Good morning. Like Dikembe Mutombo in the paint, California Gov. Gavin Newsom has vetoed the divisive state bill that aimed to hold developers of large-scale AI models accountable for harm to public safety.
The debate over SB 1047 was an age-old one: regulation vs. innovation. Newsom, not one to shy away from signing a new law, felt this bill risked harming the public good more than helping it. Back to the drawing board, I guess.
Did Newsom do the right thing? Reply and share your take. More news below. —Andrew Nusca
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Love (of profits) will tear us apart
The OpenAI headlines continue to roll in the wake of three executives’ abrupt departures last week.
In the New York Times, company financial documents obtained by the paper indicate OpenAI is “burning through piles of money.” Offsetting $3.7 billion in annual revenue—very nice—is a $5 billion loss, excluding equity payouts.
The ChatGPT-maker has been fundraising at a reported $150 billion valuation. It expects to wrap things up this week—reportedly without Apple in the mix.
Meanwhile the Wall Street Journal steps back to tally the total departures in 2024—20 to date, “including several cofounders”—and surface complaints of a staff divided.
According to the report, issues remain with OpenAI’s avowed pivot from nonprofit research lab to for-profit category leader. There are tensions related to executive drama—hardly a surprise given the aggressively revolving door in the leadership suite.
And then there are the expected complaints of a rapidly growing company (it has hired nearly 1,000 of its 1,700 employees in the last year) taking a more aggressive commercial tack: detached CEO, rushed product announcements, corrupted culture.
Can OpenAI change its ways and take a different road? Investors agree: clock’s ticking. —AN
Making hit movies is hard
Apple is having second thoughts about going Hollywood.
The tech giant is reportedly rolling back a plan to widely release films in theaters after several of its movies bombed at the box office.
Two big budget productions—Killers of the Flower Moon, about the murder of the Osage people, and Argylle, a spy action comedy film produced by Matthew Vaughn—failed to come close to breaking even.
Now Apple has canceled plans to premiere its new action comedy, Wolfs, in thousands of theaters, according to Bloomberg. Instead the movie will get a more limited release before it’s added to the Apple TV+ streaming service.
Other titles in the pipeline will get similar treatment.
Apple’s new strategy is to give only a dozen movies, most costing less than $100 million to produce, a splashy cinematic debut, according to the report.
While the iPhone maker plans to still spend about the same $1 billion overall on producing movies each year, more films will go straight to streaming.
The small screen wins again. —Jessica Mathews
Welp, Meta was fined again
Meta has been hit with a €91 million ($102 million) privacy fine in Europe.
This one’s for the time Facebook’s parent company admitted back in 2019 that it had accidentally stored hundreds of millions of user passwords in plaintext, which is…inadvisable.
Meta says there was no improper access, but the incident nonetheless counted as a security breach under EU law. The General Data Protection Regulation requires encryption for data as sensitive as this.
Meta also broke the law by failing to notify regulators of its discovery within the required 72-hour timeframe.
The fine is fatter than the €17 million Meta had to pay over a 2018 security breach, but this is a company that had to pay a €1.2 billion GDPR fine not so long ago—and that could theoretically be fined over $5 billion under that law for a particularly egregious violation.
So Zuck will survive. —David Meyer
Amazon notches an antitrust win
Amazon has one less antitrust headache to worry about.
The U.K.’s competition regulator has decided against a deeper probe of the e-commerce giant’s $4 billion investment in AI startup Anthropic. That deal, announced in March, did not qualify for investigation under merger rules, the regulator said.
That sound you hear? A sigh of relief at Amazon HQ in Seattle. The company is already facing an antitrust lawsuit from the U.S Federal Trade Commission, filed last year, for allegedly abusing its dominance in online retailing.
In terms of scrutiny of investments in AI startups, Amazon isn’t alone. Regulators on both sides of the Atlantic are looking into the growing phenomenon that cuts across all of Big Tech.
The British competition authority, for example, previously cleared Microsoft’s $650 million deal with Inflection AI while the U.S. Federal Trade Commission is still investigating.
As always, the lawyers win no matter what happens. —Jenn Brice
Intel has nearly secured $8.5b in funding
Nothing like a billion-dollar check, amirite?
Silicon Valley’s most famous semiconductor company is reportedly on track to finalize $8.5 billion in direct funding, plus $11 billion in loans, from the U.S. government by the end of the year.
The cash would be the largest subsidy awarded under the Chips and Science Act, which aims to boost domestic chip manufacturing at Asia’s expense. Preliminary terms were announced in March…back when Intel shares were trading at almost twice the price.
Intel, of course, has been slashing costs to fend off suitors friendly (Qualcomm?) and not (Arm?) in a bid to regroup after overextending itself in pricey chipmaking pursuits.
Intel would be wise to not disrupt the deal. President Biden publicly touted the support in March and we’re mere weeks away from Election Day. And who would want to mess with that? —AN
More data
—AI startups make money, it turns out. A kernel of truth in those lofty valuations?
—Amazon's ad business is big. 2025 streaming sales begin with a “b.”
—SpaceX's Starlink is a helluva business. A new level of vertical integration.
—Cybersurveillance diplomacy is hard. What’s Russian for “pick your poison”?
—Neo-Nazis are using AI to make English-language Hitler videos. Not great, Bob! —AN
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