this sober inaction. SoftBank, by contrast, has an excess of ideas courtesy of Masayoshi Son, its futuristic founder, but little cash. No sooner does the firm borrow money than it flies out of the door to finance the artificial- intelligence gold rush under way in Silicon Valley. For Mr Son’s heavily indebted firm, a crash could be terminal. The pair are a kind of yin and yang: what repels Berkshire delights SoftBank. During the dot-com bubble Mr Buffett, who aims to buy companies with unassailable “moats” at cheap prices, stuck, in his words, to “such cutting-edge industries as brick, carpet, insulation and paint”. Meanwhile Mr Son, who likes high-tech companies whatever their price, was making his name investing in Yahoo, an American internet firm, and Alibaba, a Chinese one. Two decades later Mr Buffett was again saving up for the bargains that might emerge after a market correction, just as Mr Son was docked in the Bay Area spending his massive “Vision Fund” like a sailor on shore-leave. Both firms have come to resemble parodies of themselves. Berkshire’s cash pile is now worth an astonishing 40% of its market capitalisation, double its average over the past two decades. In recent years it has bought back almost none of its own shares, presumably because it thinks they are overvalued, and it has not paid a dividend since 1967. Berkshire mostly ignores what’s going on in Silicon Valley, where its largest holding is in Apple, a rare tech giant not spending the entirety of its cashflow building data centres. The result has been underperformance. Greg Abel, Mr Buffett’s successor as chief executive, delivered his first sermon to Berkshire shareholders on May 2nd. During the past year their shares have undershot the market by 40 percentage points (about as much as they did in 1999). For its part, SoftBank lost a fortune on startups whose value was inflated by central banks’ easy-money era: it was, notoriously, the largest investor in WeWork. But that has been more than offset by its bet on Arm, a British chip designer it bought for $31bn in 2016 that is now worth $250bn (SoftBank owns 87%; the rest is listed on the Nasdaq). Mr Son’s new big wager is on OpenAI. By October SoftBank, which is OpenAI’s second- largest external shareholder after Microsoft, will have invested $65bn in the maker of ChatGPT. It has committed to spend $3bn annually on OpenAI’s products, contributing perhaps 10% of the AI lab’s revenue. This year it will
also pay $5bn for the robotics arm of ABB, a Swiss engineering firm, and $4bn for DigitalBridge, a data-centre business. Quite how Mr Son will settle these bills puzzles some lenders and frightens others. The cost to insure against a default on its debts has soared. Cashflows from its operating businesses are insufficient. Selling assets would help. But having hawked the family silver (SoftBank sold the last of its Nvidia stock in October), it must now strip metal from the roof of its rusty garage. Its shareholdings in T-Mobile, a telecoms company, Grab, a food-delivery firm, and DiDi, a Chinese ride-hailing platform, are worth much less than they were even a year ago. According to the Financial Times, SoftBank is also considering yet another stockmarket listing, this time made up of an undefined grab bag of loosely AI-related businesses. The most likely answer is more debt. But from where? The firm already faces a steep wall of maturities: the $40bn bridge loan SoftBank took out to invest in OpenAI matures next March. Selling bonds to Japanese retail investors costs more than it used to. The firm says its level of debt is copacetic, but the “loan-to-value” figure it telegraphs is something of a fantasy, since it ignores an additional $28bn borrowed against stock SoftBank owns in Arm and its Japanese telecoms operation. (The firm is also after a further $10bn to be borrowed against its stake in OpenAI.) Berkshire and SoftBank are refugees in each other’s countries. These days Berkshire is most active in Japan, where it has accumulated a portfolio worth $45bn. It joins a caravan of American activist and value investors who have fled a market they view as expensive and concentrated. SoftBank, which has bet the house on Silicon Valley, is heir to a risk-loving tradition that runs in the opposite direction. Japanese banks have always tried to muscle in on Wall Street; the best American leather jackets are made in Japan. Only one of the firms’ gambles can pay off. If it is Berkshire that comes undone, the process will be slow. For now, Mr Abel is protected by Mr Buffett’s voting power. But an uncomfortable truth is that the only thing harder than building a business like Berkshire is bequeathing one. If the market keeps rising, as it has for years, Mr Abel must eventually return Berkshire’s mountain of cash as a dividend or break up the firm entirely. The
dissolution of SoftBank, by contrast, would be a spectacle. If the value of Arm were to collapse, or OpenAI fails to list its shares, as seems increasingly likely, Mr Son’s firm will struggle to pay back its debts. Excessive temperance and risk-taking are permanent features of free markets; the firms that best embody them are not. ■ Subscribers to The Economist can sign up to our Opinion newsletter, which brings together the best of our leaders, columns, guest essays and reader correspondence. This article was downloaded by zlibrary from https://www.economist.com//business/2026/05/06/only-one-of-berkshire-hathaway-and- softbank-can-survive
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Finance & economics | Simplify and integrate The EU wants to unshackle its economy. For real this time Eurocrats are belatedly developing a healthy distaste for red tape May 7th 2026 THE EUROPEAN UNION is an economic giant. Its 27 member states combine into the world’s second-biggest economy behind America and its third-most-populous internal market, behind India and China. The EU is home to some of the world’s most recognisable brands, from Adidas to Zara, and key industrial firms such as ASML, whose lithography machines are critical in AI chipmaking, and Zeiss, whose lenses are critical to ASML. Alas, these days the giant is sleepy. The bloc’s GDP and its stockmarket have lagged far behind America’s over the past decade (see charts 1 and 2). In April activity in its services sector fell to a 62-month low. The recent shocks which contributed to the sluggishness were not of its own making:
the covid-19 pandemic, Russia’s invasion of Ukraine and now America’s war on Iran. But the EU and its members have also been getting in their own way, by overregulating companies (see chart 3) and failing to properly integrate their supposedly single market. Between 2014 and 2024 the European Commission, the bloc’s executive arm, considered over 1,000 proposals. Some 660 were adopted. Among (many) other things, these forced even smallish firms to monitor their data and global supply chains for all manner of digital, environmental and human-rights transgressions. The EU’s official beancounters at Eurostat estimate that reporting requirements and other paperwork cumulatively cost European businesses €150bn ($176bn) a year, equivalent to nearly 1% of the EU’s GDP—and that is not counting the innovation and growth forgone because entrepreneurs were put off by it all. Some new rules under discussion could add another €80bn to the bill if unchecked. The IMF reckons that selling goods and services across national borders in the EU costs firms the equivalent of a 44% and 110% tariff, respectively. A survey in 2025 found that German firms had to hire an additional 325,000 employees over the preceding three years whose job was to tick ever more bureaucratic boxes.
Spurred on by two landmark reports on European competitiveness (or lack thereof) courtesy of two former Italian prime ministers, the EU is saying basta! In March the 27 national governments jointly acknowledged that deepening its single market was “an urgent, shared responsibility of all member states and the EU’s institutions”. “There cannot be minor tweaks,” says Maria Luís Albuquerque, the EU’s financial-services commissioner. “We need fundamental changes.” Or, in the blunter words of a Eurocrat involved in bringing those changes about, “We have to eliminate the crimes of the past five years.” This is not the first time the EU has wrung its hands about economic drowsiness. Previous efforts at reform often began and ended in what Scott Bessent, America’s treasury secretary, derided as “the dreaded European working group”. Now, though, it is no longer just about economics. In a world of Russian revanchism, transatlantic fracture under Mr Bessent’s boss, Donald Trump, and Chinese commercial expansion, a stronger economy is suddenly a matter of security, even survival as a geopolitical project. Ursula von der Leyen, who relished red tape in her first term as commission president in 2019-24, has turned into a champion of reform. Ms von der Leyen’s commission is going about this in two ways. The first involves keeping the substance of rules but streamlining procedures. Ten
“omnibus” bills, each focused on making companies’ lives easier in a particular area, are in the works. One that has already been passed exempts firms importing less than 50 tonnes a year of dirty products like steel or fertiliser from an EU tax on carbon emissions embedded in foreign goods. Another lets firms with fewer than 1,000 employees and annual sales of less than €450m dispense with reporting some environmental risks. Companies with a workforce below 5,000 and yearly revenue of less than €1.5bn also no longer need to track their global environmental footprint and human-rights impact. If the commission gets its way, businesses employing up to 750 people will soon be let off the hook for keeping many detailed records of how they process customers’ personal data. Eurocrats estimate that such simplification could reduce businesses’ annual administrative costs by €37.5bn by 2029. The bigger hope in Brussels is that the exercise is only the start, and that a deeper clean is coming. The prize could be large. The Ifo institute, a think-tank in Munich, looked at 27 episodes of bureaucratic decluttering around the world between 2006 and 2020 and found that it raised GDP per person by an average of 4.6%. The second part of the strategy is to fulfil the EU’s unrealised aspiration to create a genuine pan-European market. The IMF reckons better regulation and deeper integration could boost the bloc’s GDP by 3% over the next decade—nothing to sniff at for a continent that grew by an average of less than 1% a year between 2008 and 2024.