SpaceX Merges with xAI and X - DTNS 5198

0:04This is the Daily Tech News for Tuesday, February 3rd, 2026. We tell you what you need to know, give you the important context, and help each other understand. And today, we'll explain why Twitter is now part of a rocket company. What? I'm Jason Howell. It actually makes sense. I'm Tom Merritt. It does, but that's a weird way to put it, but it does make sense. Let's start with what you need to know with a big story.

0:31Yeah, this is an interesting one. I'm curious to get your take on it, Tom. SpaceX is acquiring XAI in an all-stock deal. It values the combined company at$1.25 trillion. This is all ahead of an expected SpaceX IPO. That's expected for later this year. SpaceX is bringing rockets, you know, the Starlink internet service, all that stuff, while XAI is bringing its GROC, its Aurora models, and yes, the X social platform. Now you understand the intro to create a single stack that's going to cover, you know, launch connectivity, data, consumer AI services all under the same umbrella. Eric Berger at Ars Technica is arguing that the big bet here is space based data centers.

1:21Musk, Elon Musk wants to put AI compute into orbit, wants to do it at high volume with Starship and Starlink kind of as the core enablers behind that. And thank you, Tom, for linking me to the Ars Technica article. Very interesting stuff. Berger points out that to that end, there's a few things that need to happen. That AI actually pays off, even if we're talking about a bubble, which is a topic that comes up often. If XAI can actually become, Berger says, the Google or the Amazon through that bubble, that's definitely a payoff. Orbital data centers must reach cost parity with terrestrial data centers.

2:05So it must make financial sense for all this stuff happening in orbit. And then SpaceX has to really kind of come to terms and face some hardware realities that are involved with this as well. radiation shielding, heat management, doing upgrades while those services and that hardware is in orbit, all that stuff. Now, SpaceX has lower launch costs and low latency links because of Starlink. That can offset at least part of the physics challenges that come from sending compute into space. And SpaceX also filed on Friday with the FCC to launch up to 1 million satellites as orbital data center nodes, plans a stargaze, that's G-A-Z-E, tracking system to avoid collisions in that low Earth orbit.

2:52And finally, Musk is also talking about Starship flying hourly with 200-ton payloads and ramping up to 100 gigawatts of compute launched per year. Normal caveat of Elon Musk generally says the most extreme version of his goal that he can. And I think he does it on purpose so that they end up going farther in pursuit of that goal, even if they don't reach it. So I wouldn't expect hourly flights anytime soon, but frequent flights. He thinks they can put up a lot of payload. They can put a lot of satellites into orbit, which you would need, which would bring down the cost of the data centers because he would have a lot of them.

3:36He would have mass. It would give XAI a big boost up as a service provider. But just like with the Falcon 9 rocket, he's also willing to provide space for others, it sounds like. He also wants to be the AWS of space, which I think is the smarter deal than just managing XAI. But having XAI as part of that will inform their experience in setting up those data centers because they'll have a better idea of what these kinds of services need. Yes, like you said, the launch cost is not as big of a deal for SpaceX, which is in the business of launching for cheap. They launch incredibly cheap. And when they don't have to charge someone else, when they can launch it themselves, they can go wholesale.

4:21So they have a better shot than anybody else at being able to get the launch cost down to parity. They also can overcome the latency issue because they have Starlink. They already have a ground-based system, which is one of the big things you need for being able to make those data centers useful and overcome the lag from space. They've got experience in that. It really is the operation of them. Can they deal with the heat issues? Which can be dealt with, but we need to actually test it and see, right? Google just launched a data center to start testing these things. And then, yeah, when you launch a data center full of NVIDIA Rubens right now, well, in a year when they announce the next one, then what do you do?

5:06How do you upgrade those? The upgrade cycle is pretty fast. So being able to launch a robot to go up and swap things out, not to mention the whole situation of space debris. Like you said, they have the Stargaze thing to stop satellites from bumping into each other. There's a lot of debris from China out there in the 800 to 1 ,000 kilometer range, which is in the range they're talking about. They're talking about launching into the 500 to 2 ,000 kilometer range. So you have to watch out for that stuff. You have to stay away from that stuff. You don't want to make it worse because that debris never goes away.

5:44It's very difficult to make it go away. And then if you deorbit, then you have to deal with making sure it burns up. There's also the problem that the aluminum in these devices is starting to show effects on the ozone layer. So if you're deescalating a bunch of data centers, if you're putting a million up, eventually a million are coming down. uh yeah eventually right rip a hole in the ozone layer yeah uh and so they're talking about oh well we might be able to just launch them higher into orbit and just park them in a in a layer where they won't burn up in the atmosphere and affect the ozone layer which you know kicks the can down the road a few centuries i suppose uh eventually eventually uh far earth orbit becomes polluted with a bunch of satellites but you got a lot more space out there so i i think this is exactly what Elon Musk does.

6:32I am going to make EVs popular by making a sports car out of them. You're nuts. No one's going to buy an EV and who in their right mind would buy an EV sports car? Well, he made that happen. I'm going to privatize launches and I'm going to get us to Mars. Well, guess what? He privatized launches and he has made progress towards getting us to Mars. So I don't think this is as crazy as it sounds. And if anybody could pull it off, it would be this organization because SpaceX is incredibly successful. There are questions on whether Musk's leadership is as stable as it used to be. But on the face of it, I don't think the plan is crazy.

7:12Yeah. Yeah. As I was reading through some of these things, Dan Primack put out a few tweets because he wrote about this and he said a few things that he kind of left out of his writings. And one of the things that he pointed out was that Musk has said that China's AI edge really comes from an abundance of cheap solar on the ground. And so something like this puts that into orbit where there's constant kind of exposure to the sun. And his plan is to put America's kind of AI data centers where China's advantage does not exist in orbit compared to this floating around in space all the time, always exposed.

7:52But Dan pointed out something that's really interesting is that China still controls much of the solar materials and manufacturing. And so that kind of puts Musk's plan into a position of, and I realize Musk has his own solar kind of strategy and approach, but into leaning harder on Chinese supply chains for the solar that he ends up putting into space. I just found that kind of interesting. I mean, yes, there's nothing wrong with anything he says there, But it's the kind of argument where I feel like it's a bit cherry-picked because you could make an argument that China is one of the key suppliers of almost every technological enterprise out there.

8:38And I think it's easy to just take the shortcut in your head of like, oh, well, if China wants to pull the plug, they can. They can't. We've seen that. If they could, they would have in the past two years during these tariff fights. But China needs the business that people pay them for. They need to bring in that income. They need to supply people. So they have less maneuverability on cutting companies off than you might think. Doesn't mean they can't affect it, though. Doesn't mean they can't gain an edge in that sort of thing. So it's a fair point. But I don't know if it's like a deal killer or anything.

9:18Yeah, no, I don't know that it's a deal killer also. And then what about this kind of, you know, some of the other pushback that I've seen is around kind of the requirement around scaling. I certainly, you know, in my coverage on my other podcast, you know, we talk about this kind of this current, very current moment where you've got the kind of two sides, you know, that you've got the one side that's really driven by this idea that it's all about scale. And then you've got another side that's like, well, wait a minute, maybe that's the wrong approach. which maybe we need to kind of trim back and focus on different things, world models, whatever the case may be as far as AI is concerned.

9:51Does something like this require scaling in order for it to be a success, or is that just a piece of the puzzle? I don't know that it requires scaling. In other words, when you say something like this, you're saying generative models, LLMs, like that business, does that require scaling? Is that what you're just making sure? Yeah, yeah, yeah, exactly. Exactly. Leaning further into this as the strategy of just massive amounts of these data centers. Like, do we need all these data centers? Do we need them all? Or can other AI companies be successful without needing all these data centers? Yeah, I don't know.

10:28I think that's harder. Find me a point in history where someone overbuilt capacity and it never got used. And it never got used, yeah. Yeah. I mean, you can find examples of that. There are whole cities in China, I guess, that are examples of that where there's just no one living in them. But they're rare. Usually, you build a bunch of railroads, maybe they don't get used right away, but eventually you've got railroad companies on them. You build a bunch of power lines, eventually power lines. In fact, fiber internet is in the middle of that, right? 10 years ago, you would have pointed like, yeah, we laid all this fiber and nobody's using it.

11:03Well, guess what? We're lighting up fiber like crazy these days yes indeed so true i think that betting on capacity is never a bad bet uh because you will if you have more capacity humans will figure out how to use it uh and no one no one ever complained that they built too much highway and the traffic is too too low low congestion we need more traffic that's not to say that's a really good point a company couldn't figure out how to make a really efficient uh model and not have to pay for all the data center capacity and get an edge. I think that's absolutely a possibility. But if you can make a more efficient model, then you can also run it on that higher data center capacity and make it even more powerful.

11:47Even better. That's always the argument in the other way. Interesting. Yeah. But I think this is one of those situations where I know a lot of folks are going to want to take pot shots of like, oh, putting XAI and SpaceX together. What a dumb idea. And I don't think it is uh i think yes the fact that the social media platform is part of this does seem a little like well that's kind of tacked on uh i guess that's helping providing training data to the xai uh business and maybe there's some they tried to make it sound like oh and the the world's most real-time information source i'm like sure would you have done that if you didn't already own x probably not like it's not essential to the plan but otherwise uh i i see where this is going and And it largely fits the pattern of what business is doing these days.

12:39Well, DT &S, you wouldn't exist if it weren't for the following people. So DT &S, I'm anthropomorphizing my own show. I'm talking to it, and I say you need to thank Paul Thiessen, Ali Sanjabi, AB Puppy, and every single patron and Substack subscriber out there. Thank you.

13:04there's more we need to know today let's get to the briefs nintendo is still killing it girl with the original switch with its most recent earnings report showing that the console has officially passed the ds as the company's best-selling console of all time every other time we do this it's like nintendo's best-selling console after the ds you know like the ds is in its own category well guess what switch 2 has uh or i'm sorry the The original Switch has passed the DS. Switch crossed 155.37 million units compared to the DS's 154.02 million lifetime units. Switch 2 demand, also very big over the holidays.

13:417.1 million units sold during the quarter. 17.37 million since it launched in June. That's less than a year to surpass the Wii U. And granted, it's a lower bar. but to surpass the we use 13.7 million sales during its lifetime 17.37 million since june 13.7 million for the we u uh nintendo is targeting 19 million switch 2 units sold this fiscal year which i think surprised people that they held on to that uh what with the ram and ssd uh supply issues but nintendo must feel confident that it's it's got its deals locked up uh it there were some some talk about yes we know that if this shortage continues through the year that it will start to impact us because everybody's going to start renegotiating their contracts at a higher price but for now they feel confident now what they need to target uh not with the switch too but with the original switch if they if they care to be the top of the heap the playstation 2 apparently the leader the industry leader the next on the list that's the next level and they're not too far away from it 160 million so you know they gotta move another you know four four and a half million units that's not that much especially with this like a lot of the conversation is like do i need the switch to or can i just use the original switch like there's still people buying it so yeah and it's still a fantastic uh console obviously as evidenced by this uh by this story but um yeah yeah i got i i got eileen the switch too for christmas you did okay yeah so and then And I am following the upgrade pattern.

15:18Eileen got the Switch 2. I got her Switch. And then now the Switch Lite goes to Anise. That's the food chain of the Nintendo Switch. The Switch food chain. I like it. Well, let's return to X just real quick here. French prosecutors conducted a search of X's Paris offices as part of a probe into suspected unlawful data extractions. Also, non-consensual sexual deepfakes and complicity in the distribution of CSAM. Elon Musk and ex-CEO Linda Iaccarino, who she served as CEO until stepping down last July, by the way. She's ex-CEO. Right. Yeah, that's true. Both summoned to voluntary interviews in April.

16:08So that's coming up. The investigation began, you may remember, in January 2025 over X's recommendation algorithms, later expanded to include the Grok chatbot. And then over in the UK, or further in the UK anyways, Ofcom shared an update calling its investigation a, quote, matter of urgency, but that it cannot currently investigate the creation of these images, these non-consensual images anyways, without sufficient powers over chatbots. And then Ofcom announced a joint probe into Grok's use of personal data to generate those images without consent. And so the commission is in touch with France over its search in Paris.

16:50And yeah, so there's a lot of investigation going on. Yeah. So the only interesting part of this to me, honestly, like this is going to keep going on. And we just mentioned yesterday that Malaysia, Indonesia and the Philippines have all now dropped their blocking of Grok. I feel like this started as an investigation of whether Russia or Russian-backed influences had somehow changed the algorithm or influenced the implementation of the algorithm. And I understand that to be an important thing to investigate, although it does feel a little bit like a personality conflict. Then you get the investigation into the misuse of Grok and whether XAI was doing enough to prevent the misuse of Grok.

17:47And I feel like that's going to end up going along the same road as Malaysia, Philippines and Indonesia, who are much stricter about these things than Europe is. Again, it might be a little more drawn out because of the personalities involved. But yeah, I think it feels like the kind of thing that just it's clickbait. It gets a lot of people to click because it's got Musk and Europe in it. There's not much to it otherwise. I think what's interesting to me about this is that there's a lot of interest coming from a lot of different directions from the perspective of where there's smoke. Is there something?

18:24I'm not even saying there's fire there or whatever, but how does that impact the platform itself? I do think the larger story here continues to just be Musk. And you either love him or you hate him. And if you hate him, you're looking for stories like this to kind of point to him and be like, see, see, he's doing he's doing things that I don't approve of. And, you know, Grok continues to be the platform that kind of does the things that that the other platforms say they will not do and test the waters. And I think what we're seeing here is when you test the waters, it turns out that some of these different jurisdictions have a little bit of interest, at least, if not some teeth, to be like, no, you've gone a little too far.

19:09And I think maybe that's a little interesting about this story to see where that leads. Yeah, that's not new, though. No, it's not new. Every European investigation is you went a little too far. That's true. That's a good point. This one just happens to have Elon Musk as the CEO. So I imagine if you did an analysis, the number of words written about Grok per user of Grok would be much bigger than any other equivalent for any other AI or LLM out there. Sure. And by the way, just to close the loop, ICO, a joint investigation with ICO, Information Commissioner's Office. I knew it was somewhere. I had to find it.

19:48So there you go. Fitbit co-founders James Park and Eric Friedman have launched Lufu, an intelligent family care system that begins as an app, but they do have plans to make some hardware at some point. It's even just more than an app. It's like a cloud service for your family's health care data. The platform is focused on family caregivers, talking a lot about how difficult it is to be a caregiver, especially if your family is spread out geographically. And so they want to centralize your health data that is spread across all your portals and devices and paper records. Families can log details like vitals, meds, diet symptoms, lab results, doctor visits.

20:34You can do voice input. You can do text. You can do photos. It'll analyze data patterns. It will connect with devices. They don't say which ones. So I think that's an important part. But I think the idea is they want to integrate with as many devices as possible and look for signals of unusual changes and push out alerts to let you know when there is such a thing. There's a wait list to join up right now. If you want to take part in the limited public beta, you can go sign up and see when they bring it to you to try it out. Yeah. I mean, there's a lot of people, a lot of adults who are providing care for their families.

21:12I think the number I saw was somewhere in this range of 63 million. And actually, what I like about this story is I think a lot of the really great products that are created are created out of the need of the person that created them. And that's the case here. James Park, who is one of the co-founders, said that he was caring for his parents from across the country and realized just how poor the systems are in order to do that. Not only that, how do you provide care for your family without them feeling like they're being constantly monitored or even surveilled or whatever? Yeah, yeah, yeah, totally, totally.

21:48So I appreciate that kind of the reason, the rationale behind creating something like this. And yeah, I'm curious to see kind of how it builds out, especially when you get into the realm of hardware. What does that hardware look like? Yeah, I have a lot of questions about the details of this, and they are not accusations. I know sometimes you're like, I have a lot of questions. It sounds like you're being critical. I just have questions of like, oh, does it work with all devices? Will it work with my Apple Watch? Will it work with my, you know, I don't know. Will it work with my core devices, my Pebbles?

22:19Like, what can it access? What are the HIPAA roadblocks to this? Because if it's going to access my Cedars-Sinai information, for example, will it interoperate? That is easier said than done. But I'm confident that they've got answers for all of that thing. And if they've got very good answers to all of that sort of thing, this could literally be a lifesaver for a lot of people. My brother just went through a couple of years of hell being a caregiver to his dying husband. And keeping on top of all of this was one of the biggest pain points for him. And he works for an insurance company. So he had a leg up and it was still incredibly hard.

23:03So helping people through this kind of situation to make things easier, to keep track of things and proactively understand when things are changing is incredibly important. Yeah. Super important. Mozilla is rolling out a set of AI controls to Firefox 148. That includes a feature letting users disable all current and future AI integrated features inside of the browser. Mozilla CEO Anthony Enzo DiMeo first teased this kill switch feature last December. We may have even mentioned it in a story in response to Firefox users who were unhappy with browsers AI direction and probably just the direction of AI into browsers and all things in general.

23:46The new controls also allow users to selectively toggle things like you could toggle off built-in chatbots, translation features, tab grouping suggestions, link preview summaries, just name a few. This update is expected to be released very soon, publicly on February 24th, so in a couple of weeks. Yeah, this is good news, honestly. Firefox is very good at not keeping you from features but letting you decide which features you want. Yeah, indeed. I think at the end of the day, that's – because everybody does have a different take, a different feeling on how integrated these things are. I also appreciate that it's not just all or nothing.

24:25It's kind of like, well, you know what? I feel comfortable with these things. That's actually super helpful, but I really have no use for this. So I'm going to switch that off, keep this on. I like that flexibility. User choice always wins in my opinion. Yeah. Well, folks, user choice is how we do live with it. we find a user who chose to use a piece of technology and then we talk about how they live with it. These are not just review units. These are things that people have integrated into their lives. Sarah Lane's going to be doing one about a pet tracker that her vet gave her and when it was useful and when it wasn't and would she pay for it herself if her vet hadn't included her in the program.

25:06We got Patrick Norton recently talking about headphones. We got all kinds of good stuff. Listen to live with it or watch it at youtube.com slash daily tech news show.

25:20All right, let's check out a few quick headlines that are good to know might make you look really smart in a discussion in the future. Yeah, somebody says, who's the new PayPal CEO? You're going to go Alex. Chris is not the PayPal CEO anymore. He's out following weak performances for the company. And HP chief Enrique Loras is no longer the head of HP. He is the head of PayPal. Now, how did you know that? Well, I listen to Daily Tech News show, of course. You might also then retort by saying, well, since we're talking about CEO switcheroos, how about Disney promoting chairman of Disney Experiences, Josh DiAmaro, into the role of CEO That is replacing Bob Iger at the top, while Dana Walden, who's co-chair of Disney Entertainment, is going to move up to a new role as president and chief creative officer.

26:11Yeah, in March at the annual meeting will be the changing of the guard. And then Bob Iger gets to retire again on December 31st. Raspberry Pi just put out its second price hike, of course, because of RAM, second price hike in two months. so across the line you have to pay 10 to 60 dollars more per board depending on configuration baseline gigabyte models will remain at current prices though so not everything got rose not everything at least there's that for now for now lenovo confirmed the legion y 700 compact compact android gaming tablet uh releasing china first expected release date uh sometime next month but It has an 8.8-inch 3K, 165-hertz display, and a pretty powerful chip, Snapdragon 8 Elite Gen 5 chip.

26:59At least that's the rumor. The only thing Lenovo confirmed is that there is a Legion Y700. Good correction. If you want a good read on the class action lawsuit alleging that WhatsApp does not, in fact, use end-to-end encryption, go read Cryptographer and Johns Hopkins Professor Matthew Green's post at cryptographyengineering.com. He lays out a very good case why it's extremely unlikely that WhatsApp does not have true end-to-end encryption, and therefore doesn't have high hopes that this class action case will prevail. And finally, a little more on Nintendo. Nintendo is releasing a$100 Switch 2 virtual boy accessory on February 17th for gamers who enjoy red and black 3D nostalgia more than actually playing fun games.

27:46get your neck stretching exercises right all right we end every episode of dtns with some shared perspectives and today victor has some insight on the decline of 8k tvs based on his experience in the print industry yeah we were talking about the lg finally ending its 8k line it seems like 8k did not catch on uh victor writes i want to share an experience that came to mind when hearing the news about the stop of 8k screens i used to work for one of the big printing companies It was the 1990s, and the resolution was the race. It was 150 to 300 dpi, then 600 dpi, 1200 dpi, and larger numbers for box specs, aka marketing.

28:29Even when silver halide is about 10k dpi, there was never the need to go there. The addition of light colors to expand gamut was much more important and provide better gains. I wonder if that is what we are seeing with things like the micro LED and others. Anyway, thanks for your great work. Regards, Victor. I think it's a great analogy. More DPI did not always equal better. There were other things that were happening to make printing better. And I feel like that's very similar with TVs. I mean, there is a point. And I mean, it's not just TVs. What this reminds me of is smartphones. I remember the days of the smartphones where you could see the individual pixels and it was blurry.

29:10And then they went to 1080p and it was like, oh, my goodness, it looks like those icons are popping out. And then they couldn't help it. They had to go to like 4K. And at a certain point, it's like, yeah, but the display is small. What is the difference that I actually see? The market can't ignore a difference between a 1080p HDR display, let's say, and a 4K display when it's that small. Like, it's very minimal, and it makes you wonder, like, why? You know, what is the point then, other than to say, well, it's bigger numbers, so it's better? Yeah. At a certain point, the bigger number is not better.

29:45Otherwise, we'd have 100-inch phones. Yeah. That's a good point. Although, that's interesting. I'd review that. Yeah. I would watch your review of that. I would look forward to that. I'd live with it, in fact. Well, folks, thanks to Victor. we have great insight in today's show. You got some insight into a story. Send it to us. Feedback at DailyTechNewsShow.com. Yeah, thank you, Victor, for contributing to today's show. Thank you, the rest of you, for being along for Daily Tech News Show. You can keep us in business by becoming a patron at Patreon.com slash DTNS. We'll see you tomorrow.

30:29The DTNS family of podcasts. helping each other understand. Diamond Club hopes you have enjoyed this program.