28/08/2025

BIZ & FINANCE THURSDAY | AUG 28, 2025

FOLLOW

ON TWITTER Malaysian Paper

18

@thesundaily

Alibaba results point to modest AI impact

Musk’s lawyers seek to block OpenAI from Meta docs BENGALURU: Lawyers for Elon Musk have asked a US judge to block ChatGPT-owner OpenAI from obtaining documents from Meta Platforms related to a previous US$97.4 billion (RM410 billion) bid for OpenAI’s assets, a court filing showed. OpenAI said last week Musk had tried to enlist his rival Mark Zuckerberg in his bid for the AI company earlier this year, but that the Meta boss did not come on board. OpenAI then requested the judge to order Meta to produce documents and communications related to any bid for the company. Meta asked the judge to deny the request, saying it should seek relevant documents directly from Musk and his AI startup xAI. In a filing late on Tuesday, Musk’s lawyers said OpenAI had already received documents related to the bid from him and his AI startup. They added that OpenAI’s “expansive discovery” was irrelevant to the current phase of the trial. However, lawyers for OpenAI and CEO Sam Altman asked the judge to reject Musk’s assertions and said they were not seeking “expansive” and “sprawling” discovery and that the relevant requests for documents were targeted and“span weeks, not years.” “Plaintiffs have sought to explain the absence of bid-related documents by representing that their communications were primarily oral. If that is true, then the need for depositions – of Musk, an xAI representative, and other co-bidders – is even more acute,“ they wrote. – Reuters the Trump Administration’s illegal, politically motivated, and baseless attack on California High-Speed Rail and Central Valley communities. While opponents are recycling tired political attacks, California is building the future of American transportation.” The rail system, whose first US$10 billion bond issue was approved by California voters in 2008, has built more than 50 major railway structures, including bridges, overpasses, under-crossings and viaducts, and completed 113km of guideway. The funding cancellation marked the latest confrontation between the Republican president and a Democratic governor widely viewed as a leading contender for his party’s 2028 White House nomination. The two men have clashed over issues from transgender athletes and electric car rules to the use of National Guard troops during Los Angeles protests and even egg prices. The San Francisco-to-Los Angeles route was initially supposed to be completed by 2020 for US$33 billion. But the projected cost has since risen to US$89 billion to US$128 billion, and the start of service is expected by 2033. – Reuters

TOKYO: Take-private deals in Japan are likely to hit a record high this year, exceeding the US$40.3 billion (RM170 billion) total racked up in 2023, according to private equity funds and advisers, as companies bow to pressure to improve returns for investors. Japanese companies once feared private equity as “hagetaka”, or vultures. Now they are increasingly open to buyouts and giving up their once-prized listed status in the face of calls from activist investors and the Tokyo Stock Exchange to overhaul capital management and cross-shareholdings. Private equity players say there is unprecedented interest from their backers in opportunities in Japan, with the spate of deals this year bucking a global slowdown in such activity. In the year to Aug 20, private equity deals totalled US$27.6 billion, almost triple the US$9.5 billion over the same period in 2024, Dealogic data shows. Prominent deals announced in the past month include Blackstone’s US$3.5 billion offer for engineering staffing firm TechnoPro and EQT’s US$2.7 billion bid for elevator BEIJING: China’s Alibaba is likely to highlight its artificial intelligence (AI) strategy with its quarterly results on Friday, but in line with its peers Tencent and Baidu, may struggle to show that its big AI investments are paying off. The companies have invested billions of dollars into AI over the past three years following the global success of ChatGPT, hailing it as a key revenue driver. They rolled out their own large language models and infused them into their flagship products. But making money from these efforts has proved difficult so far, as Chinese users, unlike Western customers, have demonstrated strong resistance to paid subscription models, analysts said. Alibaba has been among the most aggressive in China’s AI industry, showcasing advancements on an almost weekly basis. The weak contribution from the AI push dampens Alibaba’s growth outlook at a time when its core e commerce business is locked in an o Billions poured into advanced tech bring little payoff as China’s giants struggle with low demand and fierce competition

Transportation Department said on Tuesday it is cancelling US$175 million (RM737 million) for four projects that are part of California’s high-speed rail project, following cancellation of US$4 billion in federal grants for the state’s ambitious but much-delayed high-speed rail project in July. The Trump administration said Tuesday it will withdraw funding for grade separation, overcrossing, design work and to build a high speed rail station in Madera. California in July sued to challenge the withdrawal of funding, calling the decision illegal. President Donald Trump and California Governor Gavin Newsom have repeatedly clashed and earlier on Tuesday USDOT threatened to cancel US$33 million in safety funding for the state after the department said California was not enforcing federal rules requiring truck drivers to be able to speak English. The funding cuts are another hurdle to the 16-year effort to link Los Angeles and San Francisco by a three hour train ride, a project that would deliver the fastest passenger rail service in the US. The California High Speed Rail Authority said Tuesday the announcement “is a continuation of challenge for AI developers in China. The more realistic path will be in the enterprise market,” said Lian Jye Su, chief analyst at technology research firm Omdia. However, intense competition that started early last year has hammered API pricing, and the price war shows no sign of abating. In May, Alibaba slashed its Qwen Long model API pricing by 97% to 0.0005 yuan per thousand tokens. A month later, ByteDance cut its Doubao model prices by 63% to as low as 2.6 yuan per million tokens. In a further challenge to the revenue opportunity, many Chinese companies including DeepSeek have committed to open-source their AI models, reducing the incentive for enterprises to buy similar models from cloud platforms. Still, companies argue that AI’s importance to their operations goes beyond a direct revenue uplift and that the investments improve their advertising and e-commerce offerings. “The long-term commercial potential is remote but highly visible,” said Charlie Chai, an analyst with consultancy 86Research. “The productivity gains across all industries will be substantial, and the enablers (through API, licensing or other delivery formats) will definitely be tapping into a huge market.” Alibaba is expected to report quarterly revenue of 252.9 billion yuan on Friday, up 4% from a year ago, according to analysts’ average estimate surveyed by LSEG. – Reuters

From weak subscriptions to price wars, Alibaba’s AI drive highlights the challenge of making new tech pay off. – UNSPLASH PIX

The share price of Fujitec more than doubled in the three years between activist Oasis first targeting the company and EQT’s bid in July. The private equity firm’s offer was a discount to the market price. “By the time a company reaches the point of needing to privatise, it may be already too late to begin considering potential partners,“ said Kohei Fukushima, a director at EQT who worked on the Fujitec deal. To avoid that situation, companies are increasingly talking to private equity firms before management becomes the target of investors agitating for change, industry players say. “In some sense it has become a natural strategic option,“ said Eiji Yatagawa, a partner at KKR in Japan. “Some management are taking proactive action and considering privatisation even before activists become shareholders,“ Yatagawa said. Funds say that now up to around half of their discussions with companies are initiated by the companies themselves. Going private provides an opportunity for existing management to undertake restructuring away from the eye of the public market. – Reuters subscription model with a 59.9 yuan monthly fee. But it discontinued the paid service in April after poor take-up by users. “In China, in reality, it’s actually very hard to use the user-paid model, which now populates the US AI tools,” Tencent president Martin Lau said during the company’s earnings call this month. Baidu CEO Robin Li said this week the company would take a “prudent approach” to AI monetisation, while prioritising user experience. With consumer subscriptions proving unviable, Chinese AI developers have pivoted to enterprise customers with application programming interface (API) services provided through their cloud platforms. “The consumer market is a

maker Fujitec. “We have an extremely rich pipeline of deals,“ said Kazuhiro Yamada, managing director at Carlyle Japan. “Of the more than 300 opportunities Carlyle Japan is seeing across its three core sectors, around 30 have a chance of closing in the next 12 to 18 months,“ Yamada said. The Tokyo Stock Exchange has set out stricter governance criteria, intended to make listed firms more attractive for investment, which is forcing companies to explore options including delisting. The bourse’s reform push, a response to Japan’s unusally high number of undervalued stocks, has sparked a slew of share buybacks, asset sales and management buyouts. Growing activist activity, which is seen as potentially preceding a go private deal, is encouraging speculation on the stock price of targeted companies. “Particularly after activists come in, speculators can push the share price up so high that nobody could make an offer,“ said Akihiko Manaka, co head of investment banking and head of M&A in Japan at Bank of America. intense price competition with rivals to keep consumers spending amid persistent economic weakness in China. Analysts estimate revenue from its cloud business which includes AI related product sales grew just 4.3% in the April-June quarter from the previous quarter to 31.4 billion yuan (RM19 billion), according to LSEG data. That would be up 18% from a year earlier, but suggests growth is slowing. Tencent’s earnings showed this month that revenue from the business that includes selling AI services is growing more slowly than its core gaming business. Baidu’s did not expand fast enough to offset declines in its advertising revenue. When it first launched its Ernie chatbot in late 2023, Baidu attempted a

From vultures to defenders, Japan private equity deals head for record year

US cancelling another US$175m in California high-speed rail projects LOS ANGELES: The US