Is Elon Musk a National Security Risk?

“A wild card”

Even before becoming “first buddy” to President-elect Donald Trump, Elon Musk wielded significant influence in government, thanks to SpaceX.

But The Times reports that the tech mogul is facing scrutiny over his activities at the rocket company — all of which may dissipate once Trump takes office.

Federal agencies are reviewing Musk’s failure to comply with security clearance rules, The Times reports. Holders of top national security credentials must submit information about foreign travel and aspects of their personal lives, including drug use, to ensure they aren’t at risk of disclosing state secrets.

But Musk and SpaceX haven’t fully complied with that requirement since at least 2021, The Times reports. Concerns about that failure — both within government and within SpaceX — have prompted multiple reviews, including by the Defense Department’s Office of Inspector General. (No federal agency has accused him of disclosing classified material.)

Why people are worried: Musk has a penchant for sharing a lot on his X social network, including about diplomatic meetings. He has held several meetings or discussions with representatives of foreign governments, reportedly including with Iranian officials and President Vladimir Putin of Russia.

Musk has also spoken openly about his use of ketamine, which he says he has a prescription for; he hadn’t disclosed that to the government.

Others are concerned about Musk abusing his influence with Trump to benefit his companies.

Why it matters: SpaceX is a major government contractor. But The Times reports that the Air Force had denied Musk a special top-level clearance, meaning that he couldn’t participate in some highly sensitive meetings. (Some government officials worry Musk does so anyway.)

Other governments have also raised concerns about Musk, according to The Times. The Israeli Ministry of Defense has called the tech baron “a wild card,” and fear that he could divulge sensitive data to others.

The United States is heavily dependent on SpaceX to launch stuff into space. While others — notably Blue Origin, Jeff Bezos’ rocket company — are trying to eat away at Musk’s dominance, they have a long way to go.

This could all be moot come Jan. 20. Trump can give anyone a security clearance after he’s inaugurated. On Truth Social on Tuesday, the president-elect reminded his followers how close they are with a picture of himself and Musk.

HERE’S WHAT’S HAPPENING

Washington is reportedly weighing a ban on popular Chinese-made internet routers. Multiple agencies are investigating whether TP-Link devices, which are used in about 65 percent of U.S. homes and small businesses and power internet communication for the Defense Department, are a national security threat, The Wall Street Journal reports.

Luigi Mangione is charged with first-degree murder in the killing of the UnitedHealthcare C.E.O. Alvin Bragg, Manhattan’s district attorney, on Tuesday accused him of executing the “well-planned, targeted murder” of the C.E.O., Brian Thompson, and branded Mangione a terrorist. Mangione is set to appear in court tomorrow in Pennsylvania, and he may waive his extradition hearing.

President Biden endorses a ban on congressional stock trading. “Nobody in the Congress should be able to make money in the stock market while they’re in the Congress,” he said in an interview published on Tuesday by More Perfect Union, a pro-labor advocacy group. There have been bipartisan efforts to stop the practice, which has been widely criticized, but those have stalled.

The race to get into the year’s biggest venture capital deal

OpenAI dropped jaws two months ago when it raised $6.6 billion. Another artificial intelligence start-up, Databricks, has just beaten that, announcing on Tuesday that it was on track to collect $10 billion at a $62 billion valuation.

It illustrates how investors are willing to bet heavily on what they think will be the A.I. winners, DealBook’s Michael de la Merced writes.

Databricks was initially hoping to raise $6 billion to $7 billion, Ali Ghodsi, a co-founder and the company’s C.E.O., told DealBook. That would have far surpassed the $1.6 billion that the 11-year-old data and analytics business raised in 2021.

But over the two to three months it took to raise the newest round, the company received $19 billion worth of interest, Ghodsi said. That allowed Databricks to increase the size of the round to $10 billion, which the company executives had set as a hard limit.

Databricks also rejected any investors who wanted to invest via special purpose vehicles, essentially bespoke funds that venture capital firms form with a select group of partners.

But the high interest meant that the start-up could be firm. “We could control who gets into the cap table,” Ghodsi said, referring to the list of the company’s equity investors.

Who made the cut: The round was led by Thrive Capital, which also led OpenAI’s latest round. Thrive invested at least $1 billion in Databricks, according to Vince Hankes, a partner at Thrive, who said that Databricks had the potential to become one of the next important tech giants.

Andreessen Horowitz, DST Global, GIC, Insight Partners and WCM Investment Management also helped lead the round.

What’s next? Databricks plans to spend the money on acquisitions and hiring increasingly expensive A.I. talent. (“We’re at peak bubble territory for A.I.,” Ghodsi said.) Hankes added that a “vast majority” would be used to buy up employee-owned shares, giving workers some liquidity, and paying taxes on their equity.

What about an I.P.O.? The new round gives the start-up flexibility on timing, Ghodsi said. The earliest that Databricks would consider going public was next year, he added.

OpenAI’s profit motive

It has been a year since OpenAI’s board of directors pushed out Sam Altman as C.E.O. and then rehired him days later, but his ouster hangs over the ChatGPT maker.

Altman was forced out by the board of the nonprofit organization that controls the company and his removal spooked investors. Now, OpenAI wants to end that control.

The Times’s Cade Metz outlines the challenges that need to be overcome to do that.

How will the nonprofit be compensated? OpenAI’s latest funding round valued the company at $157 billion. How much is the nonprofit’s control worth? Kathy Jennings, the Delaware attorney general who oversees the nonprofit because it is registered in her state, wants to review any potential changes to ensure that the nonprofit is not shortchanged.

Is Altman conflicted? Altman co-founded OpenAI as a nonprofit in 2015. He also led the creation of the for-profit company a few years later, realizing that a nonprofit couldn’t raise the billions of dollars needed to build A.I. Now, Altman runs the for-profit company and sits on the nonprofit board that controls it. This puts him on both sides of the negotiations.

How much of a say does Microsoft have? Officially, the nonprofit decides its own future. But Microsoft’s approval may be needed, according to a person familiar with the negotiations who spoke to The Times on the condition of anonymity. Microsoft has invested more than $13 billion in OpenAI, and is closely tied contractually to the start-up. This means it has power.

Nissan rallies on mega-merger talk

Shares in Nissan soared on Wednesday for their best day in at least 40 years on news that the company could merge with Honda to create the world’s third-largest carmaker.

The goal is to jump-start their electrification efforts, and better take on Chinese rivals that have upended the sector.

The latest: The companies could soon kick off formal discussions about how to broaden their partnership. A final decision has not been made, but developments suggest that there’s growing momentum behind a tie-up:

• Honda is considering multiple options for a deeper alliance, it said, including the creation of a holding company.

• Foxconn, the Taiwanese manufacturing giant that is a growing force in E.V. factories, has approached Nissan about taking a stake in the company, Bloomberg reports.

• The French car maker Renault, which has a longstanding alliance with Nissan and is its largest shareholder, is said to be open the tie-up talks with Honda.

• Japan’s Mitsubishi, which counts Nissan as a big investor, could also get involved.

Nissan and Honda have become more closely linked in recent months. In March, they joined forces to develop E.V.s. But that hasn’t stemmed sales declines, and Nissan said last month that it would cut jobs and global production.

Once-dominant carmakers are being forced to rethink how they operate. From Detroit to Japan, legacy companies are seeing rivals like Tesla and BYD of China gain market share, forcing some of them to forge new alliances.

The Giving Pledge ousts another member

A former private-equity tycoon has been ousted from the Giving Pledge, a high-profile philanthropy group tied to the Bill and Melinda Gates Foundation, The Times’s Theodore Schleifer reports exclusively for DealBook.

Arif Naqvi is the third individual to be forcibly removed. The founder of the Abraaj Group, a Dubai-based investment firm that once managed billions of dollars, once associated with the likes of Bill Gates and King Charles, when he was the Prince of Wales.

But Abraaj collapsed in 2018 and he was accused of widespread fraud. The S.E.C. sued Naqvi and New York prosecutors indicted him, and he has been fighting extradition to the United States from Britain.

The Giving Pledge removed him this year. “We can confirm that Arif Naqvi is no longer a member of the Giving Pledge community,” said a spokesperson for the group.

Naqvi could not be reached for comment. Lawyers who have previously represented him did not respond to requests for comment. He has previously denied wrongdoing.

Naqvi joined The Giving Pledge in 2013. Its wealthy members commit to donate over half of their wealth to charitable causes. The network is steered by aides to Bill Gates but they take a hands-off approach, and don’t typically weigh in on members’ giving.

But the group has forced out people over misconduct. In 2022, it ousted Sam Bankman-Fried, the founder of FTX, after he was charged with fraud at the cryptocurrency exchange. Last year, it forced out Denny Sanford, a South Dakota banking billionaire after an investigation into possession of child pornography in 2019. No charges were filed against him.

A former top New York City Hall lawyer joins a private firm

Lisa Zornberg, who quit as chief counsel to the office of Mayor Eric Adams before he was indicted on federal corruption charges in September, will join the law firm Morvillo Abramowitz Grand Iason & Anello, The Times’s Benjamin Weiser writes for DealBook.

Zornberg was a prominent member of the Adams administration. Before the mayor was indicted, she often appeared alongside him at news conferences and defended him. Zornberg and Adams have not commented publicly about the specific reasons behind her resignation. But one person with knowledge of the matter told The Times that Zornberg left largely because the mayor was not following her advice on certain personnel matters.

Adams has pleaded not guilty and faces trial in April.

Zornberg built a high-profile career in public and private law before joining City Hall. She was a partner at the law firm Debevoise & Plimpton, after heading the criminal division of the U.S. attorney’s office for the Southern District of New York from 2016 to 2018. She was also a partner at the firm Lankler Siffert & Wohl and from 1998 to 2012, she was an assistant U.S. attorney in the Southern District’s criminal and civil divisions.

Zornberg will become a partner at Morvillo in March and will focus on white-collar criminal and regulatory defense work, as well as civil matters.

THE SPEED READ

Deals

• The Italian lender UniCredit raised its stake in Commerzbank of Germany, to 28 percent from 21 percent, reviving speculation about whether it will bid for the whole company. (CNBC)

• “A 7-Eleven Heir’s $50 Billion Fight to Keep the Company in the Family” (NYT)

Politics and policy

• President-elect Donald Trump sued The Des Moines Register for running a poll before the election showing he trailed Vice President Kamala Harris, extending his threat to seek retribution against the mainstream media. (NYT)

• “Tech Makes an Economic Case for Skilled Immigrants. Will Trump Bite?” (NYT)

Best of the rest

• Lisa Zornberg, who quit as chief counsel to the office of Mayor Eric Adams before he was indicted on federal corruption charges, will join the law firm Morvillo Abramowitz Grand Iason & Anello. (Morvillo Abramowitz)

• Disney pulled a transgender story line from a forthcoming Pixar series; the media company has frequently drawn conservative blowback over L.G.B.T.Q. issues. (NYT)

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