Tech Leaders Gather for an A.I. Week in Washington
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Elon Musk, Mark Zuckerberg and Sam Altman are among the moguls meeting with lawmakers to discuss how to regulate the fast-growing technology.
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By Andrew Ross Sorkin , Ravi Mattu , Bernhard Warner , Sarah Kessler , Michael J. de la Merced , Lauren Hirsch and Ephrat Livni
Sept. 13, 2023
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“This is an all-hands-on-deck moment for Congress,” Chuck Schumer, the Senate majority leader, said of formulating new artificial intelligence rules.
Credit... Shawn Thew/EPA, via Shutterstock
The race to regulate A.I.
Artificial intelligence is again in focus this week in Washington, as leading tech executives — including Elon Musk, Mark Zuckerberg, Sundar Pichai, Satya Nadella and Sam Altman — as well as labor leaders and civil society groups meet on Wednesday with lawmakers behind closed doors .
A meeting hosted by Senator Chuck Schumer of New York, the Democratic leader, comes after a series of public hearings in recent days, as lawmakers try to get to grips with a tech few of them fully understand. But not everyone is happy that talks are being held in private, and warn that the industry is being given too much sway in early discussions.
The gathering is the first of a series of Schumer’s listening sessions before lawmakers start writing rules. “This is an all-hands-on-deck moment for Congress—we need AI experts, ethicists, labor leaders, civil rights groups, the world of academia, defense and beyond helping us with the work ahead,” he wrote Tuesday on X , the social media platform formerly known as Twitter.
Other lawmakers are pushing ahead with their own initiatives. Two separate Senate hearings devoted to A.I. were held Tuesday and new proposals are being issued. Senator Richard Blumenthal, Democrat of Connecticut, and Senator Josh Hawley, Republican of Missouri, have suggested a framework that they hope will become legislation by the end of the year. It includes an independent office to oversee A.I., licensing and safety standards, and making executives liable for their tech.
Hawley criticized the private sessions and said he was concerned about the industry’s sway. He told The Times this week that the private meeting was “the biggest gathering of monopolists since the Gilded Age” and that it should be held in public.
Hawley added on Monday that this approach was repeating past mistakes. Congress “outsourced” oversight to tech companies when rules on social media were being developed, leading to “unmitigated disaster,” he said.
Other jurisdictions are coming up with their own methods. The European Union , whose rules often become templates for other regulators, expects its A.I. Act to be ratified by the end of 2023 and come into force in two or three years. It includes measures to make creators of A.I. liable for how their products are used.
China, meanwhile, is focused on controlling the information that A.I. models produce while trying to be competitive in the race with the United States to dominate the new tech.
What’s next? The Biden administration has said it is preparing an executive order to promote “responsible innovation,” but the timing is unclear. A White House official told DealBook that the companies understood that “they have a responsibility beyond innovation.”
Just as important: The rules may target limiting China’s ability to become a global leader in A.I. as much as containing how American companies develop it.
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HERE’S WHAT’S HAPPENING
Speaker Kevin McCarthy opens an impeachment inquiry into President Biden. The California Republican announced the investigation into the president’s knowledge of his son Hunter Biden’s business dealings. The decision is meant to appease far-right members of his party who are pushing for deep spending cuts that could lead to a government shutdown.
The European Union will investigate China over electric vehicle subsidies. Ursula von der Leyen, the president of the European Commission, said Brussels would look into whether Beijing was unfairly supporting the industry and distorting the market . Many of Europe’s carmakers have warned about Chinese imports, saying lower energy and labor costs give their rivals an advantage.
Apple unveils a new iPhone. The iPhone 15’s top model will cost $1,199 , a 9 percent price increase; all models have also switched to USB-C chargers. One analyst called the news “underwhelming” — but probably enough for some consumers to consider splurging on a replacement.
Gary Gensler is accused of pushing through new rules without enough consultation. Republican members of the Senate Banking Committee said that Gensler, the S.E.C. chair, had issued new security regulations without proper analysis of the economic effect . Gensler countered that the agency was enacting new rules at a slower pace than past administrations, and that it was giving the public ample time to respond.
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BP loses another C.E.O.
BP shares fell on Wednesday morning in London trading as investors reckoned with the unexpected resignation of the oil giant’s C.E.O. , Bernard Looney.
His departure is only the latest crisis for BP, which has seen three C.E.O.s resign abruptly over the past two decades. The company’s stock has trailed rivals since Russia’s full-scale invasion of Ukraine sent the price of crude oil skyward.
He left after an internal inquiry into his past relationships with colleagues, with the board finding that he hadn’t been “ fully transparent in his previous disclosures” about them during an earlier investigation. He’ll be replaced on an interim basis by Murray Auchincloss, the company’s C.F.O. and a veteran of the American oil producer Amoco, which BP acquired in 1998.
Looney bet big on the transition to clean energy. A BP lifer who came up through the company’s drilling business, he became C.E.O. in February 2020 just before the world was starting to enter coronavirus pandemic lockdowns that sent oil prices plummeting (and once entered negative territory ).
He plotted an aggressive net-zero strategy that climate hawks greeted with suspicion . Investors never quite bought into that vision either, forcing BP to backpedal recently on some of its more ambitious decarbonization goals.
While he never fully abandoned his green-transition message, he toned it down: In recent months, he had promoted an “and, not or” strategy of having BP lead in both pumping oil and investing in renewables.
Investors and analysts think BP will revert to its petroleum roots. While BP announced on Wednesday morning that it was investing $10.7 billion in low-carbon energy and electric vehicle charging solutions in Germany, industry watchers think it will refocus on carbon-intensive assets.
“I see this as a fundamental opportunity for BP to re-pivot back to its core skill set, which takes you far closer to the U.S. model” of focusing on the more profitable oil and gas exploration and refining businesses, David Hewitt, an analyst at the investment bank Liberum, told DealBook.
That could be accelerated by whomever BP picks as its new chief. Consider what happened at Shell, which — under a new C.E.O. and buoyed by bumper oil profits — told investors this summer it would step up oil production despite having made net-zero pledges. (The backpedaling has dismayed climate active investors.)
“BP has been the last man standing amongst the majors, driving forward the energy transition into renewables, and the market is thinking that Looney’s departure may change that stance,” Nadia Martin Wiggen, a director at the commodities-focused hedge fund Svelland Capital, told DealBook.
“Your honor, this is a monopolist flexing.”
— Kenneth Dintzer , the Justice Department’s lead courtroom lawyer in the antitrust trial over Google search. Opening arguments began on Tuesday, with Dintzer and his colleagues laying out their case about how the tech giant improperly paid billions to partners including Apple to promote its search engine over rivals’. Google’s lawyers argued that consumers had plenty of alternatives to choose from.
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TKO, the company that houses World Wrestling Entertainment and Ultimate Fighting Championship, saw its shares jump in its market debut.
Credit... Charles Krupa/Associated Press
What next for Ari Emanuel’s media empire?
Shares in TKO, the company created from the merger of the Ultimate Fighting Championship and World Wrestling Entertainment, rose on Tuesday in their market debut, reflecting investor interest in a live-entertainment business that unites the avid fan bases for mixed martial arts and pro wrestling.
That augurs well for the future of TKO. But the spinoff also raises questions about what’s next for the company’s parent, Endeavor, the entertainment conglomerate Ari Emanuel runs.
TKO is a bet on the future of entertainment. Sports is one of the hottest commodities in media, as streaming companies pay up for the exclusive rights for live events. Why? Fans are willing to spend money for the sports they love, and will flock to whichever service features them. (Disney’s Hotstar service in India is proof of that, bleeding customers after it lost the rights to show Indian Premier League cricket matches.)
Both parts of TKO have benefited from that trend: ESPN is paying $300 million a year to show U.F.C. fights through 2025, while NBCUniversal bid more than $1 billion to stream W.W.E. events through 2026. Endeavor executives expect TKO to keep riding that wave and they forecast earnings to surpass $1 billion within the next four years.
That puts more focus on Endeavor’s remaining businesses, especially the WME talent agency and the IMG sports and events division. (It also owns the Professional Bull Riders league and the Frieze Art Fair.) For years, Endeavor’s market capitalization was based largely on the value of U.F.C., not its agency business; it remains to be seen how the spinoff of TKO changes that math.
That said, Endeavor executives said they were pleased by the $7 billion valuation that Creative Arts Agency fetched in its sale to the French billionaire Francois-Henri Pinault. And Mark Shapiro, Endeavor’s president, told The Hollywood Reporter that his firm would benefit from its cut of TKO’s profits — and could use that cash to strike more deals and investments .
But Endeavor also faces challenges. It had bet big on packaging — a practice in which agencies sell movie or television projects as a bundle of talent (including directors, actors and writers whom they represented) as a lucrative source of fees — but eventually agreed to change course amid a fight with writers.
More recently, its industry is grappling with the writers’ and actors’ strikes that have shut down most Hollywood productions, leaving agents with less to do.
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THE SPEED READ
Deals
Birkenstock, the German sandal maker — sorry, “ footbed company ” — filed to go public in New York in an I.P.O. that could value the company at over $8 billion . (S.E.C. filing, Bloomberg)
How hedge funds who bet on the outcome of mergers got burned by Smurfit Kappa’s deal to buy WestRock , its paper and packaging rival. (Bloomberg Opinion)
Brian Shroder, the head of the crypto exchange Binance’s embattled U.S. unit , has left. (WSJ)
Policy
A top Senate Republican, John Cornyn of Texas, said that cuts to the corporate tax rate were unlikely even if Donald Trump were re-elected next year. (Semafor)
New York City’s pension funds sued Fox and its board, accusing the broadcaster of harming investors by leaving itself open to defamation lawsuits from the broadcasting of falsehoods about the 2020 election. (NYT)
Best of the rest
A decongestant ingredient in popular cold medicines doesn’t work , an F.D.A. advisory panel found, potentially forcing drug makers to reformulate their products. (NYT)
James Dolan has bet $2.3 billion on an already-ballyhooed Las Vegas arena featuring a giant orb — and it might become the future of entertainment. (Bloomberg Businessweek)
“Modi Wants to Make India a Chip-Making Superpower . Can He?” (NYT)
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We’d like your feedback! Please email thoughts and suggestions to dealbook@nytimes.com .
Andrew Ross Sorkin is a columnist and the founder and editor at large of DealBook. He is a co-anchor of CNBC’s "Squawk Box" and the author of “Too Big to Fail.” He is also a co-creator of the Showtime drama series "Billions." More about Andrew Ross Sorkin
Ravi Mattu is the managing editor of DealBook, based in London. He joined The New York Times in 2022 from the Financial Times, where he held a number of senior roles in Hong Kong and London. More about Ravi Mattu
Bernhard Warner joined the The Times in 2022 as a senior editor for DealBook. Previously he was a senior writer and editor at Fortune focusing on business, the economy and the markets. More about Bernhard Warner
Sarah Kessler is a senior staff editor for DealBook and the author of “Gigged,” a book about workers in the gig economy. More about Sarah Kessler
Michael de la Merced joined The Times as a reporter in 2006, covering Wall Street and finance. Among his main coverage areas are mergers and acquisitions, bankruptcies and the private equity industry. More about Michael J. de la Merced
Lauren Hirsch joined The Times from CNBC in 2020, covering deals and the biggest stories on Wall Street. More about Lauren Hirsch
Ephrat Livni reports from Washington on the intersection of business and policy for DealBook. Previously, she was a senior reporter at Quartz, covering law and politics, and has practiced law in the public and private sectors.  More about Ephrat Livni
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Advertisement. SKIP ADVERTISEMENT. DealBook Business and Policy. Supported by. SKIP ADVERTISEMENT. DealBook Newsletter. Elon Musk, Mark Zuckerberg and Sam Altman are among the moguls meeting with lawmakers to discuss how to regulate the fast-growing technology. Share full article. By Andrew Ross Sorkin , Ravi Mattu , Bernhard Warner , Sarah Kessler , Michael J. de la Merced , Lauren Hirsch and Ephrat Livni. Sept. 13, 2023. Image. Image. “This is an all-hands-on-deck moment for Congress,” Chuck Schumer, the Senate majority leader, said of formulating new artificial intelligence rules. Credit... Shawn Thew/EPA, via Shutterstock. The race to regulate A.I. Artificial intelligence is again in focus this week in Washington, as leading tech executives — including Elon Musk, Mark Zuckerberg, Sundar Pichai, Satya Nadella and Sam Altman — as well as labor leaders and civil society groups meet on Wednesday with lawmakers behind closed doors . A meeting hosted by Senator Chuck Schumer of New York, the Democratic leader, comes after a series of public hearings in recent days, as lawmakers try to get to grips with a tech few of them fully understand. But not everyone is happy that talks are being held in private, and warn that the industry is being given too much sway in early discussions. The gathering is the first of a series of Schumer’s listening sessions before lawmakers start writing rules. “This is an all-hands-on-deck moment for Congress—we need AI experts, ethicists, labor leaders, civil rights groups, the world of academia, defense and beyond helping us with the work ahead,” he wrote Tuesday on X , the social media platform formerly known as Twitter. Other lawmakers are pushing ahead with their own initiatives. Two separate Senate hearings devoted to A.I. were held Tuesday and new proposals are being issued. Senator Richard Blumenthal, Democrat of Connecticut, and Senator Josh Hawley, Republican of Missouri, have suggested a framework that they hope will become legislation by the end of the year. It includes an independent office to oversee A.I., licensing and safety standards, and making executives liable for their tech. Hawley criticized the private sessions and said he was concerned about the industry’s sway. He told The Times this week that the private meeting was “the biggest gathering of monopolists since the Gilded Age” and that it should be held in public. Hawley added on Monday that this approach was repeating past mistakes. Congress “outsourced” oversight to tech companies when rules on social media were being developed, leading to “unmitigated disaster,” he said. Other jurisdictions are coming up with their own methods. The European Union , whose rules often become templates for other regulators, expects its A.I. Act to be ratified by the end of 2023 and come into force in two or three years. It includes measures to make creators of A.I. liable for how their products are used. China, meanwhile, is focused on controlling the information that A.I. models produce while trying to be competitive in the race with the United States to dominate the new tech. What’s next? The Biden administration has said it is preparing an executive order to promote “responsible innovation,” but the timing is unclear. A White House official told DealBook that the companies understood that “they have a responsibility beyond innovation.” Just as important: The rules may target limiting China’s ability to become a global leader in A.I. as much as containing how American companies develop it. Image. HERE’S WHAT’S HAPPENING. Speaker Kevin McCarthy opens an impeachment inquiry into President Biden. The California Republican announced the investigation into the president’s knowledge of his son Hunter Biden’s business dealings. The decision is meant to appease far-right members of his party who are pushing for deep spending cuts that could lead to a government shutdown. The European Union will investigate China over electric vehicle subsidies. Ursula von der Leyen, the president of the European Commission, said Brussels would look into whether Beijing was unfairly supporting the industry and distorting the market . Many of Europe’s carmakers have warned about Chinese imports, saying lower energy and labor costs give their rivals an advantage. Apple unveils a new iPhone. The iPhone 15’s top model will cost $1,199 , a 9 percent price increase; all models have also switched to USB-C chargers. One analyst called the news “underwhelming” — but probably enough for some consumers to consider splurging on a replacement. Gary Gensler is accused of pushing through new rules without enough consultation. Republican members of the Senate Banking Committee said that Gensler, the S.E.C. chair, had issued new security regulations without proper analysis of the economic effect . Gensler countered that the agency was enacting new rules at a slower pace than past administrations, and that it was giving the public ample time to respond. Image. BP loses another C.E.O. BP shares fell on Wednesday morning in London trading as investors reckoned with the unexpected resignation of the oil giant’s C.E.O. , Bernard Looney. His departure is only the latest crisis for BP, which has seen three C.E.O.s resign abruptly over the past two decades. The company’s stock has trailed rivals since Russia’s full-scale invasion of Ukraine sent the price of crude oil skyward. He left after an internal inquiry into his past relationships with colleagues, with the board finding that he hadn’t been “ fully transparent in his previous disclosures” about them during an earlier investigation. He’ll be replaced on an interim basis by Murray Auchincloss, the company’s C.F.O. and a veteran of the American oil producer Amoco, which BP acquired in 1998. Looney bet big on the transition to clean energy. A BP lifer who came up through the company’s drilling business, he became C.E.O. in February 2020 just before the world was starting to enter coronavirus pandemic lockdowns that sent oil prices plummeting (and once entered negative territory ). He plotted an aggressive net-zero strategy that climate hawks greeted with suspicion . Investors never quite bought into that vision either, forcing BP to backpedal recently on some of its more ambitious decarbonization goals. While he never fully abandoned his green-transition message, he toned it down: In recent months, he had promoted an “and, not or” strategy of having BP lead in both pumping oil and investing in renewables. Investors and analysts think BP will revert to its petroleum roots. While BP announced on Wednesday morning that it was investing $10.7 billion in low-carbon energy and electric vehicle charging solutions in Germany, industry watchers think it will refocus on carbon-intensive assets. “I see this as a fundamental opportunity for BP to re-pivot back to its core skill set, which takes you far closer to the U.S. model” of focusing on the more profitable oil and gas exploration and refining businesses, David Hewitt, an analyst at the investment bank Liberum, told DealBook. That could be accelerated by whomever BP picks as its new chief. Consider what happened at Shell, which — under a new C.E.O. and buoyed by bumper oil profits — told investors this summer it would step up oil production despite having made net-zero pledges. (The backpedaling has dismayed climate active investors.) “BP has been the last man standing amongst the majors, driving forward the energy transition into renewables, and the market is thinking that Looney’s departure may change that stance,” Nadia Martin Wiggen, a director at the commodities-focused hedge fund Svelland Capital, told DealBook. “Your honor, this is a monopolist flexing.” — Kenneth Dintzer , the Justice Department’s lead courtroom lawyer in the antitrust trial over Google search. Opening arguments began on Tuesday, with Dintzer and his colleagues laying out their case about how the tech giant improperly paid billions to partners including Apple to promote its search engine over rivals’. Google’s lawyers argued that consumers had plenty of alternatives to choose from. Image. TKO, the company that houses World Wrestling Entertainment and Ultimate Fighting Championship, saw its shares jump in its market debut. Credit... Charles Krupa/Associated Press. What next for Ari Emanuel’s media empire? Shares in TKO, the company created from the merger of the Ultimate Fighting Championship and World Wrestling Entertainment, rose on Tuesday in their market debut, reflecting investor interest in a live-entertainment business that unites the avid fan bases for mixed martial arts and pro wrestling. That augurs well for the future of TKO. But the spinoff also raises questions about what’s next for the company’s parent, Endeavor, the entertainment conglomerate Ari Emanuel runs. TKO is a bet on the future of entertainment. Sports is one of the hottest commodities in media, as streaming companies pay up for the exclusive rights for live events. Why? Fans are willing to spend money for the sports they love, and will flock to whichever service features them. (Disney’s Hotstar service in India is proof of that, bleeding customers after it lost the rights to show Indian Premier League cricket matches.) Both parts of TKO have benefited from that trend: ESPN is paying $300 million a year to show U.F.C. fights through 2025, while NBCUniversal bid more than $1 billion to stream W.W.E. events through 2026. Endeavor executives expect TKO to keep riding that wave and they forecast earnings to surpass $1 billion within the next four years. That puts more focus on Endeavor’s remaining businesses, especially the WME talent agency and the IMG sports and events division. (It also owns the Professional Bull Riders league and the Frieze Art Fair.) For years, Endeavor’s market capitalization was based largely on the value of U.F.C., not its agency business; it remains to be seen how the spinoff of TKO changes that math. That said, Endeavor executives said they were pleased by the $7 billion valuation that Creative Arts Agency fetched in its sale to the French billionaire Francois-Henri Pinault. And Mark Shapiro, Endeavor’s president, told The Hollywood Reporter that his firm would benefit from its cut of TKO’s profits — and could use that cash to strike more deals and investments . But Endeavor also faces challenges. It had bet big on packaging — a practice in which agencies sell movie or television projects as a bundle of talent (including directors, actors and writers whom they represented) as a lucrative source of fees — but eventually agreed to change course amid a fight with writers. More recently, its industry is grappling with the writers’ and actors’ strikes that have shut down most Hollywood productions, leaving agents with less to do. Image. THE SPEED READ. Deals. Birkenstock, the German sandal maker — sorry, “ footbed company ” — filed to go public in New York in an I.P.O. that could value the company at over $8 billion . (S.E.C. filing, Bloomberg) How hedge funds who bet on the outcome of mergers got burned by Smurfit Kappa’s deal to buy WestRock , its paper and packaging rival. (Bloomberg Opinion) Brian Shroder, the head of the crypto exchange Binance’s embattled U.S. unit , has left. (WSJ) Policy. A top Senate Republican, John Cornyn of Texas, said that cuts to the corporate tax rate were unlikely even if Donald Trump were re-elected next year. (Semafor) New York City’s pension funds sued Fox and its board, accusing the broadcaster of harming investors by leaving itself open to defamation lawsuits from the broadcasting of falsehoods about the 2020 election. (NYT) Best of the rest. A decongestant ingredient in popular cold medicines doesn’t work , an F.D.A. advisory panel found, potentially forcing drug makers to reformulate their products. (NYT) James Dolan has bet $2.3 billion on an already-ballyhooed Las Vegas arena featuring a giant orb — and it might become the future of entertainment. (Bloomberg Businessweek) “Modi Wants to Make India a Chip-Making Superpower . Can He?” (NYT) Image. We’d like your feedback! Please email thoughts and suggestions to dealbook@nytimes.com . Andrew Ross Sorkin is a columnist and the founder and editor at large of DealBook. He is a co-anchor of CNBC’s "Squawk Box" and the author of “Too Big to Fail.” He is also a co-creator of the Showtime drama series "Billions." More about Andrew Ross Sorkin. Ravi Mattu is the managing editor of DealBook, based in London. He joined The New York Times in 2022 from the Financial Times, where he held a number of senior roles in Hong Kong and London. More about Ravi Mattu. Bernhard Warner joined the The Times in 2022 as a senior editor for DealBook. Previously he was a senior writer and editor at Fortune focusing on business, the economy and the markets. More about Bernhard Warner. Sarah Kessler is a senior staff editor for DealBook and the author of “Gigged,” a book about workers in the gig economy. More about Sarah Kessler. Michael de la Merced joined The Times as a reporter in 2006, covering Wall Street and finance. Among his main coverage areas are mergers and acquisitions, bankruptcies and the private equity industry. More about Michael J. de la Merced. Lauren Hirsch joined The Times from CNBC in 2020, covering deals and the biggest stories on Wall Street. More about Lauren Hirsch. Ephrat Livni reports from Washington on the intersection of business and policy for DealBook. Previously, she was a senior reporter at Quartz, covering law and politics, and has practiced law in the public and private sectors.  More about Ephrat Livni. Share full article. Advertisement. SKIP ADVERTISEMENT.