 | Oct 03, 2024 | | | | Supported by  | | | | | Happy Thursday! OpenAI has completed its $6.6 billion fundraising round. A judge says the U.S. Federal Trade Commission can move forward with its antitrust claims against Amazon. OpenAI plans to allow employees to sell some of their stakes in the startup.
| | | | OpenAI has completed a $6.6 billion fundraise that values the ChatGPT developer at $157 billion, including the investment, the company announced in a blog post on Wednesday. The announcement comes after several weeks of reports the company was in talks with investors including Thrive Capital, which led the round, SoftBank's Vision Fund, Microsoft, Coatue Management and others. The completion of the massive funding round means OpenAI can now pursue a tender offer that will give employees the opportunity to sell shares, chief financial officer Sarah Friar wrote in a message to employees today. The company aims to generate more than $11 billion next year, or triple the amount it may generate this year, and more than $25 billion in 2026, The Information reported on Wednesday. | | | | The U.S. Federal Trade Commission can move forward with its antitrust claims against Amazon, a judge ruled this week, according to a person who has seen the sealed court decision. But the judge dismissed some claims brought by state attorneys general relating to alleged state law violations, the person said. Eighteen states and Puerto Rico are suing Amazon alongside the FTC, which first filed its complaint in September 2023. The core of the case are allegations that Amazon breached federal antitrust laws by illegally raising prices for shoppers and stifling competition. An Amazon spokesperson declined to comment for this story but referred to a previous statement from the company's general counsel and public policy chief David Zapolsky, who said the FTC's case "is deeply flawed as it challenges practices that are procompetitive, good for consumers and common across retail." Details of the judge's decision were first reported by the Washington Post. An unsealed version of the decision will not be made public for weeks. | | | | OpenAI told employees Wednesday it plans to allow them to sell some of their stakes in the startup through a tender offer, following its $6.6 billion fundraising haul and a planned conversion to a for-profit from its current nonprofit structure. The funding round "means that we have the ability to offer a tender event to give qualifying employees a liquidity option," chief financial officer Sarah Friar wrote in a message to employees. Friar added that the company was still working through details but would share timing and specifics as soon as it could. Friar has told some shareholders that after the company's for-profit conversion, the company itself—rather than outside investors—aimed to purchase the employee stakes. The size of the upcoming tender offer couldn't be learned, but employees and ex-employees have already sold more than $1.2 billion worth of shares, known profit units, in the past few years. OpenAI allowed some current and former employees to cash out in a tender offer valuing the company at $86 billion earlier this year, based on a deal it struck with investors in late 2023. The most recent round nearly doubled that valuation to $157 billion, Friar said. | | | | Amazon plans to increase the number of ads it shows to viewers on Prime Video next year, according to the Financial Times. In an interview with the outlet, Kelly Day, vice president of Prime Video International, said the number of ads on Prime Video will "ramp up a little bit more" next year. Amazon initially introduced ads across Prime Video programming, including movies and TV shows, in January. Viewers who still want an ad-free viewing experience (excluding live sports such as the NFL's "Thursday Night Football," which still carry commercial breaks for all Prime Video viewers) had to pay an additional $3 per month in the U.S. The strategy seems to have worked. In the U.S., Amazon exceeded its goal of $1.8 billion in upcoming ad-spending commitments during the TV upfronts, as The Information has previously reported. And in her comments to the FT, Kelly Day, the Amazon executive, suggested that less than 20% of Prime Video customers are paying up for an ad-free experience. | | | | Tome, a startup whose product uses generative artificial intelligence to quickly generate visual presentations, has laid off nearly a third of its 39 employees, the second round of cuts this year, according to a copy of the announcement. It's one of a handful of generative AI startups, including Stability AI and Jasper, that got a lot of funding before their growth hit a wall. Tome's product, which uses models from OpenAI and Anthropic, as well as Stable Diffusion, took off around the same time as ChatGPT, and by early 2023 it had raised $81 million from investors including Coatue Management and Greylock Partners, who valued the startup at $300 million. But Tome quickly faced competition from numerous startups and bigger firms such as Microsoft, including free products that perform similar tasks as Tome. Tome's leaders realized that the company's initial target customers—individuals including startup founders and freelancers—were less likely to pay for its product compared to corporate customers whose salespeople and marketers make new presentations daily, former and current employees have said. In April, the company pivoted to focus on salespeople as customers. The latest cuts show that appealing to those customers may not be easy, either, given the growing array of alternatives. "We're resetting the company," CEO Keith Peiris said in a statement to The Information. "Many of us joined to build a next generation presentation product. Through hundreds of customer calls, we've learned there's a much bigger opportunity in building AI powered tools for businesses to find and reach customers." | | | | A federal court in California blocked a new state law that would prohibit some artificial intelligence-generated digital replicas of political candidates on Wednesday. U.S. District Court Judge John Mendez ruled that the law is unconstitutional because it "does not use the least restrictive means available" for protecting elections. Gov. Gavin Newsom signed the law, AB 2839, onstage Oracle's Dreamforce event in San Francisco last month, one of 18 pieces of AI legislation he signed last month. The same day, Christopher Kohls, who makes political parody videos on YouTube under the name "Mister Reagan," filed a lawsuit against California's attorney general and secretary of state. Kohls has been associated with the bill since Elon Musk shared one of Kohls' videos on X in July, and Newsom posted, "Manipulating a voice in an 'ad' like this one should be illegal. I'll be signing a bill in a matter of weeks to make sure it is." Kohls has argued that the law violates the First Amendment right to free speech and violates the Fourteenth Amendment by being too vague. The state has countered that the law was not vague and it carved out protections for parodies. Mendez' decision means California cannot enforce the law until the lawsuit has resolved. One narrow part of the law was not blocked: a section requiring candidates to disclose that "this audio has been manipulated" in audio that depicts the candidate saying something they did not say. Mendez said that provision is "on its face reasonable and not unduly burdensome." | | | | The European Commission on Wednesday asked YouTube, Snapchat and TikTok to provide information about how their apps recommend content to people and how those algorithmic decisions might impact people's mental health or increase other safety risks. The newly passed Digital Services Act, which aims to regulate the biggest content providers, requires those companies "assess and adequately mitigate risks stemming from their recommender systems, including risks for the mental health of users and the dissemination of harmful content arising from the engagement-based design of these algorithms," the commission said in a blog post. The EC, which manages laws such as the DSA, also said it asked for information on how the social apps amplify risks to the electoral process and civic discourse. The commission additionally asked TikTok to provide more information on measures it has taken to avoid being manipulated by "malicious actors," though it didn't elaborate. The U.S. passed a law this year to force TikTok's Chinese parent company ByteDance to sell the app's U.S. operations over fears the Chinese government—which owns a piece of ByteDance and holds a seat on the board of its most important unit—might unduly influence or compromise Americans' data privacy or how they view videos on politically sensitive topics. | | | | CRV, a 54-year-old firm known for early bets on Ring, DoorDash and Twitter, says it's planning to return $275 million of a $500 million fund, raised two years ago, focused on later stage startups. It made the decision after struggling to find enough investments in these companies at the valuations it wanted, partner Saar Gur said. It will continue to invest from its $1 billion main fund focused on young startups. The unusual move to return cash to its backers follows a rollercoaster period for VC fundraising. VC funds absorbed record levels of cash in 2022 as investors, looking for yield with interest rates near zero, pursued private tech investments. After rates rose, pummeling tech stocks, VC fundraising dropped nearly 60% last year. Although valuations for mature startups have fallen off their highs, there's stiff competition for those showing strong growth rates, reducing the opportunities for the fund to hit the returns it seeks. "The private markets continue to value a lot of these companies very highly," Gur said. While returning cash is rare among VC firms, there's some precedence—including from CRV, which in 2002 handed back $750 million of a $1.2 billion fund raised in 2000, at the dot-com peak. | | | | | Popular articles By Stephanie Palazzolo, Erin Woo and Amir Efrati
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