New York (CNN Business) It seems that Elon Musk’s impressive expertise — whatever combination of wealth, carefully cultivated charm, and outstanding lawyers who helped him escape countless scandals unscathed — is beginning to unravel.
Here’s the deal: Federal regulators just announced that Musk’s private space tourism company, SpaceX, will no longer receive nearly $900 million in subsidies it received last year because the company “failed to demonstrate that it could deliver” the internet service you promised.
Let’s back up for a minute.
- In December, the Federal Communications Commission (FCC) auctioned $9 billion in subsidies to Internet service providers as part of a plan to bring high-speed Internet to rural areas in need.
- The fact that SpaceX received one of the largest tranches of that subsidy program was controversial because the Starlink network was basically new and untested.
- Starlink’s system is very different from traditional high-speed Internet, which relies on underground fiber optic cables. Starlink, however, relies on thousands of satellites working in concert to transmit Internet access to the ground.
- The FCC was essentially betting that Starlink would be camera-ready soon enough.
The gamble appears to have backfired, as the FCC is withdrawing subsidies, saying Starlink service is “still developing technology” and its speeds have slowed, reports my colleague Jackie Wattles.
SpaceX did not respond to a request for comment, as is often the case at companies run by Musk.
the big picture
Part of the whole idiosyncratic-visionary-mega-billionaire personality of Elon Musk (believe it or not) is that he runs several companies with big ambitions, like colonizing Mars, in the case of SpaceX.
Even if his shenanigans — the over-promises, the trolling tweets, the reckless corporate forays, naming one of his children X Æ A-12 — are off-putting to you, you still have to appreciate the audacity.
But now it looks like Musk’s bad behavior might finally be catching up with him.
In recent days, Musk has sold nearly $7 billion worth of Tesla shares in case he loses his legal battle with Twitter and is forced to buy the company, which he no longer wants. At the same time, California officials filed a complaint alleging that Tesla lied in ads about its Autopilot and Full Self Driving technology (which, despite their names, are not fully autonomous).
In June, when several SpaceX employees signed a letter criticizing Musk’s behavior, the company fired at least five of the people involved. A month later, a huge SpaceX rocket prototype exploded during launch. Musk’s response to that on Twitter?
“Yeah, it’s actually not good.”
We could say the same for Musk right now.
Number of the day: 8.5%
The day’s inflation headline was a bit more optimistic than expected, as July’s annual consumer price index reading was 8.5%, much slower than June’s 9.1%, but still historically high.
That’s good news and we should all take a moment to savor it. More good news: Overall prices did not increase at all between June and July. The last month prices did not rise was November 2020.
However, it is not all good news. Prices didn’t rise for one reason, and one reason only: Energy costs, which are notoriously volatile, have plummeted. If you exclude these, prices increased in virtually every other category.
Conclusion: The July report indicates that the Fed’s rate hikes may not be having the desired effect. High energy prices likely eased as demand began to dry up.
the italian job
Imagine being in the room when someone at Domino’s, the most aggressively mediocre pizza purveyor on the planet, pitched the idea of entering the Italian market.
Look, what we’re going to do is take our objectively inferior American pizzas and sell them to the same people who invented pizza and for whom food is not only a source of national pride, but also, more or less, the bedrock of the Italian cultural identity…
That’s crazy, replies the boss. So crazy it could work…
Spoiler alert: it didn’t.
After seven years trying to make it big in Italy, Domino’s formally closed all of its locations, according to Italian media.
Domino’s had big plans when it launched on the Italian market in 2015, signing a 10-year franchise agreement with a Milan-based company called ePizza. Together, they planned to introduce a large-scale pizza delivery service to the country, which did not actually exist at the time.
It was not an immediate disaster. At the beginning of 2020, ePizza managed 23 stores in Italy and six more through a sub-franchise partner.
But it turns out that Italians preferred Italian pizza to the American kind, with its distinctively American ingredients, like pineapple.
Who could have guessed? (Apart from, surely, everyone?)
While some may attribute Domino’s failure to its brazen attempt to infiltrate the homeland of pizza, ePizza blamed its demise on competition from food delivery apps.
EPizza filed for bankruptcy in April, after it struggled to make enough sales during two years of pandemic restrictions amid “unprecedented competition” from local restaurants.