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(Bloomberg) — Meta Platforms Inc. Chief Executive Officer Mark Zuckerberg says the fact his company doesn’t have a virtual reality fitness app doesn’t keep him up at night, but acquiring it would boost competition and improve such applications.

“It’s less important that we own the experiences, than they exist” he said at a trial in San Jose, California, that concluded Tuesday. “By joining us I think we can also help them be able to pioneer the category” and “spur other companies who are doing other good things in this space.”

Zuckerberg took the witness stand to defend his company’s acquisition of virtual reality startup Within Unlimited Inc. against a Federal Trade Commission antitrust suit. His testimony Tuesday is part of Meta’s push to defeat the lawsuit seeking to block the company from acquiring the maker of Supernatural — a popular VR fitness app. Zuckerberg’s testimony follows that of Meta’s Chief Technology Officer Andrew Bosworth a day earlier.

The Federal Trade Commission claims Meta’s plan to buy the competitor will give it an unfair advantage in the burgeoning VR market. The argument is an early test for FTC Chair Lina Khan and her more aggressive stance to antitrust enforcement. Late Monday Meta and Within extended the deadline for the acquisition to close until the end of January, to give US District Judge Edward Davila time to make his decision.

Calling Zuckerberg as a witness, FTC lawyer Abby Dennis asked if in the history of computing, platforms and apps have generally “gone together.” She cited deposition testimony Zuckerberg gave earlier in the case, in which, according to Dennis, he said Facebook intended to build most of the apps for its platform itself. 

Zuckerberg agreed that many companies, including Google and Microsoft Corp. build the key apps for their platforms. 

“The apps tend to hold the platform together rather than the other way around,” he said. But he resisted Dennis’s suggestion that the acquisition of Within was a significant departure for his company. Facebook, and now Meta, have focused on communication and social interaction apps, he said. “We’re not trying to build every app ourselves,” he said.

The FTC sued Meta in July over the deal, alleging the company was seeking to create a monopoly in virtual reality much in the same way Facebook bought up Instagram and WhatsApp to extend its dominance in social networking. During the Trump administration, the agency sued the company seeking to unwind those deals retroactively. That case is pending.

The Within suit represents the first time the FTC has preemptively challenged a deal by the social media giant, which has bought more than 100 smaller companies over the past decade. Tech companies and investors are closely watching the suit amid concerns the case may make startup acquisitions more difficult.

In closing arguments Tuesday, FTC lawyer Dennis said Meta has acquired nine virtual reality studios in the past three years, including three since its acquisition of Within was announced.

She urged Davila to grant the agency’s request for an order blocking Meta’s acquisition as it pursues a lengthier, administrative proceeding starting next month. She challenged Meta’s argument that if Davila sides with the FTC that the company would have to walk away from the acquisition.

“The deal is dead only if Meta wants it to be,” Dennis said. The court should reject Meta’s argument that “the FTC should not be able to challenge any action because challenges take time,” she said.

Meta’s lawyer, Mark Hansen, told Davila that his decision will determine the outcome of the deal. “This is the trial in this case,” he said, adding that Meta can’t wait two years for a longer administrative proceeding to conclude.

The Within deal is a “procompetitive acquisition” that will improve the “fitness mission” and VR capability and availability for consumers, he said. Hansen added that the deal is important for startups aiming to be acquired. “If those opportunities weren’t available, a lot fewer people would take the risk,” he said.

“The FTC has no case,” Hansen said. “No court has accepted these theories for decades, even with better facts.”

The case is FTC v. Meta, 22-cv-04325, US District Court for the Northern District of California (San Jose).

–With assistance from Leah Nylen.

(Updates with closing arguments starting in tenth paragraph)

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(Bloomberg) — Elon Musk will resign as head of Twitter Inc. as soon as a successor is found, he said in a tweet.

He said he will just run the software and servers teams after he finds a successor.

Read more: Musk Is Looking for a New Twitter CEO After Losing Poll 

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(Bloomberg) — Hong Kong International Airport says it’s ready to use driverless buses, confident it can shuttle passengers around the aerodrome from next year after extensive trials years in the making.

By bolting on cameras, sensors and tracking devices, the Asian financial hub’s main airport has adapted and kitted out an electric bus from Chinese carmaker BYD Co. and been testing so-called Level 4 autonomous technology. The four-year effort, using other types of driverless vehicles without passengers, has racked up around 130,000 kilometers (81,000 miles) without an accident, according to the airport.

“We can carry passengers to and from different destinations — totally driverless,” Chapman Fong, the airfield’s general manager, said.

Reaching full levels of autonomous driving with flawless safety in a real world environment is the holy grail for automakers and tech firms alike. But despite the tens of billions of dollars spent, it remains illusive. While self-driving trucks are being used in some controlled applications, like hauling rocks around a mine site, cars without humans that can navigate streets shared by pedestrians, pets and other vehicles don’t exist.

Read more: Self-Driving Cars Are Starting to Look Like a $100 Billion Bust

HKIA’s bus, a BYD J6 model, seats 14 passengers, features 10 cameras placed outside the vehicle from Uisee Technology (Beijing) Co. and uses GPS locators to track its position. A key part of the technology’s hardware is in a sizable, silver metal case next to where a driver would sit that contains the driverless unit and a back-up system that can independently scan the path ahead. If the main system fails, the back-up kicks in.

“For the autonomous technology we are quite confident because we have been using it for live operations and have had zero accidents,” Fong said. Having actual passengers on board is another milestone and “we’re confident it’s the next move for autonomous vehicles at this airport.”

It isn’t the airport’s first foray into high-tech transport. HKIA currently deploys four battery-powered patrol cars made by SAIC-GM-Wuling Automobile Co. as security to patrol the airfield perimeter and has a fleet of 12 battery-powered tractors towing passenger baggage containers and another four for air cargo. Sensors for those are made by San Jose-based Velodyne Lidar Inc.

The airport’s combustion-engine fleet of around 40 buses and some 800 tractors for cargo and baggage should be ripe to shift to automated systems over the coming years, the aviation hub says, and all ground transport should be electric by the end of 2030.

Longer term, HKIA also sees driverless, autonomous technology as useful to alleviate a general shortfall in labor — the company is down one-third on its pre-pandemic workforce of 73,000.

Taking a ride in the autonomous bus is much like any other vehicle. The journey is smooth yet it feels somewhat surreal knowing the steering and inputs are being controlled by a computer and not a person.

When Bloomberg visited on Monday afternoon, officials insisted on having a driver in the seat — offering a third layer of redundancy should things go wrong — and that’s likely how the airport will approach it at least initially in a live environment. The bus also didn’t attempt to run down this reporter, instead detecting the errant jaywalker and making an emergency stop.

“Airport applications and airside is the best location for the start of autonomous vehicle deployment because most of the area is controlled and we track every vehicle, every aircraft movement on the apron,” Fong said.

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(Bloomberg) — South Korea’s early trade data showed an export-slump persisting in December in the face of stiffening global economic headwinds.

Shipments decreased 8.8% in the first 20 days of the month compared with a year earlier, the customs office said Wednesday. That compares with a 14% drop for the full month of November. The country posted a $6.43 billion trade deficit in the period.

Average shipments that exclude working-day differences also fell 8.8%. Chip sales declined 24.3% and exports to China tumbled 26.6%.

Korean exports have begun to drop in recent months as the world economy enters a slowdown under pressure from Russia’s continuing war in Ukraine, fallout from China’s lockdowns and global monetary policy tightening.

A downturn in memory chip demand is exacerbating trade weakness, prompting chipmakers and other industrial giants to recalibrate manufacturing plans. 

Weakening exports, rising commodity prices and sliding investor sentiment are among headwinds facing Korea next year. Industrial production has already weakened for four months in a row in the latest sign of a cooling economy.

The Bank of Korea last month downgraded its forecast for economic growth next year to 1.7% from 2.6% previously, pointing to weakening exports. Memory chips that account for the largest share of Korean products sold abroad are likely to regain momentum from the second half of next year, it said.

Korea’s exports will probably be 4% lower next year compared with 2022, for a total of $662 billion, while imports will fall 8%, according to a Korea International Trade Association forecast.

Separately, the nation will likely see a trade deficit of $13.8 billion in 2023, KITA said. Korea is this year on track to post its first annual trade shortfall since the global financial crisis.

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(Bloomberg) — Federal authorities are set to whisk Sam Bankman-Fried to the US on Wednesday to face a range of criminal charges related to the collapse of the FTX crypto exchange.

Bankman-Fried signed his surrender documents on Tuesday, according to Bahamas Acting Commissioner of Corrections Doan Cleare. He’ll sign a separate set of papers finalizing his waiver of rights to fight extradition at the Magistrate’s Court in Nassau on Wednesday.

After that the FTX co-founder will be accompanied by FBI agents on a non-commercial aircraft back to the US, according to a person familiar with the matter. The plane will leave from a private airport in the island nation, said another person, who also asked not to be identified due to the sensitivity of the plans. 

His return to the US will cap a tumultuous week filled with speculation around when Bankman-Fried might return to face charges including fraud. Since being denied bail at an initial court hearing last week, Bankman-Fried has been held in a notorious correctional facility on the outskirts of Nassau known as Fox Hill. 

While the arrangements could still change, plans call for Bankman-Fried to be escorted by Bahamian officers from the prison to the court Wednesday morning. 

Although he initially said that he would fight extradition, Bankman-Fried has more recently indicated in private conversations that he was preparing to return to the US as soon as Monday, Bloomberg News has reported. The change in attitude was in part tied to the expectation that he’ll be able to get bail in the US.

It wasn’t immediately clear which American airport Bankman-Fried would land at. The US Attorney’s Office for the Southern District of New York last week unsealed an eight-count indictment against him.  

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(Bloomberg) — Ukrainian President Volodymyr Zelenskiy is expected to travel to Washington on Wednesday to address Congress, according to people familiar with the matter. It would be his first trip outside his country since Russia invaded on Feb. 24.

Iran’s shipments of drones to Russia for use in the war in Ukraine is transforming relations between Tehran and Moscow into a “full-fledged defense partnership,” the US State Department said.

The Ukrainian government said it had reached a deal with Elon Musk’s Space Exploration Technologies Corp. to get thousands more of its Starlink antennas to help keep people online despite Russia’s attacks on infrastructure. 

(See RSAN on the Bloomberg Terminal for the Russian Sanctions Dashboard.)

Key Developments

• Ukraine to Get Thousands More Starlink Antennas, Minister Says
• Ukraine Gets IMF Nod for Non-Cash Program, Paving Way for Aid
• US Lawmakers Release Huge Spending Bill Before Year-End Deadline
• Germany Demands Rheinmetall Fix Faulty Puma Armored Vehicles

On the Ground

Russia continues to move increasing numbers of mobilized servicemen and military equipment, munitions and fuel from its far east toward Ukraine, the Ukrainian General Staff said. Russian forces continue to concentrate their offensive efforts on the Bakhmut and Avdiyivka directions in the Donetsk region, it said in an update.

(All times CET)

Zelenskiy Plans to Address US Congress In-Person Wednesday (11:19 p.m.)

A visit by Zelenskiy to Washington on Wednesday to address Congress would follow the expected announcement by President Joe Biden’s administration that the US will provide Patriot anti-aircraft missiles to Kyiv, ratcheting up US support. 

Biden will meet with Zelenskiy at the White House, according to people familiar with the planning who asked not to be identified because the speech hasn’t been publicly announced. They cautioned the plans aren’t final because of security concerns.

House Speaker Nancy Pelosi sent a letter to other representatives on Tuesday urging them to be “physically present” on Wednesday. Punchbowl News reported earlier that Zelenskiy was expected to visit the Capitol.

White House spokespeople declined to immediately comment. Zelenskiy’s press office didn’t immediately reply to requests for comment after business hours in Kyiv.

US Says Russia and Iran Forging ‘Full-Fledged’ Partnership (8:54 p.m.)

Iran’s shipments of drones to Russia for use in its war in Ukraine is transforming the relationship between Tehran and Moscow into a “full-fledged defense partnership,” US State Department spokesman Ned Price said.

The supply of unmanned aerial vehicles, which Russia has used to attack Ukraine’s civilian infrastructure, has prompted Russia to provide an “unprecedented level of military and technical support” to Iran, Price said, and that should concern Iran’s neighbors.

US Cites ‘Active Discussions’ With Russia on Prisoner Whelan (6:35 p.m.)

The US is engaged in “active discussions” with Russia over securing the freedom of Paul Whelan, the former US Marine who has been held in Russia for the last four years, National Security Council Communications Director John Kirby said.

“There are active conversations that we continue to have with our Russian interlocutors about trying to secure Paul’s release,” Kirby told reporters. “We’re just not going to detail like you know, who’s calling who and what day and what the details are.”

The Biden administration came in for criticism after it agreed to trade convicted arms dealer Viktor Bout for WNBA star Brittney Griner without also securing Whelan’s release. US officials said Russia insisted on a one-for-one release or none at all.

Ukraine Plans to Triple Emergency Aid Stations for Blackouts (6:10 p.m.)

Ukraine is seeking to boost the number of locations where Ukrainians can get uninterrupted access to power and heating from the current 5,000, Prime Minister Denys Shmyha said. 

The premier earlier told a cabinet meeting Tuesday that two-thirds of the funds that Ukraine have received since the start of the invasion have come from the US and European countries. 

“We really appreciate this help and are working together to continue it next year,” the premier said.

Finland Sends More Defensive Aid to Ukraine (3:45 p.m.)

Finland’s government agreed to send its 11th package of defense materials, valued at €28.8 million ($31 million), to Ukraine. The package brings Finland’s total military aid to €189 million, the Defense Ministry said in a statement.

Russian Gas Flows to Europe Unaffected After Pipeline Blast (3:30 p.m.)

An explosion hit a Russian natural-gas pipeline that goes to Ukraine for further supply to Europe. The blast occurred on a section of the Urengoy-Pomary-Uzhgorod link, though the local unit of Gazprom PJSC said transportation of fuel was being provided to consumers in full through parallel pipelines.

The Urengoy-Pomary-Uzhgorod is one of the oldest gas conduits linking Russia and Europe via Ukraine. Flows through Ukraine are scrutinized by the market as it remains the last route delivering Russian fuel to western Europe amid the Kremlin’s war in Ukraine. Gas nominations for Wednesday transit via Ukraine so far remain unchanged, grid data show.

Steinmeier Calls on Xi  to ‘Use His Influence’ on Russia (3:17 p.m.)

German President Frank-Walter Steinmeier asked Xi Jinping to “use his influence” on Russia to end the war in Ukraine in an hour-long phone call with the Chinese president to mark 50 years of bilateral relations between Germany and China on Tuesday, Steinmeier’s office said in a statement.

Bakhmut Servicemen Hand Zelenskiy Flag (1:45 p.m.)

Ukrainian soldiers in Bakhmut handed over the flag of Ukraine to the president, asking for it to be passed on to “our brothers in America.” 

“We have a difficult situation, the enemy is increasing its numbers,” Zelenskiy said in comments shown on the Freedom TV channel. “We will pass on to the US Congress, to President Biden, our gratitude for their support.” 

Ukraine’s Capital Restoring Water Supplies (12:04 p.m.)

Damage caused by Russia’s shelling is being fixed and water supply is resuming in Kyiv, according to mayor Vitali Klitschko. The power situation remains “critical” for the whole region, with 80% of residents still facing blackouts, the region’s military authorities said on their Telegram-channel.

More Than Half of Kyiv Has Power Problems, Ukrenergo Says (11:30 a.m.)

Less than half of power demand in Kyiv city is being met on Tuesday following Russian drone attacks, national grid operator Ukrenerego said on Telegram.

City authorities are prioritizing the supply of electricity to key infrastructure as the country’s energy system continues to experience a significant power deficit, Ukrenergo said.

Putin Calls Situation in Southeastern Ukraine ‘Extremely Difficult’ (11:15 a.m.)

President Vladimir Putin said the situation in southeastern Ukrainian regions occupied by Russia is “extremely difficult,” following Ukraine’s success in wresting back control of an increasing part of this territory.

Putin referred to Donetsk, Luhansk, Zaporozhzhia and Kherson as “new regions of Russia,” in a video address on Tuesday marking a holiday dedicated to the country’s security agencies. 

Russia annexed the four provinces in September but has been steadily losing ground there in the face of a Ukrainian counter-offensive. Last month Russia withdrew from Kherson City, the only regional capital it controlled since invading Ukraine 10 months ago.

Ukraine to Get More Starlink Antennas (8 a.m.)

“SpaceX and Musk quickly react to problems and help us,” Mykhailo Fedorov, deputy prime minister and minister for digital transformation, said in an interview in Kyiv, adding that he spoke directly with Musk. 

“Musk assured us he will continue to support Ukraine. When we had a powerful blackout, I messaged him on that day and he momentarily reacted and has already delivered some steps. He understands the situation.” More than 10,000 devices, which provide internet service beamed down from satellites, will be sent to Ukraine, according to Fedorov.

Starlink played an important early role in the war, as Russia’s military focused on destroying communications. But Musk, SpaceX’s chief executive officer, drew the wrath of Ukrainians in October when he tweeted that Kyiv should remain neutral — an apparent suggestion that it not join military alliances like NATO — and should cede territory to Russia in exchange for a peace deal.

Kyiv Has Significant Power Cuts, Mayor Says (7:41 a.m.)

Periods of power cuts will be extended in the capital, Mayor Vitali Klitschko said on Telegram. There is enough power to supply critical facilities and about 20% of residents.

The oldest line of Kyiv’s subway network was partially closed for passengers due to a voltage drop, the subway operator said on Telegram. Two other lines resumed operation.

Ukraine Gets IMF Nod for Non-Cash Program (1:21 a.m.)

The International Monetary Fund’s management approved a new four-month program for Ukraine that doesn’t envisage lending money but may serve as a bridge to a multibillion-dollar loan package.  

The IMF executive board discussed so-called program monitoring with board involvement, or PMB, for the war-torn nation on Monday, the Washington-based lender said on its website.

The PMB “is tailored to Ukraine’s exceptional circumstances,” and helps the nation’s government implement prudent policies and catalyze donor financing,” IMF First Deputy Managing Director Gita Gopinath said.

(An earlier version of this story was corrected to eliminate a suggestion that Biden also will address Congress)

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(Bloomberg) — Elon Musk’s fortune continues to take a beating a week after he lost his spot as the world’s richest person.

His net worth tumbled $7.7 billion on Tuesday after Tesla Inc. shares had their steepest one-day loss since October.

The selloff adds to the woes of Musk, who lost his status as the world’s richest person to luxury tycoon Bernard Arnault on Dec. 13. Musk’s losses for the year now total $122.6 billion, exceeding the amount he gained in 2021 when his fortune soared to rank among the biggest in history. The Tesla chief executive officer’s net worth is now $147.7 billion, the lowest in more than two years, according to the Bloomberg Billionaires Index.

Read more: Musk Loses World’s Richest Title to Arnault With Tesla Unwinding

Musk’s fortune is primarily comprised of Tesla stock and options. The automaker’s spiraling shares pose a particular risk for Musk, 51, who leveraged more of his position to finance his acquisition of Twitter in October. 

Tesla shareholders have expressed increasing alarm over Musk’s preoccupation with Twitter, which he’s attempting to lead through a messy and public turnaround. He posted a poll on Twitter asking users to vote whether he should step down as head of the social platform. Almost 58% of the 17.5 million respondents said he should.

 

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(Bloomberg) — FTX co-founder Sam Bankman-Fried, who has been in jail in the Bahamas, has agreed to be sent to the US to face multiple criminal charges.

Bankman-Fried had been expected to drop his fight against extradition. A hearing had been set for Wednesday in Nassau to consider the matter. A representative for the former FTX chief executive officer did not immediately return a request for comment.

By signing his extradition papers, Bankman-Fried moves a step closer to facing a range of criminal charges in the US related to the collapse of the FTX, which he co-founded. 

The development, which was first reported by ABC News, was confirmed by Bahamas Acting Commissioner of Corrections Doan Cleare.

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(Bloomberg) — FTX co-founder Sam Bankman-Fried, who has been in jail in the Bahamas, has agreed to be sent to the US to face multiple criminal charges.

Bankman-Fried had been expected to drop his fight against extradition. A hearing had been set for Wednesday in Nassau to consider the matter. A representative for the former FTX chief executive officer did not immediately return a request for comment.

By signing his extradition papers, Bankman-Fried moves a step closer to facing a range of criminal charges in the US related to the collapse of the FTX, which he co-founded. 

The development, which was first reported by ABC News, was confirmed by Bahamas Acting Commissioner of Corrections Doan Cleare.

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(Bloomberg) — Kathleen Moriarty, a lawyer who played an instrumental role in the creation of the first exchange-traded fund, has died. She was 69.

Her death was announced by Chapman and Cutler LLP in New York, where she was senior counsel in the corporate and securities department. No cause or other details were provided.

Moriarty spent almost 30 years breaking ground in the fastest-growing segment of the money-management industry, guiding products to market such as the first hedge-fund replicator, the first physical commodity ETF and the first leveraged offering. 

ETFs are low-cost, investment vehicles that track an index or a basket of securities and trade like equities on an exchange. Moriarty built a reputation as the go-to lawyer for anyone seeking to sell an innovative ETF that regulators may scrutinize closely.

“I’ve represented most everybody who’s done an unusual ETF,” Moriarty said in a 2014 interview. 

She earned the nickname “SPDR Woman” for her work on the SPDR S&P 500 ETF Trust (ticker SPY), which State Street Corp. introduced in 1993, and on subsequent SPDR products. With $357 billion in assets, SPY currently reigns as the largest and oldest ETF in the $6.5 trillion industry. 

“Kathleen was a pioneer in the investment management industry and was at the forefront of some of our industry’s most impactful innovation of the last 30 years,” Morrison Warren, co-leader of Chapman’s Investment Management Practice Group, said in a statement. “Throughout her time at Chapman, she was a humble and thoughtful colleague and universally recognized as a kind-hearted and beloved individual.”

Reggie Browne, the co-global head of ETF trading and sales at GTS known as the Godfather of ETFs, called Moriarty “one of the ETF industry’s GOAT Super lawyers” in a LinkedIn post. 

“She was at the helm of nearly every upward inflection point in ETF product innovations,” he wrote. “She was a super nice person with a warm heart and welcoming spirit.”

A Chicago native, Moriarty moved with her family to New York when she was 5 and lived in Manhattan for most of her life. She graduated from Smith College in Northampton, Massachusetts, with a degree in psychology and art history, and earned her law degree from the University of Notre Dame near South Bend, Indiana, where she met her husband, Robert John Keefe.

Prior to Chapman, Moriarty worked at law firms including Arnold & Porter Kaye Scholer LLP, Katten Muchin Rosenman LLP and Carter Ledyard & Milburn LLP, according to her LinkedIn page. 

It was during her time at Katten Muchin Rosenman that Moriarty represented Tyler and Cameron Winklevoss in their first attempt by a US applicant to register a Bitcoin ETF with the US Securities and Exchange Commission. 

While that endeavor was unsuccessful — US regulators still have yet to approve a physically backed crypto ETF — Moriarty went on to represent companies using blockchain technology and other funds looking to invest in digital assets.

“I feel honored and blessed to have known and worked with Kathleen,” said Deborah Fuhr, co-founder of ETFGI, who served on the board of Women In ETFs with Moriarty. “She was involved in many new innovations. Always gave freely of her time. Was a nice, warm, friendly pioneer in the ETF industry. She will be missed.”

–With assistance from Christopher Condon.

(Adds more details in paragraph 13 about Bitcoin ETFs. A previous version corrected the name of Reggie Brown’s company.)

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