S. App Store and has become the No. 2 app in the Social Networking category, up from No. 181 a week ago, according to data from app intelligence firm Appfigures. The growth is entirely organic, we understand, as Appfigures confirmed the company is not running any App Store Search Ads.

As of writing, Bluesky is the fifth most popular free app in the Canadian iOS App Store, and the second most popular free app in the Social Networking category. Threads is the second most popular free app, and the most popular in the Social Networking category.

X is number 74 on the top free apps list. It remains classified as “News” in the App Store because it, like Twitter, has always compared poorly against other social media apps.

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Gian Volpicelli and Samuel Stolton, Bloomberg:

Under the EU’s Digital Services Act, the bloc can slap online platforms with fines of as much as 6% of their yearly global revenue for failing to tackle illegal content and disinformation or follow transparency rules. Regulators are considering whether sales from SpaceX, Neuralink, xAI and the Boring Company, in addition to revenue generated from the social network, should be included to determine potential fines against X, people familiar with the matter said, asking not to be identified because the information isn’t public.

These are all businesses privately owned by Elon Musk; Tesla, as a publicly traded company, is reportedly not being factored into the calculation. According to a Bloomberg source, the Commission is trying to decide if they should be penalizing the owner of the business and not the business itself.

Matt Levine, in Bloomberg’s Money Stuff newsletter:

See, you’re not really supposed to do that: X is its own company, with its own corporate structure and owners; 6% of X’s revenue is 6% of X’s revenue, not 6% of the revenue of Musk’s other companies. But if everyone thinks of the Musk Mars Conglomerate as a single company, then there’s a risk that it will be treated that way.

I can see how the penalty formula should not be stymied by carefully structured corporations. There should be a way to fine businesses breaking the law, even if their ownership is obfuscated.

But that is not what is happening here. As reported, this seems like an overreach to me. Even though Musk himself disregards barriers between his companies, as Levine also documents, a penalty for the allegedly illegal behaviour of X should probably be levied only against X.

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