The GOP’s Future, Apple Sues OpenAI, & the Musk-Altman Feud 7/13/26

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1:01Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod. The shocking death of a U.S. senator greets Washington as it returns from a holiday recess to a week full of confirmation hearings. Potential legislation. Oh, and remember those midterm elections. Former Republican Congressman Patrick McHenry walks us through all of it. Vote for the craziest person in the Democratic primary in order to go fight President Trump. That's the current midterm message. Then California versus a legacy studio. Paramount weighs leaving the Golden State. Semaphore reporter Rohan Goswami has the story. Paramount has offered to increase their spending up to$30 billion.

1:40That's more than Netflix, that's more than Disney. Those dollars aren't currently flowing into L.A. About the rift over the Warner Brothers merger with the state's attorney general. Rob Bonta is a person who doesn't know what he wants here, but knows he needs to want something. Plus, the rest of today's news that got us squawking, like the fight of the billionaires, Elon Musk taking aim at Sam Altman. Homey, I think. Home slice. And for you, I might do home girl. OK. It is Monday, July 13th, 2026. Squawk Pod begins right now. Stand Becky by in three, two, one. Cue, please. Good morning, everyone.

2:21Welcome to Squawk Box right here on CNBC. We are live from the Nasdaq market site in Times Square. I'm Becky Quick, along with Joe Kernan and Andrew Ross Sorkin. Tributes coming in for South Carolina Republican Senator Lindsey Graham, who died suddenly over the weekend. And Emily Wilkins joins us this morning with more. Good morning. Morning, Andrew. Well, yeah, Washington and South Carolina, both grappling with the death of Senator Lindsey Graham. He leaves behind a tremendous legacy in Washington as a foreign policy hawk, was able to work with President Trump even on issues where the two disagreed.

2:54Trump told Meet the Press that he spoke to Graham on Saturday evening and he praised the lawmaker who once ran against him in the presidential. He had a unique ability. He was able to deal with Democrats and Republicans. If I had a problem, a real problem, I wouldn't often ask. But if I had a problem with a Democrat, he could work it out. He was a great politician. Graham's passing means that South Carolina Republicans will need to replace him on the ballot for this November. That election will be held on August 11th. Congresswoman Nancy Mace is seriously considering a run. Other potential candidates include Lieutenant Governor Pamela Yvette and Congressman Ralph Norman.

3:37Now, in the meantime, South Carolina Governor Henry McMaster will need to appoint someone to temporarily fill that seat. On Capitol Hill, Graham's passing has led to calls from Democrats to pass a package of Russia sanctions that Graham was influential in shaping. Graham is also, of course, a key senator on the Judiciary Committee, and they are set to begin considering Todd Blanche to become attorney general this week. So we'll have to keep a very close eye, of course, on how Graham's passing does influence that agenda. As well, of course, Mitch McConnell coming out with a statement saying that he is able to continue his duties.

4:13He has been in the hospital for the last couple of weeks, but he's not going to be able to return to D.C. just yet. Guys. OK, Emily, thank you for that report. Appreciate it. Shares of memory chip giant SK Hynix, they posted their worst day ever in South Korea. That was along with a big decline from Samsung that helped drag Korea's KOSPI index down by close to nine percent. You can see SK Hynix shares off by more than 15 percent, with Samsung electronics down by more than 10 percent. SK Hynix's newly listed U.S. shares are also down in the pre-market here by about 8.1 percent. Profit taking and uncertainty over how the shares should be valued are being eyed as potential reasons for the stock's global sell-off today.

4:59The U.S. ADR had a strong showing in its Nasdaq debut on Friday. SK Hynix raised more than 26 billion in the largest ever share sale by a foreign company. The stock was up by 13 percent on strong demand from U.S. investors for AI-linked stocks. People close to Paramount Skydance's CEO David Ellison have been recommending he consider moving his company in billions of dollars in planned spending out of California if the state's attorney general sues to stop Paramount's merger with Warner Brothers Discovery. That's according to Semaphore. It says no decisions have been made and the talk of moving Paramount out of California could simply be a threat under its deal with Warner Brothers.

5:40Paramount has said it will keep the studio's movie lots in California operational. And we're going to speak with the author of that semaphore article in the next hour. It's just the latest in what's supposed to be a closed deal at this point. I think it's California was kind of leading the way. California is leading the way in terms of trying to block it. New York may also seek to block it. You know, he had moved. And by the way, Georgia may be part of that. I mean, there's lots of people. So the question is, where would you go? I don't think this, by the way, advances the call. If this is if this threat is a real threat, I don't think it is going to make California back off the idea of it.

6:21I mean, he by the way, he moved the offices from New York. The headquarters were in New York and he moves it moves them to California. By the way, the actors and all of the people in his business live in California. He lives in California. So I don't know. I don't know where they think they're going to start Hollywood and Texas. They might. Maybe. They're going to be all AI actors anyway. They live in the ether. Apple suing OpenAI, charging that giant, the AI giant, with stealing trade secrets in order to develop its own hardware products. Apple claiming that OpenAI's hardware chief, that's a former Apple vice president, had been directing Apple employees interviewing at OpenAI to bring parts for, quote, show and tell sessions as part of the OpenAI interviewing process.

7:11Apple also saying that OpenAI coached departing Apple employees on how to evade security processes when leaving the iPhone maker. Apple and OpenAI became partners, you remember, back in 2024. But relations between those two companies have chilled since OpenAI announced plans to enter the hardware business. And, of course, Apple has now gone into business with Google using its Gemini AI systems as part of its AI program. In a statement, an OpenAI representative said, quote, We have no interest in other companies' trade secrets. We remain focused on building innovative technology that empowers people everywhere.

7:52And then there's this piece of the debate. This continues, though. This is a really big deal. The Wall Street Journal lays it out and says this is similar to when Steve Jobs went after the Android products after Eric Schmidt had been on the board there and left. And he thought took trade secrets with him to try and rip off the product. He was absolutely furious about that and was going to go after that. But this is Tim Cook's battle that same way. Those were some of the headline things, the high-level things that happened. There was also a more junior employee at OpenAI that appeared to cross the line by using an Apple employee's login to access Apple servers.

8:30According to The Wall Street Journal, that's a pretty big deal, too. We see how quickly all of this happens, where you're friends, then you're enemies, and how quickly all of these situations change. And you're right. This is another example of that. Elon Musk and OpenAI's chief, Sam Altman, sniping at each other online after Apple's lawsuit on Friday night. Over the weekend, Musk went after Altman in a series of X posts, calling him Scam Altman and saying he might literally love scamming more than any human alive. That got Altman's attention. He responded on X. Homeboy, you're the one selling public market investors on short term space data centers.

9:11I haven't heard the use of Homeboy in a long time. It's a good use of Homeboy, though. It was a good use. I mean, I don't know. It just sort of had a I mean, that's like an 80s kind of thing to say. It's definitely a pejorative. I wouldn't. I mean, if I called you that, you'd be mad, right? Probably. Both CEOs have spent recent days hyping their latest AI model releases. Grok 4.5 for SpaceX and OpenEyes GPT 5.6. Saul on X Saturday, Altman said there are a lot of benchmarks that suggest 5.6. Saul is the best model in the world right now. But the most reliable way to tell that or the most reliable way to tell is that Elon is obsessed with me again.

9:59Are we not going to do the next part, though? Could be a next part's even crazier. What's the next part? After he says the homeboy part, Elon then responds and says, we start flying them next year. Maybe you can come see them if your parole officer approves. That's a good one. After stealing an open source AI charity, you then stole all of OpenAI's phone technology. Wow. What do you plan for an encore? That's tough to beat. Wow. so it's um yeah the homeboy was uh sarcastic because it's a close male friend so if i were to call you that that would be an endearing thing it's an acquaintance from one's neighborhood or from one's hometown it's casual affectionate way to address or refer to a close male friend homeboy so sarcasm is what he was using i think there might have been some sarcasm there i think it It might have been embedded in hip hop culture, apparently, and has variations that I didn't know.

11:00Homey, I think. Home slice. And for you, I might do home girl. OK. By the way, one other major AI news you can use for those who are Claude users, because I was obsessed with this until last night and was worried about what was going to happen. you know, Fable, which is the new model, was supposed to be taken away from most people so that they would start upcharging you for Fable because it costs them a small fortune for every token. And so they've been providing it effectively at a discount to basically all of the users. There has been a real fear that if they took it away, everybody would cancel their Claude subscriptions and go to OpenAI because the new 5.6 model is actually very, very close to what Fable is comparable of doing.

11:50So crazily enough, at about, I don't know what time it was last night, Claude sent out emails to all of their customers saying that they're extending the use of Fable for another week. But I imagine this is going to go on probably forever. No, because it's actually true. Every time they come up with a new model, they almost have to give it away for, not for free, but they can't keep... To maintain market share. To maintain market share. And so it becomes this sort of battle. If you don't maintain market share, potentially even at a loss, what do you do? And that apparently was a massive debate inside of Anthropic all weekend.

12:28There was sort of a... Particularly right before an IPO. Right before the IPO about whether to extend this or not or what to do. They've only said they're extending... But an extension of a week is not going to... Interestingly, they had already extended it by like four or five days. So it's now like this ongoing. So it's a running debate. Running debate about what do you do. And I'm sure in a couple of weeks, 5.6 on, you know, on OpenAI will turn into 5.7, in which case then you'll have to keep it like this. But this is. This is what you've talked about for a long time with the commoditization of this.

13:00But it's a commoditization at a loss. That's the craziest part. It's like the business is getting commoditized. But we've seen that before, right? If you go through.com or if you look through all of these other iterations of whether it be Uber, whoever it is, you know, trying to become the dominant market player. Right. And eating it until you can basically knock out your competition. Do you have conversations with verbal, out loud conversations with Claude? Have you done that? Not really. The better way to do that, actually, is on ChatGPT. OpenA has a much better model. Much better model. I like Claude.

13:38I feel like we're friends. And he has a British accent. Which I said, why do you have, you know, for me it's unsettling. I don't, you know, British people are okay, but I feel a little bit haughty. But would you rather talk to a male or a female voice? I think you, by the way, may be able to change it just so you know. I asked him and he goes, you know. Claude used to not be able to change it, but one of them you can change it. I could change it to a female. Could I get a Southern accent? I don't know. What about a French accent? I didn't even know that. A female with a French accent? To be honest, I did not know that you could even do that.

14:17I didn't know that it would talk to you. Yeah, you can talk to Claude. Used to me. It seemed like the same guy, but I didn't imagine him as being British. In your mind, he was? No, he wasn't. No, but in your mind, he was what? Just like normal. You. Just like you, basically. Yeah.

14:37Coming up on Squawk Pod, we're taking a look at the late Senator Lindsey Graham's legacy with former U.S. Congressman Patrick McHenry, where the Republican and the Democratic parties are each headed. Both parties have gone through this whole thing about who are we, who should we be. Like the Republican Party before President Trump got nominated, we had this big introspection. What's working, in his view, for both sides of the aisle? A hint, he is looking at Georgia for the left. We'll be right back.

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16:48It's now on set on a lot of things. congressional midterms, crypto, fight over prediction markets in the GOP following the untimely death of Senator Lindsey Graham, former Republican Congressman Patrick McHenry. He's a former chair of the House Financial Services Committee and is now a senior advisor for Lazard and A16Z. Good morning. Good morning. How are you? First, it was shocking. And we're sad for Senator Samley and a lot of really, I thought, heartfelt condolences than I saw yesterday. He was a force of nature. A stalwart. Yeah, he was. He was wild to watch. You know, his pivots, his run for president.

17:34I mean, the personality that he had carried him such a long way in his tenacity and this big fight. And he also shifted where the Republican Party shifted in a way that I think is instructive for everyone. Right. Instead of getting locked in the never-Trumper mentality that we've seen so many people that are still occupying that ground. And he did not get locked there. He didn't get locked down, but he also didn't shift on his view on foreign policy and American exceptionalism and American projection of power internationally. I think it's significant. Initially, it's straightforward. The governor puts a new senator.

18:10So that gets the GOP back to close to full ranks if Senator McConnell is able to return. Yes, it does. So they can do this in pretty quick order. It's interesting that the governor of South Carolina is finishing his term. You just had a big gubernatorial primary, two members of Congress running there, kind of wild to see. So you have all these statewide candidates have just come off the campaign trail weeks ago. President Trump already endorsed, I think, Yvette, is that one of them? Who's the lieutenant governor. Lieutenant governor. So I think that's likely who it is. You do? This is, you know, McMaster, Governor McMaster is very tight with President Trump.

18:52I don't think this was done without some conversation. Okay. So he was chair of the Budget Committee, I think, in the Senate, Senator Grant. And he helped usher through the reconciliation process. But he led judiciary and budget. So both of those. Does that matter in terms of 3.0 budget reconciliation? I think it does. And it also matters for Blanche. For President Trump's nominee for attorney general. I think that does complicate things. And it complicates John Thune's life because you then have a cascading effect of these committee chairmanships that are quite coveted. If the president said he spoke to him the night before and at that point, Senator Graham said, I think it's finally possible for SAVE to come up.

19:38And how would that work? How is that going to? So I just served in the House for 20 years. I'm just a lowly House member. I don't I don't really pretend that I can articulate Senate rules. I also don't pretend that most senators can pretend to articulate Senate rules in the reconciliation. Yeah, but there are limitations. It wasn't going to be getting rid of the filibuster. No, it's also you cannot fully do the same. You cannot fully legislate the SAVE Act within the budget resolution process and the Senate rules. The House can do it. The House has passed the SAVE Act before. They can do it again.

20:13They can wag their finger. But that doesn't mean the Senate has capacity to get something done or 60 votes to get the fullness of the policy through. So overall, for the elections that are coming in midterms and beyond, what does the presence of the socialist element in the Democratic Party do for it? Does it energize the Democratic Party in voter turnout? Or does it turn off the rest of the country that don't live on the two coasts where this seems like a reasonable option? So what you have is long, some of these are long held Democratic seats with incumbents that have been in 20, 30, 40 years.

20:55And the turnover here is the next generation. The next generation, you had a big fight here in New York that we all followed nationally. And the Democratic Party in New York was taken over almost fully by the socialists. And Dami had a major impact on that. But you also have to step back and look at this with a larger view. Go back to 2010. Thomas Massey gets elected to Congress. He thought it was an endorsement of his libertarian views. And then he realized that the voters were just voting for the craziest person they could vote for in order to go fight President Obama. That's what's happening in the Democratic Party.

21:34They're voting for the craziest person to go fight President Trump. And those crazy people are the socialists. Right. You can't call them communists because they've called themselves socialists. But, you know, you look at you look at their ideas and they're out of the very, very extreme far left. So if you think that all this is just a pendulum swing, one is an answer to another. How do we get back to the middle? Well, this would be the pendulum touching the other side, right from 10. And here we are. Fast forward to 26. This is an extraordinary long time for that pendulum to swing. So I think we're we will get back to something rational, but not tomorrow.

22:14But now tomorrow, is that 28? Is it 32? And by the way, can't we go off the rails before then as a result of all this? But both parties have gone through this whole thing about who are we? Who should we be? Like the Republican Party before President Trump got nominated, we had this big introspection about why Mitt Romney lost. And maybe we need to have a different view on immigration. And like the, you know, the the Kool-Aid man running through the wall. President Trump shows up and says jokes on you guys. You just didn't do it the right way. So the president, the Trump coalition was an answer to us failing the presidential nomination process two times in a row.

22:58We'll see what the Democratic Party does. And the Democrats are looking at their loss as a failure. And you think that the only way for the Democrats to win is then to go as far left as possible? No, that's not what I'm saying. I'm saying the Democratic election. But part of the lesson of this is a little bit of that, no? Oh, it is. So vote for the craziest person in the Democratic primary in order to go fight President Trump. That's the current midterm message. Midterm messages and presidential election messages are completely different. But is it midterm messages or is it primary messages? Because part of it, it's not just like what the country wants.

23:31It's actually the sort of. The people who turn out to vote. of that. Intramural, intramural fighting, right? Yes. And Democratic and Republican primaries for the House are markedly different than the Senate. In the Senate, you've seen both parties nominate crazy people and they have failed. In the House, those crazy people get elected, right? And then as a House member who had to count votes, you then have to work with them to get policy done. This is what's happening right now. So what does this tell you about what's going to happen in the next two years after the midterm election? Well, I think the odds are in favor of Democrats to take the U.S.

24:06House. It's going to be a narrow run thing because after redistricting Republicans, Trump won, President Trump won about 233, 234 of the House seats going into this midterm. So this means that Hakeem Jeffries' potential majority is going to be much narrower, which is going to complicate his life. It also means it's going to be a tougher to herd votes. Yes. Which means they're going to do one thing that will unify them, which is investigate President Trump. And that will be the fullness of this. That's not a good general election message for 28. It doesn't reshape the party, but it's an answer to how they can operate for the next years.

24:44But it sounds like a win the battle, lose the war sort of playbook for whatever party. Well, as a Republican, I look at that and think pretty favorably of that. And then it's a question of whether or not these Democratic presidential candidates really do want to talk policy, want to answer the questions that the voters are raising, or do they just want to ride that negative energy to the nomination? If they just ride the negative energy, it's not a great general election message in 20. Do you have a feel for who the party would, do we have any feel for who the Democrats might nominate in 20, 20?

25:19No, no, it's going to be absolutely fascinating. But if I look at who's running the best race right now, Senate governor, House races, who has that capacity? Look at John Ossoff in Georgia. He's doing these major rallies. He's unifying his party, which is quite diverse in Georgia, disproportionately African-American in Georgia for the Democratic Party. He's doing these rallies. he's then using the social media connectivity. So this feels a lot like Barack Obama in 2008. Not a long time in the Senate, no major legislative achievements, but he can harness that energy. My son tells me it's awesome.

26:03And I said, there's no way. He barely won in Georgia the first time. But he shouldn't have won at all. I know he shouldn't have. It's a Republican state. And Trump, we all remember what happened to David Perdue. He missed by decimal points. and then there had to be the runoff, and that's the only reason I think it finally happened. So he's well thought of in Georgia at this point? Well, yeah, and he's likely to win re-election in a state that President Trump carried, that Republicans control every apparatus of the statewide electeds in Georgia, and will again. Kamala Harris, everybody, she's at the top of everyone's talk.

26:43Would they do that? Answering a call no one made. That is the Kamala Harris presidential campaign. Nobody is asking her to come back. And, you know, the party's not begging for this. You don't think AOC, they're not crazy enough to do that, are they? The Dems? AOC? The electorate right now is, the Democratic electorate is crazy. Completely crazy right now. So I don't discount any eventual nominee. Tall with great hair. Right? Yes. I don't care about what's going on in the state. I mean, he looks the part, doesn't he? And he's got a little something on Twitter where he tries to be as nasty as what people think President Trump is.