Good morning. The U.K.’s communications watchdog has launched an investigation into Elon Musk’s X social-media platform over sexualized images created by its Grok artificial-intelligence chatbot.

•  Possibly CSAM: Ofcom said Monday that the use of Grok to create and share undressed images of people “may amount to intimate image abuse or pornography.” It also said that sexualized images of children “may amount to child sexual abuse material.” Grok began allowing users to edit images with text prompts in late December. Since then, nonconsensual and AI-generated images of women in underwear have flooded X.
   
• A response: On Friday, Grok told users that image generation and editing were limited to paying subscribers. In response to a request for comment, the company referred to its Jan. 4 comment, when it said it takes action on child sexual abuse material by removing it, permanently suspending accounts and working with local governments and law enforcement.
   
• Online Safety Act: Ofcom said it decided to start investigating X to determine whether the company has failed to comply with the U.K.’s Online Safety Act, which obliges platforms to better safeguard users from illegal content online. If the regulator’s investigation finds that a company has broken the law, it can require platforms to take steps to come into compliance or to remedy harm caused by the breach. It can also impose fines.
   
• EU action: The U.K. isn’t alone in trying to tackle Grok’s image generation. The European Commission has also reached out to X in recent days, asking the platform to retain documents related to its Grok service while officials assess its compliance with European Union tech rules.

See also: xAI, Under Fire for Sexualized Child Photos on Grok, Restricts Tool

Commerce Department fines Exyte unit for violating Chinese chip controls.

An Exyte Group subsidiary agreed to pay $1.5 million to resolve U.S. Commerce Department allegations it provided equipment to China’s biggest semiconductor fabricator, Risk Journal reports.

The German engineering company admitted that its Chinese subsidiary procured $2.85 million worth of items for Semiconductor Manufacturing International Corp., or SMIC, between 2021 and 2022, according to a Jan. 7 settlement with the Bureau of Industry and Security, the Commerce Department’s civil export controls enforcer.

• UnitedHealth Group deployed aggressive tactics to collect payment-boosting diagnoses for its Medicare Advantage members, a Senate committee investigating the company’s practices said.
   
• President Trump posted on Truth Social Monday afternoon that it would be a "complete mess" if the Supreme Court were to rule against his administration's tariffs.

For years, Powell avoided fighting Trump. That’s over.

For years, Federal Reserve Chair Jerome Powell has responded to President Trump’s broadsides in ways that generally avoided escalation.

That changed on Sunday night. In an extraordinary two-minute video message, Powell accused the administration of using the threat of criminal prosecution to pressure the Fed into lowering rates. He framed the Justice Department investigation as nothing less than a head-on challenge to the Fed’s ability to operate free of political control.

White House weighs Iran’s nuclear-talks offer as Trump leans toward strikes.

The White House is weighing a last-ditch Iranian offer to engage in diplomacy over curbing its nuclear program even as President Trump currently leans toward authorizing fresh military strikes on Iran, U.S. officials say.

Some senior administration aides, led by Vice President JD Vance, are urging Trump to try diplomacy before retaliating against Iran for killing protesters during a two-week uprising over a flailing economy and regime repression, the officials said.

• The increasing speed and complexity of risks means companies often must cope with several problems simultaneously—in an environment where one incident can take down an industry if they aren’t prepared, the newly installed president of one of the largest corporate risk organizations told Risk Journal’s Katherine Peavy.
   
• Taiwan Semiconductor Manufacturing Co., the world’s largest fabricator of advanced artificial-intelligence chips, is planning a significant expansion​ in Arizona as part of a potential trade agreement between the U.S. and Taiwan, according to people familiar with the matter.
   
• In the aftermath of the U.S. raid to seize Venezuelan strongman Nicolás Maduro, Washington is trying a new approach to regime change: Keep the regime—and try to change its behavior.
   
• Canada anticipates progress with China on resolving trade irritants regarding canola and electric vehicles during Prime Minister Mark Carney’s visit to Beijing this week, officials said.
   
• President Claudia Sheinbaum said Monday she rejected an offer from President Trump to use the U.S. military against Mexico’s drug cartels, as Mexican security officials grow concerned about potential American demands in the wake of Venezuelan leader Nicolás Maduro’s ouster.

• President Trump has complained to aides repeatedly in recent weeks about Attorney General Pam Bondi, describing her as weak and an ineffective enforcer of his agenda, administration officials and other people familiar with his complaints said.
   
• Minnesota has filed a lawsuit against U.S. immigration officials, seeking to end what the state called an unlawful surge of federal agents.
   
• Paramount Skydance plans to launch a proxy fight for board seats at Warner Bros. Discovery, the company said Monday, as it continues pushing its hostile bid for the company.
   
• With student loan debt at a record $1.7 trillion, the U.S. is tightening the spigot on federal loans.
   
• House Republicans including GOP leaders are lining up behind a stock-trading crackdown that they think is their best shot at addressing long simmering concerns about lawmakers potentially profiting off insider information.
   
• President Trump will receive Venezuelan opposition activist and Nobel Peace Prize winner María Corina Machado at the White House on Thursday, according to administration officials.

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