Good morning. Andrew here. Back in 2018, I moderated a panel at the World Economic Forum that included Marc Benioff of Salesforce. It was then that he essentially declared that Facebook was the modern-day equivalent of cigarettes, and that it and other social media companies should be regulated as such. Well, Meta’s loss in court yesterday, in a case about whether its platforms were designed to be addictive to adolescents, may be a watershed. Investors don’t seem to be fazed — the company’s shares hardly moved after the verdict came out — but the decision could change the conversation around the company yet again. More below. (Was this newsletter forwarded to you? Sign up here.)
Back-to-back lossesFor years, technology giants successfully fought off efforts by regulators, lawmakers and others to put limits on their social media businesses, some of the most popular apps on the planet. That winning streak ended this week, first with a loss for Meta in New Mexico and then with the landmark decision yesterday in Los Angeles that found that Meta and YouTube had harmed a young user’s mental health. Some legal experts wonder if Big Tech is staring at a Big Tobacco moment, a reference to how cigarette makers had to overhaul their businesses — at a huge expense — after courts ruled that some of their products were addictive and harmful. “We’re in a new era, a digital era, where we have to rethink definitions for products based on which entities might have superior information to prevent these injuries and accidents,” Catherine Sharkey, a professor of law at N.Y.U., told The Times. She added that the “implications” of those verdicts were “very, very big.” “This has potentially large impacts on other areas in tech, A.I. and beyond that,” Jessica Nall, a San Francisco lawyer who represents tech companies and executives, told The Wall Street Journal. “The floodgates are already open.” Meta and Google plan to appeal. The companies have signaled that they will fight efforts to make them drastically redesign their products and algorithms. Investors don’t appear worried. Shares in Meta, Google, which owns YouTube, and other social media companies were down only slightly in premarket trading this morning. The potential penalties — a combined $6 million for Meta and YouTube in the California case, and a $375 million hit to Meta in the New Mexico ruling — are a fraction of their immense profits. The wider implications are far from clear. Tech giants still face an avalanche of lawsuits and efforts worldwide to bar young teens from these platforms. After yesterday’s verdict, U.S. lawmakers from both parties, including Senators Marsha Blackburn, Republican of Tennessee, and Richard Blumenthal, Democrat of Connecticut, called on fellow legislators to pass the Kids Online Safety Act, a bill they’ve introduced that aims to protect minors from social media content deemed harmful. But the tech industry has courted President Trump since his second inauguration. And, in a separate case involving a major internet service provider, the Supreme Court yesterday suggested that it would uphold a legal protection for tech companies. What to watch for: any new efforts to limit the protection afforded to tech giants by Section 230 of the Communications Decency Act of 1996, one of the most powerful — and divisive — legal shields for the industry. The Los Angeles case didn’t rely on Section 230 arguments, but critics of the tech industry continue to argue for a legislative overhaul.
Stocks fall and oil climbs on fading optimism for U.S.-Iran talks. Global market volatility returned as signals from Iranian officials contradicted President Trump’s claims that Tehran wants “to make a deal so badly,” threatening his reported desire for a speedy end to the war in the Middle East. Separately, Iran is advancing a law to formalize charging ships a toll in exchange for safe passage through the Strait of Hormuz. Trump and President Xi Jinping of China are slated to meet in May. The White House announced that the summit, which the Trump administration postponed from next week amid war in the Middle East, is expected to take place on May 14 and 15 in Beijing. Tariffs and trade will most likely anchor the agenda. China is looking for lower levies, as well as access to advanced artificial intelligence chips, and Washington is eying, among other things, freer trade in rare earth minerals. Scott Bessent reportedly wants to rein the Fed in. The Treasury secretary told financial industry executives that he would like to see the central bank overhauled along the lines of the Bank of England, which has formal independence for setting monetary policy but less latitude than the Fed in reacting to financial instability, The Financial Times reports, citing unnamed sources. Bessent has been a critic of the Fed’s debt-buying efforts, known as quantitative easing; Kevin Warsh, Trump’s pick to run the Fed, has backed more policy coordination with the Treasury Department. SpaceX reportedly lifts its I.P.O. fund-raising expectations. Elon Musk’s rocket company told investors yesterday that it aimed to raise about $75 billion in its I.P.O., up from as much as $50 billion, the FT reports, citing unnamed sources. The amount would dwarf the record $29 billion Saudi Aramco raised. Lawmakers will introduce a bill to curb presidential and congressional prediction-market trading. Next week, House members from both parties plan to file legislation barring fellow lawmakers and some executive branch officials from using certain prediction markets to bet on political events or policy decisions, Politico reports. A reminder: Measures seeking to limit lawmakers’ stock trading have had little success on Capitol Hill.
Exclusive: A big new fund-raising round for Shield AIShield AI has emerged as one of the most prominent next-generation defense start-ups, bringing autonomy and artificial intelligence to the battlefield. With fighting in hot spots like Ukraine and Iran underscoring the role of drones and A.I. software in modern fighting, Shield AI has raised billions in new capital and announced an acquisition, Michael de la Merced is first to report. What Shield AI does: Founded in 2015 by Brandon Tseng, a former Navy SEAL, and his brother Ryan, a tech executive, the company has two main businesses. One is software for autonomous piloting, called Hivemind, that works with an array of products (including those from other contractors like Anduril Industries). The other is selling its own autonomous drones, like the V-BAT vertical-takeoff model that is used by Ukrainian forces. “The capabilities that we can deliver, the cost curve that we can deliver, is fundamentally different than in the past,” Gary Steele, the former Cisco executive who is now Shield AI’s C.E.O., said in an interview. It just raised $2 billion at a $12.7 billion valuation. About $1.5 billion is coming from new investors like Advent International and the direct-investment group of JPMorgan Chase’s Security and Resiliency Initiative, and from existing ones including Snowpoint Ventures. Shield AI also raised $500 million in preferred equity from Blackstone, with the possibility of raising an additional $250 million. Shield AI’s new valuation is more than double what the company attained in its last fund-raising round just over a year ago. The company also plans to acquire Aechelon Technology, a start-up that makes simulation software used by governments to train both humans and A.I. Steele told DealBook that the takeover would help customers learn how to use its products quickly and would also provide data useful in training its own products. It was the opportunity to buy Aechelon that spurred Shield AI to pursue new funding, even when the company already had plenty of cash, Steele said. What’s next? Beyond integrating Aechelon, Shield AI will focus on growing, including developing its X-BAT drone. The company describes it as an autonomous fighter jet and says is set for release this year. Eventually, the goal is to seek a stock listing, Doug Philippone, a founder of Snowpoint who is on Shield AI’s board, told DealBook. NUMBER OF THE DAY $49.2 billionWall Street had another bang-up year, and its employees are reaping the rewards. The total bonus pool for the New York City securities industry reached a record $49.2 billion for 2025, up 9 percent from 2024, according to an estimate released today by the office of the New York State comptroller, Thomas DiNapoli. The average bonus was $246,900, about the starting price of a new Porsche 911 Turbo. Banks could afford to be generous: Wall Street’s collective profits rose 30 percent in 2025 to $65.1 billion.
Will E.V.s get a war boost?With oil prices surging since the war in the Middle East began, car dealers in Europe and Asia are suddenly being flooded with customers seeking electric vehicles. There are signs of renewed interest in the U.S., too, where sales have lagged. Now automakers are weighing whether the impact of wartime chaos will be lasting enough to pry open new markets, Vivienne Walt reports. E.V. sales were rebounding in Europe before the fighting began. They jumped 29 percent in Germany and 28 percent in France for battery-electric models in February, compared with a year earlier, according to the European Automobile Manufacturers’ Association. That’s partly thanks to cheaper models and government subsidies of the kind that were repealed last year in the U.S. In theory, war could bolster sales. “The uncertainty around oil prices is definitely a good opportunity for E.V.s to take off in markets where they have not done well,” Felipe Munoz, an auto industry analyst, told DealBook. That’s especially true in Europe, where drivers now pay about 2 euros a liter, or $8.77 a gallon — more than double the average U.S. price. In Paris, the Chinese E.V. giant BYD offered discounts in mid-March. And it took more than 1,000 orders in two days, a 90 percent jump from a similar January promotion, Michael Martinez, BYD’s public relations manager in Paris, told DealBook. “Is it linked with the Iran situation?” he asked. “It’s complicated to say.” Dealers in Asia have also seen sales spike. “Clients are replacing units in favor of E.V.s because of the oil price hikes,” Matthew Dominique Poh, a BYD dealer in Manila, told Bloomberg. The U.S. is the laggard. Last year, President Trump scrapped government subsidies and manufacturing support for E.V.s, prompting legacy automakers like Ford, Honda and G.M. to shutter new E.V. plants in the U.S., and take billions in write-downs. Less expensive E.V.s are coming. Volkswagen and Renault are among automakers planning to bring out more affordable models this year, partly thanks to breakthrough lithium-iron-phosphate batteries, which allow low-cost production and fast charging. “We will see an avalanche of smaller, cheaper E.V.s, which will come just at the right time,” said Matthias Schmidt, a market analyst for Schmidt Automotive Research. We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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