Finimize - 💔 Google's big breakup

What’s going on here?

The US Department of Justice (DoJ) came out swinging this week, recommending that Google be forced to sell its Chrome browser.

What does this mean?

US federal court set the stage for this showdown over the summer, ruling Google’s search monopoly illegal. Now the country’s top law enforcement agency and a group of US states have come back with a one-two punch of recommendations. First: sell Chrome. Second: either sell its Android mobile phone operating system or stop making its search, mapping, and other services mandatory on the devices that run on Android. And, as a final, bruising blow, the DoJ is asking that Google be required to let website publishers opt out of having their data used to train the tech giant’s increasingly essential AI models.

Why should I care?

For markets: On the ropes.

Google rules search with a massive 88% market share – and it uses it to collect customer data that fuels its ad-driven revenue machine. A breakup could open the door for rival search engines and complicate the firm’s AI ambitions – all while this $2 trillion firm’s search dominance is already facing pressure from AI challengers like Perplexity and OpenAI.

The bigger picture: Misery loves company.

Google’s not the only tech behemoth being threatened with an unhappy split. US regulators have also turned their antitrust gaze to Apple, Microsoft, Meta, and Amazon. And the upcoming change in the White House isn’t likely to offer any reprieve: Republicans have generally supported the antitrust claims against Big Tech. In fact, the case against Google was filed in 2020, during the president-elect’s first term in office.

What’s going on here?

Elon Musk’s artificial intelligence startup, xAI, had investors chattering on Thursday, announcing that it had raised $5 billion in a funding round valuing the firm at $50 billion.

What does this mean?

That’s more than double the value the upstart boasted back in May when it raised $6 billion in funding to put its overall price tag at $24 billion. The firm will need deep pockets to catch up in this industry: xAI was founded just a year ago, well behind several rivals – not least of which is OpenAI, the ChatGPT creator that Musk helped co-found back in 2015. And developing the computer power to train AI models and build the infrastructure won’t come cheap. After all, it’s going to require stacks of Nvidia’s high-priced, essential chips and other expensive gear. But, the word on the street is that xAI is raking in $100 million a year in revenue to pay for it, thanks to the Grok chatbot used by premium members of Musk’s X social platform and some business customers. And the chatbot’s upgraded version is set for launch next month.

Why should I care?

For markets: AI’s golden touch.

AI is the hottest investment trend in markets right now, and there are plenty of winners beyond the much-adored belle of the ball, Nvidia. Companies that equip data centers have seen demand skyrocket – including the advanced cooling systems that keep the whole thing from overheating. And, as power-hungry AI systems drive up electricity demands, nuclear energy is staging a major comeback. It’s no wonder: those data centers alone could chug nearly 9% of all US electricity output by 2030.

The bigger picture: Spend, spend, spend.

With companies shelling out so much money on AI – and with few returns to show for it – investors are beginning to drum their fingers in frustration. Still, Nvidia’s order books are bulging. And companies like xAI are only adding to the AI frenzy.