Uncover Tech Insights - October 2-6
Weekly market stock moves
Most impactful news of the week
Next month, Microsoft is set to introduce its first artificial intelligence (AI) chip at its annual developers' conference, according to a source with direct knowledge of the matter. This marks the culmination of years of effort and could reduce Microsoft's dependence on Nvidia-designed AI chips, which have been in high demand and short supply. Microsoft's chip is designed for data center servers that train and run large language models, such as the software underpinning conversational AI features like OpenAI's ChatGPT.
Amazon has taken a significant step toward its satellite-internet venture, which could become a competitor to SpaceX and other similar projects. On Friday, two prototype Amazon satellites were successfully launched into orbit via a rocket from a Florida launchpad. This mission aims to demonstrate the satellite's performance in space while testing various systems. Amazon unveiled its satellite network plan, Project Kuiper, in 2019, with a commitment to invest $10 billion in its development. The company has received regulatory approval to deploy over 3,200 satellites gradually.
During the Made by Google event, Google unveiled Assistant with Bard, an AI-enhanced assistant that leverages generative AI to provide personalized assistance to users. This new assistant is capable of helping with tasks such as trip planning, email inbox searches, and grocery list creation. It integrates with existing Google apps like Gmail and Docs to assist in finding and summarizing information. Users can interact with the tool through text, voice, or images, and it retains key features of Assistant, such as sending text messages.
Three months ago, Threads, Meta Platforms' response to Twitter, enjoyed immense popularity, with 100 million users signing up within days. However, usage has sharply declined since then, leading Meta employees to seek ways to rekindle interest in the app. A key focus is encouraging creators to post more frequently to enhance the content that could retain users. In the coming month, Instagram, the creator of Threads, will conduct multiple focus groups with creators to gather insights on how to make the app more appealing. Instagram's partnerships department, responsible for non-advertising deals with media entities and creators, is working towards onboarding new creators to Threads and retaining existing ones.
In an effort to address European Union rules that may limit its ability to deliver personalized ads without user consent, Meta Platforms has proposed monthly subscription fees of nearly $14 for Instagram and nearly $17 for Instagram plus Facebook on desktop, excluding ads. The company aims to charge European users who decline to permit their digital activity for ad targeting purposes. Meta presented this proposal to privacy regulators in Ireland and digital-competition regulators in Brussels during meetings in September. The plan has also been shared with other EU privacy regulators for their input. This move reflects Meta's strategy to navigate evolving EU regulations while preserving its primary revenue source.
Microsoft is reportedly aiming to finalize its proposed $68.7 billion acquisition of Activision Blizzard next week, with October 13th targeted as the potential closing date. However, the actual closing date still depends on the UK's Competition and Markets Authority (CMA), which previously blocked Microsoft's deal. Microsoft restructured the deal to transfer cloud gaming rights for existing and new Activision Blizzard games to Ubisoft, which garnered preliminary approval from the CMA in late September. Once the CMA's concerns are addressed, Microsoft can officially announce the acquisition's completion.
Tesla produced 430,488 vehicles in the third quarter of 2023, marking a 10% decrease from the previous quarter. However, this figure represents a 25% year-over-year increase for the company. Tesla attributed the sequential drop in production to planned downtimes for factory upgrades. CEO Elon Musk explained during an earnings call that these "summer shutdowns" were necessary for implementing product upgrades, including the refreshed Model 3 and Model Y recently introduced in the Chinese market.
ByteDance, the parent company of TikTok, is planning to purchase at least $300 million worth of stock from current and former U.S. employees. This buyback deal values the privately-held company at $223.5 billion, marking a 26% decrease from a similar offer made a year ago. Current and former employees interested in selling their shares must notify the company by the end of October. ByteDance is offering to buy shares from current employees with less than two years of tenure at a rate of $160 per share, resulting in the $223.5 billion overall valuation. Former employees who were laid off also qualify for this valuation.
Google altered its advertising auction formula in 2017, resulting in a 15% increase in prices and likely generating billions of dollars in additional revenue, according to an economist testifying on behalf of the US Justice Department in the antitrust case against the company. Michael Whinston, an MIT economics professor, revealed that Google adjusted its approach to selling text ads under "Project Momiji" with the aim of raising prices for the highest bidders. Search ads account for over 60% of Google's total revenue, surpassing $100 billion in 2020. The company has consistently experienced double-digit search ad revenue growth since 2012.
An early-stage startup backed by Bill Gates's private office is launching a chatbot called Pix. This chatbot offers personalized recommendations for books, movies, TV shows, and podcasts. Pix runs on OpenAI's natural language processing technology and will learn users' preferences over time. The service will be offered to users for free. The startup plans to leverage its 600 million consumer data points to differentiate its media recommendation platform from existing one-size-fits-all chatbots. Unlike recommendation software within streaming services, Pix will suggest content across platforms to users who interact with it through text, email, or its app.
Adobe is set to unveil a new AI-powered photo editing tool at the Adobe Max event. This tool, known as the "object-aware editing engine" or Project Stardust, can automatically identify individual objects in regular photographs, making it easier to manipulate and edit them without prior editing experience. While similar to Google's Magic Editor, Adobe's offering is expected to be more powerful. The tool can automatically select objects in an image, making it easier to move and change them as if they had been separated using traditional editing tools like Photoshop's lasso tool. This innovation could simplify photo editing for a broader audience.
Principal at a Large Digital Agency shares his view on Meta , Google and the performance they are seeing right now:
Meta has been outperforming in the last two quarters. There are multiple reasons for this:
Advertisers are getting more data/visibility back with SKAN 4.0. giving back visibility from 7-day to 28-day look-back.
Advertisers are moving from brand to performance advertising
Reels has gained a lot of content in the last few months, and TikTok spending has slowed because of brand-safe concerns, Reels profiting from it.
In the expert's opinion, Reels still has 18 months to become more ubiquitous and fully grow out.
Click-to-message is giving advertisers the ability to retarget that customer, which is very valuable.
In the expert's opinion, click-to-message can become a big point of differentiation for Meta to expand its power and position.
Former Microsoft CTO shares his view on the company and the cloud industry in general:
The expert thinks Microsoft could do a better job at integrating and supporting the third-party ISV (independent software vendor) ecosystem. Microsoft instead pushes their own first-party products, which the expert thinks could be a double-edged sword. He believes Amazon AWS has the cleanest model for partners.
When the expert was running the ISV team, the volume of ISVs that had their first market offering in Azure was less than 2%. Even those that were the vast majority were because their clients didn’t want to be at AWS or GCP because they were a competitor.
The expert thinks most enterprise customers are multi-cloud/hybrid. They don’t want to 100% at one cloud provider because they are worried about vendor lock-in and what it means for pricing, performance stability, etc.
In the expert’s opinion, Microsoft has never been that good at digital native companies vs AWS or Google.
Snowflake and many other data management/consumption companies are at risk because of hyperscalers moving into their turf. Microsoft Fabric is one example of a possible threat for Snowflake.
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Source: the expert interviews are found on Alphasense, a platform specialized for expert interviews and other investment data.
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