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As thousands of homes started to burn across Los Angeles on Jan. 7, fire hydrants stopped working. The rapid spread of flames in winds up to 100 miles per hour was happening too quickly for water pumps to keep up. It shocked the system and those fleeing the flames.

“This area is known for having fire issues, so you would think that they would be prepared for this,” said Joan Zoloth, 70, who said she first moved to the area when she was 6 years old.

Zoloth’s childhood home burned down in the Palisades Fire. Her own home around the corner and her son’s home nearby were also lost. 

“My mother was a teacher,” Zoloth said. “What people don’t realize is how much Malibu is filled with those types of people — not just movie stars.”

The remains of Joan Zoloth’s childhood home in Malibu, California, shown on Jan. 21, 2025, after it burned down in the Palisades Fire.

Andrew Evers

CNBC went to the wreckage of the Palisades Fire to ask officials what happened to the water system in LA, and what other cities can do to be better prepared. As many as 1 in 6 Americans now live in areas with significant wildfire risk. 

“A firefight at this size, such an urban conflagration, any system is going to have its challenges in maintaining water pressure,” said State Fire Marshall Daniel Berlant, of the California Department of Forestry and Fire Protection, known as Cal Fire.

Water pressure was the primary problem, rather than a lack of supply, fire officials and water experts told CNBC. 

Much of the water in the Palisades is provided by three 1 million gallon tanks that sit up in the hills, using gravity to maintain water pressure in the hydrants and homes they supply below.

Pumps forcibly move water from main lines and surrounding reservoirs to those tanks. The tanks were full when the fires started, but the pumps couldn’t replenish water in the tanks as quickly as firefighters were using it below. As the tanks depleted, so did the water pressure, until some 20% of hydrants ran dry.

“The hydrants would have run dry anywhere in the world with a fire event like this in the topography where this occurred,” said Greg Pierce, director of the UCLA Human Right to Water Lab.

Joan Zoloth lost three family homes in Malibu during the Palisades fire. She’s shown here at a family friend’s house where she’s staying in Venice, California, on January 21, 2025.

Andrew Evers

The closure of a 117 million gallon reservoir nearby complicated matters. Earlier this month, California Gov. Gavin Newsom and LA city council members called for investigations into why the Santa Ynez Reservoir hadn’t yet reopened after being drained almost a year ago to repair a tear in its cover.

“That would have made a difference,” Pierce said. “But even, by all accounts, if that reservoir was full, it wouldn’t have stopped the fire.”

Typically, fires are also fought by aircraft dropping water and fire retardant from above, but high winds kept them grounded for several hours on the first night of the fire.

Firefighters adapted with three tactics. They shuttled water through multiple engines connected to functional hydrants, drove it to locations in large water tenders, and pumped water directly from backyard swimming pools.

The LA Department of Water and Power said it quadrupled the water flow to the area and summoned 15 water tankers to directly refill fire trucks. It wasn’t enough.

The blame game

As immediate danger calmed, misinformation ran wild. The Federal Emergency Management Agency, or FEMA, reactivated its rumor response site, and the LA Fire Department directly responded to inaccurate social media posts.

President Donald Trump, for instance, claimed that water ran out in LA because of policies meant to protect a small endangered fish called the Delta smelt.

“It’s just simply false. It’s nonsense,” said Peter Gleick, co-founder of the Pacific Institute, a global water think tank. Gleick has been researching water issues for four decades.

On his first day back in office, Trump signed an executive order titled “Putting People Over Fish: Stopping Radical Environmentalism to Provide Water to Southern California.” After visiting with Newsom in LA, Trump signed another executive order directing federal officials to find ways to override “disastrous” California water policies. 

“There’s lots of conversations about California water policy and how we allocate water to protect fish or ecosystems versus deliver water to different kinds of users, but that had no role whatsoever to play in water availability for firefighting,” Gleick said.

Southern California reservoirs are at above-average levels for this time of year because of two plentiful rainy seasons, he added.

“Misinformation about how if we just had more water from Northern California in Southern California, that would have made the difference, that’s not true,” UCLA’s Pierce said. “Even if you have water stored fairly close by in the region, you can’t just move it quickly up to an area like the Palisades.”

That’s why billionaires Lynda and Stewart Resnick are also not to blame for the Palisades Fire, the water experts who spoke with CNBC said. 

The Resnicks own the Wonderful Company, which includes brands such as Pom and Fiji Water, and have sprawling farmlands in the San Joaquin Valley that grow pistachios, oranges and pomegranates. They’ve been the subject of attacks on social media, some of which are antisemitic, that blame them for the water pressure problems in LA because of their investment in a public-private water bank that’s 100 miles north of LA and that has no ability to impact water pressure in the Palisades.

“There’s absolutely no connection between the two. This is a localized problem,” said Felicia Marcus, former chair of the California State Water Resources Control Board.

The fires also resurfaced criticism around state and local water decisions, from taking down dams to not building enough reservoirs.

The real culprit is extremely dry conditions, experts told CNBC. Before the fires, LA saw close to zero rain since May, and 2024 was the hottest year on record for the planet, Gleick said.

“Higher temperatures means more demand for water by soils and vegetation and people and agriculture,” he said. “Climate change is in many ways a water problem. It’s being manifested by drought and floods and wildfires.”

More resilient water systems

This is not the first time hydrants ran dry in a major firefight. They’re designed to handle one or two structure fires, not hundreds burning at the same time.

Similar water pressure problems plagued the 1991 Oakland Hills Fire, which destroyed more than 3,000 homes, and two Ventura County fires that each burned more than 1,000 homes in 2017 and 2018

The problem extends beyond California. Texas saw the largest fire in its history last February. As population booms, more people are moving to areas at high risk of fires between dense developments and wildland. 

California is home to the top six cities at highest wildfire risk in the U.S., but Texas, Colorado and Oregon also have cities in the top 15.

A firefighting helicopter draws water from the first-ever installed Heli-Hydrant to quickly stop the Blue Ridge Fire in Yorba Linda, California, on October 28, 2020.

Yorba Linda Water District

There are three key components to making water systems more resilient, Pierce said: increasing water supply, improving local infrastructure, and bolstering power.

After a 2008 fire that destroyed 280 homes, Yorba Linda Water District in California addressed all three. It added backup generators at water pump stations that had failed during the fire, added a long-planned underground reservoir, and installed a first-of-its-kind water tank called a Heli-Hydrant.

That $70,000 tank can automatically refill itself and is reserved for helicopters to dip from, reducing the length of flight times between water pickups and drops. It was used to quickly stop the Blue Ridge Fire in 2020.

“Cal Fire was able to jump on it and use our Heli-Hydrant, trigger it and keep the fire to five acres,” said John DeCriscio, who was operations manager at the Yorba Linda Water District at the time. “That was a huge success.”

San Francisco implemented a comprehensive solution after the city was almost completely destroyed in the 1906 earthquake and resulting fire, which also caused most hydrants to run dry. 

In 1913, the city developed a unique fire-suppression water system separate from the rest of the city’s water. Seawater enters the system from 52 suction connections along the waterfront, and it’s pumped in from fireboats and two high-pressure pumping stations. There are more than 200 underground cisterns to store backup water. A high-elevation reservoir and two large-capacity tanks use gravity, not pumps, to feed special high-pressure emergency hydrants that can be seen around the city with black, red and blue tops.

There are other solutions that cities can implement.

A company called Rain is working on autonomous, unmanned aircraft for dropping water on fires. In Japan, an autonomous system of water cannons protects a cultural heritage site with 200-year-old thatched roof houses.

Cost is the main reason these solutions haven’t been implemented widely. 

“There’s always this delicate balance of being afraid to go to your customers and raise their rates, but if you don’t raise their rates, you can’t do these extra things,” said Marcus, the former state water board chair. “It’s the kind of thing that keeps you up at night when you manage one of these agencies.”

How firefighting planes and helicopters are battling the LA Fires

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Instagram tests Reels pause feature as TikTok remains in limbo

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Instagram tests Reels pause feature as TikTok remains in limbo

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Meta is testing a long-awaited pause feature on Instagram Reels that will allow users to start and stop videos with just one tap.

The new feature is the latest sign that Meta is looking to capitalize on TikTok’s uncertain future in the U.S. after it briefly went dark earlier this month. The popular short-form video app, which is owned by the Chinese company ByteDance, could be banned for good on April 5 and is still unavailable on the Apple and Google app stores.

The pause feature is currently available to a small group of users around the globe, Meta said. The company was unable to specify when it will roll out more broadly.

Previously, Instagram users have only been able to pause videos on Instagram Reels by tapping and holding on their screen, requiring more work than simply tapping the screen to pause on TikTok. Previously, one tap on Instagram Reels would mute a video’s audio, but the video would continue to play. On Thursday, CNBC was able to pause Instagram Reels videos with a single tap.

Thousands of users have left comments and taken to other social media to lobby for a Reels pause button.

“Hello @instagram, can I please request a pause button on reels?? sincerely, a grieving former TikTok scroller,” one user posted on social media site X while TikTok was offline for a few hours in the U.S. earlier this month.

Besides the Reels pause button, Meta this month has announced a new video editing app called Edits that will compete directly with ByteDance’s CapCut editing app. Edits will launch in February, Instagram chief Adam Mosseri said in a post.

Meta is also paying creators to promote Instagram on TikTok, Snapchat, YouTube Shorts and other short-form video platforms, CNBC reported Sunday.

Shares of Meta are up slightly on Thursday, a day after the company reported fourth-quarter earnings that beat analysts’ estimates on the top and bottom lines.

“We’re going to learn what’s going to happen with TikTok, and regardless of that, I expect Reels on Instagram and Facebook to continue growing,” Meta CEO Mark Zuckerberg said on a call with analysts Wednesday.

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Apple’s gross margin hits record as services business keeps growing

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Apple's gross margin hits record as services business keeps growing

Omar Marques | Lightrocket | Getty Images

Apple is struggling to squeeze growth out of its flagship iPhone unit, but its profit margin keeps going up thanks to a flourishing services business.

In its fiscal first-quarter earnings report on Thursday, Apple reported a gross margin — the profit left after accounting for the cost of goods sold — of 46.9%. That’s the highest on record, surpassing the 46.6% margin the company record in the period ending March 2024.

For Apple, services includes App Store purchases, advertising, payments, AppleCare support and other subscription offerings. The growth in those products has offset a slowdown in sales of the iPhone and a saturation in the global smartphone market.

The “services business in general in aggregate is accretive to the overall company margin,” Apple CFO Kevan Parekh said on the earnings call after the report.

In the current quarter, Apple said its gross margin will be between 46.5% and 47.5%.

IPhone sales slipped almost 1% in the latest quarter from a year earlier, as the company reported weakness in Greater China. Total revenue rose almost 4% to $124.3 billion.

Services revenue rose about 4% to $26.34 billion, beating analysts’ estimates. The business now accounts for roughly 21% of Apple’s overall revenue. Last quarter, Apple announced that its services unit had turned into a $100 billion a year business.

“We were thrilled to bring customers our best-ever lineup of products and services during the holiday season,” CEO Tim Cook said in the press release.

Cook’s emphasis on services has transformed Wall Street’s view of a company that’s been defined over the decades by its iconic devices. For many years in the iPhone era, Apple’s gross margin would predictably come in at between 38% and 39%, reflecting the company’s tight grip over its supply chain and its pricing power in the market.

But with iPhone growth slowing in recent years, Apple’s move into services has changed the equation. The company hit a 40% gross margin in 2021 and has continued to expand it.

Because of Wall Street’s love of profit, Apple’s been able to keep delivering for investors. The stock rose 31% last year, outperforming the Nasdaq, and the company’s market cap has climbed to $3.6 trillion.

“We believe Apple deserves to trade at premiums to its historical comparable valuation, as it sets itself further apart as a provider of premium electronic consumer devices and high-margined digital services, and notably as the age of on-device generative AI gets underway,” analysts at Argus wrote in a report earlier this month. They recommend buying the stock.

Apple shares rose more than 3% in extended trading after Thursday’s report.

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OpenAI in talks to raise funding that would value AI startup at up to $340 billion

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OpenAI in talks to raise funding that would value AI startup at up to 0 billion

OpenAI CEO Sam Altman speaks next to SoftBank CEO Masayoshi Son after U.S. President Donald Trump delivered remarks on AI infrastructure at the Roosevelt Room in the White House in Washington on Jan. 21, 2025.

Carlos Barria | Reuters

OpenAI is in talks to raise up to $40 billion in a funding round that would lift the artificial intelligence company’s valuation to as high as $340 billion, CNBC has confirmed.

Masayoshi Son’s SoftBank would lead the round, contributing between $15 billion and 25 billion, according to two people familiar with the negotiations who asked not to be named because the talks are ongoing. SoftBank would surpass Microsoft as OpenAI’s top backer.

The Wall Street Journal was first to report on the talks.

Part of the funding may be used for OpenAI’s commitment to Stargate, a joint venture between SoftBank, OpenAI and Oracle that was introduced by President Donald Trump last week, the sources said. The plan calls for billions of dollars to be invested in U.S. AI infrastructure.

OpenAI was last valued at $157 billion by private investors. In late 2022, the company launched its ChatGPT chatbot and kicked off the boom in generative AI. OpenAI closed its latest $6.6 billion round in October, gearing up to aggressively compete with Elon Musk’s xAI, as well as Microsoft, Google, Amazon and Anthropic.

Meanwhile, Chinese startup lab DeepSeek is blowing up in the U.S, presenting fresh competition to OpenAI. DeepSeek saw its app soar to the top of Apple’s App Store rankings this week and roiled U.S. markets on reports that its powerful model was trained at a fraction of the cost of U.S. competitors.

At an event in Washington, D.C., on Thursday hosted by OpenAI, CEO Sam Altman said DeepSeek is “clearly a great model.”

“This is a reminder of the level of competition and the need for democratic Al to win,” he said. He said it also points to the “level of interest in reasoning, the level of interest in open source.”

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OpenAI in talks to raise up to $40 billion in funding round, potentially raising valuation to $340B

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