Amazon’s $11.5B Globalstar Buy, SpaceX Financials Show Starlink Reliance, Polymarket Audits Startups

0:13Welcome, everyone, to The Information's TI TV. My name is Akash Pasricha. It is Tuesday, April 14th. We've got some big news this morning. Amazon is striking a multi-billion dollar deal to buy satellite firm Globalstar and signing an Apple iPhone deal that will put Amazon in direct competition with SpaceX. We'll unpack all of that with our Elon Musk reporter and an analyst. The information also published exclusive details on SpaceX's financials, not just the revenue breakdown, but also the profitability. We'll talk to our reporter about that who broke the story. We'll then shift gears to prediction markets.

0:49Polymarket is taking insider trading more seriously, according to an exclusive report from my colleague Michael Rodden. We'll bring him on to share with us what he knows. And we are wrapping the show with a conversation about internet culture in the AI era. It's going to be a fun show, so let's get right on into it. Amazon has signed a giant deal to buy satellite firm Globalstar. It also has a new deal with Apple to power iPhone satellite features and challenge SpaceX. Here to discuss the news is Theo Waite, our Elon Musk reporter, and Tim Ferrara, president of TMF Associates. Gentlemen, welcome to you both.

1:23It's great to have you both here. Thank you, too. Keep here. Okay, Theo, I want to start with you. Walk us through the details of the deal that was announced this morning.

1:31Theo Wayt:So Amazon is buying Global Star for$90 a share, which comes out to around$11 billion, which for Amazon puts it somewhere between Whole Foods and MGM on the acquisition scale. And Amazon's going to use Global Star to beef up its Starlink competitor, Amazon Leo, by launching a direct-to-sell service and continuing to power satellite features for iPhones, which Global Star already does. And the main asset that Amazon is getting to this is the spectrum here. Explain that for us. So Global Star operates some satellites. It also owns a bunch of Spectrum, which is to grossly simplify basically the legal right to beam down service to phones in a particular area.

2:26Theo Wayt:and Amazon will now own that and it'll give them a lot more room to kind of build out this direct-to-sell service and compete with SpaceX, which is also in the midst of trying to close a deal that they announced last year for Spectrum from Echo Star. Tim, a lot of people thought that Global Star was going to get bought, including you. You thought that it was going to get bought, but I don't think Amazon was the company you thought that it was going to buy it well my view was yeah global star was going to get bored but the challenge is what happens with apple and amazon's relationship going forward uh and particularly apple has always been very nervous about being seen as being on the other side from spacex and so you know we have to see how this works going forward amazon says they'll be the primary provider to apple going forward for direct-to-device connectivity.

3:20We'll have to see what SpaceX has to say about that. So did you think SpaceX was going to buy Global Store? Remind me. Well, that was some of the rumors last fall, you know, when Global Store effectively put itself up for sale. You know, Apple had a look. SpaceX had a look. Some other people had a look. So I think, you know, Amazon clearly was not in the conversation or mentioned publicly until very recently um and yeah i thought that it was quite possible that spacex could come along and outbid them or just that apple would prefer a deal with spacex to a deal with amazon but that's not how it's ended up at the end of the day you know uh no one wanted to match amazon's uh offer it seems and let's talk about the offer price tim so what do you make of the price tag that amazon is uh has put on global star well it's pretty expensive when you think about it in comparison to the echo star deal that spacex did last year uh the big thing about that you know yes that was 17 billion but there spacex was getting hold of terrestrial spectrum that if directed advice didn't work out for whatever reason they could go and sell it back to at &t or verizon or t-mobile for basically what they paid for it and global star is not like that global star has these good satellite spectrum rights but its terrestrial rights are very limited uh when it does terrestrial terrestrial rights meaning just for for those of us who don't follow the extra and terrestrial distinctions yeah so i mean global star has been providing services from its satellites for the last uh almost 30 years it has got some permissions from the FCC to use some of the same spectrum for hotspots on the ground but at very low power so it's sort of like wi-fi or private networks in a very limited area that sort of spectrum is a lot cheaper because you know you can always use wi-fi as an alternative for basically for nothing so if this didn't work out for Amazon they'd have a really hard time getting the$11 billion or so back from selling it to a mobile operator or something like that.

5:35So I think that's the difference here is it's an expensive deal in that context that there's no real backup plan if this direct-to-device business doesn't work out for them. So there's so much to unpack here, Theo. I want to focus a little bit on the Apple angle here to all this. So we do know that Amazon has this new deal with Apple. I'm not sure that we know the exact differences of this deal compared to what the the former deal was but what do you make of this is apple walk away a winner here or what yeah so so just for context you know apple owns

6:08Theo Wayt:something like 20 of global star and has you know invested in them heavily in the past few years to uh you know kind of stand them up so they could power satellite uh services for iphones as to if they're a winner or a loser you know i think they're probably a winner here like if you think about their approach here, you know, it's kind of similar to what people say they've done in AI. Like, you know, some people might say, why doesn't Apple just buy Globalstar and run its own satellite service? Just like they've said, you know, why doesn't Apple spend tens of billions of dollars on data centers or, you know, acquire an expensive AI company or something like that?

6:48Theo Wayt:And in both situations, I think Apple's strategy is letting other companies take the risk and do the gigantic capex and hopefully still reap the benefits in the end. You know, like an iPhone user isn't going to necessarily care if it's Apple or Amazon that owns the satellite that's giving them service, just like they're not going to care if it's Apple or Google that built the LLM that's powering Siri. Like, I think from Apple's perspective, letting Amazon pour, you know, billions and billions of dollars into this to stand at the surface is probably fine. I mean, clearly Apple could have done this if they'd wanted to and they decided against it.

7:27Theo Wayt:Tim, do you agree? Yeah, I think, I mean, Apple is, the Global Star announcement says Apple is putting in another$450 million in the short term to finish off the C3 constellation, the new satellites that Apple has been funding since the end of 2024. before. But the services that are described in the announcement are more limited than Apple was previously suggesting would be present. And that reflects the fact that Amazon needs a lot of this capacity for its own needs. Apple was getting 85 % of Global Star's capacity up until now, and I don't think that share is going to continue. Amazon's going to want a lot more of the capacity for its own needs.

8:10And so that will potentially constrain Apple's services to more basic texting and applications that won't be as advanced as what Starlink's planning to offer on its next generation. So we're still to see what happens in the long term. Amazon thinks it's going to be the primary provider to Apple going forward with its own constellation that Amazon's planning to build, but we don't know what that's going to offer. We don't know what Apple's going to pay for that. We don't know what Apple wants to use there. And so, you know, it throws that sort of plan into a lot of uncertainty right now. Tim, I want to get to what I think is one of the most interesting parts of this deal, which is how it put Amazon in competition with SpaceX.

8:59And this is something you alluded to, but, you know, we have sort of thought that if you look at SpaceX's Starlink business and you look at the terminals and the mobile business. I mean, Theo has reported on how meager the size of the mobile business is right now. And here you have Amazon. In my view, they're almost sort of validating that market and saying, well, this is actually something that we want to go, that's worth going after. Do you agree with that? I mean, walk us through you're thinking well i think that there's a case to be made that people will want a bundle of fixed and mobile services that's already happening in the terrestrial world you know the telcos are selling a mixture of broadband and mobile the cable companies are now selling that so it's natural that these satellite players are going to think about the same issue of bundling a fixed and mobile offering.

9:56But the problem with the mobile services, these direct-to-device or direct-to-sell services from space, is that they don't offer the same capabilities as terrestrial towers on the ground. You're hundreds of miles up in space instead of a mile down the road. And so the services are limited in data rate, the services are limited in total capacity and the number of users they can support. And as Thea reported, that's sort of reflected in the fact that T-Mobile isn't paying very much for the service so is that going to change in the future i don't think we know yet and we're going to have to see what happens with these newer systems with more capability uh more capacity more data what's your hunch though because i i i have to imagine if i'm amazon right i'm i'm i'm making this this giant investment i mean i have to be thinking that the amazon executives think that this is a market it's a sizable market and one that you know that they really want to compete in.

10:53I didn't think it was that big a market. I didn't know how many people wanted it. People kind of called the Starlink Mobile offering a small product. But if Amazon's doing it, it's got to be pretty big, right? Well, I think they've got to feel that they need to compete with SpaceX across the board and not just be trying to compete in broadband. So in a way, it could be viewed as defensive for their broadband proposition that they can add mobility to it and have everything an enterprise or a consumer might want. So I am very doubtful that this market will turn out to be anything like the size of the broadband business.

11:27I think that's going to be the dominant area for revenues for Starlink. And I think it's going to be the dominant area of revenues for Amazon going forward. Theo, what questions does this raise for you in terms of just the space ecosystem at large? You wrote a story a couple of weeks ago about all the space stocks that had seen their share prices rise as SpaceX is charged towards an IPO. What are you wondering about right now?

11:56Theo Wayt:I mean, I think, you know, building off what Tim said, I think really the question is how much do regular people actually care about direct-to-device service? I mean, everything else is going to be downstream of that. Like, the average Starlink or Amazon Leo customer is going to be someone that, you know, pays a bunch of money for a terminal that beams service down to their home or their business and they're going to be paying, you know, 50 or$100 a month. The average mobile, you know, consumer of these services, we really don't know how much they're willing to pay if they're willing to pay anything.

12:31Theo Wayt:And there are a few other companies that own Spectrum, like Iridium and Viasat, I believe that, you know, might potentially, like, if somebody wants to build a third competitor to Starlink and Amazon to their mobile services. Like, it's possible those companies could get bid on in the future or something. And, you know, their stock prices have gone up to reflect that. But I think there's still just really a big question about whether people actually care very much about having internet on their cell phones in remote areas, because it's just not a proven market, really. Tim, let me ask you one more question here.

13:11You know, I'm thinking about Amazon's approach with Leo. I'm thinking about how much they maybe planned to invest into this initiative, even outside of the Global Star acquisition. I mean, they had a budget, right? And we're going to invest this much in satellites. I mean, have you thought at all about, you know, how much more Amazon is sort of now thinking to, How much more will they need to invest now that they've bought GlobalStar to further build out this offering than they would have had to spend if they didn't have GlobalStar? If you're catching my question, I don't know if I'm asking. Okay.

13:49Yeah. I mean, so Amazon originally said it was going to invest at least$10 billion in the broadband system. Now with all the extra costs that they've incurred, it looks like that broadband system alone is going to cost them pretty close to$20 billion to complete the first 3 ,000 satellites. And now they've bought Global Star for$11 billion. And we don't know the size of investment that they're going to put into a constellation. We don't know how many satellites they're going to build for that. SpaceX is building far fewer for direct-to-sell than it's building for broadband. It's only building 1 ,200 satellites.

14:23So the cost of that system might be only a few billion dollars. But, you know, then we're talking, you know, Amazon going to have invested$35 billion into space. Is there going to be a return from that? And, you know, what do Amazon's investors think? I think generally the reactions have been pretty negative about that investment. Great. Well, Theo and Tim, stick around for a minute because I want to bring you back for our next segment as well. The information has exclusive reporting on SpaceX's financials. Corey Weinberg, our Deputy Bureau Chief of Finance, broke that news. He has details not just about their revenue breakdown, but also their profitability.

15:02Corey, welcome back to the show. It's great to have you here. What did you learn about SpaceX's financials? I learned that SpaceX is talking about three business lines that it has ahead of its IPO. Just one of them is growing at the rate that I think investors would say is impressive. and actually makes money. So Starlink is clearly the crown jewel here. It makes up about more than 60 % of SpaceX's revenue overall compared to its space launch business and compared to its AI business and XAI. It's growing 50 % a year, which is a great growth rate that investors will, I'm sure, love, especially if it can keep that up.

15:46And it has high margins. Its adjusted EBITDA margins are over 60%. The other two business lines, not as much. Growing, not as fast, more than, you know, sort of less than half as fast and not profitable. Okay. So, Corey, when you found these numbers out, I mean, is this better or worse than you thought the financial picture looked for SpaceX? What did it tell you overall about the story? When I brought these numbers up with one hedge fund investor, and I brought up the amount of capital expenditures that SpaceX had, which is nearly$21 billion last year, largely sort of settled in the XAI business, his response was not good.

16:33This is not a pile of CapEx that investors are necessarily going to be excited to see ahead of an IPO. And that's been the one huge caveat around the SpaceX IPO since they absorbed XAI a couple months ago, is you're tacking on this business that investors are going to have a lot more questions about than they would have about Starlink, which they would love. So Theo, now if you put these numbers into context with the news this morning, I'm wondering what further questions do you have about Starlink's business and how it breaks down?

17:13Theo Wayt:Yeah, I mean, I think what I would still love to find out from SpaceX is, you know, what the breakdown is right now between Starlink Mobile and, you know, the core Starlink broadband business and how they see each of them growing. Because, you know, the overall number and the overall growth rate is quite impressive. But like we said before, we understand the size of the T-Mobile deal is is quite tiny and that's probably their their biggest deal at this point um and so i'd love to see you know what they're telling investors about about that tim what did you make of of these financials that corey reported well i think it's very clear that spacex has done everything possible to flatter the numbers for starling i mean what they bunged in there is all the satellites that they're making for the dod and the national reconnaissance office which is not really providing a service it's building satellites for someone and in particular the way they divide things between Starlink and the launch business there's no cost all the costs for Starlink launches are in the launch business costs but none of the revenues for that are so the Starlink does not pay 20 million dollars a launch which is the sort of internal cost you know that would incur another 2.6 billion dollars of cost on the Starlink business if they paid full price and remember Amazon's paying full price for all of its launches, 130 launches last year would have cost them $9 billion and Starlink would be in a loss-making position.

18:41So I think that the read across to Amazon isn't particularly favorable here. If Starlink was paying full price for its launches, then it would be making loss even though it's an amazing business. And, you know, Corey, I wonder if you got any color about how SpaceX is thinking about the launch business? I mean, like Tim said, they're investing so much into it. They have Starship coming out. I think based on your reporting, the revenue profile, it's not growing as quickly. They have these big contracts with the government. Did you get sort of a temperature check at all on, is the launch business still really what they are most proud of, even though it doesn't make the most money?

19:22Or how are they thinking about it? I mean, I think you have to think about the launch business in terms of what are they going to be telling investors to pay attention to going forward. And that's why this next test launch for Starship, their largest rocket, will be so crucial because an IPO is about telling a story about a future and getting people to buy into that story. And the launch business as it currently stands, obviously Falcon 9 is dominant. It is the kind of rocket that goes into orbit the most. And Starlink is the kind of internal business within SpaceX that really powers that and allows it to remain so dominant.

20:06But it's a limited market, space launch today. There's not that many commercial or government services that would lead to dynamite growth for that business. And so SpaceX is going to be pointing to Starship and we can make this rocket fully reusable. It can carry bigger payloads, et cetera, et cetera. Great.

20:31Theo Wayt:Well, yeah. Sorry, go ahead. Go ahead. No, go ahead. If you think about, you know, Starlink is the internal customer for Falcon 9 that has made it into this workhorse, you know, SpaceX also needs to think about an internal customer for Starship. if Starship is successful. And at some point, Starlink is going to have enough capacity. There was a Gwen Shotwell interview a couple weeks ago with Time Magazine where she kind of put a upper limit on how many Starlink satellites they expect to launch. And so what is the next internal customer for a much bigger rocket? I guess it's data centers in space.

21:08Theo Wayt:And if you think about what Elon has said about that, it kind of makes a lot more sense in that context where we're going to put a bunch of stuff in space what do we put? I guess data centers are the thing to put up there now. And Tim, have you come around to the idea of data centers in space any more than the last time we spoke to you? Well, I think, you know, as we talked about last time, it's necessary for justifying Starship launching every day or every hour, as Elon Musk claims it's going to do. As Theo just pointed out, Starlink itself is only going to need one or two launches a week once we get to Starship to serve hundreds of millions of customers.

21:47So the Orbital Data Center story is what makes everything hang together. And it's even more distant in the future that we're going to know whether or not it works. I mean, we're hopefully going to know more about direct-to-device in the next two or three years. Orbital Data Centers, we may not know for a decade if it's going to turn out to be a good business or not. Great. Well, a lot of questions. I want to thank you all for coming on to help us make sense of it. That is Tim Ferrer from TMF Associates and Corey Weinberg and Theo Waite from our newsroom here at The Information. Polymarket is taking insider trading more seriously, according to an exclusive report from my colleague, Michael Rodden.

22:27I want to bring him on to share with us what we know. Michael, welcome back to the show. It's great to have you here. Hi, Pat. Okay, so give us the headline. What did you find here about Polymarket? Well, if you want to inside a trade on Polymarket, one of the easiest ways to do it was through Copy Trading app. It looks like that option might be ending soon based on what we found. Polymarket has this big developers program that allows anyone with a computer to create tools, new trading interfaces, new trading bots on top of the technology. It's called the Builders Program and it has about 200 developers in it at the moment.

23:05We found that a lot of those developers are advertising the ability to copy different accounts that look pretty close to being insider trading accounts. You know, they're putting on very suspicious bets. They're large. They're high conviction. But these services are saying to the everyday user, hey, do you want to copy this trade? You know, you could be an insider too. We started asking around about that sort of ecosystem. system and it turns out Polymarket just recently started a audit of that builders program. So we don't know what's going to come out of that yet but it does come at this time when the prediction markets, so Polymarket and Cauchy, are taking a lot of steps to sort of ensure the integrity of these platforms because there's been a lot of instances where people have said, hey that trade doesn't seem right or did this person have insider knowledge about you know the president of Venezuela getting captured?

24:01Or when is the US going to launch a bombing campaign on Iran? Some people have made a lot of money by placing very well-timed bets on those markets. Right. So, okay, let's break this down into a couple pieces. So at the center of this story is this developer program that Polymarket has. What exactly is this? This is, I mean, And Polymarket wants developers to build apps that can connect to its predictions market. What's it supposed to do? Yeah, so this is like a really fast-growing startup. You know, it's very hot. And they want to get as many users onto the platform as possible. Polymarket has this open technology.

24:43You can plug into their APIs and build on top of it. And they're basically encouraging anyone with a computer to say, hey, if you know a way to make these systems work better, make them more flashy, help users make automated trading services, you can do that. Build a way and then come and talk to us and Polymarket will review you and verify you. It'll become sort of like an affiliate program where you get a little badge on social media that says like, hey, I'm a Polymarket builder. You can trust me. You can send your trades through me. A lot of developers charge you know, 0.5 % to 2 % per trade or per volume.

25:27So this is basically helping to really accelerate people's capabilities to trade. One of the interesting things that you mentioned at the start too, copy trading. So this idea that you can copy, what is that? Yeah, so it's like a lot of these developers in the program are launching copy trading services. So on Polymarket, for instance, you can tell what everyone is betting on. a lot of it so everyone has an anonymous sort of an account name but because it's on the blockchain this crypto web 3 decentralized world you can tell what people are betting on and how much they're betting you know you can see their track record um and so these services sort of identify different users who might have a good track record and say the basketball markets or it's like hey this user over here as being really good at betting on when some sort of Middle Eastern crisis is going to happen.

26:24So these services say, hey, you can follow these track record wallets that have a really great winning streak. Or it's like, hey, you can get an alert where it's like, hey, look at this unusual bet. It was really well timed. It's pretty suspicious, but they have a high conviction that this is going to turn out right. so it's like it's sort of like a wink-wink nudge nudge where it's like this might be an insider trader and you want to be on the right side of this bet so you should put your money with this person okay so so i guess maybe to simplify things and this developers program that polymarket has had did it make it based on your reporting has it made it easier for people to insider trade or has it made it easier to detect the insider trading?

27:11Like what was the net outcome of this program? So there's a lot of like services competing over the same sort of, you know, world here. But a lot of them promote the ability, like one of these services says like, hey, we had a user that turned$400 into$30 ,000, you know, in the space of a couple of weeks using our copy trading platform. You know, it's just like, we tracked this one user, RicoSwab666, who had a great track record on when Israel was going to bomb the Iranian campaign. You don't want to be on the wrong side of these bets, so you should follow these guys. And the overall volume that this developers program has sent to Polymarket has really been growing quickly.

27:54So in November, when it was launched, it was about$100 million a month that all these developers were sending to Polymarket. In March, that equaled about$600 million. And so when you look at the overall Polymarket ecosystem, that's about almost 20 % of their overall volume. So it's like a fast growing slice of where all this money was coming through was through these apps. Now, that all sounds, you know, fun and interesting. But a lot of these apps are run by anonymous developers. So it's very hard to tell who is behind these apps at all. Like I had a lot of trouble trying to like talk to these people.

28:32It's all on encrypted messaging through Telegram, so it's very difficult. And there's also some security issues. As our story shows, two of these developers were hacked in recent weeks, and people lost money. Now, the actual developers made various claims about the people who were going to be refunded and that security audits would be launched. But it's obviously like a pretty murky space. And there doesn't seem to be a lot of controls around who can launch these programs, who can be lured to these things. So it's like, you know, it does come with the risks as well. Right. So what has been the change that Polymarket has implemented, if any, according to what you found?

29:20Well, it's hard to know. We found out that Polymarket did start an audit of its developers program recently. Polymarket won't tell us when that audit began. Or why they're doing it? It's not really clear, but it seems to be along this move where the platform is trying to insulate itself from these criticisms that it's faced. You know, it's facing a lot of different lawsuits from the state lawmakers about, you know, is it stepping over gambling laws that the states are in charge of? Now, the federal regulator is on the side of polymarket, but that is still working its way through the courts. But also, a lot of people in Congress are very upset about the notion that, you know, government employees might be trading on insider information or sports people might be placing bets through these channels.