This week we talk about Khamenei, Trump, and Netanyahu.

We also discuss Venezuela, Cuba, and cartels.

Recommended Book: Plagues upon the Earth by Kyle Harper

Transcript

Ali Hosseini Khamenei was an opposition politician in the lead-up to the Iranian Revolution that, in 1979, resulted in the overthrow of the Shah—the country’s generally Western government-approved royal leader—and installed the Islamic Republic, an extremely conservative Shia government that took the reins of Iran following the Shah’s toppling.

Khamenei was Iran’s third president, post-Shah, and he was president during the Iran-Iraq War from 1981-1989, during which the Supreme Leader of Iran, the head of the country, Ruhollah Khomeini sought the overthrow of then Iraqi leader Saddam Hussein. Khomeini died the same year the war ended, 1989, and Khamenei was elected to the role of Supreme Leader by the country’s Assembly of Experts, which is responsible for determining such roles.

The new Supreme Leader Khamenei was reportedly initially concerned that he wasn’t suitable for the role, as his predecessor was a Grand Ayatollah of the faith, while he was just a mid-rank cleric, but the constitution of Iran was amended so that higher religious office was no longer required in a Supreme Leader, and in short order Khamenei moved to expound upon Iran’s non-military nuclear program, to expand the use and reach of the Islamic Revolutionary Guard Corps, in-country and throughout the region, and he doubled-down on supporting regional proxies like Hezbollah in Lebanon, the Houthis in Yemen, and Hamas in Gaza, incorporating them into the so-called Axis of Resistance that stands against Western interests in the region—the specifics of which have varied over the decades, but which currently includes the aforementioned Hezbollah and Houthis, alongside smaller groups in neighboring countries, like Shiite militias in Bahrain, and forces that operate in other regional spheres of influence, like North Korea, Venezuela, and at times, portions of the Syrian government.

Khamenei also reinforced the Iranian government’s power over pretty much every aspect of state function, disempowering political opponents, cracking down on anyone who doesn’t toe a very conservative extremist line—women showing their hair in public, for instance, have been black-bagged and sometimes killed while in custody—and thoroughly entangled the functions of state with the Iranian military, consolidating essentially all power under his office, Supreme Leader, while violently cracking down on anyone who opposed his doing whatever he pleased, as was the case with a wave of late-2025, early 2026 protests across the country, during which Iranian government forces massacred civilians, killing somewhere between 3,000 and 35,000 people, depending on whose numbers you believe.

What I’d like to talk about today is a new war with Iran, kicked off by attacks on the country from Israel and the United States that led with the killing of Khamenei and a bunch of his higher-up officers, how this conflict is spreading across the region and concerns about that spreading, and what might happen next.

—

On February 28, 2026, the US and Israel launched a wave of joint air attacks against Iran, hitting mostly military and government sites across the country. One of the targets was Khamenei’s compound, and his presence there, above-ground, which was unusual for him, as he spent most of his time deep underground in difficult-to-hit bunkers, alongside a bunch of government and military higher-ups, may have been the rationale for launching all of these attacks on that day, as the attackers were able to kill him and five other top-level Iranian leaders, who he was meeting with, at the same time.

This wave of attacks followed the largest military buildup of US forces in the Middle East since the invasion of Iraq back in 2003, and while military and government targets were prioritized, that initial wave also demolished a lot of civilian structures, including schools, hospitals, and the Grand Bazaar in Tehran, leading to a whole lot of civilian casualties and fatalities, as well.

In response, Iran launched hundreds of ballistic missiles and drones at Israel, and at US bases throughout the region—these bases located in otherwise uninvolved countries, including Qatar, Bahrain, the UAE, Kuwait, Iraq, Jordan, and Saudi Arabia. Iranian missiles and drones also hit non-military targets, and in some cases maybe accidentally hit civilian infrastructure, in Azerbaijan, and Oman, alongside a British military base on the island of Cyprus.

The Iranian president apologized in early March for his country’s lashing out at pretty much everyone, saying that there were miscommunications within the Iranian military, and that Iran wouldn’t hit anyone else, including countries with US bases, so long as US attacks didn’t originate from those bases.

Despite that apology, though, Iranian missiles and drones continued to land in many of those neighboring countries following his remarks, raising questions about communications and control within the now-decapitated Iranian military.

This new conflict follows long-simmering tensions between Iran and Israel—the former of which has said it will someday wipe the latter from the face of the Earth, considering its existence an abomination—and long-simmering tensions related to Iran’s nuclear program, which the government has continuously said is just for civilian, energy purposes, but which pretty much everyone suspects, with a fair bit of evidence, is, in parallel, also a weapons program.

Iran’s influence throughout the region has been truncated in recent years, due to a sequence of successes by the Israeli military and intelligence services, which allowed them to hobble or nearly wipe out traditional Iranian proxy forces like Hamas, Hezbollah, and the Houthis, which have collectively surrounded and menaced Israel for decades.

Those menacing forces more or less handled, Israel has become more aggressive in its confrontations with Iran, exchanging large air attacks several times over the past handful of years, and the US under Trump’s second term continues to see Iran as the main opposition to their efforts to build a US-aligned counterbalance against Russian and Chinese influence in the Middle East, with Israel, Saudi Arabia, and increasingly entities like Qatar and the UAE playing ball with the West, while Iran and its allies stand firm against the West.

Trump has regularly threatened to act in Iran, usually waiting for the Iranian government to do something really bad, like that recent massacre of civilians following those large anti-government protests in late-2025, early 2026, and that to some degree has served as justification for the massing of US military assets in the region, leading up to this attack.

Now that the attack has launched, a new war triggered, the question is how big it will get and how long it will last.

For the moment, it looks like Iran’s government and military is very much on the back foot, a lot of their assets taken out in that initial wave, and they’re still scrambling to put someone in charge to replace Khamenei and those other higher-ups who were assassinated at the outset of this war—that’ll likely change soon, maybe even before this episode goes live. But whomever takes the reins will have quite the task ahead of them, probably—according to many analysts, at least—aiming to just hold out until the US runs out of ammunition, which is expected to happen within a week or so, at which point Iran can launch surgical attacks, aiming to make this war too expensive, in terms of money and US lives, for the Trump administration to continue investing in, as money and lives are especially expensive in an election year, which 2026 is. So the idea is to grind the US down until it makes more political sense for Trump to just declare victory and leave, rather than allowing this to become a Vietnam or Afghanistan situation for his administration.

It’s also generally expected that when the US pulls out, Israel probably will too, as they’ve already made their point, tallied a bunch of victories, and set Iran back in a lot of ways; they could walk away whenever they like and say they won. And Iran would probably be incentivized to, at that point, avoid doing anything that would lead to more punishment, though they would almost certainly immediately begin rebuilding the same exact centralized, militarized infrastructure that was damaged, the only difference being they would have someone else on top, as the Supreme Leader. Relations could be even worse moving forward, but it would probably be at least a few years before Iran could do anything too significant to their regional enemies, which I guess if you’re Israel does, in fact, represent a win.

But considering the unlikelihood of permanent change in Iran, the big question here, in the minds of many, is what this war, this attack, is even for.

For Israel, the main purpose of any attack against Iran is to weaken or destroy an enemy that has made no secret about wanting to weaken and destroy them. For the US, though, and the Trump administration more specifically, the point of all this isn’t as clear.

Some contend that this is another effort to steal attention and headlines from the increasingly horrifying revelations coming out of the investigation into the Epstein files, which seem to indicate Trump himself was involved in all sorts of horrible, pedophilic sexual assault activities with the late human-trafficker.

Some suspect that the apparent victory in grabbing former Venezuelan president Maduro from his own country and whisking him away to the US without suffering any US casualties has emboldened Trump, and that he’s going to use the time he’s got to take out anyone he doesn’t like, and may even specifically target authoritarian leaders who will not be missed—who oppress and kill their own people—because then it’s difficult for his political opponents to call him out on these efforts.

Most Venezuelans are happy to see Maduro gone, and many Iranians celebrated when Khamenei was assassinated. Trump has publicly stated that he intends to go after Cuba, next, and continues to suggest he wants a war of sorts with Mexican and south and central American cartels, which follows this same pattern of demonstrating a muscular, aggressive, militarized United States doing whatever it wants, even to the point of kidnapping or assassinating foreign leaders, but doing so in a way that is difficult to argue against, because the leaders and other forces being taken out are so horrible, at times to the point of being monstrous, that these acts, as illegal as they are according to internal laws, can still seem very justified, through some lenses.

Still others have said they believe this is purely an Israeli op, and the US under Trump is just helping out one of Trump’s buddies, Israel’s Netanyahu, who wants to keep his country embroiled in war in order to avoid being charged for corruption.

The real rationale could be a combination of these and other considerations, but the threat here, regionally, is real, especially if Iran continues to lash out at its neighbors.

This part of the world is renowned for its fuel reserves and exports, and every time there’s a Middle Eastern conflict, energy prices rise, globally, and other nations that produce such exports, like Russia, benefit financially because they can charge more for their oil and gas for a while—gas prices in the US have already increased by 14% over the past week as a result of the conflict—and those increases also then the raises the price of all sorts of other goods, spiking inflation.

Another huge concern here, though, is that this part of the world is highly reliant on the desalination of water just to survive; massive desalination plants, most located along the coast, where they are very exposed to military threats, are at risk if Iran and Saudi Arabia, or Kuwait, or Oman start firing at each other in earnest.

About 90% of Kuwait’s drinking water comes from these sorts of plants, and about 86% of Oman’s and 70% of Saudi Arabia’s do, as well.

Earlier in this war, a US strike damaged an Iranian desalination plant, and the Iranian foreign minister made a not-so-veiled threat against such plants in neighboring countries, saying the US set the precedent of attacking such infrastructure, not them.

Worth noting here, too, is that many desalination plants are attached to power stations, located within the same facility, so attacks on power infrastructure, which are already common in any conflict, could also lead to more damaged desalination plants, all of which could in turn create massive humanitarian crises, as people living in some of the hottest, driest parts of the world find themselves, in the millions, without drinkable water.

The potential for a spiraling humanitarian disaster increases with each passing day, then, which would seem to increase the likelihood that someone will stop, declare victory, and move on to the next conflict. But there’s always the chance the one or more of the involved forces will clamp down and decide that it’s in their best interest to keep things going as long as possible, instead—and in this case, it would likely be Iran playing that role, locking the US and Israel and their allies into a grinding, long-term conflict that no one would actually win.

Show Notes

https://en.wikipedia.org/wiki/Axis_of_Resistance

https://en.wikipedia.org/wiki/Death_and_state_funeral_of_Ruhollah_Khomeini

https://en.wikipedia.org/wiki/2026_Iran_massacres

https://en.wikipedia.org/wiki/Ali_Khamenei

https://en.wikipedia.org/wiki/Assassination_of_Ali_Khamenei

https://www.eurasiareview.com/08032026-strikes-continue-despite-iranian-presidents-apology/

https://www.reuters.com/world/europe/trump-rejects-settling-iran-war-raises-prospect-killing-all-its-potential-2026-03-08/

https://www.reuters.com/world/us/irans-retaliation-began-us-officials-scrambled-arrange-evacuations-2026-03-07/

https://www.reuters.com/world/middle-east/mapping-crisis-iran-visual-explainer-2026-03-06/

https://apnews.com/live/iran-war-israel-trump-03-08-2026

https://apnews.com/article/iran-israel-us-march-8-2026-f0b20dbffaea9351ae1e54183ffe53ff

https://apnews.com/article/iran-war-desalination-water-oil-middle-east-12b23f2fa26ed5c4a10f80c4077e61ce

https://apnews.com/video/trump-says-us-will-turn-attention-to-cuba-after-war-with-iran-91c3f239c18349fdb409f901c50b7e71

https://www.nytimes.com/live/2026/03/08/world/iran-war-trump-israel-lebanon

https://www.nytimes.com/2026/03/08/us/politics/trump-russia-ukraine-iran-war.html

https://www.nytimes.com/2026/03/07/us/politics/iran-war-first-week.html

https://www.nytimes.com/interactive/2026/03/08/opinion/iran-war-ayatollah.html

https://en.wikipedia.org/wiki/2026_Iran_war

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit letsknowthings.substack.com/subscribe

This week we talk about Anthropic, the Department of Defense, and OpenAI.

We also discuss red lines, contracts, and lethal autonomous systems.

Recommended Book: Empire of AI by Karen Hao

Transcript

Lethal autonomous weapons, often called lethal autonomous systems, autonomous weapons systems, or just ‘killer robots,’ are military hardware that can operate independent of human control, searching for and engaging with targets based on their programming and thus not needing a human being to point it at things or pull the trigger.

The specific nature and capabilities of these devices vary substantially from context to content, and even between scholars writing on the subject, but in general these are systems—be they aerial drones, heavy gun emplacements, some kind of mobile rocket launcher, or a human- or dog-shaped robot—that are capable of carrying out tasks and achieving goals without needing constant attention from a human operator.

That’s a stark contrast with drones that require either a human controlled or what’s called a human-in-the-loop in order to make decisions. Some drones and other robots and weapons require full hands-on control, with a human steering them, pointing their weapons, and pulling the trigger, while others are semi-autonomous in that they can be told to patrol a given area and look for specific things, but then they reach out to a human-in-the-loop to make final decisions about whatever they want to do, including and especially weapon-related things; a human has to be the one to drop the bomb or fire the gun in most cases, today.

Fully autonomous weapon systems, without a human in the loop, are far less common at this point, in part because it’s difficult to create a system so capable that it doesn’t require human intervention at times, but also because it’s truly dangerous to create such a device.

Modern artificial intelligence systems are incredibly powerful, but they still make mistakes, and just as an LLM-based chatbot might muddle its words or add extra fingers to a made-up person in an image it generates, or a step further, might fabricate research referenced in a paper it produces, an AI-controlled weapon system might see targets where there are no targets, or might flag a friendly, someone on its side, or a peaceful, noncombatant human, as a target. And if there’s no human-in-the-loop to check the AI’s understanding and correct it, that could mean a lot of non-targets being treated like targets, their lives ended by killer robots that gun them down or launch a missile at their home.

On a larger scale, AI systems controlling arrays of weapons, or even entire militaries, becoming strategic commanders, could wipe out all human life by sparking a nuclear war.

A recent study conducted at King’s College London found that in simulated crises, across 21 scenarios, AI systems which thought they had control of nation-state-scale militaries opted for nuclear signaling, escalation, and tactical nuclear weapon use 95% of the time, never once across all simulations choosing to use one of the eight de-escalatory options that were made available to them.

All of which suggests to the researchers behind this study that the norm, approaching the level of taboo, associated with nuclear weapons use globally since WWII, among humans at least, may not have carried over to these AI systems, and full-blown nuclear conflict may thus become more likely under AI-driven military conditions.

What I’d like to talk about today is a recent confrontation between one AI company—Anthropic—and its client, the US Department of Defense, and the seeming implications of both this conflict, and what happened as a result.

—

In late-2024, the US Department of Defense—which by the way is still the official title, despite the President calling it the Department of War, since only Congress can change its name—the US DoD partnered with Anthropic to get a version of its Claude LLM-based AI model that could be used by the Pentagon.

Anthropic worked with Palantir, which is a data-aggregation and surveillance company, basically, run by Peter Thiel and very favored by this administration, and Amazon Web Services, to make that Claude-for-the-US-military relationship happen, those interconnections allowing this version of the model to be used for classified missions.

Anthropic received a $200 million contract with the Department of Defense in mid-2025, as did a slew of other US-based AI companies, including Google, xAI, and OpenAI. But while the Pentagon has been funding a bunch of US-based AI companies for this utility, only Claude was reportedly used during the early 2026 raid on Venezuela, during which now-former Venezuelan President Maduro was taken by US forces.

Word on the street is that Claude is the only model that the Pentagon has found truly useful for these sorts of operations, though publicly they’re saying that investments in all of these models have borne fruit, at least to some degree.

So Anthropic’s Claude model is being used for classified, military and intelligence purposes by the US government. Anthropic has been happy about this, by all accounts, because that’s a fair bit of money, but also being used for these purposes by a government is a pretty big deal—if it’s good enough for the US military, after all, many CEOs will see that as a strong indication that Claude is definitely good enough for their intended business purposes.

On February 24 of 2026, though, the US Defense Secretary, Pete Hegseth, threatened to remove Anthropic from the DoD’s stable of AI systems that they use unless the company allowed the DoD to use Claude for any and all legal purposes—unrestricted use of the model, basically.

This threat came with a timeline—accede to these demands by February 27 or be cut from the DoD’s supply chain—and the day before that deadline, the 26th, Anthropic’s CEO released a statement indicating that the company would not get rid of its red lines that delineated what Claude could and could not be used for, and on the 27th, US President Trump ordered that all US agencies stop using Anthropic tools, and said that he would declare the company a supply chain risk, which would make it illegal for any company doing business with the US government at any level and in any fashion to use Anthropic products or services—a label that’s rarely used, and which was previously used by the Trump administration against Chinese tech giant Huawei on the basis that the company might insert spy equipment in communications hardware installed across the US if they were allowed to continue operating in the country.

Those red lines that Anthropic’s CEO said he wouldn’t get rid of, not even for a client as big and important as the US government, and not even in the face of threats by Hegseth, including that he might invoke the Defense Production Act, which would allow him to force the company to allow the Pentagon to use Claude however they like, or Trumps threat that the company be blacklisted from not just the government, but from working with a significant chunk of Fortune 500 companies, those red lines include not allowing Claude to be used for controlling autonomous weapon systems, killer robots, basically, and not allowing Claude to be used for surveilling US citizens.

The Pentagon signed a contract with Anthropic in which they agreed to these terms, but Hegseth’s new demand was that Anthropic sign a new version of the contract in which they allow the US government to use Claude and their other offerings for ‘all legal purposes,’ which apparently includes, at least in some cases and contexts, killer robots and mass surveillance.

So the Pentagon tried to strong-arm a US-based AI company into allowing them to use their product for purposes the company doesn’t consider to be moral, and that led to this situation in which Anthropic is now being phased out from US government use—it’ll apparently take about 6 months to do this, and some analysts speculate that timeline is meant to serve as a period in which further negotiation can occur—but either way, it’s being phased out and it may even have trouble getting major clients in the future as a result of being blackballed.

As all this was happening, OpenAI stepped in and offered its products and services to fill the void left by Anthropic in the US government.

OpenAI’s CEO has been cozying up to Trump a lot since he regained office, and has positioned the company as a major US asset, too big to fail because then China will win the AI race, basically, so this makes sense. Its CEO released several statements and press releases in the wake of this further cozying, saying that they believe the same things Anthropic does, and that they’re not giving up any credibility for doing this because they have the same red lines, no killer robots, no mass surveillance of US citizens.

But this is generally assumed to be bunk, because why would the Pentagon agree to the same terms all over again, and with a company that provides, for their purposes and right now, anyway, inferior services instead of the one they just chased out and blackballed, and which was helping them do purposeful, effective things, like kidnapping a foreign leader from a secure facility, today?

Instead, what it sounds like is OpenAI is trying to have its cake and eat it too, saying publicly that they don’t want their offerings used to control autonomous weapons systems or mass surveil Americans, but instead of writing that into the contract, they’ve got some basic guardrails baked into their systems, and they are assuming those guardrails will keep any funny business from happening. So it’s a sort of gentleman’s agreement with their clients that OpenAI products won’t be used for mass surveillance or killer robots, rather than something legally binding, as was the case with Anthropic.

The response to all this within the tech world has been illustrative of what we might expect in the coming years. Many people, including folks working on these technologies, are halting their use of OpenAI tech in protest, and in some (at this point at least) fewer cases, people are quitting their OpenAI jobs, because they are strongly opposed to these use-cases and would prefer to support a company that takes a strong stand on these sorts of moral issues.

Some analysts also wonder if this will ensure the Pentagon only ever has access to inferior AI models because they intentionally threatened and disempowered a key AI industry CEO in public, saying that they had final say over how these tools are used, and many such CEOs are both unaccustomed to such stripping down, but are also doing the work they’re doing for ideological reasons—they have beliefs about what the future, as enabled by AI technologies, will look like, and they believe they will play a vital role in making that future happen.

The idea, then, is why would they want to work with the Pentagon, or the US government more broadly, if that means no longer being in charge of the destiny of these tools they’re putting so much time, effort, and resources into building? Why would they take on a client, even a big, important one, if that means no longer having any grain of control over the future of the world as shaped by the systems they’re building?

We’ll know a bit more about how all this plays out within the next handful of months, as this could serve as a moral differentiator between otherwise near-match products in the AI category, allowing companies like Anthropic to compete, both in terms of clients and in terms of employees, with the likes of OpenAI and xAI by saying, look, we don’t want killer robots or mass surveillance and we gave up a LOT, put our money where our mouths are, in support of that moral stance.

That could prove to be a serious feather in their cap, despite the initial cost, though it could also be that the pressure the US government is willing and able to apply to them instead serves as a warning to others, and the likes of OpenAI and Google and so on just get better at speaking out of both sides of their mouths on this issue, creating sneakier contracts that allow them to say the same on paper, seeming to take the same moral stance Anthropic did, while behind closed doors allowing their clients to do basically whatever they want with their products, including using them to control killer robots and to mass surveil US citizens.

Show Notes

https://www.kcl.ac.uk/news/artificial-intelligence-under-nuclear-pressure-first-large-scale-kings-study-reveals-how-ai-models-reason-and-escalate-under-crisis

https://www.axios.com/2026/02/26/ai-nuclear-weapons-war-pentagon-scenarios

https://www.nytimes.com/2026/02/27/technology/openai-agreement-pentagon-ai.html

https://en.wikipedia.org/wiki/Lethal_autonomous_weapon

https://www.theverge.com/ai-artificial-intelligence/885963/anthropic-dod-pentagon-tech-workers-ai-labs-react

https://www.theverge.com/ai-artificial-intelligence/886816/openai-reached-a-new-agreement-with-the-pentagon

https://arstechnica.com/tech-policy/2026/02/trump-moves-to-ban-anthropic-from-the-us-government/

https://apnews.com/article/anthropic-pentagon-ai-dario-amodei-hegseth-0c464a054359b9fdc80cf18b0d4f690c

https://www.wsj.com/tech/ai/whats-really-at-stake-in-the-fight-between-anthropic-and-the-pentagon-d450c1a1

https://openai.com/index/our-agreement-with-the-department-of-war/

https://www.kcl.ac.uk/news/artificial-intelligence-under-nuclear-pressure-first-large-scale-kings-study-reveals-how-ai-models-reason-and-escalate-under-crisis

https://www.axios.com/2026/02/26/ai-nuclear-weapons-war-pentagon-scenarios

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit letsknowthings.substack.com/subscribe

This week we talk about Trump’s tariffs, the Supreme Court, and negotiating leverage.

We also discuss trade wars, Greenland, and the IEEPA.

Recommended Book: Smoke and Ashes by Amitav Ghosh

Transcript

I’ve spoken on this show before about tariffs and about US President Trump’s enthusiasm for tariffs as an underpinning of his trade policy. Last October, back in 2025 I did an episode on tariff leverage and why the concept of an ongoing trade war is so appealing to Trump—it basically gives him a large whammy on anyone he enters negotiations with, because the US market is massive and everyone wants access to it, and tariffs allow him to bring the hammer down on anyone he doesn’t like, or who doesn’t kowtow in what he deems to be an appropriate manner.

So he can slap a large tariff on steel or pharmaceuticals or cars from whichever country he likes just before he enters negotiations with that country, and then those negotiations open with him in an advantageous spot: they have to give him things just to get those tariffs to go away—they have to negotiate just to get things back to square one.

That’s how it’s supposed to work, anyway. What we talked about a bit back in October is TACO theory, TACO standing for Trump Always Chickens Out—the idea is that other world leaders had gotten wise to Trump’s strategy, which hasn’t changed since his first administration, and he has mostly been a doubling-down on that one, primary approach, to the point that they can step into these negotiations, come up with something to give him that allows him to claim that he’s won, to make it look like he negotiated well, and then they get things back down to a more reasonable level; maybe not square one, but not anything world-ending, and not anything they weren’t prepared and happy to give up.

In some cases, though, instead of kowtowing in this way so that Trump can claim a victory, whether or not a victory was actually tallied, some countries and industries and the businesses that make up those industries have simply packed up their ball and gone home.

China has long served as a counterbalance to the US in terms of being a desirable market and a hugely influential player across basically every aspect of geopolitics and the global economy, and this oppositional, antagonistic approach to trade has made the US less appealing as a trade partner, and China more appealing in comparison.

So some of these entities have negotiated to a level where they could still ship their stuff to the US and US citizens would still be willing to pay what amounts to an extra tax on all these goods, because that’s how tariffs work, that fee is paid by the consumers, not by the businesses or the origin countries, but others have given up and redirected their goods to other places. And while that’s a big lift sometimes, the persistence of this aggression and antagonism has made it a worthwhile investment for many of these entities, because the US has become so unpredictable and unreliable that it’s just not worth the headache anymore.

What I’d like to talk about today is a recent Supreme Court decision related to Trump’s tariffs, and what looks likely to happen next, in the wake of that ruling.

—

Ever since Trump stepped back into office for his second term, in January of 2025, he has aggressively instilled new and ever-growing tariffs on basically everyone, but on some of the US’s most important trade partners, like Mexico and Canada, in particular.

These tariffs have varied and compounded, and they’ve applied to strategic goods that many US presidents have tried to hobble in various ways, favoring US-made versions of steel and microchips, for instance, so that local makers of these things have an advantage over their foreign-made alternatives, or have a more balanced shot against alternatives made in parts of the world where labor is cheaper and standards are different.

But this new wave of tariffs were broad based, hitting everyone to some degree, and that pain was often taken away, at least a little, after leaders kowtowed, at times even giving him literal gold-plated gifts in order to curry favor, and/or funneling money into his family’s private companies and other interests, allowing him to use these tariffs as leverage for personal gain, not just national advantage, in other cases giving him what at least looked outwardly to be a negotiating win.

Things spiraled pretty quickly by mid-2025, when China pushed back against these tariffs, adding their own reciprocal tariffs on US goods, and at one point extra duties on Chinese imports coming into the US hit 145%.

Shortly thereafter, though, and here we see that TACO acronym proving true, once again, Trump agreed to slash these tariffs for 90 days, and around the same time, in May of 2025, a federal appeals court temporarily reinstated some of Trump’s largest-scale tariffs after a lower court ruled that they couldn’t persist.

The remainder of 2025 was a story of Trump trying to strike individual deals with a bunch of trade partners, like South Korea, Indonesia, and India, in some cases via direct negotiation, in others with a bunch of threats that eventually led to a sort of mutual standoff that no one was particularly happy about.

2026 was greeted with a threat by Trump to impose a huge wave of new tariffs on eight major European allies, those tariffs sticking around until these nations agreed to allow the US to buy Greenland, which was an obsession of Trump’s at that point, but a lot of Trump’s tariff posturing was derailed by a Supreme Court decision that landed in mid-February, in which the justices decided, 6 to 3, that Trump’s reciprocal tariffs are unconstitutional, as setting and changing tariffs is a Congressional power, not a Presidential one.

This was a serious blow to Trump and his stated policies, as pretty much all of his economic plans oriented around the idea—which most economists have said is bunk and based on fantasy, not reality, but still—that putting a bunch of tariffs on everything will allow the US to earn so much additional revenue that the deficit can be paid down.

It’s worth noting here that, just as those economists predicted, the deficit has only gotten larger under both Trump administrations, and in fact the growth of the US debt has sped up, not declined, despite the additional billions being pulled into government coffers by these tariffs, because the Trump administration’s spending is massive, and because the losses related to tariffs are also significant. But tariffs remain center to his policy nonetheless, so this was a major blow.

This ruling also seemed likely to defang a lot of Trump’s threats and drain his leverage at the negotiating table, as he could no longer threaten everyone with more tariffs, practically booting them from or weakening them on the US market.

So Trump was pissed, and as he tends to do, he publicly raged about the decision, which was made by a Supreme Court that is heavily stacked in his favor; which gives an indication of just how unpopular and unconstitutional all of this has been.

But immediately after that decision landed, he announced that, using alternative authorities—different powers—he would be imposing a blanket 10% tariff on everything coming into the US, and the following day announced that it would be a 15% tariff on everything, instead.

This does seem to be something Trump has the power to do, but he can only do it under the auspices of the International Emergency Economic Powers Act, or IEEPA, and these tariffs will only last for 150 days, max, and might also be challenged in court.

Also notably, some entities, like Britain and Australia, will face higher rates than they faced under the previous tariff setup, because of how they are applied and compound with other trade barriers, or the nature of what they export to the US market, while others, including China, will see their tariffs substantially drop.

Which could make things tricky, as that implies some of the previously negotiated deals have changed post-deal, or in some cases mid-negotiation; which means a lot more work to get things where everyone wants them, but also a loss of legitimacy and credibility for this administration, as they seem to be negotiating using powers they don’t actually have and making promises they can’t keep.

All of which, rather than simplifying and clarifying things for the US market and our international trade partners, actually further complicates them, at least for now, until the dust settles.

It does seem likely Trump’s administration will continue to try to leverage whatever power they can in this matter, grabbing at levers that haven’t been previously used, or used in this way, and those attempts will almost certainly be legally challenged, which could lead to more court cases, and a lot more uncertainty in the meantime, until those cases are figured it.

It’s also created new rifts within the Republican party, as Trump seems to be going after those who voted against his tariffs, or in any other way supported their removal, and he’s raged against the Supreme Court justices, even those he put into place and who are ideologically aligned with the Republican party almost always, which could also lead to more fracturing within his base, leading up to the November 2026 Congressional elections.

One more thing that’s worth noting here is that Trump’s usual tactic of trying to distract from things he doesn’t want people to pay attention to is in full operation following this court case: as all this has been happening, and against the backdrop of increasingly serious allegations related to his abundant presence in the Epstein files, he’s been talking more about potentially attacking Iran and releasing files on aliens, on extraterrestrials on Earth and in the US.

So we’re likely to see a lot more of that sort of thing in the coming months, especially if things continue to not go his way in regards to these tariffs and the hubbub surrounding them, but this story will shape global and US economics for years to come, not to mention on-the-ground realities for many people today, which should substantially impact Trump’s popularity and voter behavior come November.

Show Notes

https://www.axios.com/2026/02/20/supreme-court-trump-energy-tariffs

https://www.axios.com/2026/02/20/trump-tariff-plan-section-122-trade-act

https://www.axios.com/2026/02/20/trump-scotus-tariff-refund-battle

https://www.nytimes.com/2026/02/21/business/economy/trump-tariffs-trade-war.html

https://www.nytimes.com/2026/02/22/business/trump-tariffs-japan-indonesia.html

https://www.nytimes.com/2026/02/20/us/politics/supreme-court-trump-tariffs-takeaways.html

https://apnews.com/live/supreme-court-tariff-ruling-updates

https://www.bbc.com/news/live/c0l9r67drg7t

https://heatmap.news/economy/clean-energy-tariff-ruling

https://www.nytimes.com/live/2026/02/20/us/trump-tariffs-supreme-court

https://arstechnica.com/tech-policy/2026/02/supreme-court-blocks-trumps-emergency-tariffs-billions-in-refunds-may-be-owed/

https://www.theguardian.com/us-news/2026/feb/20/what-will-happen-to-trump-tariffs-after-supreme-court-verdict

https://www.nytimes.com/2026/02/21/business/economy/tariffs-supreme-court-global-busines-reaction.html

https://www.nytimes.com/2026/02/21/business/trump-deminimis-loophole-closed.html

https://www.axios.com/newsletters/axios-am-5b34aa80-2020-453a-bef1-8cf648e9b3c3.html

https://www.axios.com/2026/02/20/trump-tariff-plan-section-122-trade-act

https://www.scotusblog.com/2026/02/supreme-court-strikes-down-tariffs/

https://www.wsj.com/opinion/donald-trump-supreme-court-tariffs-ieepa-john-roberts-brett-kavanaugh-90daf559

https://www.supremecourt.gov/opinions/25pdf/24-1287_4gcj.pdf

https://www.nytimes.com/2026/02/21/us/politics/supreme-court-tariffs-conservatives.html

https://www.wsj.com/economy/u-s-manufacturing-is-in-retreat-and-trumps-tariffs-arent-helping-d2af4316

https://budgetlab.yale.edu/research/state-us-tariffs-scotus-ruling-update

https://www.kielinstitut.de/fileadmin/Dateiverwaltung/IfW-Publications/fis-import/92fb3f30-07b8-4dcf-b2bc-fbefb831f1a1-KPB201_EN.pdf

https://www.whitehouse.gov/fact-sheets/2026/02/fact-sheet-president-donald-j-trump-imposes-a-temporary-import-duty-to-address-fundamental-international-payment-problems/

https://www.nbcnews.com/business/business-news/tariff-refunds-supreme-court-trump-rcna259968

https://www.wsj.com/opinion/its-the-end-of-the-beginning-of-the-tariff-war-88a08d37

https://www.axios.com/2026/02/21/trump-tariff-supreme-court-increase

https://www.axios.com/2026/02/21/alien-files-conspiracy-theories-usa

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit letsknowthings.substack.com/subscribe

This week we talk about mass surveillance, smart doorbells, and the Patriot Stack.

We also discuss Amazon, Alexa, and the Super Bowl.

Recommended Book: Red Moon by Benjamin Percy

Transcript

In 2002, in the wake of the September 11, 2001 terrorist attacks on the World Trade Center, the US government created a new agency—the United States Immigration and Customs Enforcement, or ICE, operating under the auspices of the US Department of Homeland Security, which was also formed that year for the same general reason, to defend against 9/11-style attacks in the future.

As with a whole lot of what was done in the years following the 9/11 attacks, a lot of what this agency, and its larger department did could be construed as a sort of overcompensation by a government and a people who were reeling from the first real, large-scale attack within their borders from a foreign entity in a very long time. It was a horrific event, everyone felt very vulnerable and scared, and consequently the US government could do a lot of things that typically would not have had the public’s support, like rewiring how airports and flying works in the country, creating all sorts of new hurdles and imposing layers of what’s often called security theater, to make people feel safe.

While the TSA was meant to handle things on the front-lines of air transportation, though, X-raying and patting-down and creating a significant new friction for everyone wanting to get on a plane, ICE was meant to address another purported issue: that of people coming into the US from elsewhere, illegally, and then sticking around long enough to cause trouble. More specifically, ICE was meant to help improve public safety by strictly enforcing at times lax immigration laws, by tracking down and expelling illegal immigrants from the country; the theory being that some would-be terrorists may have snuck into the US and might be getting ready to kill US citizens from within our own borders.

There’s not a lot of evidence to support that assertion—the vast majority of terrorism that happens in the US is conducted by citizens, mostly those adhering to a far-right or other extremist ideologies. But that hasn’t moved the needle on public perception of the issue, which still predominantly leans toward stricter border controls and more assiduous moderation of non-citizens within US borders—for all sorts of reasons, not just security ones.

What I’d like to talk about today is an offshoot of the war on terror and this vigilance about immigrants in the US, and how during the second Trump administration, tech companies have been entangling themselves with immigration-enforcement agencies like ICE to create sophisticated surveillance networks.

—

In mid-July of 2025, the US Department of Defense signed one of its largest contracts in its history with a tech company called Palantir Technologies. Palantir was founded and is run by billionaire Peter Thiel, who among other things is generally considered to be the reason JD Vance was chosen to be Trump’s second-term Vice President. He’s also generally considered to be one of, if not the main figure behind the so-called Patriot Tech movement, which consists of companies like SpaceX, Anduril, and OpenAI, all of which are connected by a web of funding arms and people who have cross-pollinated between major US tech companies and US agencies, in many cases stepping into government positions that put them in charge of the regulatory bodies that set the rules for the industries in which they worked.

As a consequence of this setup and this cross-pollination, the US government now has a bunch of contracts with these entities, which has been good for the companies’ bottom lines and led to reduced government regulations, and in exchange the companies are increasingly cozy with the government and its many agencies, toeing the line more than they would have previously, and offering a lot more cooperation and collaboration with the government, as well.

This is especially true when it comes to data collection and surveillance, and a great deal of that sort of information and media is funneled into entities like Palantir, which aggregate and crunch it for meaning, and then send predictions and assumptions, and make services like facial-recognition technologies predicated on their vast database, available to police and ICE agents, among others such entities.

There has been increasingly stiff pushback against this melding of the tech world with the government—which has always been there to some degree, but which has become even more entwined than usual, of late—and that pushback is international, even long-time allies like Canada and the EU making moves to develop their own replacements for Amazon and Google and OpenAI due to these issues, and the heightened unpredictability and chaos of the US in recent years, but it’s also evident within the US, due in part to Trump’s moves while in office, but also the on-the-ground realities in places like Minneapolis, where ICE agents have been brutalizing and blackbagging people, sometimes illegal immigrants, sometimes US citizens, usually non-white US citizens, and the ICE agents are being rewarded, getting bonuses, for beating up and kidnapping and in some cases murdering people, whether or not any of these people are actually criminals—and it’s illegal to do that kind of thing even if they are criminals, by the way.

All of which sets the scene for what happened following the Super Bowl, this year.

Ring is a home security and smart home device company that is best known for its line of smart doorbells, but which also makes all sorts of security cameras and other alarm system devices.

Even though smart doorbells, complete with cameras and other sorts of functionality, existed before Ring, this company basically created the smart doorbell industry as it exists today back in 2014, when it received a round of equity investment and changed its named from Doorbot to Ring. It was bought by Amazon four years later, in 2018, for a billion dollars.

One of Ring’s premier features is related to its camera: you can use your phone or other smart home device to see who’s at your door when they ring the bell, but it can also be set to record when it detects movement, which makes it easy to check and see who stole your Amazon package from your porch when you weren’t at home, for instance, and resultingly Ring door camera footage has become fundamental to reporting, and on occasion pursuing, some types of crime.

As a direct result of that utility, Ring introduced its Neighbors service in mid-2018, this service serving as a sort of social network that allows Ring device users to discuss local issues, especially those related to safety and security, anonymously, while also allowing them to share photos and videos taken by their devices. This service also created relationships with local law enforcement, and allowed police to jump onto the network and request footage from Ring customers, if they thought these doorbell cams might have photos or video of someone escaping with a stolen car, for instance, which might then help the police catch that crook.

It’s generally assumed that Amazon probably bought Ring, at least in part, to entrench itself as the lord of the internet of things world, as it launched its Amazon Sidewalk platform in 2020, which allowed all Amazon devices, including Ring devices, to share a wireless mesh network, all of them communicating with each other and all using Amazon’s Alexa as an interface.

In 2023, Ring was sued by the FTC for $5.8 million because it allowed its employees and contractors to access private videos by failing to have basic security and privacy features in place—so not only could any Ring employee view their customer’s private video feeds, hackers could easily access all this media and data, as well. Just one example surfaced in that lawsuit shows that a Ring employee viewed thousands of video recordings of at least 81 different female users over the course of a few months in 2017.

So Amazon was building a surveillance network that worked really well, in the sense that it was predicated on popular, at times quite useful devices that people seemed to love, but which was also quite leaky, giving all sorts of people access to these supposedly private feeds, and it was shared with law enforcement via that social network. It’s also been alleged that Ring (and Amazon) have used users’ footage without further permission for things like facial recognition and AI training. Their partnership with police agencies also allegedly created incentives for the police to encourage citizens to buy Ring cams and other security devices for their homes, creating perverse incentives. And again, these devices connect wirelessly to other internet of things devices, expanding their reach and the potential for abuse of collected user data.

In late 2025, Ring announced a new partnership with Flock Safety, a company that’s best known for its security offerings, including automated license plate readers and gunshot detector systems.

These are mass surveillance tools used by some governments and law enforcement entities, and they use cameras and microphones to capture license plates, people’s faces, and sounds that might be gunfire and aggregate that data to be used by police, neighborhood associations, and in some cases private property owners.

This sort of technology is incredibly useful to companies like Palantir, which again, aggregates and crunches it, on scale, and then shares that information with police, ICE, and other such agencies.

These tools can sometimes help flag areas where guns are being fired or where crimes are being committed, but they’re also imperfect and at times biased against some groups of people and areas, and some data show that not only is crime not reduced by the presence of these systems, but there’s a fair bit of evidence that this data often falls into the hands of hackers or is used by employees for nefarious, stalkery purposes, as was the case with Ring’s cameras. So most civil liberties groups, like the ACLU and the Electronic Frontier Foundation are vehemently against them, but governments like the second Trump administration like them, because they create a surveillance mesh they can tap into and use for, for instance, figuring out where to deploy ICE agents, or, in theory at least, spying on your political enemies or ex-spouses for abuse or blackmail purposes.

Ring’s late-2025 announcement wasn’t widely reported, but in early 2026 the company bought a Super Bowl ad to announce a new feature called Search Party, enabled by their partnership with Flock.

The ad showed a neighborhood coming together to find a lost dog, using the web of doorbell cameras on all the homes in the area to track the dog and figure out where it went—all the cameras activated at once to create a surveillance mesh of live footage.

This ad landed with a resounding thud,, as to many people it felt more menacing than heartwarming, the new feature overtly raising the potential that government agencies, including ICE, could tap into it to surveil and track their neighbors. The response was so negative that Ring quickly issued a statement saying that it was no longer moving forward with its Flock partnership, attempting to reassure its customers that “integration never launched, so no Ring customer videos were ever send to Flock Safety.”

This result is notable in part because it’s a rare instance of a major tech company backtracking on a major feature decision due to public backlash, but also because it suggests backlash against ICE is reverberating through other aspects of life and interconnected industries.

Ring device users mostly buy these things for their surveillance capabilities, but the increasing, and increasingly hostile and violent acts committed by members of ICE seem to have nudged the conversation so that folks are more worried about these agents than about the porch pirates and other criminals that these devices and this partnership could ostensibly help them identify.

It’s too early to say what this might mean for the burgeoning patriot stack of tech companies and government agencies, but it does suggest there are limits to what people will put up with, even when those in charge are adhering to a playbook that has typically worked well for them, in the past, and the devices and services they’re using to build their surveillance network are otherwise beloved by those who use them.

Show Notes

https://restofworld.org/2026/big-tech-backlash-alternatives-upscrolled/

https://europeancorrespondent.com/en/r/trumps-power-switch

https://www.authoritarian-stack.info/

https://www.nytimes.com/2026/02/11/realestate/smart-home-cameras-nest-ring-privacy.html

https://arstechnica.com/tech-policy/2026/02/platforms-bend-over-backward-to-help-dhs-censor-ice-critics-advocates-say/

https://www.theverge.com/report/879320/ring-flock-partnership-breakup-does-not-fix-problems

https://www.theverge.com/news/878447/ring-flock-partnership-canceled

https://www.404media.co/with-ring-american-consumers-built-a-surveillance-dragnet/

https://en.wikipedia.org/wiki/United_States_Immigration_and_Customs_Enforcement

https://www.pbs.org/newshour/nation/children-of-color-projected-to-be-majority-of-u-s-youth-this-year

https://en.wikipedia.org/wiki/Ring_(company)

https://en.wikipedia.org/wiki/Flock_Safety

https://www.wired.com/story/ice-expansion-across-us-at-heres-where-its-going-next/

https://www.wired.com/story/social-security-administration-appointment-details-ice/

https://www.wired.com/story/security-news-this-week-ring-kills-flock-safety-deal-after-super-bowl-ad-uproar/

https://www.wired.com/story/ice-crashing-us-court-system-minnesota/

https://www.wired.com/story/palantir-ceo-alex-karp-employee-questions-on-ice/

https://www.wired.com/story/inside-the-ice-forum-where-agents-complain-about-their-jobs/

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit letsknowthings.substack.com/subscribe

This week we talk about OpenAI, nudify apps, and CSAM.

We also discuss Elon Musk, SpaceX, and humanistic technology.

Recommended Book: Who’s Afraid of Gender? by Judith Butler

Transcript

xAI is an American corporation that was founded in mid-2023 by Elon Musk, ostensibly in response to several things happening in the world and in the technology industry in particular.

According to Musk, a “politically correct” artificial intelligence, especially a truly powerful, even generally intelligent one, which would be human or super-human-scale capable, would be dangerous, leading to systems like HAL 9000 from 2001: A Space Odyssey. He intended, in contrast, to create what he called a “maximally truth-seeking” AI that would be better at everything, including math and reasoning, than existing, competing models from the likes of OpenAI, Google, and Anthropic.

The development of xAI was also seemingly a response to the direction of OpenAI in particular, as OpenAI was originally founded in 2015 as a non-profit by many of the people who now run OpenAI and competing models by competing companies, and current OpenAI CEO Sam Altman and Elon Musk were the co-chairs of the non-profit.

Back then, Musk and Altman both said that their AI priorities revolved around the many safety issues associated with artificial general intelligence, including potentially existential ones. They wanted the development of AI to take a humanistic trajectory, and were keen to ensure that these systems aren’t hoarded by just a few elites and don’t make the continued development and existence of human civilization impossible.

Many of those highfalutin ambitions seemed to either be backburnered or removed from OpenAI’s guiding tenets wholesale when the company experienced surprising success from its first publicly deployed ChatGPT model back in late-2022.

That was the moment that most people first experienced large-language model-based AI tools, and it completely upended the tech industry in relatively short order. OpenAI had already started the process of shifting from a vanilla non-profit into a capped for-profit company in 2019, which limited profits to 100-times any investments it received, partly in order to attract more talent that would otherwise be unlikely to leave their comparably cushy jobs at the likes of Google and Facebook for the compensation a non-profit would be able to offer.

OpenAI began partnering with Microsoft that same year, 2019, and that seemed to set them up for the staggering growth they experienced post-ChatGPT release.

Part of Musk’s stated rationale for investing so heavily in xAI is that he provided tens of millions of dollars in seed funding to the still non-profit OpenAI between 2015 and 2018. He filed a lawsuits against the company after its transition, and when it started to become successful, post-ChatGPT, especially between 2024 and 2026, and has demanded more than $100 billion in compensation for that early investment. He also attempted to take over OpenAI in early 2025, launching a hostile bid with other investors to nab OpenAI for just under $100 billion. xAI, in other words, is meant to counter OpenAI and what it’s become.

All of which could be seen as a genuine desire to keep OpenAI functioning as a non-profit arbiter of AGI development, serving as a lab and thinktank that would develop the guardrails necessary to keep these increasingly powerful and ubiquitous tools under control and working for the benefit of humanity, rather than against it.

What’s happened since, within Musk’s own companies, would seem to call that assertion into question, though. And that’s what I’d like to talk about today: xAI, its chatbot Grok, and a tidal wave of abusive content it has created that’s led to lawsuits and bans from government entities around the world.

—

In November of 2023, an LLM-based chatbot called Grok, which is comparable in many ways to OpenAI’s LLM-based chabot, ChatGPT, was launched by Musk’s company xAI.

Similar to ChatGPT, Grok is accessible by apps on Apple and Android devices, and can also be accessed on the web. Part of what makes its distinct, though, is that it’s also built into X, the social network formerly called Twitter which Musk purchased in late-2022. On X, Grok operates similar to a normal account, but one that other users can interact with, asking Grok about the legitimacy of things posted on the service, asking it normal chat-botty questions, and asking it to produce AI-generated media.

Grok’s specific stances and biases have varied quite a lot since it was released, and in many cases it has defaulted to the data- and fact-based leanings of other chatbots: it will generally tell you what the Mayo clinic and other authorities say about vaccines and diseases, for instance, and will generally reference well-regarded news entities like the Associated Press when asked about international military conflicts.

Musk’s increasingly strong political stances, which have trended more and more far right over the past decade, have come to influence many of Grok’s responses, however, at times causing it to go full Nazi, calling itself Mechahitler and saying all the horrible and offensive things you would expect a proud Nazi to say. At other times it has clearly been programmed to celebrate Elon Musk whenever possible, and in still others it has become immensely conspiratorial or anti-liberal or anti-other group of people.

The conflicting personality types of this bot seems to be the result of Musk wanting to have a maximally truth-seeking AI, but then not liking the data- and fact-based truths that were provided, as they often conflicted with his own opinions and biases. He would then tell the programmers to force Grok to not care about antisemitism or skin color or whatever else, and it would overcorrect in the opposite direction, leading to several news cycles worth of scandal.

This changes week by week and sometimes day by day, but Grok often calls out Musk as being authoritarian, a conspiracy theorist, and even a pedophile, and that has placed the Grok chatbot in an usual space amongst other, similar chatbots—sometimes serving as a useful check on misinformation and disinformation on the X social network, but sometimes becoming the most prominent producer of the same.

Musk has also pushed for xAI to produce countervailing sources of truth from which Grok can find seeming data, the most prominent of which is Grokipedia, which Musk intended to be a less-woke version of Wikipedia, and which, perhaps expectedly, means that it’s a far-right rip off of Wikipedia that copies most articles verbatim, but then changes anything Musk doesn’t like, including anything that might support liberal political arguments, or anything that supports vaccines or trans people. In contrast, pseudoscience and scientific racism get a lot of positive coverage, as does the white genocide conspiracy theory, all of which are backed by either highly biased or completely made up sources—in both cases sources that Wikipedia editors would not accept.

Given all that, what’s happened over the past few months maybe isn’t that surprising.

In late 2025 and early 2026, it was announced that Grok had some new image-related features, including the ability for users to request that it modify images. Among other issues, this new tool allowed users to instruct Grok to place people, which for this audience especially meant women and children, in bikinis and in sexually explicit positions and scenarios.

Grok isn’t the first LLM-based app to provide this sort of functionality: so called “nudify” apps have existed for ages, even before AI tools made that functionality simpler and cheaper to apply, and there have been a wave of new entrants in this field since the dawn of the ChatGPT era a few years ago.

Grok is easily the biggest and most public example of this type of app, however, and despite the torrent of criticism and concern that rolled in following this feature’s deployment, Musk immediately came out in favor of said features, saying that his chatbot is edgier and better than others because it doesn’t have all the woke, pearl-clutching safeguards of other chatbots.

After several governments weighed in on the matter, however, Grok started responding to requests to do these sorts of image edits with a message saying: “Image generation and editing are currently limited to paying subscribers. You can subscribe to unlock these features.”

Which means users could still access these tools, but they would have to pay $8 per month and become a premium user in order to do so. That said, the AP was able to confirm that as of mid-January, free X users could still accomplish the same by using an Edit Image button that appears on all images posted to the site, instead of asking Grok directly.

When asked about this issue by the press, xAI has auto-responded with the message “Legacy Media Lies.” The company has previously said it will remove illegal content and permanently suspend users who post and ask for such content, but these efforts have apparently not been fast or complete, and more governments have said they plan to take action on the matter, themselves, since this tool became widespread.

Again, this sort of nonconsensual image manipulation has been a problem for a long, long time, made easier by the availability of digital tools like Photoshop, but not uncommon even before the personal computer and digital graphics revolution. These tools have made the production of such images a lot simpler and faster, though, and that’s put said tools in more hands, including those of teenagers, who have in worryingly large numbers taken to creating photorealistic naked and sexually explicit images of their mostly female classmates.

Allowing all X users, or even just the subset that pays for the service to do the same at the click of a button or by asking a Chatbot to do it for them has increased the number manyfold, and allowed even more people to created explicit images of neighbors, celebrities, and yes, even children. An early estimate indicates that over the course of just nine days, Grok created and posted 4.4 million images, at least 41% of which, about 1.8 million, were sexualized images of women. Another estimated using a broader analysis says that 65% of those images, or just over 3 million, contained sexualized images of men, women, and children.

CSAM is an acronym that means ‘child sexual abuse material,’ sometimes just called child porn, and the specific definition varies depending on where you are, but almost every legal jurisdiction frowns, or worse, on its production and distribution.

Multiple governments have announced that they’ll be taking legal action against the company since January of 2026, including Malaysia, Indonesia, the Philippines, Britain, France, India, Brazil, and the central governance of the European Union.

The French investigation into xAI and Grok led to a raid on the company’s local office as part of a preliminary investigation into allegations that the company is knowingly spreading child sexual abuse materials and other illegal deepfake content. Musk has been summoned for questioning in that investigation.

Some of the governments looking into xAI for these issues conditionally lifted their bans in late-January, but this issues has percolated back into the news with the release of 16 emails between Musk and the notorious sex traffic and pedophile Jeffrey Epstein, with Musk seemingly angling for an invite to one of Epstein’s island parties, which were often populated with underage girls who were offered as, let’s say companions, for attendees.

And this is all happening at a moment in which xAI, which already merged with social network X, is meant to be itself merged with another Musk-owned company, SpaceX, which is best known for its inexpensive rocket launches.

Musk says the merger is intended to allow for the creation of space-based data centers that can be used to power AI systems like Grok, but many analysts are seeing this as a means of pumping more money into an expensive, unprofitable portion of his portfolio: SpaceX, which is profitable, is likely going to have an IPO this year and will probably have a valuation of more than a trillion dollars. By folding very unprofitable xAI into profitable SpaceX, these AI-related efforts could be funded well into the future, till a moment when, possibly, many of today’s AI companies will have gone under, leaving just a few competitors for xAI’s Grok and associated offerings.

Show Notes

https://www.wired.com/story/deepfake-nudify-technology-is-getting-darker-and-more-dangerous/

https://www.theverge.com/ai-artificial-intelligence/867874/stripe-visa-mastercard-amex-csam-grok

https://www.ft.com/content/f5ed0160-7098-4e63-88e5-8b3f70499b02

https://www.theguardian.com/global-development/2026/jan/29/millions-creating-deepfake-nudes-telegram-ai-digital-abuse

https://apnews.com/article/france-x-investigation-seach-elon-musk-1116be84d84201011219086ecfd4e0bc

https://apnews.com/article/grok-x-musk-ai-nudification-abuse-2021bbdb508d080d46e3ae7b8f297d36

https://apnews.com/article/grok-elon-musk-deepfake-x-social-media-2bfa06805b323b1d7e5ea7bb01c9da77

https://www.nytimes.com/2026/02/07/technology/elon-musk-spacex-xai.html

https://www.bbc.com/news/articles/ce3ex92557jo

https://techcrunch.com/2026/02/01/indonesia-conditionally-lifts-ban-on-grok/

https://www.bbc.com/news/articles/cgr58dlnne5o

https://www.nytimes.com/2026/01/22/technology/grok-x-ai-elon-musk-deepfakes.html

https://en.wikipedia.org/wiki/XAI_(company)

https://en.wikipedia.org/wiki/OpenAI

https://en.wikipedia.org/wiki/ChatGPT

https://en.wikipedia.org/wiki/Grok_(chatbot)

https://en.wikipedia.org/wiki/Grokipedia

https://www.cnbc.com/2025/02/10/musk-and-investors-offering-97point4-billion-for-control-of-openai-wsj.html

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This week we talk about the European Union, India, and tariffs.

We also discuss trade barriers, free trade, and dumping.

Recommended Book: The Kill Chain by Christian Brose

Transcript

A free trade agreement, sometimes called a free trade treaty, is a law that reduces the cost and regulatory burden of trading between two or more states.

There are many theories as to the ideal way to do international trade, with some economists and politicians positing that complete free and open trade is the way to go, because it allows goods and services to cross borders completely unencumbered, which in turn allows businesses in different countries to really lean into whatever they’re good at, selling their cars to countries that are less good at making cars, while that recipient country produces soy beans or computer chips or whatever they’re good at making, and sending those in the other direction, likewise unburdened by stiff tariffs or regulatory hurdles. Each country can thus produce the best product cheapest and sell it to the market where their products are in high-demand, while they, in turn, benefit from the same when it comes to other products and services.

This theory leans on the idea that everyone is better off when everyone does what they’re best at, rather than trying to do everything—specialization. But those who oppose this conception of international trade argue that this creates and reinforces asymmetries between different nations and businesses: a country that’s really good at producing soybeans may be at a substantial disadvantage if the country that makes cars ever decides to go to war, because they won’t have the existing infrastructure to build tanks or drones or whatever else, while the country that specializes in computer chips might hold all the cards when it comes to generating economic pressure against its enemies or would-be enemies, because such chips are in everything these days, from military hardware to kitchen appliances.

This also creates potential frailties for countries that specialize in, say, buggy whips, only to have a new technology like the automobile come around and put a significant chunk of their total economy out of business.

This theory may also leave local businesses that don’t lean into a regional strength kind of in the lurch. If a country with a decent-sized automobile industry decides leaves their borders completely open to international competition, there’s a chance that could light a fire under those local producers, forcing them to become more competitive, but there’s also a chance it could collapse the market for local offerings—their cars might no longer be desirable, because the international stuff flooding across the borders from a nation that has heavily prioritized making cars are just so much better and cheaper, whether naturally or artificially, because of subsidies by that foreign government meant to help them take out international competition.

This is why most nations have all sorts of tariffs, regulations, and other trade barriers erected between them and their trading partners, and why those trade barriers are ultra-specific, different for every single possible trade partner. The goal is to make international options less appealing by making them more expensive, or making it trickier for foreign competition to smoothly and quickly get their products on your shelves, while still making those things available in a volume that aligns with local consumer demands. And then ideally making it easier and cheaper for your stuff to get on their shelves.

The negotiation of all this is massively complicated because Country A might want to favor their soybean farmers, who are an important voting bloc, and Country B might want to do the same for their car industry, because tax income from that industry is vital, and these two governments will thus do what they can to ensure their favored local industries and businesses have the biggest leg-up possible in as many foreign markets as possible, without giving away so much to their trade partners that they create worse situations for other industries and businesses (and the people who run them) on the home-front, as a consequence.

What I’d like to talk about today is a recent, massive and potentially quite vital trade deal that was struck in early 2026, and what it might mean for global trade.

—

At the tail-end of January 2026, the European Commission announced that they had struck what they called “the mother of all deals” with India, this deal the culmination of two decades worth of negotiation, its tenets impacting about 2 billion people and around a quarter of the world’s total GDP.

The agreement, as is the case with most such agreements, is fairly complex. But in essence it reduces or eliminates tariffs on 96.6% of all EU goods exported to India, which means about 4 billion euros of annual duties that would have otherwise been paid on European products in India will disappear—a savings for Indian consumers, and a boon for European producers whose products will now be cheaper in India.

This is expected to be especially beneficial for European automakers like Volkswagen, Renault, and BMW, which have long been weighed down by a 110% tariff in India; that tariff will be reduced to as little as 10% on the first 250,000 vehicles sold, following this agreement. Lower priced vehicles will still face higher tariffs, to help protect India’s local carmakers, but electric vehicles will benefit from a five-year grace period, as India has been focusing on allowing as many cheap, renewable energy assets and infrastructure into the country as possible, regardless of where they come from.

Tariffs on machinery, chemicals, and pharmaceuticals coming from the EU will be almost entirely eliminated, down from tariff rates of 44, 22, and 11%, respectively. Wine, which has long been tariffed at a rate of 150%, will be cut to between 20-30% for many varieties, and spirits from the EU coming into India will see 150% tariffs cut to 40%.

On the other side of this deal, the EU will also open its market to Indian goods, reducing tariffs on about 99.5% of all such goods, including seafood, textiles, gems and jewelry, leather goods, plastic products, and toys. Several of these categories, like Indian seafood, textile-making, and other labor-intensive industries, have had a rough time of late, because of high US tariffs enforced by President Trump’s second administration, so this is being seen as a significant win for them in particular.

Interestingly, while the reduction in trade barriers is substantial here, and the number of people and industries, and amount of money that’s involved is massive, this deal doesn’t include, and in some cases explicitly excludes, any agreements related to labor rights, climate commitment, or environmental standards.

This means that while the European Union has thus far been pretty strict in terms of ensuring incoming products align with their policies and values regarding things like carbon emissions and ensuring goods aren’t produced by people laboring in slave-like conditions, this deal falls short of such enforcements, allowing India to operate with relative impunity, with regards to those issues, at least, and still sell with dramatically reduced barriers, on the European market. That’s a big deal, and is perhaps the biggest indicator of just how badly the EU wanted to make this deal work.

The EU was also able to keep significant protections in place for important local sectors like beef and chicken, dairy, rice, and sugar—all industries in which India would have liked to compete in the EU, but which, because of those maintained barriers, they practically can’t. That would likely have been a feverishly negotiated topic, and it’s likely an indicator of how much India wanted this to work, too.

On that note, both India and the EU were apparently especially interested in making this multi-decade deal work, now, because of increasing pressure from China on one side and the US on the other.

China has been rerouting many of its cheap products that would have previously gone to the US market, elsewhere, engaging in what’s often called ‘dumping’ which slowly but surely puts businesses that produce comparable products at a profit in those local target markets out of business, at which point these Chinese companies can then ratchet up their prices and profits, operating without real competition.

The EU and India have both been targeted by Chinese companies taking this approach, because they’re still producing at a feverish pace and because of US tariffs and the general unpredictability and irregularity of US policy overall under the second Trump administration, they’ve been firing that cheap product cannon more intensely at other large markets, instead—and India and the EU are the next two big markets in line right now, after the US and China.

On the US side of things, those same tariffs have been hurting companies in both the EU and India that would otherwise been shipping their goods to the rich and spendy US market, and in many cases these tariffs have been fine-tuned to hurt important local industries as much as possible, because that’s one of Trump’s main negotiating tactics: lead with pain and then negotiate to take some of the pain away.

This deal, then, serves multiple purposes in that it creates a valuable, newly polished trade relationship between a rich and powerful existing bloc and the newly most-populous country on the planet, which is also rapidly expanding economically and geopolitically.

One last point to note, here, though, is that the European Union has been trying to create these sorts of mutually beneficial deals with non-US partners for a while, now, and the two most recent wins, trade deals with a South American trade bloc and with Indonesia, in early January 2026 and in September of 2025, respectively, have borne mixed results.

The deal with Indonesia seems to be moving forward apace, and while it’s a heck of a lot smaller than the India deal, only worth about 27 billion euros, that’s still important, as Indonesia is increasingly important, both economically and geopolitically, especially in a Southeast Asia that’s slowly reinforcing itself against China’s economically and potentially militarily expansionist tendencies.

The deal with that South American bloc, however, was referred to the EU Court of Justice in mid-January for legal review due to its lack of alignment with other EU treaties, and that could delay or prevent its ratification.

This new mother of all deals with India could likewise face holdups, or could fizzle before being implemented—though most analysts who are keeping eyes on this are seeing it not just as an economic agreement, but a gesture of solidarity at a moment in which China and the US are signaling their intent to carve up the world into hemispheric hegemonies, when those who might otherwise be forced into subordinate positions are scrambling to figure out who they can team up with and create counter-balancing forces capable of standing up against current and future aggression and coercion.

There’s a chance that even if politics and propriety threaten to get in the way, then, India and the EU will figure out a way to work together, on this and potentially other matters of global import, as well.

Show Notes

https://www.theguardian.com/business/2026/jan/27/eu-and-india-sign-free-trade-agreement

https://www.reuters.com/sustainability/climate-energy/eu-india-trade-deal-leaves-blocs-carbon-border-tariff-intact-2026-01-27/

https://archive.is/20260127162349/https://www.ft.com/content/b03b1344-7e92-4d0d-b85e-5ed92fc8f550

https://en.wikipedia.org/wiki/Free_trade_agreement

https://en.wikipedia.org/wiki/Trade_barrier

https://ec.europa.eu/commission/presscorner/detail/en/ip_26_184

https://ec.europa.eu/commission/presscorner/api/files/document/print/en/ip_26_184/IP_26_184_EN.pdf

https://www.ndtv.com/world-news/how-indias-mother-of-all-deals-with-eu-wipes-out-pakistans-trade-advantage-10921011

https://theconversation.com/what-the-mother-of-all-deals-between-india-and-the-eu-means-for-global-trade-274515

https://cepr.org/voxeu/columns/economic-impact-us-tariff-hikes-significance-trade-diversion-effects

https://www.europarl.europa.eu/news/en/press-room/20260116IPR32450/eu-mercosur-meps-demand-a-legal-opinion-on-its-conformity-with-the-eu-treaties

https://www.aljazeera.com/economy/2026/1/27/mother-of-all-deals-how-india-eu-trade-deal-creates-27-trillion-market

https://www.cnbc.com/2026/01/27/trump-reaction-eu-india-trade-deal-fta.html

https://www.atlanticcouncil.org/content-series/inflection-points/the-mother-of-all-trade-deals-in-the-time-of-trump/

https://economictimes.indiatimes.com/news/economy/foreign-trade/with-mother-of-all-deals-in-bag-minister-piyush-goyal-says-mother-will-be-compassionate-fair-to-all-28-children/articleshow/127821015.cms

https://en.wikipedia.org/wiki/India%E2%80%93European_Union_Free_Trade_Agreement

https://en.wikipedia.org/wiki/India%E2%80%93European_Union_relations

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit letsknowthings.substack.com/subscribe

This week we talk about social networks, propaganda, and Oracle.

We also discuss foreign adversaries, ByteDance, and X.

Recommended Book: Rewiring Democracy by Bruce Schneier and Nathan E. Sanders

Transcript

In 2021, TikTok, a short-form video platform that’s ostensibly also a social network, though which leans heavily toward consuming content over socializing, was ranked the most popular website by internet services company Cloudflare, beating out all the other big tech players, including search engine juggernaut, Google.

It was a neck and neck sort of thing, with Google taking the lead some days that year, but 2021 was definitely TikTok’s time to shine, as it was already popular with young people and was starting to become popular with the general public, of all ages and across a huge swathe of the planet. It even beat Facebook as the most popular social media website that year, despite, again, being mostly about consuming content rather than interacting—that was actually a prime motivator for Meta, which owns Facebook and Instagram, to redirect its own apps in a similar direction, shifting its focus from communication and interaction between users toward the creation of binge-able content, and feeding users more of that content in a feed optimized for time-losing levels of consumption.

2021 was also the first full year that TikTok was coming under scrutiny from the US government. In the preceding year, 2020, then first-term president Donald Trump said he was considering banning the app because it was becoming so popular, with young people in particular, and because it was owned by a Chinese company, ByteDance it represented a potential national security threat.

So the idea was that because Chinese companies are forced, by their very nature, to do what the Chinese government tells them—that’s just how things work over there—and to do so on the down-low if that’s what the governments demands, and to lie about having to do what the government tells them to do, if the government tells them to thus lie, it doesn’t matter that ByteDance’s leadership swore up and down to the world that the company will never use its popularity, and the data it soaks up from all its users as a result of that popularity, to help the Chinese government, the Chinese military, or Chinese intelligence services.

It of course will have to do that, and if it doesn’t, its leaders could be black-bagged and disappeared in the night—because again, that’s just how things work over there. So the Trump administration decided to make TikTok a sort of bogeyman, representing Chinese companies in general, and to some degree the presence of China in the US and throughout the Western world, and said, nope, we’re not gonna let this thing continue to operate over here.

It’s worth remembering, too, that by 2021 the world was enmeshed in the COVID-19 pandemic, which originated in China, and which Trump and his administration were ardently attempting to tie to the Chinese government—calling Covid the Chinese Flu, and even worse things, as part of that effort.

So this move against TikTok and its parent company, while based on genuine concerns about the ownership of the company and how and where the data being collected by said company is handled, it should also be seen as a political maneuver, allowing Trump, during the 2020 election run-up, to look like he was taking a big stand against a big foreign threat, China.

What I’d like to talk about today is a deal that was proposed way back then by the Trump administration, as a potential way out for TikTok and ByteDance, allowing it to continue operating in the US despite threats to shut it down, now that said deal, or a version of it, seems to have finally come to fruition—and what we know about the shape of the resulting new, US-based version of TikTok.

—

On January 18, 2025, TikTok stopped worked in the US. It voluntarily suspended all services in the country in the lead-up to the implementation of the Protecting Americans from Foreign Adversary Controlled Applications Act, which was passed by the US congress and signed into law by then-president Joe Biden in April of 2024. This law gave social networking services controlled by ‘foreign adversaries’ 270 days, with the possibility of a 90-day extension, to divest themselves so that they’re no longer considered foreign adversary-owned.

This law was almost exclusively aimed at TikTok, and the idea was that TikTok, in the US, would no longer be able to legally function following that deadline if it was still owned by China, which for the purposes of this law has been labeled a foreign adversary.

ByteDance could keep TikTok in the US going if it sold a majority, controlling stake of its US-based assets to non-adversary owners, but otherwise it would have to shut down.

Interestingly, though Trump was the original source of concerns about TikTok and its Chinese ownership during his first administration, when he stepped back into office in January 2025, he signed a new executive order that delayed the enforcement of this Biden-signed law, and then delayed it still-further, three more times after that, saying that he wanted to give American investors the time to negotiate controlling interest of US TikTok, rather than banning it.

Those efforts eventually bore fruit in the shape of a new controlling entity called TikTok USDS Joint Venture LLC, which is made up of a bunch of non-Chinese investment entities, including US software behemoth Oracle, an Emirati investment firm called MGX, a US investment firm called Silver Lake, and a personal investment company owned by Michael Dell, the founder of Dell Technologies. There are other, smaller investors also involved, but the red thread that runs through almost all of them is that they’re big Trump supporters and funders, funneling a lot of money into Trump’s campaigns, and his family businesses.

So six years after the initial legal salvo was fired at TikTok in the US, the local assets are now controlled by non-Chinese investors, though the original Chinese owner, ByteDance, still owns just under 20%, compared to about 15% apiece for Oracle, MGX, and Silver Lake.

The new company’s board is majority-run by those investors, too, which means it’s majority-run by ardent Trump supporters. We don’t yet know what effect this will have on content within the app, but under full Chinese ownership, topics related to democracy, Tianamen Square, and the LGBTQ community, among others, were significantly downgraded in the algorithm, ensuring they were seldom shown to anyone, which in turn disincentivized content that those owners didn’t like while incentivizing content that was pro-China, and pro-Chinese government priorities.

It’s considered to be likely, by analysts who watch these sorts of maneuverings, that the same will be true of this new entity, but for and against subject matter that the Trump administration is for and against. Which raises the possibility that the new US TikTok, while superficially the same as the previous US TikTok, will slowly go the way X, formerly Twitter, has gone under Elon Musk, which was dramatically pushed in a new direction under its own owner, focusing on his political and ideological priorities and punishing users who spoke against those priorities.

TikTok could become more or less an extension of the Trump-verse, in other words, and could thus become something more akin to Trump’s own network, Truth Social, or other right-leaning and far-right social networks, like conservative YouTube-clone, Rumble, rather than something less ideological, or maybe I should say less overtly politically ideological, like Meta’s Facebook, Threads, and Instagram.

Users have already noticed some changes to US TikTok after the change in ownership, though, including what sorts of data are collected.

TikTok’s new privacy policy, which all users have to agree to before using the app, now that the platform has changed hands, says that TikTok will be using precise location tracking, keeping tabs on exactly where users are located via their device’s GPS. That’s compared to the app’s previous approximate location-tracking effort, which used SIM card and IP address data to understand general proximity—it still uses that data, too, but now, rather than knowing what neighborhood you’re probably in, it may also know what room in your house you’re scrolling from.

The new US TikTok also tracks users’ interactions with AI tools, including their prompts, outputs, and metadata attached to said interactions, which includes details about where users are when they’re using such tools, and what time they used them.

They also collect gobs of marketing data from outside sources, and based on the users’ activity within the app. So things you buy, websites and other apps you visit and use, and conversations you have will all be sucked up and agglomerated into a profile that’s then used to show you targeted advertising. This isn’t unique to US TikTok, but the company does seem to intend to make use of more such data, and to combine it with that other stuff it’s now collecting, to increase the price it can charge for ads, because they’ll be a lot more specifically targeted than before.

Some users are beginning to comb through the new user agreement with a fine-toothed comb, noticing, in addition to those aforementioned major changes, that the company also reserves the right to collect information about your physical and mental health, to use identifying information in the videos and images you might share, and information gleaned from people and their identifying characteristics in images and videos, and to collect biometric data, which usually means eyes and faces and walking gate and things like that, to differentiate and track people across such content. They can keep tabs on your sex life, sexual orientation and gender, your drug usage, your ethnic and racial origins, your citizenship and immigration status, your financial situation and information—all sorts of stuff is collected, and they say in the privacy policy and user agreement that they intend to do gather and store and cross-reference this kind of information whenever possible.

Again, much of this isn’t novel, as social platforms are gobbling up all sorts of stuff about their users all the time, mostly to refine their ad placements because that allows them to charge advertisers more for better-targeted placements, over time.

That said, because of the nature of the group that now owns US TikTok and which is making executive decisions about it, including, potentially, how this data is shared, including with the US government and its many agencies, there’s a chance we might see an exodus of sorts from the still younger-than-average user base of this network, because there is a nonzero chance it could become a tool in the Trump administration’s utility belt for tracking down people they don’t like and spreading messages that are favorable to them and their ideological aims; so basically what was happening under the previous ownership, but for the current US administration’s priorities, rather than those of the Chinese government.

Show Notes

https://www.nbcnews.com/tech/tech-news/tiktok-surpasses-google-popular-website-year-new-data-suggests-rcna9648

https://www.nytimes.com/2026/01/22/technology/tiktok-deal-oracle-bytedance-china-us.html

https://www.wired.com/story/tiktok-new-privacy-policy/

https://archive.is/20260123005655/https://www.bloomberg.com/news/articles/2026-01-23/tiktok-seals-deal-to-create-us-venture-with-oracle-silver-lake

https://www.axios.com/2026/01/23/tiktok-deal-trump-app-ban

https://www.theverge.com/tech/866868/tiktok-usds-new-owners-algorithm-explained

https://www.politico.com/news/2026/01/22/5-things-to-know-about-the-tiktok-deal-00743316

https://www.nytimes.com/2026/01/23/business/media/tiktok-us-terms-conditions.html

https://en.wikipedia.org/wiki/TikTok

https://en.wikipedia.org/wiki/Donald_Trump%E2%80%93TikTok_controversy

https://en.wikipedia.org/wiki/Efforts_to_ban_TikTok_in_the_United_States

https://en.wikipedia.org/wiki/Protecting_Americans_from_Foreign_Adversary_Controlled_Applications_Act

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit letsknowthings.substack.com/subscribe

This week we talk about war, inflation, and currency devaluation.

We also discuss tyrants, police violence, and social media threats.

Recommended Book: Post-Growth Living by Kate Soper

Transcript

Back in mid-June of 2025, a shooting war erupted between Iran and Israel, with Israeli military forces launching attacks against multiple Iranian military sites, alongside sites associated with its nuclear program and against individual Iranian military leaders.

Iran responded to these strikes, which left a lot of infrastructural damage and several military leaders assassinated, with large waves of missiles and drones against both Israeli and allied military targets, and soon after, later the same month, both sides agreed on a ceasefire and that was that.

Following that blip of a war, though, Iran’s economy suffered greatly. It already wasn’t doing well, in part due to the crippling sanctions enforced by the US government for years, but also because of persistent mismanagement by Iran’s ruling regime, and the resultant deterioration of local infrastructure, both physical and bureaucratic.

Millions of people fled Iranian urban centers during the war with Israel, and while most of them returned when the ceasefire was brokered, the pace of life and other fundaments of these cities never got back up to where they were, before, as there have been fairly consistent blackouts that have kept people from being able to function as normal, and these outages have also kept businesses from getting back on their feet. That, in turn, has resulted in closures and firings and an overall reduction in economic activity.

The general hamhandedness of the government has amplified these issues, and the countless other issues of trying to exist within a country that is being so persistently targeted—both in the sense of those crushing sanctions from the US, but also in the sense of being periodically struck by Israel—has dramatically increased uncertainty throughout Iran these past several years.

Even before that brief war, Iran was already on the backfoot, having suffered the loss of their local proxies, including the Assad regime in Syria, Hezbollah in Lebanon, the Houthis in Yemen, and Hamas in the Gaza Strip—all of which have been either severely weakened by Israel in recent years, or functionally wiped out—and that in turn has more directly exposed them to meddling and attacks from their key opposition, which includes the US, Israel, and Saudi Arabia.

That new vulnerability has put the Iranian government on high-alert, and the compounding effects of all that infrastructural damage, mismanagement, and the need to reallocate more resources to defense has left the country suffering very high levels of inflation, a severely devalued currency, regular blackouts, mass unemployment, a water shortage, and long-time repression from a government that is in many ways more paranoid and flailing than in any time in recent memory.

What I’d like to talk about today is a recent wave of protests across Iran and why the US government is apparently considering taking action to support protestors against the Iranian government.

—

Iran has long suffered all sorts of issues, including regular efforts by ethnic secessionists to pull it apart into pieces they periodically occupy and want to govern, themselves, and concerns from citizens that the government spends a whole lot of their time and the nation’s resources enriching themselves, oppressing the citizenry, funding what seems to be a pointless nuclear program, and prioritizing their offensive efforts against Israel and their other regional enemies, often by arming and funding those aforementioned, now somewhat defunct proxy militias and militaries.

On top of all that, as of October 2025, inflation in Iran had surged to 48.6% and the Iranian currency, the rial, dropped in value to 1.45 million per dollar. The government tried to artificially boost the value of the rial to 1.38 million per dollar in early January of 2026, but it dropped further, to 1.5 million per dollar a few days later, hitting a record low. This combined with that wild inflation rate, made the basic fundamentals of life, food, electricity, and so on, unaffordable, even for those who still had jobs, which was an ever-shrinking portion of the population.

For context, the drop of the rial to a value of 1.38 million per dollar, the boosted value, represented a loss of about 40% of the rial’s value since June of 2025, just before that war with Israel, which is a staggering loss, as that means folk’s life savings lost that much in about half a year.

When currency values and inflation hit that level of volatility, doing business becomes difficult. It often makes more sense to close up shop than to try to keep the doors open, because you don’t know if the price you charge for your product or service will make you a profit or not: there’s a chance you’ll sell things at a loss, because the value of the money you receive and the cost of goods you require, both to survive and to keep your business functioning, will change before the day ends, or before the sale can be completed.

Iran’s economic crisis has further exploded in the past few weeks, then, because all those issues have compounded and spiraled to the point that simply selling things and buying things have become too risky for many people and entities, and that means folks are having even more trouble getting food and keeping the lights on than before; which becomes a real survival issue, on top of the regular crackdowns and abuses by the government that they’ve suffered in various ways for decades.

In 2022, those abuses and limits on personal rights led to large protests that were catalyzed by the death of a 22-year-old woman named Mahsa Amini, who was in police custody for allegedly wearing her hijab improperly. Those 2022 protests were historically large—the biggest in the country, by some estimates at least, since the 1979 Islamic Revolution.

On December 28 2025, a group of shopkeepers in Iran’s capital city, Tehran, went on strike, closing their shops in protest against what’s been happening with Iran’s economy; again, it’s basically impossible to safely do business in a country with that much inflation and currency devaluation happening.

Other shopkeepers followed suit, and large protests formed around these closed shops. Those protests flooded social media platforms in short order, protestors shouting slogans that indicated they were pissed off about all the economic mismanagement in the country, and then eventually that led to anti-government slogans being shouted, as well.

Things remained peaceful at these protests, at first, and they expanded across the country within the next few days, shops closing and people filling the streets.

By the fourth day, police had started to use live ammunition and tear gas against protestors, some of the protestors were killed, and things spiraled from there.

By December 31, the government ordered a total, nationwide business shutdown, to try to get ahead of these protests, which again tended to revolve around the shutdown of businesses in protest—the government said they were making this call because of cold weather, but the writing was kind of on the wall at this point that they were scrambling to make it look like businesses were shutting down because they said so, not in protest of the government.

The government also announced that they would start cracking down on protestors, hard, and on the first day of 2026, things escalated further, police using even more force against those who gathered, which of course led to more protests in more places, more angry slogans being shouted, and more protestor deaths at the hands of government forces.

Protests had spread to all 31 Iranian provinces by early January of 2026, and at this point there were only 17 confirmed deaths.

US President Donald Trump got involved around this time, maybe feeling confident following the successful nighttime grab of Venezuelan President Maduro; whatever the case, he warned the Iranian government not to shoot protestors, or the US government might have to get involved, coming to the protestors’ rescue.

Iran’s government responded by saying the rioters must be put in their place, suppressing the funerals of protestors, and muffling local internet service, slowing down access speeds and increasing the number of outages by about a third. They threatened to execute hundreds of protestors by hanging, then said they wouldn’t. Trump declared this to be a personal victory, though the Iranian government has used his insinuation of himself into the matter to position the fight as Iran against the US, the protestors backed by their great enemy, which has shown itself to be responsible for these protests.

The government then started forcing captured protestors to make confessions on video, which only seemed to further anger the non-arrested protestors, and some protestors began to fight back, in one case setting a police officer on fire, and in other cases local militia groups defended protestors against police, leading to several deaths.

Iran’s government shut down more communication services in an attempt to regain control, in some cities taking down the internet completely, though some information, photos and videos of police abuses of protestors still made it out into the wider world using satellite services like Starlink, and by the 9th of January, protests reached a scale that rivaled and maybe surpassed those seen during the 1979 Islamic Revolution, and protestors began to set fire to buildings associated with the Islamic Republic, the government, and directly clashing with security forces in some cases.

Hundreds of people were reportedly killed per day from that point forward, and thousands were rushed to hospitals, overwhelming local doctors.

Thousands of people were also violently killed by police, under cover of the now complete internet blackout, and on January 10th, it was estimated that around 2,000 protestors had been killed in the past two days, alone, while other estimates from inside and outside Iran range from 12,000 to 20,000 protestors killed by the government. The most reliable source I could find, as of last weekend, indicated that the true number of dead is something like 3,300 people, at minimum.

In the past week or so, the Iranian government has apparently figured out how to jam Starlink internet signals, making it even more difficult for protestors to share what’s happening in the country, and President Trump posted on his social network, Truth Social, telling Iranian citizens that they should overthrow the government and that help is on the way.

The Iranian government has arrested tens of thousands of people, has tanks patrolling their towns and cities, and seems to have successfully quashed protests for the time being; no protests at all were reported across the country as of mid-January, and so many people were killed and injured that hospitals and other institutions are still overwhelmed, trying to work through their backlog; much of the country is in mourning.

Government forces are reportedly going door to door to arrest people who were spotted in CCTV and social media footage participating in protests, and they’ve set up checkpoints to stop people, look through their phones, and arrest them if any photos or videos are found that indicate they were at protests, deleting that digital evidence in the process.

This remains a fast-moving story and there’s a chance something significant, like the US striking Iranian government targets, or renewed, more focused protests will arise in the coming days and weeks.

Some analysts have argued that it’s kind of a no-brainer for the Trump administration to hit the Iranian government while it’s strained in this way, because it’s a long-time enemy of the US and its allies that’s currently weak, and doing so would reinforce the narrative, sparked with the capture of Maduro, that Trump’s administration is anti-tyrant; which is questionable by most measures, but again, this is a narrative, not necessarily reality. And narratives are powerful, especially going into an election year.

It’s also possible that, because economic conditions in Iran haven’t changed, that this is just the beginning of something bigger; protestors and militias taking a moment to regain their footing and consider what they might do to have more of an impact when they start back up again.

Show Notes

https://www.iranintl.com/en/202601130145

https://www.theguardian.com/world/2025/dec/31/we-want-the-mullahs-gone-economic-crisis-sparks-biggest-protests-in-iran-since-2022

https://www.nytimes.com/article/iran-protests-inflation-currency.html

https://www.fdd.org/analysis/2025/06/25/mapping-the-protests-in-iran-2/

https://www.nytimes.com/2026/01/10/us/politics/trump-iran-strikes.html

https://www.nytimes.com/2026/01/10/world/middleeast/iran-protests-death-toll.html

https://www.reuters.com/world/china/iranian-mp-warns-greater-unrest-urging-government-address-grievances-2026-01-13/

https://www.wsj.com/world/middle-east/iran-is-hunting-down-starlink-users-to-stop-protest-videos-from-going-global-d8b49602

https://archive.is/20260114175227/https://www.wsj.com/world/middle-east/bank-collapse-iran-protests-83f6b681

https://www.cbsnews.com/news/iran-protest-death-toll-over-12000-feared-higher-video-bodies-at-morgue/

https://sundayguardianlive.com/world/did-irans-currency-collapse-rial-plummets-to-000-against-euro-while-inflation-protests-escalate-across-the-country-164403/

https://archive.is/20260116034429/https://www.ft.com/content/5d848323-84a9-4512-abd2-dd09e0a786a3

https://www.bbc.com/news/articles/cm2jek15m8no

https://theconversation.com/the-use-of-military-force-in-iran-could-backfire-for-washington-273264

https://archive.is/20260114182636/https://www.washingtonpost.com/opinions/2026/01/14/iran-regime-protest-trump-strike/

https://www.nytimes.com/2026/01/16/world/middleeast/iran-protests-deadly-crackdown.html

https://www.nytimes.com/2026/01/17/world/middleeast/iran-ayatollah-khamenei.html

https://en.wikipedia.org/wiki/2025%E2%80%932026_Iranian_protests

https://www.en-hrana.org/day-thirteen-of-the-protests-nighttime-demonstrations-continue-amid-internet-shutdown/

https://en.wikipedia.org/wiki/2025_Iran_internal_crisis

https://apnews.com/article/iran-protests-trump-khamenei-fc11b1082fb75fca02205f668c822751

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit letsknowthings.substack.com/subscribe

This week we talk about Venezuela, Maduro, and international law.

We also discuss sour crude, extrajudicial killings, and Greenland.

Recommended Book: The Keep by F. Paul Wilson

Transcript

Back in mid-November of 2025, I did an episode on extrajudicial killings, focusing on the targeting of speedboats, mostly from Venezuela headed toward the United States, by the US military. These boats were allegedly carrying drugs meant for the US market, and the US government justified these strikes by saying, basically, we have a right to protect ourselves, protect our citizens from the harm caused by these illegal substances, and if we have to keep taking out these boats and killing these people to do that, we will.

There’s been a lot of back-and-forthing about the legitimacy of this approach, both in the sense that not all of these boats have been shown to be carrying drugs, some just seemed to be fishing boats in the wrong place at the wrong time, and in the sense that launching strikes without the go-ahead of Congress in the US is a legally dubious business. There was also the matter of some alleged follow-up strikes, which seemed to be intended to kill people who survived the initial taking-out of the boats, which is a big international human rights no no, to the point of potentially being a war crime.

All of this happened within the context of a war of words between US President Trump’s second administration and the increasingly authoritarian regime of Venezuelan President Nicolás Maduro, who followed the previous president Hugo Chávez as his hand-picked successor, and has more or less completed the authoritarian process of dissolving, coopting, or diminishing all aspects of the Venezuelan government that might ever check his power, which allowed him, in 2024, to bar the very popular, now Nobel Peace Prize winning candidate María Corina Machado from running, and her sub-in candidate, like previous Maduro opponent Juan Guaido, seems to have won the election by a fair bit, and in an internationally provable way, but Maduro’s government faked results that made it look like he won, and his single-party rule has since continued unabated.

Or rather, it continued unabated until the early morning of January 3, 2026, around 2am, when US Operation Absolute Resolve kicked into action, leading to the—depending on who you ask—justified captured or illegal kidnapping—of Maduro and his wife from a stronghold in his country.

And that’s what I’d like to talk about today: the operation itself, but also the consequences and potential meaning of it within the context of other important things happening in the world right now.

—

Maduro is immensely popular with about a fifth of the Venezuelan population, but essentially everyone else is strongly opposes him and his iron-fisted rule.

It’s estimated that between 2017 and 2025, just shy of 8 million people, which is more than 20% of Venezuela’s 2017 population, has fled the country in order to escape a tyrannical government and its failed policies, which have collapsed the economy, made getting working and feeding oneself and one’s family difficult, and made crime, conflict, and the state-sanctioned oppression of anyone who doesn’t kowtow to the ruling party a commonplace thing.

Trump speculated about the possibility of invading Venezuela even in his first administration, and part of the overt rationale was that it’s run by a failed government that most of the locals hate, so it would be an easy win. That justification shifted to orient around immigration and drugs by his second administration, and then more recently, Trump has said publicly that the real issue here is that Venezuela stole a bunch of US company-owned oil assets when it nationalized the industry back in the day, and those assets should be recaptured, given back to the US.

Operation Absolute Resolve took months to plan and only about two and a half hours to complete. By most objective measures it was a spectacular military and intelligence success, especially considering all the moving parts and thus, all the things that could have gone wrong.

The operation apparently involved at least 150 aircraft of various sorts, a spy within Maduro’s government, and months of surveillance, which helped them establish Maduro’s habits and routines, and that allowed them to map out where he would be, when, and what to expect going in to get him. All of these patterns changed in September of 2025 when US warships started massing in Caribbean, as Maduro started to get a little paranoid—justifiably, as it turns out—and he started moving between eight different locations, seldom sleeping in the same place more than one night in a row.

He was eventually grabbed from a military base in Caracas, Venezuela’s capitol, and to make that happen the US military assets in the area had to take out local aviation and air defenses so that US Delta Force troops could be carried in by helicopter. Several air bases and communications centers were taken out by missiles, and fighter jets were bombed on air base tarmacs. Trump alluded that a cyberattack of some kind might have also been used to take out power in the area, though satellite imagery suggests bombs might have been used against a power station to make that happen.

The operation apparently went almost exactly as planned, though a helicopter was damaged and the Delta Force team killed a large part of Maduro’s security team when he refused to surrender. A few US soldiers were wounded, but none were killed, and Venezuelan officials said, in the aftermath, that lat least 40 Venezuelans were killed throughout the country during the operation. Maduro and his wife were swept from the base before they could lock themselves in their safe room, and they were tucked into the helicopters which headed out to sea, landing them on the USS Iwo Jima, which is an assault ship.

All of this took a matter of hours and, again, is generally considered to be an objective success, in terms of precision, outcome, and other such metrics. Morally, legally, and politically, however, the operation is receiving a far more mixed response, and that response is continuing to play out as Maduro works his way through a bizarre version of the US justice system where he’s being sent to court for drug dealing.

In the US, Trump supporters have generally said all of this was a good, smart move, though some maintain that US involvement in any kind of international conflict is a waste of time, effort, and resources, and they worry about getting bogged down in another Iraq or Afghanistan-style conflict.

Everyone else is generally against the effort, even those who admit that Maduro was a tyrant who needed to go—it’s good that he’s gone, but the way in which it was done is not just questionable, but worrying because of what it says about Trump’s capacity to unilaterally launch kidnapping missions against the leaders of other countries. Not a good look, but also kind of scary.

Internationally the response is generally aligned with the latter opinion, especially in other countries that Trump has at some point threatened, which is most of them.

Governments in South and Central America have been especially concerned, however, because one of Trump’s newer messaging efforts has revolved around the concept of a Western Hemisphere basically owned and protected by the US. Do whatever you want in the rest of the world, basically, but everything over here is ours. This has raised the possibility that an emboldened Trump might attempt similar maneuvers soon, including possibly claiming the Panama Canal for the US again, or grabbing the leaders of other Latin American countries he doesn’t think are kowtowing enthusiastically enough; toeing the new international line that he’s drawing, basically.

He’s also renewed messaging around the possible purchase or capture of Greenland, which has been raising alarm bells across Europe in particular. Greenland is considered to be a vital strategic base for US security, and it would grant potential access to an abundance of also strategically and economically important minerals, both on land and underwater, but Greenland is an autonomous territory of Denmark, and most European leaders have said something along the lines of “if the US takes action to militarily claim Greenland, that’ll be the end of NATO,” an organization that was originally founded to help protect the world, and Europe especially, from military conquest from the Soviet Union, but which, at that point, might be recalibrated to protect against incursions from the US, as well.

NATO has been mostly funded and perpetuated by the US until recently, however, so there’s a chance that something else would need to replace it, if the US is no longer providing nuclear deterrence as the ultimate whammy against a potential Russian invasion of its European neighbors.

The UN has also indicated that they consider this operation to be a violation of international law, and have called it a dangerous precedent—because one nation capturing the leader of another nation, unilaterally, kind of negates the purpose of negotiations and the whole concept of international law. That kind of use of force is meant to be granted by the UN, not attempted secretively and outside the bounds of international processes for such things.

All that said, the Trump administration seems to be leaning into the victory, gleefully talking about next-step potential targets, the most likely of which seem to be in Iran, a long-time US opponent, and a target of this administration last year, when the US attacked Iranian nuclear facilities alongside Israel.

There are ongoing, very large and seemingly significant protests happening across Iran right now, so the US could see this as another opportunity to topple another unpopular authoritarian regime while also getting the chance to flex its military and intelligence capabilities at a moment in which another big-name player in that space, Russia, is generally flailing; it’s failed to protect several of its allies, including Venezuela, over the past few years, and its intended few-day invasion of Ukraine has now stretched into years.

That contrast is considered to be meaningful by most analysts, and though a lot of the PR about the capture of Maduro has focused on the oil, most US-based oil executives have said it’s a red herring—the hundreds of billions of dollars required to get more of Venezuela’s thick, dirty, expensive to process oil pumping and back on the market wouldn’t be worth it—and it’s more likely that this is partly a means of keeping the press and US public focused on something other than the Epstein files, which is a major scandal for Trump and his administration, while also allowing Trump to test the boundaries of his power; what the public and government will let him get away with currently, and what he can do to expand the range of what he can do without any outside buy-in or significant personal consequences, in the future.

Show Notes

https://theconversation.com/how-maduros-capture-went-down-a-military-strategist-explains-what-goes-into-a-successful-special-op-272671

https://archive.is/20260105035543/https://www.theatlantic.com/national-security/2026/01/trump-nicolas-maduro-venezuela/685493/

https://www.wsj.com/business/energy-oil/chevron-charts-a-new-path-in-venezuela-to-unlock-vast-oil-reserves-0369ce1b

https://www.theguardian.com/world/2026/jan/04/tactical-surprise-and-air-dominance-how-the-us-snatched-maduro-in-two-and-a-half-hours

https://www.nytimes.com/2026/01/10/us/politics/trump-iran-strikes.html

https://www.nytimes.com/2026/01/10/nyregion/nicolas-maduro-lawyers.html

https://www.nytimes.com/2026/01/10/business/dealbook/oil-executives-trump-venezuela.html

https://www.nytimes.com/2026/01/10/world/americas/venezuela-oil-tanker-us.html

https://www.axios.com/2026/01/11/trump-iran-protest-options-death-toll

https://www.axios.com/2026/01/03/maduro-capture-trump-venezuela-operation

https://www.axios.com/2025/05/11/trump-maga-western-civilization

https://www.axios.com/2026/01/08/venezuela-war-powers-senate-aumf-time-kaine

https://www.axios.com/2026/01/07/trump-russia-oil-tanker-seize-bella-venzuela

https://www.axios.com/2026/01/08/trumps-donroe-doctrine-sets-us-on-great-power-collision-course

https://www.theguardian.com/world/2026/jan/05/un-security-council-trump-attack-venezuela

https://www.nytimes.com/2026/01/08/us/politics/trump-interview-power-morality.html

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit letsknowthings.substack.com/subscribe

This week we talk about prediction markets, incentives, and gambling addiction.

We also discuss insider trading, spot-fixing, and Gatorade.

Recommended Book: The Kingdom, the Power, and the Glory by Tim Alberta

Transcript

Prediction markets are hundreds of years old, and have historically been used to determine the likelihood of something happening.

In 1503, for instance, there was a market to determine who would become the next pope, and from the earliest days of commercial markets, there were associated prediction markets that were used to gauge how folks thought a given business would do during an upcoming economic quarter.

The theory here is that while you can just ask people how well they think a political candidate will fare in an election or who they think will become the next pope, often their guesses, their assumptions, or their analysis will be swayed by things like political affiliation or maybe even what they think they’re meant to say—the popular papal candidate, for instance, or the non-obvious, asymmetric position on a big commercial enterprise that might help an analyst reinforce their brand as a contrarian.

If you introduce money into the equation, though, forcing people to put down real currency on their suspicions and predictions, and give them the chance to earn money if they get things right, that will sometimes nudge these markets away from those other incentives, making the markets commercial enterprises of their own. It can shift the bias away from posturing and toward monetization, and that in turn, in theory at least, should make prediction markets more accurate because people will try to align themselves with the actual, real-deal outcome, rather than the popular—with their social tribe, at least—or compellingly unpopular view.

This is the theory that underpins entities like Polymarket, Kalshi, Manifold Markets, and many other online prediction markets that have arisen over the past handful of years as regulations on these types of businesses have been eased, and as they’ve begun to establish themselves as credible players in the predicting-everything space.

In politics in particular, these markets have semi-regularly shown themselves to be better gauges of who will actually win elections than conventional polls and surveys, and though their records are far from perfect and still heavily biased in some cases, such community-driven predictions from money-motivated markets are gaining credibility because of their capacity to incentivize people to put their money where their mouths are, and to try to profit from accurate preordination.

The flip-side of these markets, and some might even say a built-in flaw with no obvious solution, is that they are rife with insider trading: people who are in the position to know things ahead of time making in some cases millions of dollars by placing big bets that, for them, aren’t bets at all, because they know what will or what is likely to happen.

This seems to have occurred at least a few times with big political events in 2025, and it’s anticipated that it could become an even bigger issue in the future, especially for markets that use cryptocurrencies to manage payments, as those are even less likely than their fiat currency peers to keeps solid tabs on who’s actually behind these bets, and thus who might be trading on knowledge that they’re not supposed to be trading on.

That said, it could be argued that such insider trading makes these markets even more accurate, eventually at least. And that points us toward another problem: the possibility that someone on the inside might look at a market and realize they can make a killing if they use their position, their power to sway these markets after placing a bet, giving them the ability to assure a payout by abusing their position—major events being influenced by the possibility of a community-funded payday for those in control.

What I’d like to talk about today is the same general principle as it’s playing out in the sports world, and why the huge sums of money that are now sloshing around in the sports betting industry in the US are beginning to worry basically everyone, except the sports betting companies themselves.

—

In October of 2025, the head coach of the NBA basketball team, the Portland Trail Blazers, Chauncey Billups, Miami Heat player Terry Rozier, and former NBA player Damon Jones, and about 30 other people were arrested by the FBI due to their alleged illegal sports gambling activities. Rozier was already under investigation following unusual betting activity that was linked to his performance in a 2023 game—he was later cleared of wrongdoing, but the implication then and in this more recent instance is that he and those other folks who were rounded up by the FBI may have been involved in rigging things so they could get a big payoff on gambling markets.

Similar things have been happening across the sports world, including a lifetime ban for Jontay Porter, a former Toronto Raptors player, who apparently gave confidential information to people who were placing bets on NBA games—he later pleaded guilty to conspiracy to commit wire fraud as a result of that investigation—and in November of 2025 two Major League Baseball players, both of them pitchers for the Cleveland Guardians, Emmanuel Clase and Luis Ortiz, were charged by federal prosecutors for allegedly rigging pitches to benefit people betting on those pitches; they’ve been charged with wire fraud and money laundering, and each could face up to 65 years in prison.

And those are just a few of the many instances of game-rigging that have been alleged in recent years, the specifics of which vary, but the outcome is always to give someone an advantage in these markets, which are only recently broadly legal across the United States, and which thus allow folks with the right connections or some money to invest ahead of time to, for instance, pay a pitcher to throw an inning, or pay a coach to tell them who will be benched and when, so that they can make a big wager with less of a risk, or in some cases, no risk at all.

One of the big issues here is that rather than simply being a which-team-will-win sort of thing, many of these bets are highly specific and granular, including what are called proposition or prop bets that allow folks to gamble on the number of strikeouts a pitcher will tally in a given inning and other very specific things.

If a pitcher were to then place a bet, perhaps through an intermediary, on their own prop bet-related performance, they would stand a decent chance of tallying the right number of strikes and balls. They could also sell that information to someone else, taking a guaranteed payout in exchange for the foreknowledge they grant that gambler, who could then do what they want with the information, and then if they do well with it, they could pay that pitcher to do the same again in the future.

This type of bet is called spot-fixing, and it’s seen across prediction markets, not just sports markets. Pitchers can fix an inning of a game, but poker players can also go all-in or fold a given number of times in a tournament, and the folks in charge of dumping Gatorade over the winning coach following a Super Bowl event can leak that color, based on their foreknowledge of the setup, to gamblers—these markets are sprawling and varied, and anyone in any position of power who can make decisions about such things, or who’s involved enough to leak information can do so at a profit, either themselves putting down money on spot-fixed prop bets, or selling that information to those who will themselves place a bet.

The issue sports organizations in the US are now running into is that while they aligned themselves with sports gambling entities like DraftKings and FanDuel after these platforms were legalized in more states following the striking-down of a federal ban on such things in 2018—as I record this, they’re currently legal in 31 states, alongside Washington DC and Puerto Rico—and they’ve profited a fair bit from that, allowing these businesses to become sponsors, to slap their logos on everything, and to generally become interwoven with the leagues themselves; despite all that, they’ve also created a sports culture in which betting is ultra-common, and that means fans are no longer just fans, they’re putting down money on various possible sports-related outcomes.

That means folks who were maybe previously die-hard fans of their local team may no longer just be disappointed when their team loses, they’ll be financially impacted, perhaps even devastated. And many athletes who play on these teams, in these leagues, are now suffering all kinds of abuse and threats from people who decided to put a lot of money on their performance, but who failed to win a game, or maybe even throw the exact right number of strikes and balls in a given inning.

This points at two big issues with sports betting in the US right now.

First is that there’s a lot of money splashing around in this space. An estimated $160-170 billion was wagered by US citizens in 2025 alone, generating about $16.4 billion in revenue for sportsbooks—the entities that take these sorts of bets.

That’s likely a significant undercount, too, as more generalist prediction markets are also getting involved in the sports betting game, blending this type of gambling with other sorts of prediction markets, like those related to politics and international happenings, like war.

And second, a lot of people are gambling a lot of money on sports stuff right now, and that’s becoming an issue. In October of 2025, a Pew Research poll found that 43% of US adults think legalized sports betting is bad for society, up from 34% in 2022, and 40% says it’s bad for sports, up from 33%. A whopping 22% of US adults say they personally bet money on sports in the past year, up from 19% in 2022, and 10%, one in ten American adults, say they have placed a sports bet online in the past year, up from 6% in 2022.

There has been a significant increase in calls to the National Problem Gambling Helpline in recent years—a 45% increase from 2017 in states where sports betting hasn’t been legalized, and a 148% increase, more than three times as much, in states where sports betting was legalized by August of 2025. Not for nothing, too, it’s estimated that professional athletes are about five-times more likely than the average person to become hooked on gambling, which would seem to amplify all these issues, in addition to the obvious problems this can create for people with often high-paying, but also often financially precarious, short-term careers.

The implication, then, is that legal sports betting either sparks or reinforces gambling issues, creating more addictive behavior and triggering more financial issues. And bankruptcy numbers seem to back this up: in states where online gambling is allowed, bankruptcy rates increased by 28% and debt collections rose by 8% just two years after sports betting legalization. Data also shows that there’s a 20% increase in mass-market alcohol consumption in states with legalized sports betting, and that for every dollar spent on sports betting, 99 cents of investment money disappears from records, which means, basically, people are not using spare money they would spend on random stuff anyway when placing these bets, they’re spending money that would otherwise be put into savings, or which is already in their savings on this type of gambling—and much of that money then disappears into the pockets of these gambling platforms.

This same general state of affairs has played out in other countries before the US, but things seem to be moving especially fast here in part because this isn’t gambling that’s limited to a physical location, it’s increasingly being conducted on smartphones and other always-on-us devices, and that means it’s easier to get hooked, but also that it’s more accessible to more people more of the time, and the ever-present deluge of information about these topics, and about these platforms that allow us to casually place bets on said topics, make getting sucked in and sold on the idea of easy money, simpler and more likely than ever before.

Show Notes

https://www.washingtonpost.com/sports/2025/10/23/nba-chauncey-billups-terry-rozier-arrested-betting-probe/

https://www.washingtonpost.com/sports/2025/11/09/emmanuel-clase-luis-ortiz-indicted-bribes/

https://www.washingtonpost.com/sports/2025/12/29/sports-betting-integrity-fans/

https://www.washingtonpost.com/sports/2025/10/29/player-prop-bets-nba-arrests/

https://www.washingtonpost.com/sports/2025/06/14/sports-betting-athlete-abuse-online/

https://en.wikipedia.org/wiki/List_of_bookmakers

https://www.actionnetwork.com/online-sports-betting

https://nypost.com/betting/best-sports-betting-apps-usa/

https://en.wikipedia.org/wiki/Gambling_in_the_United_States

https://en.wikipedia.org/wiki/Sports_betting

https://en.wikipedia.org/wiki/Sportsbook

https://www.delasport.com/history-of-sports-betting/

https://pmc.ncbi.nlm.nih.gov/articles/PMC7780080/

https://www.espn.com/sports-betting/story/_/id/23561576/chalk-line-how-got-legalized-sports-betting

https://www.cnn.com/2024/05/03/sport/sports-betting-usa-impact-on-lives-spt-intl

https://naadgs.org/history-of-sports-betting-the-transition-from-illegal-to-mainstream/

https://en.wikipedia.org/wiki/List_of_match-fixing_incidents

https://en.wikipedia.org/wiki/History_of_gambling_in_the_United_States

https://en.wikipedia.org/wiki/Professional_and_Amateur_Sports_Protection_Act_of_1992

https://en.wikipedia.org/wiki/Gambling_in_the_United_Kingdom

https://en.wikipedia.org/wiki/Prediction_market

https://users.wfu.edu/strumpks/papers/Int_Election_Betting_Formatted_FINAL_NoComments.pdf

https://en.wikipedia.org/wiki/Proposition_bet

https://www.axios.com/2025/12/14/sports-betting-gambling-young-men-crisis

https://www.espn.com/espn/betting/story/_/id/47337056/scandals-prediction-markets-2025-turning-point-sports-betting

https://www.pewresearch.org/short-reads/2025/10/02/americans-increasingly-see-legal-sports-betting-as-a-bad-thing-for-society-and-sports/

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit letsknowthings.substack.com/subscribe

This week we talk about energy consumption, pollution, and bipartisan issues.

We also discuss local politics, data center costs, and the Magnificent 7 tech companies.

Recommended Book: Against the Machine by Paul Kingsnorth

Transcript

In 2024, the International Energy Agency estimated that data centers consumed about 1.5% of all electricity generated, globally, that year. It went on to project that energy consumption by data centers could double by 2030, though other estimates are higher, due to the ballooning of investment in AI-focused data centers by some of the world’s largest tech companies.

There are all sorts of data centers that serve all kinds of purposes, and they’ve been around since the mid-20th century, since the development of general purposes digital computers, like the 1945 Electronic Numerical Integrator and Computer, or ENIAC, which was programmable and reprogrammable, and used to study, among other things, the feasibility of thermonuclear weapons.

ENIAC was built on the campus of the University of Pennsylvania and cost just shy of $500,000, which in today’s money would be around $7 million. It was able to do calculators about a thousand times faster than other, electro-mechanical calculators that were available at the time, and was thus considered to be a pretty big deal, making some types of calculation that were previously not feasible, not only feasible, but casually accomplishable.

This general model of building big-old computers at a center location was the way of things, on a practical level, until the dawn of personal computers in the 1980s. The mainframe-terminal setup that dominated until then necessitated that the huge, cumbersome computing hardware was all located in a big room somewhere, and then the terminal devices were points of access that allowed people to tap into those centralized resources.

Microcomputers of the sort of a person might have in their home changed that dynamic, but the dawn of the internet reintroduced something similar, allowing folks to have a computer at home or at their desk, which has its own resources, but to then tap into other microcomputers, and to still other larger, more powerful computers across internet connections. Going on the web and visiting a website is basically just that: connecting to another computer somewhere, that distant device storing the website data on its hard drive and sending the results to your probably less-powerful device, at home or work.

In the late-90s and early 2000s, this dynamic evolved still further, those far-off machines doing more and more heavy-lifting to create more and more sophisticated online experiences. This manifested as websites that were malleable and editable by the end-user—part of the so-called Web 2.0 experience, which allowed for comments and chat rooms and the uploading of images to those sites, based at those far off machines—and then as streaming video and music, and proto-versions of social networks became a thing, these channels connecting personal devices to more powerful, far-off devices needed more bandwidth, because more and more work was being done by those powerful, centrally located computers, so that the results could be distributed via the internet to all those personal computers and, increasingly, other devices like phones and tablets.

Modern data centers do a lot of the same work as those earlier iterations, though increasingly they do a whole lot more heavy-lifting labor, as well. They’ve got hardware capable of, for instance, playing the most high-end video games at the highest settings, and then sending, frame by frame, the output of said video games to a weaker device, someone’s phone or comparably low-end computer, at home, allowing the user of those weaker devices to play those games, their keyboard or controller inputs sent to the data center fast enough that they can control what’s happening and see the result on their own screen in less than the blink of an eye.

This is also what allows folks to store backups on cloud servers, big hard drives located in such facilities, and it’s what allows the current AI boom to function—all the expensive computers and their high-end chips located at enormous data centers with sophisticated cooling systems and high-throughput cables that allow folks around the world to tap into their AI models, interact with them, have them do heavy-lifting for them, and then those computers at these data centers send all that information back out into the world, to their devices, even if those devices are underpowered and could never do that same kind of work on their own.

What I’d like to talk about today are data centers, the enormous boom in their construction, and how these things are becoming a surprise hot button political issue pretty much everywhere.

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As of early 2024, the US was host to nearly 5,400 data centers sprawled across the country. That’s more than any other nation, and that number is growing quickly as those aforementioned enormous tech companies, including the Magnificent 7 tech companies, Nvidia, Apple, Alphabet, Microsoft, Amazon, Meta, and Tesla, which have a combined market cap of about $21.7 trillion as of mid-December 2025, which is about two-thirds of the US’s total GDP for the year, and which is more than the European Union’s total GDP, which weighs in at around $19.4 trillion, as of October 2025—as they splurge on more and more of them.

These aren’t the only companies building data centers at breakneck speed—there are quite a few competitors in China doing the same, for instance—but they’re putting up the lion’s share of resources for this sort of infrastructure right now, in part because they anticipate a whole lot of near-future demand for AI services, and those services require just a silly amount of processing power, which itself requires a silly amount of monetary investment and electricity, but also because, first, there aren’t a lot of moats, meaning protective, defensive assets in this industry, as is evidenced by their continual leapfrogging of each other, and the notion that a lot of what they’re doing, today, will probably become commodity services in not too long, rather than high-end services people and businesses will be inclined to pay big money for, and second, because there’s a suspicion, held by many in this industry, that there’s an AI shake-out coming, a bubble pop or bare-minimum a release of air from that bubble, which will probably kill off a huge chunk of the industry, leaving just the largest, too-big-to-fail players still intact, who can then gobble up the rest of the dying industry at a discount.

Those who have the infrastructure, who have invested the huge sums of money to build these data centers, basically, will be in a prime position to survive that extinction-level event, in other words. So they’re all scrambling to erect these things as quickly as possible, lest they be left behind.

That construction, though, is easier said than done.

The highest-end chips account for around 70-80% of a modern data center’s cost, as these GPUs, graphical processing units that are optimized for AI purposes, like Nvidia’s Blackwell chips, can cost tens of thousands of dollars apiece, and millions of dollars per rack. There are a lot of racks of such chips in these data centers, and the total cost of a large-scale AI-optimized data center is often somewhere between $35 and $60 billion.

A recent estimate by McKinsey suggests that by 2030, data center investment will need to be around $6.7 trillion a year just to keep up the pace and meet demand for compute power. That’s demand from these tech companies, I should say—there’s a big debate about where there’s sufficient demand from consumers of AI products, and whether these tech companies are trying to create such demand from whole cloth, to justify heightened valuations, and thus to continue goosing their market caps, which in turn enriches those at the top of these companies.

That said, it’s a fair bet that for at least a few more years this influx in investment will continue, and that means pumping out more of these data centers.

But building these sorts of facilities isn’t just expensive, it’s also regulatorily complex. There are smaller facilities, akin to ENIAC’s campus location, back in the day, but a lot of them—because of the economies of scale inherent in building a lot of this stuff all at once, all in the same place—are enormous, a single data center facility covering thousands of acres and consuming a whole lot of power to keep all of those computers with their high-end chips running 24/7.

Previous data centers from the pre-AI era tended to consume in the neighborhood of 30MW of energy, but the baseline now is closer to 200MW. The largest contemporary data centers consume 1GW of electricity, which is about the size of a small city’s power grid—that’s a city of maybe 500,000-750,000 people, though of course climate, industry, and other variables determine the exact energy requirements of a city—and they’re expected to just get larger and more resource-intensive from here.

This has resulted in panic and pullbacks in some areas. In Dublin, for instance, the government has stopped issuing new grid connections for data centers until 2028, as it’s estimated that data centers will account for 28% of Ireland’s power use by 2031, already.

Some of these big tech companies have read the writing on the wall, and are either making deals to reactivate aging power plants—nuclear, gas, coal, whatever they can get—or are saying they’ll build new ones to offset the impact on the local power grid.

And that impact can be significant. In addition to the health and pollution issues caused by some of the sites—in Memphis, for instance, where Elon Musk’s company, xAI, built a huge data center to help power his AI chatbot, Grok, the company is operating 35 unpermitted gas turbines, which it says are temporary, but which have been exacerbating locals’ health issues and particulate numbers—in addition to those issues, energy prices across the US are up 6.9% year over year as of December 2025, which is much higher than overall inflation. Those costs are expected to increase still further as data centers claim more of the finite energy available on these grids, which in turn means less available for everyone else, and that scarcity, because of supply and demand, increases the cost of that remaining energy.

As a consequence of these issues, and what’s broadly being seen as casual overstepping of laws and regulations by these companies, which often funnel a lot of money to local politicians to help smooth the path for their construction ambitions, there are bipartisan efforts around the world to halt construction on these things, locals saying the claimed benefits, like jobs, don’t actually make sense—as construction jobs will be temporary, and the data centers themselves don’t require many human maintainers or operators, and because they consume all that energy, in some cases might consume a bunch of water—possibly not as much as other grand-scale developments, like golf courses, but still—and they tend to generate a bunch of low-level, at times harmful background noise, can create a bunch of local pollution, and in general take up a bunch of space without giving any real benefit to the locals.

Interestingly, this is one of the few truly bipartisan issues that seems to be persisting in the United States, at a moment in which it’s often difficult to find things Republicans and Democrats can agree on, and that’s seemingly because it’s not just a ‘big companies led by untouchable rich people stomping around in often poorer communities and taking what they want’ sort of issue, it’s also an affordability issue, because the installation of these things seems to already be pushing prices higher—when the price of energy goes up, the price of just about everything goes up—and it seems likely to push prices even higher in the coming years.

We’ll see to what degree this influences politics and platforms moving forward, but some local politicians in particular are already making hay by using antagonism toward the construction of new data centers a part of their policy and campaign promises, and considering the speed at which these things are being constructed, and the slow build of resistance toward them, it’s also an issue that could persist through the US congressional election in 2026, to the subsequent presidential election in 2028.

Show Notes

https://www.wired.com/story/opposed-to-data-centers-the-working-families-party-wants-you-to-run-for-office/

https://finance.yahoo.com/news/without-data-centers-gdp-growth-171546326.html

https://time.com/7308925/elon-musk-memphis-ai-data-center/

https://wreg.com/news/new-details-on-152m-data-center-planned-in-memphis/

https://www.politico.com/news/2025/05/06/elon-musk-xai-memphis-gas-turbines-air-pollution-permits-00317582

https://www.datacenterwatch.org/report

https://www.govtech.com/products/kent-county-mich-cancels-data-center-meeting-due-to-crowd

https://www.woodtv.com/news/kent-county/gaines-township-planning-commission-to-hold-hearing-on-data-center-rezoning/

https://www.theverge.com/science/841169/ai-data-center-opposition

https://www.iea.org/reports/energy-and-ai/energy-demand-from-ai

https://www.cbre.com/insights/reports/global-data-center-trends-2025

https://www.phoenixnewtimes.com/news/chandler-city-council-unanimously-kills-sinema-backed-data-center-40628102/

https://www.mlive.com/news/ann-arbor/2025/11/rural-michigan-fights-back-how-riled-up-residents-are-challenging-big-tech-data-centers.html?outputType=amp

https://www.courthousenews.com/nonprofit-sues-to-block-165-billion-openai-data-center-in-rural-new-mexico/

https://www.datacenterdynamics.com/en/news/microsoft-cancels-plans-for-data-center-caledonia-wisconsin/

https://www.cnbc.com/2025/11/25/microsoft-ai-data-center-rejection-vs-support.html

https://www.wpr.org/news/microsoft-caledonia-data-center-site-ozaukee-county

https://thehill.com/opinion/robbys-radar/5655111-bernie-sanders-data-center-moratorium/

https://www.investopedia.com/magnificent-seven-stocks-8402262

https://www.mckinsey.com/industries/technology-media-and-telecommunications/our-insights/the-cost-of-compute-a-7-trillion-dollar-race-to-scale-data-centers

https://www.mckinsey.com/industries/technology-media-and-telecommunications/our-insights/ai-power-expanding-data-center-capacity-to-meet-growing-demand

https://www.marketplace.org/story/2025/12/19/are-energyhungry-data-centers-causing-electric-bills-to-go-up

https://en.wikipedia.org/wiki/Data_center

https://en.wikipedia.org/wiki/ENIAC

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