Oracle’s leadership shake-up

0:03Good morning from the Financial Times. Today is Tuesday, September 23rd, and this is your FT News Briefing. NVIDIA is dropping some big bucks on OpenAI, and Oracle announced a leadership shakeup yesterday. Plus, the Trump administration's new rules around worker visas has some major implications for India.

0:23FT News Team: There is a lot of question marks about the future of the tech employment from India that was going to the U.S. I'm Mark Filippino, and here's the news you need to start your day.

0:42NVIDIA's spending spree continues. Last week, the American chipmaker said it was going to invest$5 billion into its rival Intel. Now, NVIDIA is going to sink up to$100 billion into OpenAI. And in return, NVIDIA is getting a significant stake in the chat GPT maker. And as part of the deal, OpenAI plans to buy millions of NVIDIA's AI processors. Investors were on board with the move. NVIDIA's share price ended the day up nearly 4%. It's up more than 30 % this year.

1:18Oracle's CEO stepped down yesterday, and the American software company said it would now split the job between two people. If that wasn't enough news, the White House also announced yesterday that Oracle would play a major role in a deal to spin out TikTok's U.S. business. This all adds to the momentum Oracle is experiencing as a result of the artificial intelligence boom. Here to talk more about it is the FT's Rafe Rosner-Udin. Hey, Rafe. Hey, Mark. So let's start with this management shakeup. What do we know about it? Yeah, so what's happened is Safra Katz, who is Oracle's longstanding chief executive, is taking on a new role.

1:54She's stepping down as chief exec, and she'll be executive vice chair of Oracle, working hand in hand with the co-founder of Oracle, Larry Ellison, on the board. And she'll be replaced by two new co-chief executives. One is Mike Cecilia, who heads up Oracle's applications business. And the other is Clay Magiuk, who heads up the data center infrastructure business at Oracle. Okay, so what is the goal of this leadership change, Rafe? So in many ways, the approach of a co-chief exec is a return to normal for Oracle. Originally, Safa shared the position with a former HP executive, Mark Hurd, who passed away from cancer in 2019.

2:37She's been running the company by herself alongside Larry Ellison since then. But with this change, what we'll have is Katz in a sort of semi-advisory role as vice chair of the board. And then these two executives who lead incredibly important parts of the business elevated in a way that shows the market the prioritization of these units. And what's interesting is that there is quite a sizable age difference between the two new co-chief execs. I think there's about a 12-year age difference. And what we might see is that eventually one of them will end up as the sole chief exec as well. So I want to talk about the other piece of news that I mentioned earlier about TikTok.

3:20I mentioned that Oracle will be part of this deal to spin off TikTok's U.S. arm. What exactly is its role going to be? so Oracle will take a stake alongside other US investors alongside also pre-existing investors in this new spun out US TikTok and it'll also have oversight over the safe operation of the TikTok algorithm so the idea now is that this algorithm will be licensed to the US company retrained from the ground up. And then Oracle will play a role effectively sort of policing the algorithm and the app to ensure that there won't be any sort of breach or access from China on the back end.

4:03Sounds like quite a bit for Oracle. Is it good for its business? So the benefits of this are that TikTok is seen as an incredibly valuable asset. And Oracle will get a fairly sizable chunk of the business seemingly at a discount. At the same time, it has a sort of political benefit. Oracle will grow closer to the administration, which is overseeing this deal. And that proximity is also somewhat advantageous in an America where these relationships matter more. Rafe, Oracle has obviously been a large company for a long time. And as I mentioned, it's been on a roll recently. But it certainly doesn't get as much attention as the metas and the Googles of the world.

4:48Does everything that we've been talking about mean that the company could become as attractive as these companies to investors? So in some ways, Oracle has benefited from a lack of capacity at lots of larger technology companies. It started signing deals for this data center capacity. But there are a number of different caveats. We don't really know how wide the margins are for Oracle's data center business. And Oracle doesn't seem to have the same diverse portfolio of investments and products that other major technology companies have. So it may not necessarily sort of springboard into the virtuous circle that is the Magnificent Seven, but it can be very close to them.

5:31As it is right now, it's teetering quite close to where Tesla is. Rafe Rosner-Udin covers technology for the FT. Thanks, Rafe. Thanks, Mark.

6:09month's midterms. Malay is a close ally of President Donald Trump. Besant called the country a, quote, systematically important U.S. ally. Malay, Besant, and Trump are expected to meet in New York today.

6:27Shares in Indian tech companies were down on Monday. That's after U.S. President Donald Trump announced last week he's imposing a fee of$100 ,000 on each H-1B visa for skilled workers. About 70 % of the H-1Bs annually go to tech workers coming to the U.S. from India. The program helped bring over some of tech's top executives, including Sundar Pichai at Alphabet and Satya Nadella at Microsoft. Christian Kaushik is our Mumbai correspondent, and he's been following the story. Hey, Christian. Hi, Mark. So let's recap some basics to start. What's the H-1B visa, and why is Trump's fee messing with India's tech sector?

7:08Sure.

7:09FT News Team: So H-1B visa is basically a visa for skilled talent to come to the US, which is then sponsored by an employer over there. Till now, the employer fee was about $7.80. And this is the best route for tech talent from India, at least, to go to the US, work there for a few years, and then they use those best practices when they come back to this country. But many people, when they go to study in the US as well, they hope that they eventually will be able to get an H-1B visa and a job in the U.S. And now with the imposition of this$100 ,000 for processing fee, not many employers will be willing to pay that much per applicant.

7:45FT News Team: So there is a lot of question marks about the future of the tech employment from India that was going to the U.S. So it sounds like this is obviously going to impact individuals and their career goals and their career paths. Industry-wide, it's going to have a pretty big impact too. Which companies in particular were affected on Monday because of this news on H-1B visas and why? So the entire IT services sector in India, which brings in more than$280 billion worth of business to the country, is led by companies like the Tata Consultancy Services. There's Wipro, there's Infosys, there's HCL Tech.

8:17FT News Team: These are all massive names globally when it comes to IT services. So these companies will be most directly hit because they have a lot of people working for them in the US. So that's where the stocks were down yesterday. India's benchmark Nifty IT index, which tracks the IT services industry, was down almost 3%. So there's, of course, a lot of concern and fear in the industry right now. Christian, is there a chance the fees will have consequences for the Indian economy as a whole? There are multiple threats to this, Mark. The most direct consequence that we can see potentially right now is remittances back to India.

8:52FT News Team: It can impact up to$8 billion in remittances for the country. But of course, then there's an avalanche effect of, you know, what kind of jobs will be created? how much are the companies willing to invest if they can't find American clients. But on the flip side, many people are saying this can be a boon for the country over here because it means that tech talent that was going out of the country can just stay back here. There is a booming GCC sector, which is called the Global Capability Centers. These are the back offices of some of these top tier firms that are setting up bases in India. And then they service their head offices sitting over here.

9:21FT News Team: So this can be a boon for that, but it's too uncertain right now. So let's see how it plays out. So what does this mean more largely for the U.S.-India relationship? Because, you know, let's not forget, the U.S. just imposed massive tariffs on India too. Absolutely. That's the peculiar part, right? I mean, this policy change is not directed towards any one country, but it impacts India the most. So definitely, as you mentioned earlier, because 70 % of these beneficiaries of this visa program are Indians, so it feels like it is another way to target India. And when we speak to officials over here, they are absolutely clueless about what has led to this breakdown in relationship between the two countries.

10:00FT News Team: Of course, as you again rightly mentioned, US has imposed tariffs at as high as 50 % on India's exported goods, right? And that's the highest levy for any other country comparable only to Brazil. So right now, nobody knows what is the off-ramp from here, because it seems with every new step, the pressure is only rushing up on India. But then they don't really have a clear idea about how to really negotiate this. But nobody knows what the endgame is right now. Christian Kosciuk is our Mumbai correspondent. Thanks so much, Christian. Thank you, Mark.

10:53notes. This has been your daily FT News Briefing. Check back tomorrow for the latest business news.

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