Silicon Valley Heads to Washington

Big Tech and big government

The flow of Silicon Valley executives President-elect Donald Trump wants to join his administration is becoming a torrent after he announced more picks over the weekend.

It’s the latest evidence of tech heavyweights’ growing influence on Washington, and the venture capital firm Andreessen Horowitz is at the center of it.

Trump tapped a pair of the V.C.’s executives to high-profile roles. He named Scott Kupor, a managing partner at the firm, to be director of the Office of Personnel Management — a role that could make him crucial to streamlining staffing across the federal government.

Trump also appointed Sriram Krishnan, until recently a general partner at Andreessen Horowitz, to advise on artificial intelligence policy. Krishnan is a confidant of Elon Musk, and host of a widely followed tech podcast with his wife. Krishnan will work with David Sacks, the Silicon Valley investor who was an early backer of Trump, and who has been named the White House crypto and A.I. czar.

Other tech names picked by Trump:

Emil Michael, a former Uber executive, to be under secretary for research and engineering (he will have to be confirmed by the Senate).
Michael Kratsios, the managing director of Scale AI, a data start-up, will also advise Sacks.

The moves come as the tech sector builds bridges with Trump. Silicon Valley has had a reputation of favoring Democrats, but during the election it was home to many of the loudest pro-Trump voices. Since the election, a parade of tech C.E.O.s has traveled to Mar-a-Lago to try to win over the president-elect.

Big Silicon Valley Democrats liked the choices, too. Aaron Levie, the C.E.O. of the data storage company Box who supported Vice President Kamala Harris for president, called the latest picks “very strong.” Other Big Tech luminaries, including Musk and Demis Hassabis, Google’s A.I. chief, were effusive about Krishnan’s appointment.

Andreessen Horowitz has become a key player. Marc Andreessen, a co-founder of the firm, was a very public backer of Trump during the election, saying that the Biden administration was a brake on tech, especially on crypto and A.I. He told the “Honestly With Bari Weiss” podcast that he had spent about half of his time at Mar-a-Lago since Election Day helping the transition team.

What next for the Silicon Valley-Washington relationship? Palantir and Anduril, two big defense tech companies, are in talks to start a consortium to bid for more government work, The Financial Times reports, suggesting that deepening ties are on the cards.

HERE’S WHAT’S HAPPENING

Honda and Nissan formally start merger talks. The Japanese auto giants said on Monday that they would discuss combining their businesses under a holding company, with the aim of completing a full merger in August 2026. A deal would create the world’s third-largest automaker and bolster their efforts in electrical vehicles and new technology.

Donald Trump vows to lower taxes, to “stop woke,” and to put Panama on notice. In a 90-minute speech on Sunday at a conservative conference, the president-elect delivered a “preview” of his second term, repeating false claims, criticizing adversaries and doubling down on policies to take on immigration and cut regulation. He also threatened to seize control of the Panama Canal, accusing the country of overcharging the United States too much.

The Biden administration steps up scrutiny of Chinese chips. The White House announced on Monday that it was opening a trade investigation into an older generation of Chinese-made semiconductors that are a key component in dishwashers, telecom networks and military equipment.

The year (and year ahead) in deals

By most measures, 2024 was a year of fits and starts for M.&A., especially compared with a year ago. And I.P.O.s were a flat-out dud.

For deal makers, there are plenty of reasons to hope that 2025 will be better, including a potentially more business-friendly White House and Congress, investor ebullience and a relatively strong American economy. But there are also factors that may keep corporate deal makers on edge, DealBook’s Michael de la Merced writes.

The year was mixed for deal making. Heading into 2024, bankers and lawyers said that the overall mood in corporate boardrooms was cautious, given geopolitical uncertainties and questions about the vitality of the global economy.

Deal activity ultimately reflected that. While the dollar volume of deals announced in 2024 as of Friday rose 9 percent year-on-year, to $3 trillion, the number of transactions fell 18 percent, to 46,534, according to data from the London Stock Exchange Group. That’s the lowest level since 2015 and worse than 2020, which was afflicted by the coronavirus pandemic.

While a handful of large corporate buyers were willing to take a chance on M.&A., would-be acquirers more broadly were feeling cautious. The biggest takeover bids announced in 2024 included:

Alimentation Couche-Tard’s $58 billion offer for Seven & i Holdings, the Japanese operator of the 7-Eleven chain;
Capital One’s $35 billion deal to buy Discover Financial Services;
Mars’s roughly $36 billion acquisition of Kellanova, the Pop-Tarts maker.

(A potential point of comfort is that the biggest transactions covered a broad area of industries, including retail, financial services and technology.)

Among advisers, the usual suspects — Goldman Sachs, Morgan Stanley and JPMorgan Chase — claimed the biggest share of M.&A. activity, collectively participating in nearly $2.3 trillion worth of transactions. A resurgence in investment banking helped push shares in all three to record levels this fall. And Evercore, an independent investment bank, beat out bigger rivals like Barclays and UBS with $266.5 billion worth of advisory assignments.

Despite a bull market for the S&P 500, 2024 was a year to forget for I.P.O.s. Some 1,167 companies went public in the year, raising $110.6 billion. That’s down about 9.5 percent by number and 1.6 percent by fund-raising volume.

While some issuers were willing to brave sometimes choppy markets — top-performing I.P.O.s included those of Lineage, a real estate investment trust, and Reddit, the social media company — investor caution prompted many would-be market debutantes to wait.

Things are already looking up for 2025. Interest rates have come down in the United States and other major markets, as central banks take stock of relatively favorable declines in inflation. That has lowered the cost of financing, an especially important consideration for private equity firms.

By far the most significant reason for hope, deal makers say, is Donald Trump’s election victory and the likely return of deregulation. The president-elect has managed to reassure corporate leaders and their advisers that he will probably go easier on M.&A. than the Biden administration, notably with his picks of Gail Slater to lead the Justice Department’s antitrust division and Andrew Ferguson to head the Federal Trade Commission.

And for I.P.O.s, there’s a backlog of prominent names that could list in 2025, including Shein, the fast-fashion giant, and Klarna, the payment processor. Private equity and venture capital firms have been closely watching for signs of an I.P.O. comeback as a way to finally cash out on long-held investments.

But there are also areas of concern. Corporate leaders have been anxious about whether Trump will follow through on his threats to impose wide-ranging tariffs, which could drastically raise prices and lead to global trade battles even with close allies.

And then there is the prospect of chaos in Washington, despite Republicans set to regain control of both the White House and Congress. The fierce warfare over federal government funding, and some Republicans’ willingness to buck Trump (and Elon Musk, his influential adviser) on key priorities like raising the debt ceiling are reintroducing the No. 1 thing that worries the C-suite: uncertainty.

Some holiday reading

The DealBook team picks some books and newsletters that we liked in 2024, and ones to look forward to in 2025.

The enigma of Masa Son

“The Money Trap: Grand Fortunes and Lost Illusions Inside the Tech Bubble,” by Alok Sama

“Gambling Man: The Wild Ride of Japan’s Masayoshi Son,” by Lionel Barber

Masa Son, the mercurial head of SoftBank, is one of the world’s most consequential investors and showmen. Last week, he met with President-elect Donald Trump and promised to invest $100 billion in the United States.

In “The Money Trap,” Sama, a former SoftBank president, describes what it was like inside Son’s global empire. He writes about the figures around Son, how the SoftBank founder differs from those in Silicon Valley and the roller coaster ride of doing deals alongside him during that time.

Next up: “Gambling Man.” The biography of Son, by Lionel Barber, a former editor of The Financial Times, is set to be published in the United States next month.

An economic thriller

“The Wealth of Shadows,” by Graham Moore

At DealBook, we closely follow the relationship between money and global policy. In “The Wealth of Shadows,” Moore hits on these themes in a fast-paced historical thriller.

The novel follows Ansel Luxford, a middle-aged tax attorney who lived in Minnesota and grew alarmed by the growing threat of Nazi Germany. Instead of watching history unfold from the sidelines, Luxford turns to a weapon he knows how to wield: money. He goes to work at the Treasury Department and helps devise an economic warfare playbook to take down Hitler.

Moore discovered Luxford while researching a book on the 1944 Bretton Woods Conference.

Understanding prediction markets

“Imperfect Information” by Rajiv Sethi

Rajiv Sethi is an economics professor at Barnard College and Columbia University whose research lately focuses on information and beliefs.

Sethi’s newsletter gained significant attention during the U.S. presidential election, when prediction markets became such a big deal. Sethi, who has researched the effectiveness of such markets, put the trend into context and explained developments like an apparent attempt at manipulation on Polymarket. His book takes on a wide range of timely issues, including the growth of Bluesky and the potential effects of President-elect Donald Trump’s proposed tariffs.

Tech revolutions and revolutionaries

“Character Limit: How Elon Musk Destroyed Twitter,” by Kate Conger and Ryan Mac “Supremacy: AI, ChatGPT and the Race That Will Change the World,” by Parmy Olson

Silicon Valley’s political rift, artificial intelligence and a shift in social media were among the big themes of the year, and two books offered an insight into each.

The Times’s Conger and Mac pulled back the curtain on Elon Musk’s takeover of Twitter, and how he transformed the company by cutting costs and staff. Now that Musk has become a key Trump ally, that playbook could be deployed as part of Musk’s effort to cut federal government spending.

Olson, a Bloomberg Opinion columnist, details the high-stakes race to dominate A.I. between Sam Altman of OpenAI and Demis Hassabis of Google. Their rivalry helps explain how we got here, she writes, and what to watch next.

THE SPEED READ

Deals

News Corp will sell its Australian cable TV unit Foxtel to DAZN for $2.1 billion, and gain a minority stake in the sports streaming platform. (Reuters)
Third Point, Daniel Loeb’s investment management firm, has agreed to buy AS Birch Grove, a credit fund manager. (Business Wire)

Politics and policy

Alphabet, which is embroiled in an antitrust showdown with the Justice Department over its dominance in online search, has vowed to fight similar charges in Japan. (Bloomberg)
“Robert F. Kennedy Jr. Wants to Ban Drug Ads on TV. It Wouldn’t Be Easy.” (NYT)

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