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It's not a matter of "if" but "when"
Andrew Ross Sorkin says the next financial crisis is coming
In 1929, unchecked speculation and economic hype helped fuel the worst financial crash in modern history. Nearly a century later, New York Times journalist and CNBC anchor Andrew Ross Sorkin sees troubling parallels. On the GZERO World podcast, he joins Ian Bremmer to talk about his new book, "1929: Inside the Greatest Crash in Wall Street History—and How It Shattered a Nation," and whether today’s economy is headed for another cliff.
Sorkin warns that behind today’s AI boom and market exuberance lies an undercurrent of fragility—historic debt levels, shaky private credit markets, and investors chasing returns with little oversight. While the technology behind AI is real, much of the money flooding in feels familiar to those who’ve studied speculative bubbles before. “We're not going to have another 1929,” Sorkin says, “but I think it's very possible. Actually, I would argue it's almost impossible for us not to have another 1999.” He sees eerie parallels between the past and the present: massive speculative investments, surging inequality, and a public increasingly disconnected from financial realities.
But one thing stands out today: silence. Sorkin warns that many CEOs and financial leaders, despite recognizing the risks, are unwilling to speak out publicly. “If we ever get to a moment where we need to make very difficult decisions,” he says, “are there going to be leaders willing to stand up and explain what needs to happen?”
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All antitrust eyes are on Nvidia
The artificial intelligence boom has been transformative for Nvidia, which has become the third-most-valuable company in the world just behind Apple and Microsoft. That’s a bronze-medal performance. (We can make Olympics references for another week, folks.)
Nvidia’s chipmaker’s graphics processors and data centers are integral for anyone and everyone who wants to train or run a generative AI model. That’s true for teams at Silicon Valley giants and upstarts alike. And Nvidia is the clear market leader: By one estimate, Nvidia now controls 80% of the market for AI-grade chips and data centers, far ahead of rivals AMD and Intel.
Naturally, Nvidia’s market dominance has begun to attract scrutiny from antitrust authorities in the US, its home country, and around the world. The semiconductor giant now faces multiple antitrust probes, raising questions about whether its acquisitions and competitive practices have been fair.
The US Department of Justice is reportedly investigating the company in two separate probes: First, it’s looking into whether Nvidia’s $700 million attempted acquisition of Run:ai, an Israeli AI startup, would be anticompetitive. Second, it’s investigating complaints from competitors that Nvidia is abusing its market power. If the government sues, it could seek to block the acquisition, or demand changes to how Nvidia conducts its business.
Diana Moss, vice president and director of competition policy at the Progressive Policy Institute, says that while these investigations are significant, it’s hard to discern whether charges will be filed since such decisions are dependent on what investigators learn. She said success in business alone isn’t enough to be dinged by antitrust regulators. “The key question is about the pathway to success,” she wrote in an email. “Commercial success on the merits, i.e., by being lower cost or more innovative, draws less antitrust attention than success based on squeezing out rivals and raising prices. Antitrust enforcement targets the latter.” (For example, just yesterday, a federal judge found Google liable for abusing its own monopoly power in the online search business by cutting deals with phone suppliers like Apple and Samsung to make the Google search engine the default experience.)
The investigations into Nvidia come at a time when the US government has been actively supporting the domestic semiconductor industry through initiatives like the CHIPS Act and boxing out China through stringent export controls. But boosting the chip industry and scrutinizing one of its leaders aren’t necessarily at odds.
“The CHIPS Act is focused on the manufacturing segment of the supply chain, not necessarily designers like Nvidia,” said Xiaomeng Lu of Eurasia Group. Lu views both the support for the chip industry and the antitrust probes as “moves designed to shape the industrial landscape in a way favorable to [the] government’s strategic goals.”
Moss adds that antitrust enforcement operates somewhat independently of these other economic and national security policy priorities. “I don’t see the current administration pressuring enforcers to exercise prosecutorial discretion to stand down on enforcement regarding large US national champions,” she said.
Even if the US decides to bring a case against Nvidia, its leading chip designer, that doesn’t mean it’s going to go easy on China. “The possibility of being held liable for antitrust violations doesn’t mean ceding the field to China, any more than Microsoft being ordered to level the playing field for rival browsers and other third-party software was a fatal blow to that company,” said Mitch Stoltz, head of the antitrust working group at the Electronic Frontier Foundation.
Lu suggests that from the DOJ’s perspective, “limiting the dominant player’s power will foster more innovation and allow the emergence of a host of AI chip companies who can outperform their Chinese counterparts.”
Scott Bade of Eurasia Group points out that this dilemma is not unique to the chip industry. “It’s worth noting that this is also a common refrain with almost all tech-focused antitrust. If you want a national champion, don’t go after your leading contenders,” he said. “But the FTC has different priorities than Commerce and an independent mandate.” (The Commerce Department handles export controls as one of its many duties.)
Stoltz strongly argues against the idea of protecting “national champions” from antitrust scrutiny. “Monopolists are prone to mistreating consumers, mishandling people’s private information, and working closely with authoritarian governments no matter what country they’re located in,” he asserts.
“Building homegrown monopolists that are too big to regulate effectively isn’t ultimately any better for consumers and society than ceding the field to foreign companies with close ties to authoritarian regimes,” Stolz adds.
The decision to focus on Nvidia isn’t that of the United States alone. The French government is expected to charge the company with antitrust violations, while it’s disclosed that the UK, Europe, and China are also examining its practices.
Nvidia’s ability to weather these storms could determine how much of a foothold direct competitors can gain in the AI chip industry. Nvidia feels its market dominance has been earned and deserved, but one abuse of that monopoly power and regulators will look to take it down a peg — no matter what that means for the global chip race.
Nvidia logo in Taipei, Taiwan.
Hard Numbers: Nvidia soars, Salesforce’s UK investment, step up for your eye exam, More millionaires (more problems?), Apple’s rebound
4 billion: Salesforce is investing $4 billion in the United Kingdom and opening a 40,000-square-foot AI-focused office in London on June 18. The US-based software company said it’ll also run training and upskilling programs for professionals looking to gain AI-related skills.
6 million: Want a 90-second eye exam without interacting with a human? The startup Eyebot raised $6 million for AI-enabled kiosks that’ll do just that. The kiosks perform an eye exam, evaluate prescription lenses or contacts, and any recommended prescriptions are sent to a doctor for final review and approval. The company hopes that this telehealth initiative can be an affordable way for people to get their vision checked, especially those without easy access to professionals.
600,000: There are now 600,000 millionaires in the US, thanks to the AI boom. Atop an AI-fueled stock market boom, America’s number of millionaires jumped more than 7% year over year in 2023. Asia gained about 5% more millionaires while Europe saw a 4% increase.
471 billion: Apple’s stock has rallied since early April, gaining 20% — or $471 billion — in value on the back of investor anticipation of AI rollouts on its devices. The company kicked off its Worldwide Developers Conference on June 10, announcing Apple Intelligence, an AI upgrade to its iPhones that will prioritize certain messages and notifications, offer new writing tools, and boost Siri’s capability as a voice-powered assistant.