Will Larry Ellison Be the Face of the A.I. Bubble?

[ed. Don't miss this one. It's got everything (and could easily be a Pulitzer contender).]

On Jan. 21, 2025 — the first full day of the second Trump administration — Larry Ellison woke up in his 33-bedroom, 34-bathroom oceanfront mansion in Florida, got into his Gulfstream jet and headed up to Washington. Ellison, who was 80 and worth in the neighborhood of $200 billion, had an appointment at the White House. He didn’t bother to take a driver’s license — he needed to call someone on the president’s staff to vouch for him at the gate — but there he was, at 2 p.m., standing beside Donald Trump in the Roosevelt Room as the president announced “the largest A.I. infrastructure project by far in history” and told the world that his friend Larry Ellison was just the man to get it done. “He’s sort of C.E.O. of everything,” Trump said. “He’s an amazing man and an amazing businessperson.”

Ellison began by thanking Trump. “We certainly couldn’t do this without you,” he said. “It would simply be impossible.” He then proceeded to sketch out the ambitious plan. Ellison’s database software and cloud computing company, Oracle, and its partners — most prominently OpenAI — were going to invest as much as $500 billion over the next four years into a group of sprawling data centers, 500,000 square feet each, that would produce 10 gigawatts of computing power, using enough energy to power as many as 10 million homes. It was called Project Stargate, after the 1994 sci-fi movie in which Kurt Russell steps through a wormhole and finds himself inside a pyramid on an alien planet. This Stargate would be a portal leading humanity from the postindustrial era to the artificial-intelligence age. [...]

For Ellison, it was the capstone of a mad two-year scramble to transform Oracle into an A.I. juggernaut. The effort began in late 2022 when the launch of ChatGPT stunned the world and set in motion a race to master and control the most transformative new technology since the birth of the internet. Ellison, a founding father of Silicon Valley and the last of his generation still in the game, was desperate to avoid getting left behind. He’d moved quickly and aggressively — some might even say recklessly — to turn Oracle into a “hyperscaler,” one of the handful of companies providing the critical infrastructure that would power the A.I. boom. [...]

ChatGPT landed very differently in Washington than it did in Silicon Valley, setting off a scramble of its own inside the Biden administration to regulate the development of A.I. To oversee his A.I. policy, Biden turned to a veteran Democratic policy adviser, Bruce Reed, who believed that the administration needed to be proactive. A year after ChatGPT’s debut, in late 2023, Biden signed a comprehensive executive order on A.I., seeking to define the government’s role in the future of this new technology.

For the Biden administration, artificial intelligence was by no means just a domestic economic issue. Countries around the world were all racing to develop their own A.I. infrastructure and technology, and global power and influence would flow to whoever got there first. From this perspective, A.I. data centers were less businesses than geopolitical assets.

The administration was especially concerned about the A.I. ambitions of China and the Persian Gulf, given the powerful role artificial intelligence was likely to play in reshaping the information ecosystem. [...]

The administration’s concerns and Ellison’s ambitions were on a collision course. China and the Gulf were both critical to Ellison’s A.I. plans. Oracle already had a lot of contracts around the Gulf, and it also had a strong business relationship with one of China’s most important A.I. companies, ByteDance. Oracle was the U.S. cloud provider for the U.S. division of ByteDance’s TikTok, storing and securing the data of the app’s 100 million American users. But with ByteDance itself now pivoting into generative A.I., they had the opportunity to do more business together. In the summer of 2024, Oracle started working on a $6.5 billion deal to build a large data center complex in Malaysia, from which it could convey computing power to ByteDance and other foreign companies through opaque leasing deals.

It would be perfectly legal — but under the Biden administration maybe not for long. By that point, national security officials were growing increasingly concerned about China and the Gulf’s A.I. ambitions and were discussing ways to gain more control over them. The administration was especially worried about the role Oracle might play in fueling these ambitions. They knew that Ellison was trying to scale up the company’s A.I. infrastructure quickly and that it was badly in need of cash, which meant that it might be more tempted to make deals that the administration didn’t think were in America’s best interests. [...]

In early 2024, the administration started working with Congress on a bipartisan bill — the Protecting Americans’ Data From Foreign Adversary Controlled Applications Act — that would force ByteDance to divest its U.S. TikTok operations. Biden signed the bill into law in April 2024, setting a deadline of Jan. 19, 2025, for a sale. If ByteDance failed to meet the deadline, the app would be shut down in the United States.

At the same time, the administration was preparing to shore up its efforts to restrict China’s access to American computing power and to exert more control over the Gulf’s. In late 2024, it circulated the draft of a plan to require hyperscalers to go through a licensing process to operate overseas and to keep 50 percent of their computing power in America.

All of the hyperscalers were looking to build overseas, but Oracle had the most to lose: Its global plans were the most ambitious, at least relative to its size. The company publicly and aggressively opposed the Biden plan. Its top policy executive in Washington, Ken Glueck, called it “one of the most destructive” moves ever taken against the tech industry, arguing that the best way to solidify America’s lead in the artificial intelligence race was for U.S. companies to build and control as much of the world’s A.I. infrastructure as possible.

Biden signed off on the new policy in the final days of his presidency. It was scheduled to go into effect in May 2025. If enacted, it could force Oracle to scale back its ambitions in Malaysia and the Gulf. Ellison’s plan to transform Oracle was in trouble. But a new president was on his way to Washington.

‘The Tsunami’

Relief came almost immediately. Hours after his inauguration in January 2025, Trump sat down at the Resolute Desk and began signing executive orders aimed at dismantling Biden’s A.I. policies. He also signed an order directing his attorney general to hold off on enforcing the congressionally mandated TikTok ban for 75 days. And then, of course, came the Project Stargate announcement with Ellison and Altman.

Trump turned to a very different group of people to shape his new administration’s approach to artificial intelligence. He named as his A.I. and cryptocurrency czar David Sacks, a Silicon Valley venture capitalist who had raised many millions for the Trump campaign and, according to a New York Times investigation, was personally invested in at least 449 companies with ties to artificial intelligence. Sacks, who has denied any conflict of interest, believed that when it came to A.I., the government’s job was to get out of the way.

The National Security Council’s technology and national security division had played a key role in shaping America’s A.I. policy in the Biden years. Trump initially appointed David Feith — who had serious concerns about China’s ability to remotely access computing power through Malaysia and other Southeast Asian nations — to run it. But in April, he fired Feith and a few other China hawks and then eliminated the entire directorate. [...]

Trump saw another benefit to withdrawing the Biden plan: The Gulf states were adamantly opposed to it. They needed U.S. computing power to build out their own A.I. infrastructures and had something to offer in return. Their sovereign wealth funds were sitting on trillions of dollars that they were ready to invest in all sorts of American companies, including some connected to the Trump family.

Two weeks before the Biden policy was scheduled to go into effect, Zach Witkoff — son of the Trump adviser Steven Witkoff and chief executive of the Trump family’s cryptocurrency firm World Liberty Financial — made an announcement at a conference in Dubai: The Emiratis would use $2 billion of the firm’s brand-new stablecoin for an investment in Binance, a crypto exchange. Less than two weeks later — 48 hours before the Biden restrictions would kick in — Trump rescinded the policy.

That same day, Trump landed in Saudi Arabia, the first stop on a three-day tour of the Gulf. He was joined in the United Arab Emirates by Altman to announce Stargate U.A.E., a multibillion-dollar initiative to build one of the world’s largest data centers outside Abu Dhabi. Oracle would be a partner, too.

With the Biden plan dead, Oracle was free to operate its data center complex in Malaysia as it saw fit. By the end of June, the facility was on track to become the second-biggest in the world. Oracle doesn’t release the names of its customers there, but by studying its output, an independent A.I. research firm, SemiAnalysis, determined that the facility was feeding most of its computing power to ByteDance. An analyst at the tech-focused think tank ChinaTalk, Aqib F. Zakaria, ran his own numbers and arrived at a startling conclusion: Oracle was providing a staggering 22.6 percent of China’s known A.I. computing power.

by Jonathan Mahler, Jim Rutenberg and Kirsten Grind, NY Times |  Read more:

Images: Louie Psihoyos; Scott Ball
[ed. Not to be redundant but this came out shortly after I'd posted about Oracle (and Larry Ellison) below in The Hater's Guide to Oracle (Part 2). It contains a treasure trove of new information and a road map to how business and politics intersect in Washington and around the world these days. Well worth a read.]