OpenAI wants to go public
And: What’s a jet between friends?
Welcome to Cautious Optimism, a newsletter on tech, business, and power.
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OpenAI wants to go public
OpenAI is currently working to shake up its corporate structure while building a massive data center, opening regional hubs so that it can respect data sovereignty while selling its goods, dealing with tariffs, snapping up CEOs from other companies, and the like.
It’s a busy time.
The move to become a public-benefit corporation under a non-profit instead of a capped LLC under the same is drawing attention thanks to Microsoft. Redmond put a lot of capital into OpenAI when it needed — and more again later. Since the companies were working with a weird structure on the OpenAI side, Microsoft got spend, technology access, and potential profit from the deal.
Now, with OpenAI moving to a model that will allow it to offer equity in a more traditional sense, it has to renegotiate with Microsoft. A company that it has fallen out of bromance with.
Now, the two companies are — per the great reporters over at the FT — working out a deal that could see Microsoft earn access to OpenAI technologies past the initial 2030 timeline, for which Satya Nadella may be willing to accept fewer shares. The deal seems good for OpenAI, from where I sit. Unless OpenAI wants to compete directly with Microsoft. Then allowing a potential rival access to its crown jewels even further into the next decade may rankle.
But Microsoft has the cards here. The capital. And time. OpenAI needs Microsoft to come along, and Microsoft is itself worth trillions. So, leverage. I somewhat expect the two companies to remain friends long-term, with OpenAI taking on lots of consumer and general business use-cases with its technology, while Microsoft continues to dominate the enterprise sectors that it already does. Just with more AI.
That’s not a bad way to divvy up the world. Unless you, as OpenAI, think that the whole world should be yours, and you’d get away with it too —if it wasn’t for those meddling kids Softies.
The kicker is that OpenAI wants to list, the FT says. We here at CO also want that, so we’re pulling for a deal. Can you imagine the goodies that OpenAI’s S-1 filing would unearth?
It’s corruption and randomness, all the way down
The big news this morning is that the United States and China have come to an agreement to lower broad tariffs on one another. The US-China tariff rate will fall to 30% for 90 days, while China-US tariffs will decline to 10% for a period of 90 days.
Why not zero? As CNN notes, 20% “fentanyl-related levies on China, imposed in February and March” sticking around along with other duties.
Markets loved the news, as trade flows between the two nations were becoming more than a little strained. We managed to reach a point in which the number of ships heading from China to the United States zeroed out. Not good.
In response to Trump blinking on tariffs, stocks are higher. The Nasdaq is up nearly 3.8% in pre-market trading. Major indices are higher around the world today, which is welcome if you own equities. And since you read this newsletter, I know that you do. Congratulations to our collective net worth!
The bad news is that there is a lot of bad news. A 30% tariff rate between the two nations is still painfully elevated, and there’s no guarantee that after 90 days we won’t wind up right back where we were. And we’re on the clock regarding the other raft of “reciprocal” tariffs with the world that were also paused for 90 days.
Recall that we’re already more than a third of the way through the world-wide pause on so-called reciprocal tariffs.
Expect trade data to stay lumpy, as businesses lurch to follow the random sharp-turns that international business has been forced to endure all year continues. Now, companies have to choose between overbuying for 90 days to hedge against a possible rebound in trade fees — or not, and simply roll the dice that tariffs won’t climb yet again.
Damned if you do (hoarding isn’t cheap), damned if you don’t (excessive business risk).
The good news is that while POTUS pushes the stock market and global economy like my two-year old attacking whatever I have built for her out of blocks, he’s also executing one of the most corrupt transactions in American Presidential history:
Qatar royal family intends to gift a “superluxury Boeing 747-8 jumbo jet” to POTUS to use while President, after which it will be “transferred to the Trump presidential library foundation.”
Can a President accept a $300 million gift? Views vary. Those inside the administration seem to think so:
Sources told ABC News that Attorney General Pam Bondi and Trump's top White House lawyer David Warrington concluded it would be "legally permissible" for the donation of the aircraft to be conditioned on transferring its ownership to Trump's presidential library before the end of his term, according to sources familiar with their determination.
That AG Bondi was once a former lobbyist for the Qatari government certainly plays no role here, I presume. And don’t forget that back in 2017, Trump accused the Qataris of funding terrorism.
I understand the transaction from Trump’s perspective. He’s a king. Qatar has a king. One king is giving another king something nice. Nothing weird there. And as POTUS fancies himself POTWorld, what’s a jet between friends?
Note here that even some of Trump’s most zealous venture advocates are not pleased by the plane concept. Some less-Trump aligned investors including Trace Cohen and Josh Wolfe also made noise.
The VC I spend the most time with — Jason Calacanis, with whom I podcast — added the following in response to Shaun Maguire’s original tweet calling out the grift:
For those of us dedicated to liberal democracy, this is a hot mess. Loose ties between Qatar and Trump are not new. Recall that the Qatari royal family put $50 million into Newsmax back in 2024, giving the pro-Trump outlet lots of cash to keep doing what it does. Which is this.
The WSJ has a great rundown of the Trump family’s current sheaf of business in the Middle East. I mean, just read this:
This newsletter is focused on tech, business, and power. Here we see two of the three at work. I think to the detriment of the first. Because the United States wins in a global market where competition is fair. I wonder if we’ll do as well under a system in which a handful of elderly men who do whatever they want, whenever they want, business climate be damned.
Much ado about copyright
At the intersection of power and technology, there’s also a lot going on. I apologize for having to cover politics so much lately, but as the current administration seems hellbent to impact every inch of business, here we are.
POTUS fired Shira Perlmutter, the head of the U.S. Copyright Office, it was reported over the weekend. The timing is notable, coming right after she released a report on AI that, CBS News summarizes, “expressed some concerns and questions about the usage of copyrighted materials by AI technology.”
Recall that POTUS has drafted political points off of OpenAI’s big datacenter plans, and he is close with Elon Musk, who also owns an AI company.
So, what is in the report in question? You can read the whole thing here, which goes over not only how genAI works, but a series of pertinent court cases and outside input on the copyright matter. It’s a good read.
However, the brief does not come down cleanly on one side of the debate or another. Instead, read this summary of argument from page 74 (emphasis added):
As generative AI involves a spectrum of uses and impacts, it is not possible to prejudge litigation outcomes. The Office expects that some uses of copyrighted works for generative AI training will qualify as fair use, and some will not. On one end of the spectrum, uses for purposes of noncommercial research or analysis that do not enable portions of the works to be reproduced in the outputs are likely to be fair. On the other end, the copying of expressive works from pirate sources in order to generate unrestricted content that competes in the marketplace, when licensing is reasonably available, is unlikely to qualify as fair use. Many uses, however, will fall somewhere in between.
This is a big statement. Recall that Meta used pirated data for its own AI model training. If that is not fair use, then Meta could be in legal trouble. And, I reckon, other AI model companies that have done the same but not been forced to admit it.
If you are POTUS and friends with AI folks, the above conclusion is likely not welcome. So, out goes the head. Along with the head of the Library of Congress. What a mess.
I suppose you could argue that it’s good for US AI competitiveness to obviate intellectual property rights. But we’re not. We’re on the cusp of doing away with the intellectual property rights of creatives, not corporates, at the behest of the latter to the detriment of the former.
My internal realpolitik wants us to win in AI no matter the cost; at the same time, if we start cutting off our own body parts to run faster, will we arrive at the finish line recognizable?