The Art of the Zuck Memo
Meta's Q2 2024 • Microsoft's Q4 2024 • Amazon's NYT AI Payment • SF is Back Again • Remember the Metaverse?
Mark Zuckerberg's 'Personal Superintelligence' memo is something else. Less in what it says and more in how it says it. Personally, I found it fairly rife for ridicule. But if you're looking for more serious breakdowns, might I suggest Om Malik who puts this memo in the historical context of Zuck's previous pivots/memos. Or Jim Prosser who coins this genre of memo 'vibe writing', which I appreciate.
📝 A Personal Read of 'Personal Superintelligence'
Ahead of Meta earnings and with mega offers being turned down, Mark Zuckerberg aims to change the conversation around AI...
• Written on an M4 MacBook Air 💻
• Sent from London, England 🏴 Notebook
📈 Meta's Mega Q2
So much for the skepticism around Meta's growth. The company crushed analyst projections across the board which in turn has sent the stock soaring in after-hours trading – up 12% right now. It could very well surpass $2T market cap for the first time today. That $200B instant jump in value puts the 'Godfather' offers to AI talent into perspective. And all of this gives Zuck the leeway he needs (well, doesn't need since he fully controls the company, but still...) to be as aggressive as possible to get back into the AI race. And he can call his flavor of AI whatever he wants. His main selling points to Wall Street right now: AI is helping their ad business and also leading to more time spent in their various apps. While they raised the low end of their CapEx spend this year, the high-end remained at $72B. But they signaled that next year could surpass $100B. [Techmeme]
📈 Microsoft's Mighty Q4
Well, they're not Meta, as their stock is surging a "mere" 8% in after hours. But that should be more than enough for Microsoft to open as the second company ever to hit the $4T valuation mark, following NVIDIA earlier this month. That's two Metas. Microsoft broke out Azure revenue for the first time: $75B for the year and they're saying AI is actually accelerating the growth rate at this scale. To keep that going, Microsoft is now expecting to spend $120B on CapEx next year. This year (this quarter was the end of their fiscal year), Satya Nadella was indeed "good for" his $80B – coming in just over $88B. For context, in 2023, Microsoft's CapEx spend was $32B. Who needs a consumer AI business? Amazingly, OpenAI was only mentioned four times – all at once in Nadella's opening remarks – on the earnings call. Zero questions about the ongoing dynamics in that relationship. As for those layoffs, Microsoft's headcount ended up flat for the year. [Techmeme]
📰 Amazon's AI Payments to NYT
When the two sides reached an agreement in May, I noted that the amount being paid would undoubtedly leak out soon, and now it has: $20M - $25M a year. That's clearly meaningful to the NYT – their profit last year was just under $300M. Amazon, meanwhile, makes north of $150M in profit – every single day. Sadly, this likely sets a ceiling for what publishers will get paid for access to their data and given the NYT's prominence, no one else is likely to come close to this amount. These one-off deals aren't scalable anyway, everyone needs a better, sustainable model here. I also worry if this starts to splinter information sources into individual AI models/products that strikes deals. If you want the latest from NYT, you have to ask Alexa, if you want WSJ, you ask ChatGPT, etc. That would be a bad experience for everyone. In such a world, Google may remain the winner! [WSJ 🔒]
I Quote…
"When you want to make a movie, you go to Los Angeles. When you want to build a business in AI, you come to San Francisco."
– Anand Doshi, an entrepreneur, conveying the feeling that to build in AI, you need to be in SF. As expected, after being written off for dead, SF is coming back around. Before it's declared dead again in a few years. Only to be reborn again after that.
Loose Leaf
Perhaps on the news of Anthropic's new fundraise (and OpenAI completing their own previously announced $40B mega raise), word of OpenAI's updated metrics are trickling out: $12B in ARR (double where it was to start the year), with 700M WAUs (up from 500M in March). [Information 🔒]
They keep coming up with new ways to spend that money though. Following 'Stargate UAE' and well, 'Stargate' itself – sort of! – behold: 'Stargate Norway'! [Bloomberg 🔒]
Google says it will sign the EU's AI "code of practice" (tied to their undoubtedly overbearing AI Act), but clearly seems to be playing nice in the hopes of altering it. Microsoft says it will "likely" sign it, but undoubtedly wants to alter it too. Meta is a "no way", which is zero surprise. [FT 🔒]
xAI will also sign it – well, at least one part around safety. Perhaps not the others which are "profoundly detrimental to innovation and its copyright provisions are clearly over-reach". [Reuters]
They took their sweet time – gotta drag such things out as long as possible – but Apple has officially filed a response to the DoJ antitrust complaint. Unlike some of the other Big Tech cases, this one does feel pretty flimsy... [9to5Mac]
Key nugget: "This lawsuit seeks to attack a random collection of Apple’s design choices, degrade the privacy and security benefits of iPhone that customers value, and eliminate the competitive differentiation and consumer choice that currently exist in the marketplace." [9to5Mac]
Surge AI's first round of funding would set a valuation of "at least $25B" – take that, Safe Superintelligence and Thinking Machine Lab. Of course, Surge AI has an actual product in market and, in fact, is said to have done $1.2B in revenue in 2024 – Scale AI, just valued at $29B in Zuck Bucks, did $870M. And Surge is profitable. [Bloomberg 🔒]
A forthcoming "smart mode" or "magic mode" within Microsoft's Copilot service may hint at the impending GPT-5 launch. (And may point to ChatGPT offering something similar to finally clean up their UX/UI.) [Verge]
With royalty/licensing revenue slowing, ARM all-but confirms that they're going to start designing their own chips as well since many now made with partners are "mostly ARM IP". [FT 🔒]
The cast for The Social Network Part II (probably not the name) is starting to come into focus with Jeremy Allen White and Mikey Madison being circling for 'Facebook Files' reporter Jeff Horwitz and whistleblower Frances Haugen, respectively. It will apparently have a vibe like Michael Mann's The Insider... Still no word on Jesse Eisenberg back as Zuck... [THR]
I Spy...
Clearly Wall Street doesn't have the same issues/concerns around AI spend as they did with Meta's metaverse spend – which has transitioned into Reality Labs spend and is still very much burning that hole in Zuck's pocket. The division lost another $4.5B for the quarter. Matthew Ball puts the cumulative losses at $88.6B now – and notes they may surpass $100B lost in total this quarter.
That's a nice parallel to the $100B projection to be spent on CapEx next year and puts the number in some perspective. But does all that AI spend get us this?
