Bloomberg: Musk's New Venture in "Oligopoly"

Original authors: Max Chafkin, Dana Hull

Original text compilation: Luffy, Foresight News

On the afternoon of Election Day, Elon Musk was at a polling station in South Texas. Afterward, he took a private plane to Mar-a-Lago in Palm Beach, Florida to attend Donald Trump's election party. Along the way, Musk held an impromptu political rally. He posted a live stream link on Social Web X and said, 'Only a few hours left,' as the plane's engines hummed. Approximately 100,000 people were tuning in to his live stream, so he made sure to urge fren and fam to vote, vote, vote.

Before this year, Musk operated six companies: TSL (electric cars), SpaceX (rockets), Neuralink (brain implants), Boring Co. (tunnels), xAI (artificial intelligence chatbots), and X (Twitter). But in May of this year, he added a seventh company: America PAC. This is a political action committee, and from its establishment to the election, the company spent over 1.7 billion dollars.

What's even more surprising is that Musk personally got involved in this work. He temporarily moved to Pennsylvania, where he traveled the entire state, held marathon-style town hall meetings in the suburbs, and turned his personal X account into a place for rapid response to the right wing. Many of the jokes he spread were related to gender or racial discrimination, or both. In the last few days of the campaign, his numerous posts expressed anger at the euthanasia of a porn star's pet squirrel.

Musk PAC expenditure categories, data source: Federal Election Commission

Elon Musk's iconic rebellious humor and shameless behavior have been successful, perhaps because Trump is the perfect candidate who matches these qualities. On election day, this former president, who has been impeached twice and convicted 34 times, not only mobilized the usual elderly white voters but also added a younger, more diverse, and predominantly male new group. In other words, those who like Elon Musk. 'He dropped the threshold to become a Trump supporter,' said Josiah Gates, vice president of political marketing firm Harris Media.

Candidate supported by Musk's PAC, source: Federal Election Commission

"The Democratic Party has almost involved all celebrities," Musk said in the live broadcast, "They have a great bias against traditional mainstream news." He told the audience that Democratic politicians intentionally introduced 'illegal immigrants' to 'flood the swing state's votes, so there are no real elections.' Like many things Musk has said in the past two years, these are at best misleading. The immigrants he disparages in his conspiracy theory are not 'illegal immigrants,' but asylum seekers who live legally in the United States, pay taxes, but do not have the right to vote.

Musk is clearly not a weakling. His alliance with Trump is a typical story of the strong. One of the protagonists is a provocative and domineering billionaire, and the other is also a domineering billionaire, coincidentally the richest person in the world. This is also a story about money. We don't know the exact amount of Musk's financial contribution to Trump's election, but it is at least over 132 million dollars, and the total amount may reach 200 million dollars. How much return will these contributions bring in the next four years? In the first three days after the election, TSL's market capitalization pumped by 25%, and Musk's personal net worth increased by 50 billion dollars, reaching over 300 billion dollars.

Elon Musk presented Kristine Fishell with a $1 million check at Pittsburgh City Hall. Image source: Getty Images

Trump made some promises: to provide rocket contracts for new Mars missions, to establish rules to support Musk's upcoming self-driving taxi, and to decide which government projects to cut and which to keep in his administration. Trump and Musk referred to this hypothetical policy combination as the 'Government Efficiency Department', a name derived from Musk's fondness for the abbreviation DOGE, the symbol of his favorite cryptocurrency DOGE. Trump mentioned Musk in his victory speech, saying, 'He's a special guy, he's a super genius. We have to protect our super geniuses.'

Soon, Musk may be given a more accurate title: Oligopoly. This term applies not only to him, but also to Jeff Bezos, Sam Altman, Sundar Pichai, Satya Nadella, and other corporate tycoons who have been making various gestures after the election, from fake smiles to complete submission, hoping to get what they want from Trump. The issues they seem most concerned about include preferential treatment for mergers (Nadella, Pichai), relaxed regulations on artificial intelligence (Altman), and avoiding retaliation for news published in their own publications (Bezos).

Will their efforts pay off? Trump's past record can't give them enough confidence. After Bezos decided to withdraw his support for Kamala Harris, The Washington Post faced a wave of canceled subscriptions, losing 10% of its subscription users within a few days. This implies that executives and investors who have been boosting Tesla's stock price have not fully realized the potential negative impact.

In the days following the election, there was closer contact between Trump and Musk. Musk actually set up camp with Trump's core circle at Mar-a-Lago, appearing in family photos and joining Trump's conversations with world leaders. So far, the president-elect has seen Musk both as a trophy and as a confidant, not shying away from potential national security issues, such as having Musk talk to Ukrainian President Zelensky or threatening to withdraw from NATO in retaliation for European attempts to regulate Musk's companies.

Musk and members of the Trump family at the Mar-a-Lago estate. Photo credit: Kai Trump's Twitter

Meanwhile, Musk, as usual, strongly supports Trump on Twitter, suggesting that he may fire 80% of government employees, abolish the Department of Education, and increase propaganda against the unconstitutional actions of the Federal Reserve.

This kind of enthusiasm is definitely not going to last. Moreover, if Trump wants to govern effectively, it certainly cannot continue.

Musk is eloquent and quick to react. At 53, he also understands the instincts of young men, perhaps because he behaves in many ways like a teenager. This may lead to disagreements between him and analysts and investors, as they do not see the humor in fart jokes, 420, and 69, which are golden numbers. They fail to understand that, for Musk and his fans, boredom is the key.

Outsiders may find it hard to realize that, despite its commercial failure, X has been a huge political success. Musk has turned a relatively unpopular social media network into a distribution platform for right-wing media, fans, and many genuine white supremacists. X has lost a large number of users and advertisers, leading to a nearly 80% big dump in the company's value since the acquisition in 2022. However, it still has a huge young audience interested in Trump, sports, video games, and Crypto Assets. A survey conducted in November by YouGov Blue, a polling firm working for left-wing groups, found that social media is the main source of news for men aged 18-29, with X being the most popular, surpassing YouTube and TikTok.

When Musk began funding the U.S. Political Action Committee, he targeted that group. The organization has three basic goals to help Trump: register new voters, encourage supporters to vote early, and get those who may not vote to vote. It arranges paid canvassers instead of volunteers, and invests heavily in social media ads that cater to the "fringe lord" sentiment of Trump viewers. A 15-second ad begins with a bearded young man lounging on a couch in a gruff voice saying "Kamala and the madmen will win if you don't run this election," before describing Trump as an "American badass." Another ad warns that Harris will ban pickups, red meat, and Zyn nicotine bags. The third ad described Harris as "a capital C." ("C" stands for "Communist.") ）

Musk PAC's video advertisement. Source: YouTube

In the early days of the PAC, it was chaotic. Operators complained about unpaid bills, unstable decision-making, and violations of standard labor practices, echoing long-standing complaints from employees of TSL and SpaceX. However, Musk's efficiency is astonishing: political movements typically take years to build, but Musk and his deputies recruited a force of 2,000 in just a few months. Andrew Romeo, a former advisor to Florida Governor Ron DeSantis, is in charge of North Carolina. David Rexrode, who worked for former Virginia Governor Glenn Youngkin, is responsible for Pennsylvania and Michigan. Chris Carr, Trump's 2020 political director, is responsible for Arizona and Nevada. Most campaign activities seek to save money by arranging promoters to visit more densely populated areas, where they can visit as many households as possible. However, a source familiar with the operation of the PAC said that Musk's funding enabled governors to send campaigners to more rural areas, where Trump was able to increase the number of votes. The anonymous source said Musk's PAC visited approximately 11 million households.

Musk is also extravagant in other ways. When the campaign team rents a contact list to send emails and messages to potential voters, each lead usually costs no more than $10. Musk built his own list from scratch. He offered $47 to anyone who recommended registered voters in swing states to the American Political Action Committee, requiring them to provide email addresses and phone numbers. Musk later raised the offer for registered voters in Pennsylvania to $100. Then he announced that he would give $1 million to a lucky petitioner signer every day. This proposal could be said to be illegal and has sparked a lawsuit by the Philadelphia District Attorney's Office in an attempt to prevent the giveaway, but it has also attracted media attention. Musk's petition ultimately collected over a million names. 'That's a nice number,' said Gate, of Harris Media.

Musk campaigns for Trump at Madison Square Garden. Source: Getty Images

But Musk's most important move is to inject his personal brand into PAC's work. On October 5, he appeared on stage at a Trump rally in Butler, Pennsylvania, at the very spot where Trump escaped an assassination attempt. He didn't just speak, he jumped into the air, put on a black MAGA hat, and declared himself the 'dark MAGA'. (The campaign team immediately adopted this term, meaning 'loves Trump too much, in a terrifying way.') Musk held a series of events across Pennsylvania, attracting young audiences who liked him but may not necessarily understand Trump. Then, on October 27, he appeared at Trump's showcase rally at Madison Square Garden in New York, where he was treated even better than Trump's campaign partners and his children.

The day before the election, Joe Rogan, the most popular podcast host in the United States, interviewed Musk, just as he did with Trump a week ago. 'This is a message to men,' Musk said, and Rogan nodded in agreement. 'Voting is like your life depends on it.' Rogan supported Bernie Sanders in 2020, but he now supports Trump, and he explicitly credits Musk for it. 'The great and powerful Elon Musk,' Rogan later wrote on X. 'I think he made the most convincing argument for Trump, and I completely agree with him.'

In the days following Trump's victory, Musk was not the only rich man whose net worth increased. The biggest winners include investors in private prison companies, Crypto Assets enterprises, and nuclear energy producers. The idea behind these so-called Trump trades is: if Trump expels millions of immigrants, private prisons will benefit; if Trump establishes the strategic BTC reserve he promised, the value of Crypto Assets will pump; and nuclear energy companies will benefit from Trump's claim to build new reactors.

Musk's own Trump transaction follows a similar logic. During the election campaign, Trump said his government would fund Musk's manned Mars mission plan before 2028. This could bring SpaceX billions or even tens of billions of dollars in value, as the company has already launched rockets for NASA and the Department of Defense.

A more direct potential return involves SpaceX's satellite internet service Starlink. Musk has been complaining about being excluded from a $42.5 billion subsidy plan passed during Biden's presidency, which aims to fund fiber optic broadband in rural areas. Blair Levin of telecom research firm New Street Research suggested that the government could allocate some funds to Musk instead of using them for fiber optic deployment.

Musk's other transactions with Trump are also speculative and almost fanciful. The pump in TSL stock seems to be because Trump will unilaterally legalize the company's planned autonomous taxi. Musk mentioned this during the TSL earnings conference call a few weeks before the election. 'If there was an efficiency department in the government, I would do my best to help make this happen,' Musk said, adding that these regulations would apply to all car companies, not just TSL. The problem is that TSL has not actually developed a functioning autonomous taxi yet.

In addition, although many TSL investors fit the image of Trump supporters or Musk fans, the actual people buying Musk's electric cars are often the moderate middle class who care about climate change. During the previous term of President Trump, TSL customers responded to his ban on Muslim immigrants by canceling orders, despite Musk's indirect relationship with the Trump administration at the time.

Then there's the personal relationship between Musk and Trump. Almost every influential business leader closely associated with Trump has eventually been forced to leave his circle. Trump's influence has a very short half-life, to the point where there's a joking term 'Scaramucci' referring to Anthony Scaramucci, an investor and former close friend of Trump who served as White House press secretary for 10 days before being fired in 2017. 'Elon Musk and others are now enjoying their time with Donald Trump,' Scaramucci said in a radio interview in early November. 'But it's only a matter of time before they go down with him into hell.'

Even if Musk could hold on until the Scaramucci era, even if his companies could withstand customer resistance, Musk and Trump are not very popular. (An NBC News survey at the end of September showed Musk's approval rating at 34%; as of November 11th, FiveThirtyEight's average survey showed Trump's approval rating at 44%.) If Trump wants to fulfill his promise to cut $2 trillion from the federal budget, it is almost certain that Social Security and some of the most popular government programs will be cut. This will provoke fierce opposition not only from the Democratic Party but also from the Republican Party. Even if the Republicans win the House of Representatives, their control over Congress is very limited.

"Musk may behave like an elected Oligopoly, but the United States is not an Oligopoly regime, at least not yet," said Bill Allison.