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You can't outrun the law forever

In Brazil, Elon Musk finally has a case worth fighting — but he has to do it in the courts

Casey Newton

Starlink, the satellite broadband company led by Elon Musk, said on Tuesday that it would comply with a court order and block access to X in Brazil. It marked yet another surprising twist in a wild saga that has been simmering all year but boiled over this weekend when a Brazilian judge single-handedly moved to ban X in the country.

Today let’s talk about how a personality clash between two powerful men led to tens of millions of Brazilians being prevented from accessing X — and how the move could be used to justify further restrictions on internet freedom around the world.  

In April, I wrote about how Musk had decided to risk a ban of X in Brazil over a court’s order that the platform ban a number of accounts belonging to right-wing users. Musk decided to restore the accounts in defiance of a powerful Supreme Court justice named Alexandre de Moraes, who subsequently opened an inquiry into the billionaire.

Musk, who has said he bought Twitter to turn the platform into a bulwark of free speech, positioned the move as a defense of liberty against an extremist government. Moraes, for his part, called Musk an “outlaw” whose X would “allow the massive spread of disinformation, hate speech and attacks on the democratic rule of law, violating the free choice of the electorate, by keeping voters away from real and accurate information.”

After Musk’s April outburst, X quickly reversed course, and said it would comply with the judge’s order. But the accounts that Moraes sought to terminate remained active, and last month X said he threatened to arrest a local employee for the platform’s failure to comply with his order. (The court wouldn’t comment, but threatening platform employees with jail time is an increasingly common and typically quite effective means of allowing government agents to moderate content as they see fit.) 

Typically, threatening an employee with jail is all it takes to get a company to reverse course. Musk, on the other hand, said X would close its offices in Brazil.

On Friday, Moraes met that dramatic escalation with one of his own. Here are Jack Nicas and Kate Conger in the New York Times:

In a highly unusual move, Justice Moraes also said that any person in Brazil who tried to still use X via common privacy software called a virtual private network, or VPN, could be fined nearly $9,000 a day.

Justice Moraes also froze the finances of a second Musk business in Brazil, SpaceX's Starlink satellite-internet service, to try to collect $3 million in fines he has levied against X. Starlink — which has recently exploded in popularity in Brazil, with more than 250,000 customers — said that it planned to fight the order and would make its service free in Brazil if necessary.

Moreover, while he quickly reversed course, Moraes initially ordered Apple and Google to block X at the level of the app store in Brazil, as well as blocking VPN apps that let users circumvent geographic barriers to app usage.

While moves like these are common in authoritarian countries such as Russia or China, they are extraordinary to see in democracies, which typically place a higher value on free expression.

In any case, the fallout from Moraes’ ban was swift. Countless fan and meme pages went silent. Bluesky added 2 million users, and Threads saw some lift as well. (They are currently the No. 1 and 2 apps respectively in the Brazilian App Store, per Similarweb.) 

And depending on how long the ban lasts, it will likely degrade even further the value of X, which a new analysis over the weekend found had lost an estimated $24 billion in value since Musk acquired Twitter in 2022.

What makes the story of Brazil and X such an unusual tech policy story is the way it has been driven almost entirely by two people. 

On one side is Musk, who has often claimed the mantle of free speech warrior in public while capitulating to government requests in private. One analysis last year found that under Musk, X had given into 83 percent of requests from authoritarian governments to remove content. And he appears more willing to accede to the requests of right-wing governments, such as India’s.

In 2021, it seemed possible that India would be the first democracy to ban Twitter, after the company fought court orders to remove political dissent — including from left-wing opponents to the government of Narendra Modi. But relations have warmed between Musk and the Modi government since he stopped fighting those battles.

“The rules in India for what can appear on social media are quite strict, and we can’t go beyond the laws of a country,” Musk told the BBC last year. “If we have a choice of either our people go to prison or we comply with the laws, we will comply with the laws.” At another point in the interview, Musk said: “If people of a given country are against a certain type of speech, they should talk to their elected representatives and pass a law to prevent it.”

Brazil once again gave Musk the choice of sending an employee to prison or complying with its laws. This time, he chose not to comply.

Musk’s defiance likely would have sparked a backlash in most countries where X operates. But he has found a particularly pugnacious opponent in Moraes, a hugely powerful and controversial figure within Brazilian politics who came to prominence during the tenure of former president Jair Bolsonaro. Bolsonaro, a Trump-like figure who threatened to undermine Brazil’s democracy, lost the 2022 election and left office after a violent riot at the capitol by his supporters last year.

Both during and since Bolsonaro’s presidency, Moraes has used the unusual powers of his office to order people arrested over their social media posts, account bans on the platforms where they posted, and even temporarily removing a governor from office. At X, he has sought the removal of at least 140 accounts, the Times reported, and often delivers his orders in sealed documents that do not specify any rationale for his decision.

Moraes is not the first government agent to make overbroad legal requests of a tech platform. Google, Meta, and other companies receive thousands of requests like these every year, and disclose them in aggregate in annual transparency reports. The reason they publish those reports is to serve as a check on governments that seek to abuse their power by seeking information from platforms for surveillance and other potentially problematic uses.

Crucially, Google and Meta also fight against overbroad requests in court. Sometimes, they win. The result is a kind of dance between platforms and governments that leaves everyone at least somewhat disappointed but is also the reason that so many people around the world can speak freely online.

I don’t post on X any more myself, and I will not lament its passing when it disappears. But whatever role the 140 X accounts in question in Brazil may have played in threatening Brazil’s democracy, they cannot have threatened it more than silencing the 20 million or so Brazilians who have been using it regularly. Particularly when Brazil’s move will be seen by autocracies as justification to enact ever more onerous speech restrictions of their own.

Like Pavel Durov before him, Musk appears to have thought he could escape the reach of regulators indefinitely. This weekend, he began to learn the same lesson Durov has: you can’t outrun the legal system forever. Had Musk fought for his users in court earlier, he might have avoided a ban. Instead, as he has before in so many other things, Musk chose to do it the hard way.

Casey Newton writes Platformer, a daily guide to understanding social networks and their relationships with the world. This piece was originally published on Platformer.

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Paramount doesn’t improve its offer for Warner Bros., leaving its fate to a long-shot shareholder appeal

Paramount Skydance on Thursday reaffirmed its $30-per-share offer to buy Warner Bros. Discovery, again stating that it believes the offer to be superior to rival Netflix’s.

In a press release, Paramount said its last amendment to the offer — which included a $40.4 billion personal guarantee from Larry Ellison, the father of Paramount CEO David Ellison — “cured every issue raised by WBD.”

The problem: Warner Bros.’ board on Wednesday unanimously voted to reject that offer, its sixth rejection of a Paramount takeover and second rejection of this specific $30-per-share bid. Warner’s board stated that it believes Paramount’s offer to be inferior to Netflix’s due in part to an “extraordinary amount of debt financing” and lower effective termination fees should the deal not clear the regulatory process.

By not improving the bid, Paramount is effectively leaving the deal in the hands of Warner Bros.’ shareholders, who will have to weigh the bids and the multiple rejections. Event contracts show a moderate boost in Parmount’s odds to end up in control of WBD on Thursday morning, jumping to 31% as of 9:30 a.m. ET, up from 27% at 9:00 a.m. ET.

(Event contracts are offered through Robinhood Derivatives, LLC — probabilities referenced or sourced from KalshiEx LLC or ForecastEx LLC.)

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Warner Bros. Discovery’s board tells shareholders to turn down Paramount’s “inadequate” hostile bid

Warner Bros. Discovery has told shareholders to reject Paramount’s hostile takeover bid, with the company releasing a statement early Wednesday urging shareholders to take the Netflix offer on the table. WBD’s board of directors said the outcome of the Netflix deal is “extraordinary by any measure.”

Paramount’s offer, in contrast, was described in the letter as “illusory,” providing “inadequate value,” and likely to impose “numerous, significant risks and costs on WBD.” The board said Paramount has “misled WBD shareholders that its proposed transaction has a ‘full backstop’ from the Ellison family,” and the board also outlined that it doesn’t believe there is a “material difference in regulatory risk between the PSKY offer and the Netflix merger.”

WBD shares dipped in the minutes leading up to the market close on Tuesday after news leaked that its management was preparing to encourage shareholders to reject Paramounts bid, and shares of the HBO parent were down at $28.66, off 0.83% from yesterday’s close, as of 7:56 a.m. ET on Wednesday. Netflix was ticking higher, up around 1.7%, and Paramount Skydance was modestly in the red, down 1%.

Several outlets have reported that Jared Kushners firm would back out of the group that had been assembled to help finance the Paramount bid. Confirming this withdrawal, a spokesperson for the firm helmed by the president’s son-in-law told NBC News that “the dynamics ​of the investment have changed significantly ​since we initially became ​involved ​in October.”

Analysts this month have said that a renewed bidding war for Warner Bros. seems “inevitable” given the antitrust concerns surrounding Netflix’s potential acquisition. President Trump on Tuesday appeared to distance himself from speculation around his closeness to Paramount’s owners, posting on Truth Social, “If they are friends, I’d hate to see my enemies!”

Warner’s attempt to influence its shareholders could fuel a higher bid from Paramount in the coming weeks — shareholders currently have until January 8 to decide whether to accept the current offer.

Paramount’s offer, in contrast, was described in the letter as “illusory,” providing “inadequate value,” and likely to impose “numerous, significant risks and costs on WBD.” The board said Paramount has “misled WBD shareholders that its proposed transaction has a ‘full backstop’ from the Ellison family,” and the board also outlined that it doesn’t believe there is a “material difference in regulatory risk between the PSKY offer and the Netflix merger.”

WBD shares dipped in the minutes leading up to the market close on Tuesday after news leaked that its management was preparing to encourage shareholders to reject Paramounts bid, and shares of the HBO parent were down at $28.66, off 0.83% from yesterday’s close, as of 7:56 a.m. ET on Wednesday. Netflix was ticking higher, up around 1.7%, and Paramount Skydance was modestly in the red, down 1%.

Several outlets have reported that Jared Kushners firm would back out of the group that had been assembled to help finance the Paramount bid. Confirming this withdrawal, a spokesperson for the firm helmed by the president’s son-in-law told NBC News that “the dynamics ​of the investment have changed significantly ​since we initially became ​involved ​in October.”

Analysts this month have said that a renewed bidding war for Warner Bros. seems “inevitable” given the antitrust concerns surrounding Netflix’s potential acquisition. President Trump on Tuesday appeared to distance himself from speculation around his closeness to Paramount’s owners, posting on Truth Social, “If they are friends, I’d hate to see my enemies!”

Warner’s attempt to influence its shareholders could fuel a higher bid from Paramount in the coming weeks — shareholders currently have until January 8 to decide whether to accept the current offer.

power
Jon Keegan

Senators open investigation into data centers’ effect on consumer utility bills

As Big Tech builds more and more massive data centers in small towns around the country, the public is starting to ask questions about whether they are to blame for rising utility bills.

Today Sens. Elizabeth Warren (D-MA), Chris Van Hollen (D-MD), and Richard Blumenthal (D-CT) sent letters to the CEOs of some of the biggest builders of data centers: Meta, Microsoft, Amazon, Google, CoreWeave, Digital Realty, and Equinix.

The senators wrote:

“Utility companies have spent billions of dollars updating the electrical grid to accommodate the unprecedented energy demands of AI data centers and appear to recoup the costs by raising residential utility bills. Through these utility price increases, American families bankroll the electricity costs of trillion-dollar tech companies.”

Electricity prices in the US are indeed up, rising 6.2% since last year. A recent Bloomberg analysis found that ratepayers within 50 miles of data centers saw rates increase up to 276% over the past five years.

The companies have until January 12, 2026, to respond to the senators.

The senators wrote:

“Utility companies have spent billions of dollars updating the electrical grid to accommodate the unprecedented energy demands of AI data centers and appear to recoup the costs by raising residential utility bills. Through these utility price increases, American families bankroll the electricity costs of trillion-dollar tech companies.”

Electricity prices in the US are indeed up, rising 6.2% since last year. A recent Bloomberg analysis found that ratepayers within 50 miles of data centers saw rates increase up to 276% over the past five years.

The companies have until January 12, 2026, to respond to the senators.

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Hyunsoo Rim

TIME names the “Architects of AI” as its Person of the Year for 2025

TIME just announced its Person of the Year… and it’s not a single person.  

The magazine selected the “Architects of AI” as its 2025 honoree, spotlighting the executives and engineers behind the year’s AI boom. One of the two covers features eight tech leaders perched on a steel beam — recreating the iconic “Lunch Atop a Skyscraper” photo from 1932 — including Meta’s Mark Zuckerberg, AMD’s Lisa Su, xAI’s Elon Musk, OpenAI’s Sam Altman, and Nvidia CEO Jensen Huang at the center, whose chips power many of today’s AI models.

Western Auctioneer with Two Fingers up and Gavel in Hand

As investors pick sides in Netflix vs. Paramount, analysts say a renewed Warner Bros. bidding war looks inevitable

Analysts at Bloomberg on Wednesday said Paramount’s WBD hostile takeover offer could go as high as $35 per share.

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