Tech Brew Ride Home - (Omnibus) Week Of 02/03/2025

Episode Date: February 8, 2025

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On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. So again, what you're about to hear is the experimental omnibus episode. Every segment I did this week in order. The idea is, if you'd rather listen to the show once a week and one binge to catch up with everything while you're walking your dog on Saturday afternoon or something like that, this is that.

It will only be available to subscribers of the premium feed going forward. So if you want this, subscribe over at tech.comcast.com. Yes, if you listen to this whole thing right now, there are ads in it, but obviously on the ad-free feed, there would be none. Just the firehose of segments. Again, if you like this experiment, tell me to keep going with it by subscribing at tech.supercast.com. Here are all the segments from the TechMeme Right Home podcast for the week of February 3, 2025. Over the weekend, OpenAI unveiled deep research an AI agent for creating in-depth reports,

available to $200 per month chat GPT Pro subscribers and limited to 100 queries per month, quoting TechCrunch. Open AI said in a blog post published Sunday that this new capability was designed for people who do intensive knowledge work in areas like finance, science, policy, and engineering, and need thorough, precise, and reliable research. It can also be useful, the company added, for anyone making purchases that typically require careful research like cars, appliances, and furniture. Basically, chat GPT, deep research is intended for instances where you don't just want a quick answer or summary, but instead need to assiduously consider information for multiple

websites and other sources, end quote. Quoting the verge. Instead of simply generating text, it shows a summary of its process in a sidebar with citations and a summary showing the process used for reference. Users can ask questions using text, images, and additional files like PDFs or spreadsheets to add context, and then it will take anywhere from five to 30 minutes to develop a response provided in the chat window with promises that in the future it will also be able to include embedded images and charts. Open AI also notes limitations for deep research saying it can

sometimes hallucinate and makes up facts, struggle with telling the difference between authoritative info and rumors, and register how certain it should rate a response, end quote. And quoting the Guardian. Open AI said deep research would, was for professionals who work in areas such as finance, science, and engineering, but it can also examine purchases such as cars and furniture. It is based on O3, OpenAI's latest reasoning model, which takes longer to process queries than conventional models, and has yet to be released in full publicly. It comes after OpenAI announced the release on Friday of another derivation of O3, a free slimmed-down version called O3 Mini. Deep research will be available in the U.S.

for users of OpenAI's pro-tier, which costs $200 a month, but at a limit of up to $100,000, queries a month, reflecting the cost of processing every query under the tool. It is not available in the UK and Europe, end quote. You may have heard a little something about tariffs over the weekend, and in the flurry of executive orders and whatnot, I've found a tech angle. President Trump's recent executive order for levies on China says the de minimis exemption for items under $800 no longer applies, which would seriously affect Alibaba, JD.com, Shian, Temu, and others, because that loophole was sort of their main advantage. Quoting Bloomberg, Trump's executive orders directing 25% levies on Canada and Mexico, plus a 10% duty on China, specified that the de minimis

exemption for small packages no longer applies. Under the exemption, products below that dollar amount are able to enter the U.S. without tariffs, a boon for China's e-commerce retailer, who often ship cheaper wares directly to consumers in the U.S. Washington is taking aim at a loophole that retailers from PDD Holdings, Temu, to fashion-focused Shian have exploited for years to expand rapidly in the U.S. That's given Chinese-linked e-commerce companies, which grew by hawking smaller packages in much higher volumes to consumers, huge advantages over market incumbents such as Amazon. Critics say the flood of parcels from China is hard to monitor and may contain illegal or dangerous goods.

Trump's decision, while earlier than some analysts expected, had been largely anticipated by Temu and Sheehan, since last year they've begun diversifying their logistics chains, expanding networks in the U.S. and moving to bigger bulk orders. Still, a formal closure is expected to hit a fast-growing market segment. Tamu U.S. accounts for a low teen percentage of PDD's revenue. Jeffries has estimated Alibaba Group holding and JD.com have thriving U.S. businesses, and it raises questions about Sheehan's highly anticipated. initial public offering, a mega debut investors expect to take place as soon as this year, end

quote. But it's not just from that angle that they're facing new headwinds. Sources say the EU Commission and four member nations are planning a probe into Sheehan specifically over illegal products, opening the fast fashion marketplace up to potential fines, quoting a different Bloomberg piece. The Chinese-founded massive online marketplace, Shian faces potential fines with the European Union imminently set to open a probe into its compliance with consumer laws over the sale of illegal products. The Block's executive branch, the European Commission, will lead national consumer protection regulators in a coordinated action against the fast-fashioned marketplace, according to two people familiar with the matter, who were granted anonymity to discuss confidential plans.

The Commission is increasingly relying on a mechanism known as the Consumer Protection Cooperation Network, which aims to marshal national authorities to form a unified front against large online platforms suspected of breaching consumer protection rules. Chinese-owned e-commerce service Temu and Apple also faced similar actions in November for potential violations. Companies found do have broken the law can be hit by fines by national regulators in individual EU member states, end quote. I continue to be fascinated by Tether. They recently reported that they had $13 billion in net profits in 2024, including around $7 billion from its U.S. treasuries and repo holdings,

and $5 billion from unrealized appreciation of gold and Bitcoin holdings. But they're just the largest face of a whole movement. As TechCrunch points out, stablecoins are becoming a core part of financial infrastructure in emerging markets, expanding beyond cross-border payments into consumer finance and more. Quote, five years ago, SpaceX launched Starlink, which has since grown into its biggest revenue driver, expanding to more than 100 countries.

But as Starlink scaled, it faced a major hurdle. accepting payments in developing markets where traditional banking infrastructure is unreliable, slow, and prone to blocking transactions. Many local banks across Africa, Latin America, and Asia struggle with international payments forcing SpaceX to look for alternatives. To bypass these challenges, SpaceX turned to stablecoins, a fast-growing method for cross-border payments already widely used in emerging markets. The company partnered with Bridge, a stablecoin payments platform to accept payments in various currencies and instantly convert them into stablecoins for its global trade. Treasury. This move positioned Bridge as a viable alternative to correspondent banks in markets where traditional financial systems fall short. Soon after, Stripe took notice, acquiring the startup for more than $1 billion, and solidifying Bridges' reputation and driving up its valuation

as an infrastructure player, solving inefficiencies in global finance. The rise of stable coins, now a $205 billion market is driven by real-world utility, not speculation, particularly in emerging markets where the most compelling use cases unfold. Cross-border payments in those regions are typically slow and expensive, involving multiple intermediaries. For example, a textile manufacturer in Brazil, paying a supplier in Nigeria might have to go through several banks and currency exchanges, each adding fees and delays. Stablecoins remove this friction, enabling cheaper near-instant transactions. This growing demand has led to massive transaction volume growth for startups providing stable coin cross-border solutions for businesses in Africa,

emerging markets. Yellow card, which provides a platform that lets users convert Fiat to crypto and back to Fiat, doubled its annual transaction volume to $3 billion in 2024 from $1.5 billion in 2023. Conduit, which enables stablecoin payments for import-export businesses in Africa and Latin America, saw its annualized TPV jump to $10 billion from $5 billion. Lago-based Juicy Way, which facilitates cross-border payments using stable coins, has processed $1.3 billion in total payments volume to date. Investor interest has also surged with top venture firms backing stable coin-powered fintechs targeting these markets. Tether itself invested a sizable check in an African stable coin infra and liquidity provider tech crunch has learned. Meanwhile,

Conduit, which raised a $6 million seed round last year, is finalizing another round with some big-name backers, end quote. Mark German over the weekend said that Apple has canceled another project, this one, a project to build AR glasses that would pair with the Mac. The company is still working on successors to the Vision Pro, apparently, but I kind of thought they might move in the direction of Mac accessory. I guess not. Quoting Bloomberg, Apple has canceled a project to build advanced augmented reality glasses that would pair with its devices, marking the latest setback in its effort to create a headset that appeals to typical consumers. The company shuttered the program this week,

according to people with knowledge of the move, that now canceled product would have looked like normal glasses but include built-in displays and require a connection to a Mac, said the people who asked not to be identified because the work wasn't public. An Apple representative declined to comment. The project had been seen as a potential way forward after the week introduction of the Apple Vision Pro, a $3,499 model that was too cumbersome and pricey to catch on with consumers. The hope was to produce something that everyday users could embrace, but finding the right technology at the right cost has proven to be a challenge. Apple risks losing ground to meta platforms, which already sells a popular set of Rayban smart glasses. Meta is working to create a version that adds augmented

reality, the superimposing of images and data on real-world views, and expects to have a product ready by 2027. That's when Apple had previously intended to sell its device-connected glasses, which were codenamed N-107. The decision to wind down work on the N-107 product followed an attempt to revamp the design, according to the people. The company had initially wanted the glasses to pair with an iPhone, but it ran into problems over how much processing power the headset could provide. It also affected the iPhone's battery life, so the company shifted to an approach that required linking up with a Mac computer, which has faster processors and bigger batteries. But the Mac-connected products performed poorly during reviews with executives and the desired

features continued to change. Members of Apple's Vision Products Group, which worked on the device, grew increasingly concerned that the project was on the rocks. Sure enough, the final word came this week that the effort was over. The Vision Pro remains a technical marvel, even with its slow start. Chief Executive Officer Tim Cook touted the product during an earnings conference call Thursday, saying that more corporate customers are embracing it. But employees in Apple's Vision Products Group or VPG believe there's a lack of focus and clear direction within the team, which is overseen by Mike Rockwell and company hardware chief John Ternis. The N107 retreat is, just the latest failed attempt to make Apple's headset technology successful, they say, and that's

hurting morale. The company is still working on successors to the Vision Pro, including updated versions of the original model. It also has other concepts in the works, such as AirPods with cameras and executives still hope to eventually create a set of standalone AR glasses someday. Apple has made other recent changes. Last week, one of its Vision Pro team's top executives moved to the AI Division. The N107 device had advanced projectors that could display information, images and video in the field of view for each eye similar to augmented reality glasses being developed by meta and others. Despite the project being shuttered, Apple is still working on underlying technologies that could be used in AR glasses down the road, including custom micro-l-ed-type

screens, Bloomberg News reported this week. The Holy Grail for the industry is creating fully standalone glasses with their own screens, processor, and operating system that wouldn't require a smartphone or computer. Last year, meta previewed a prototype glasses called Orion that come close to this design, though they do connect to a wireless puck that handles the computing. Meta expects developers to start buying test units in 2026, helping them create software for the device. The launch of a consumer version codenamed Artemis is planned for 2027. With its AR Glasses Project, Apple had hoped to capitalize on one of the more compelling features of Vision OS, the operating system that runs the Vision Pro, it can link up with a Mac and let people

handle computing tasks in mixed reality. That means the Vision Pro can serve as a giant virtual monitor that feels like it curves around a user. Prototypes of the device were light enough to not require a strap to wrap around a wearer's head, a requirement of the heavier Vision Pro. Apple also removed the front-facing screen on today's Vision Pro that shows a wearer's eyes. Though that technology is one of the more memorable aspects of the current headset, the feature adds cost and weight. But the device did still have some bells and whistles. The company worked on including lenses that could change their tint depending on what a user is doing. The idea was to tell an onlooker if the person is present and approachable or busy working on computing tasks, end quote.

Finally, today the Beatles Now and Then, a new song from the band created using AI and an original 1970s lo-fi demo, won best rock performance at the Grammys last night, quoting the Verge. The Beatles have won their eighth competitive Grammy Award, thanks to a little help from artificial intelligence. The 2023 track Now and Then, which Billboard reports, is the first song knowingly created with AI assistance to earn a Grammy nomination was awarded Best Rock Performance on Sunday, beating out competition from Green Day Pearl Jam, the Black Keys, Idles, and St. Vincent. The track was pieced together using a demo that John Lennon recorded in the late 1970s,

with Paul McCartney, Ringo Starr, and George Harrison, later providing their own contributions in the mid-90s with the aim of including the final song in the Beatles Anthology Project. Now and then wasn't released, however, due to technical limitations at the time, preventing Lenin's vocals, and piano from being separated from the original Lofi demo, end quote. It was director Peter Jackson and his team who developed the AI needed to isolate the various components that allowed for the track to be finally pieced together. On release, Paul McCartney said, quote, to be clear, nothing has been artificially or synthetically created. It's all real, and we all play on it. We cleaned up some existing recordings, a process which has gone on for years,

end quote. If you haven't heard the song, is it any good? Well, quoting Boy Genius Report, objectively, it's not a great song, and it's not a great song because Lenin never finished it in his lifetime. It was just a song fragment. If he was alive today, I just cannot see him being fine with putting the track out in its current form, especially with its kind of boring melody, and in one instance some mind-bogglingly stupid lyrics that I assume were more placeholder lines at the time for Lenin, like, and if you go, I know you'll never stay, which is, as Asinai is saying, if you leave, I know you won't be here. Certainly, Cartney and Starr had the approval to do this from Lenin's widow, Yoko Ono, who handed over the cassette of Lenin's demo by way of officially blessing the project. But her approval is not the same as his, and I haven't even touched on

the fact that the late George Harrison is also present in the song via some of his harmonies that were snatched from an earlier Beatle song and adjusted to fit the new song's key. The Beatles fan and me certainly loves that we have new music from the greatest pop rock group of all time. However, just because that we can resurrect the voice of a dead artist and enjoy it in a way that he or she might not have wanted, doesn't mean we should, end quote. Donald Trump has signed an executive action to direct officials to create a U.S. sovereign wealth fund and says that it could be used to facilitate a sale of TikTok US. Also, we've been waiting for the announcement of some sort of crypto or Bitcoin Reserve 2. This is not that, I believe, but this could be part of that, I guess. Quoting Bloomberg, we have tremendous potential.

Trump told reporters in the Oval Office on Monday as he announced the move, the president said the action would charge Treasury Secretary Scott Besant and Howard Lutnik, the nominee for Commerce Secretary with spearheading the effort. Bessonet, who joined Trump at the Oval Office, said the fund would be created in the next 12 months, calling it an issue of great strategic importance. Trump suggested the fund could be used to facilitate the sale of TikTok, which is currently operating in the U.S. thanks to an extension he signed, prolonging the deadline for a forced sale or shutdown. Lutnik said the U.S. government could leverage its size and scale, given the business it does with companies, citing drug makers as an example.

If we are going to buy two billion COVID vaccines, maybe we should have some warrants and some equity in these companies, he said. The action calls for officials to submit a plan to Trump within 90 days, recommendations for funding, investment strategies, fund, structure, and governance. And it asked for an evaluation of the legal considerations for setting up and running a fund, including whether legislation is required. Trump advisors have previously discussed plans to use the U.S. International Development Finance Corporation to partner with major institutional players to leverage U.S. Economic Powers. Among those driving the conversation about using the DFC, both more like a sovereign fund and as a tool to radically change America's approach to foreign aid are Elon Musk and

Stefan Feinberg, the billionaire co-founder of Ceribus Capital Management, who Trump has nominated as Deputy Defense Secretary, according to people familiar, who were close to the president's transition team before taking office. Trump on Friday said he was nominating Ben Black, the son of Apollo Global Management co-founder Leon Black, to head the DFC. Trump floated the idea of a sovereign wealth fund during an address at the Economic Club of New York during the campaign in September, where he proposed funneling money from tariffs into a wealth fund that could invest in manufacturing hubs, defense and medical research. We will create America's own sovereign wealth fund to invest in great national endeavors for the benefit of all the American people, Trump said at the time and suggested

that the Wall Street and corporate leaders at that event could have a role to play, helping to advise and recommend investments. Sarvean wealth funds generally exist in countries that either have large foreign exchange reserves, such as China, or revenue from the sale of oil or other commodities like Norway and Saudi Arabia. The money is then invested in everything from stocks and bonds to infrastructure and technology. Among the biggest are Norway's $1.8 trillion Norges Bank Investment Management, the $1.3 trillion dollar China Investment Corp, and the $1.1 trillion Abu Dhabi Investment Authority, end quote. The existence of Sarban wealth funds, especially from the Middle East, has completely transformed the higher end of the venture capital business in recent years.

There was a time when only Masa San could throw around tens of billions of dollars at a time, but now there are several. Massa-sized players. there and they've been flexing their investment muscles, especially in this AI era. I did not know this, but 20 U.S. states have state-level sovereign funds, Alaska famously, but most recently, North Dakota launched a $11.5 billion fund in 2010. I don't follow economic news closely enough, but I believe those tariffs for Mexico and Canada are off the table for a while anyway. But as far as I know, no such reprieve has been brought down for China, as I mentioned yesterday vis-a-vis the likes of Sheehan and Temu. And so I guess the trade war will continue a pace there.

China's state administration for market regulation says it will probe Google for antitrust violations moments after Trump announced tariffs on Chinese goods. And a source is telling the Financial Times that China is looking at maybe launching a formal probe into Intel. Quoting Bloomberg first. China retaliated to Donald Trump's opening trade war tariffs by targeting a handful of American companies and slapping levies on some U.S. goods in a move seemingly designed to avoid escalating tensions between the world's biggest economies. Beijing imposed a 15% levy on less than $5 billion of U.S. energy imports and a moderate 10% fee on American oil and agricultural

equipment on Tuesday, moments after new U.S. tariffs entered effect. China said it will also investigate Google for alleged antitrust violations, although Alphabet's search services have been unavailable in the country since 2010. In a more targeted measure, authorities put Calvin Klein owner, PVH Corp, and U.S. Gene Sequencing Company Illumina on a so-called blacklist of entities that could affect their sizable operations in China and impose new export controls on tungsten and other critical metals used in electronic, aviation, and defense industries. President Xi Jinping's response appeared carefully calibrated to avoid major blowback on China's economy, while showing Trump and ability to inflict damage on a range of fronts, including by disrupting the key minerals,

supply chain, and hurting U.S. companies with major operations on the mainland. That restraint, coupled with speculation that Xi may do more to bolster China's economy, led to a relatively muted reaction in markets, particularly as Trump signaled a desire to speak with the Chinese leader before the tariffs took effect. The Chinese tariffs are set to kick in on February 10th, potentially leaving room for negotiation. It looks like a fairly muted retaliation from first glance, said Lin Song, chief economist for Greater China at ING Bank and Hong Kong, noting that energy accounts for a small share of China's imports from the U.S. The measures on U.S. companies, however, can be seen as, quote,

a warning shot to U.S. businesses that depend on China's market, he added, end quote. And quoting the Financial Times. China has revived antitrust investigations into Google and NVIDIA while considering a new probe against Intel as Beijing looks for leverage in talks with U.S. President Donald Trump. Chinese regulators who announced a similar antitrust investigation into NVIDIA in December were also now looking at launching a formal probe of Intel, said to people familiar with the situation. However, the nature of the probe into the U.S. chipmaker remained unclear, one of the people said, adding whether it was officially launched, could be affected by the state of U.S.-China relations. President Xi Jinping is expected to speak to Trump in the coming days.

The tech investigations, quote, may be part of the retaliatory measures made by China in response to Trump's new tariffs, against the country, said Liu Zhu, a researcher at the National Strategy Institute of Teng Shwa University. Zhu added that using antitrust investigations as a tool in trade negotiations might not be the best way to protect Chinese companies hit by U.S. tariffs. It would inevitably spark controversy, he said. Beijing scrambled to build cases against prominent U.S. tech companies comes as they are increasingly caught in the crossfire of growing tensions between the two global powers. Sammer announced in December it was investigating claims about, NVIDIA violating commitments made during its 2019 acquisition of Melanux Technologies, an Israeli company

that makes computer networking equipment. Sammer approved the acquisition in 2020 with conditions to prevent anti-competitive practices and insurer supplies to China, and soon thereafter began to quietly collect complaints from industry according to people familiar with the matter. The probe comes as a surprise to NVIDIA, the world's largest maker of advanced AI semiconductors. Days before the Samar announcement, NVIDIA's executives met officials at China's Ministry of commerce to discuss the $2.9 trillion chipmakers operations in its second biggest market outside the U.S., according to two people with knowledge of the meeting. One of those people said the commerce officials advised, quote, Nvidia is welcome to continue growing its business in China. The country

represented 13% of its global sales during the first three quarters of 2024, according to company filings, end quote. The Icon factory has launched an app called Tapestry on the app store, which brings Blue Sky, Mastodon, RSS, and other features. like delivery systems into a single timeline with a $1.99 per month tier to remove ads. The icon factory are the folks who were behind TwitterRific all those years ago. So one way to think of this is the rebirth of TwitterRific in a post-Twitter era. But another way to look at this is remember those apps that let you unify your chats between like AIM and Messenger and Yahoo and whatever Google messages were called back in the day.

Yeah, this is a bit like that. Quoting 9 to 5 Mac. Here's an overview of the apps features via the App Store listing. The Web Your Way. Tapestry combines posts from your favorite social media services like Blue Sky, Mastodon, Tumblr, along with others like RSS feeds, podcasts, YouTube channels, and more. All your content is presented in chronological order with no algorithm deciding what you should or shouldn't see. A bird's eye view, tapestry makes it easier than ever to browse content from dozens or even hundreds of sources,

create custom timelines, seamlessly sync your reading position across devices, and keep track of feeds in an easy-to-read color-coded stream of content. Avoid spoilers everywhere. Quickly create powerful rules that control what you do and don't see across your feeds. Avoid potential spoilers and stay clear of unwanted topics by creating rules that muffle and mute items in everything you follow. Powerful searching. Search for topics and terms across all feeds simultaneously. Tapestry makes it easy to find that blog post, YouTube video, or podcast you're looking for, and easy to do. to market for later. Private by design. Your privacy is a priority. Tapestry works with content

stored on your device, so searching and viewing content is completely private. We never sell or share your data with third parties. Custom connectors expand tapestry's potential with third-party connectors. Import custom connectors from trusted developers or even write your own to add your favorite bit of data to the timeline. If there's an open data feed available, a connector can weave it into tapestry. This all comes with the types of features you would expect from the team behind Twitterific. Customization tools for the app, icon, layout, and fonts,

light and dark mode support, ability to save items for later and more. Tapestry is a free download on the app store with subscription options available to remove ads, unlock custom timelines, content muting, and themed customization. Subscriptions run $1.99 per month, $1999 per year,

or you can make a one-time purchase of $7999, end quote. Speaking of fun little product launches, Opera has launched Opera Air, a free browser, focused on mindfulness and mental well-being, including break reminders and ambient soundscapes for Windows and MacOS. Quoting The Verge, The Web is beautiful, but it can be chaotic and overwhelming, says Mohamed Sala, opera's senior director of product.

We decided to look at science-backed ways to help our users navigate it in a way that makes them feel and function better, end quote. Air features a semi-transparent design and a floating sidebar for its mindfulness features when you need to work. The boost feature offers music, ambient sounds, and binaural beats, where slightly different frequencies are played in each year, which creates a perceived third frequency in the brain and is believed to help influence relaxation or focus. Soundscapes can be set to play from 15 minutes up to forever and can be paused from the sidebar at any time. The break reminder is an icon made up of three lines in the sidebar that gray out

while you work. You can customize the duration, reminding you to take a break once the icon is fully faded. Air can help at that point, too, with breathing exercises, neck stretches, full body scans, and guided meditations, which last up to 15 minutes. Air joins the default opera browser and its gaming-focused Opera GX in the lineup. Like those, it includes a built-in ad blocker and free VPN, plus access to the chat GPT-powered ARIA AI assistant. Air is available to download for free now on MacOS or Windows. Finally today, remember when I used to have that screener for Stocks, hitting all-time highs. Back in the go-go days of 2021, it was helpful to me to keep track of companies on the rise. Like, I don't know, that's how I learned about things like a firm

and Roblox becoming major players. Well, if you had checked out that screener in recent weeks, you would have seen Spotify there several times because it hit all-time highs a couple of times recently. I guess this is why. Spotify reported Q4 revenue up 16% year-on-year to 4.2 billion euros, monthly active users up 12% year-on-year to 675 million people, subscribers up 11% year-on-year to 263 million people, and crucially, 1.14 billion euros in 2024 net income versus a 532 million euro loss in 2023. So Spotify is very, very profitable all of the sudden. Quoting the journal, Spotify reported its first ever full year of profitability, fueled by record user growth and austerity measures after years of heavy spending on growth initiatives such as podcasts.

Its fourth quarter earnings are a sign that the company has been able to wean itself off years of intense investment and transform from a music streaming service with tough margins to a full-service audio company. Shares in the company rose 10% and are up about 29% on the year. It only took 18 years for us to get here, but we're here, Chief Executive Daniel Eck said in an interview. Eck on Tuesday told investors the company aims to pick up the pace of new initiatives and ship new products faster. He said music and offerings like a higher price premium tier, including high-fi streaming and remix tools, would be a focus this year. You should expect there to be many more versions of Spotify in the future that will adapt to the many subsections of

this consumer base, including superfans, X said. Monthly active users climbed 12% to 675 million people, the strongest fourth quarter in the company's history and topping guidance by 10 million people. When Spotify went public nearly seven years ago, it told investors it would give priority to growth over profits in an effort to establish itself as the dominant audio streaming service. After spending over $1 billion on podcasting and facing pressure from investors to turn a profit, the company in 2023 shifted its focus to cost controls and laid off about a fifth of its workforce. It raised subscription prices in many regions around the world last year, including in the U.S. for the second time, further juicing its revenue.

Executives promised sustained profits last year while pushing into audiobooks. Other key highlights from Spotify's fourth quarter earnings gross margin of 32.2% stronger than its guidance and ahead of the goal it's set at a 2020-investor day of achieving 30% gross margins between 2025 and 2027. Average revenue per user for its subscription business ticked up 5% to 4 euro 85 thanks to price increases. The metric has been pressured as Spotify brings in new subscribers via discounted plans and lower prices in emerging markets. Ad-supported revenue grew 7% to 537 million euro driven by both music and podcasts, end quote. The United States Postal Service this morning said it will resume accepting mail from China and Hong Kong hours after suspending service and is working with customs and border protection on the new China tariffs. I told you on Monday that if the tariffs against China held up, this was potentially a huge issue for the likes of Sheehan, Temu, and Ali Express.

while the U.S.PS had halted all inbound parcels from China and Hong Kong after President Trump ended the de minimis exception I told you about, sending the e-commerce industry into chaos. Here's why that was potentially a big deal, quoting the Financial Times. The U.S. Postal Service gave no reason for its decision to suspend packages temporarily, which would also cover Hong Kong, saying only that it would still accept flat parcels and letters. Customs agents now have to check and clear packages mailed from China following Trump's decision to scrap the day. de minimis rules, exempting shipments under $800 from duties. The changes will drive up sharply the cost of the four million parcels a day arriving in the U.S. under the de minimis exemption, about 30% of which come from Chinese e-commerce groups Temu and Sheehan. With flights disrupted, the new tariffs

threatened to hit China's burgeoning international e-commerce trade at a moment when Beijing is relying on exports to offset weak demand in its domestic economy, end quote. And quoting wired. Daniel, the owner of a trucking company based in Alberta, Canada, who asked to only use his first name for privacy reasons, tells Wired that two of its company's trucks were turned away at the U.S. border in New York and Montana today, because they contained packages originally from China. After speaking with a U.S. Customs and Border Protection Agent in Montana, the company was able to get a third truck into Washington State by removing all packages from China, Daniel says. We talked to the Montana CBP cargo supervisor, and they said everything is from the higher up, Daniel says. A lot of trucks were actually turned away today at the border we were told by our drivers,

and a lot of officers were checking the trucks and questioning drivers like, are you sure there are no made-in-China items in there? This is your last chance. They were actually going through the trucks and randomly checking the packages, end quote. Previously, packages like the ones Daniel's company often handles could move freely across the border. Trump's executive order, though, not only imposes an additional 10% tariff on goods from China, but also ends a key import tax exemption,

one that has enabled the rise of Chinese e-commerce platforms like Temu, and Sheehan. Known as de minimis, the rule waives import duties for small packages valued at less than $800 shipped into the U.S. originally intended to exempt personal gifts and other items that Americans send home from trips abroad. It has since allowed foreign businesses to more easily sell goods to U.S. consumers without needing to worry about paying import taxes. The number of de minimis packages has soared in recent years as the e-commerce market has become more global, making it difficult, if not impossible for customs and border protection to keep track of all the parcels flowing into the U.S." End quote. Yeah, here's the other thing. Even if you were like,

well, who cares? I could live without Temu and Sheehan, except there are ripple effects. Temu spent $3 billion marketing last year. Sheehan ran 80,000 ads across Google's platforms last year. These are huge players in the online advertising market. So if they stop spending because they can't sell, that could have an impact on the bottom line at places like Meta and Alphabet. Recapping Alphabet's earnings in about two minutes, Alphabet reported Q4 revenue up 12% year-on-year to $96.47 billion net income up 28% year-on year-on year to 26.54 billion. Services revenue up 10% to $84.1 billion and other bets revenue down 39% to $400 million. You know, I like to keep track of how YouTube is doing because it would be such a monster business on its own.

ad revenue was up 14% to hit $10.47 billion just in the quarter. Google Cloud revenue was up 30% to $11.96 billion. So at this point, Google Cloud and YouTube taken together are at a $110 billion annual revenue run rate. So yeah, they finally found some big business beyond search. But what matters to Wall Street right now? CapEx spending. Alphabet said it expects 2025 cap-ex to come in around $75 billion versus the $58 billion that Wall Street was expecting. Thus, Alphabet being down 7% this morning in pre-market versus Nvidia being up almost 2%. Why? Wall Street hates that Google will be spending so much on Nvidia chips, but Wall Street loves that Google will be spending so much on Nvidia chips.

Quoting the verge, capital expenditures have become a hot topic as of late as big tech companies race to build infrastructure to support their growing AI ambitions. and today's announcement from Alphabet is clearly meant to keep the company in that conversation. Alphabet spent $32.3 billion on capital expenditures in 2023, so $75 billion in 2025 would be a big jump. And while Google's press release today doesn't specifically say that the upcoming capital expenditures are all for AI, given the amount of money flowing into AI infrastructure across the industry, it seems likely that a good amount of the expense will go toward benefiting Google's AI work. AI continues to benefit Google's business as well. Google Cloud revenues are up 10% to $12 billion,

which Google says is led by growth in Google Cloud platform across GCP products, AI infrastructure, and generative AI solutions. On today's investor call, CEO Sundar Pichai said that the company has very good ideas for native ad concepts in its Gemini AI assistant. He also teased that Google plans to put new search experiences in front of users through the course of 2025, end quote. Google-related, they have dropped language from their AI principles that said Google would not pursue AI applications, quote, likely to cause overall harm, such as for weapons and surveillance, quoting the Washington Post. The company's AI principles previously included a section listing for applications we will not pursue. As recently as Thursday, that included weapons, surveillance,

technologies that, quote, cause or are likely to cause overall harm, and use cases, contravening principles of international law and human rights, according to a copy hosted by the Internet Archive. A spokesperson for Google declined to answer specific questions about its policies on weapons and surveillance, but referred to a blog post published Tuesday by the company's head of AI Demis Hasabis and its senior vice president for technology and society James Manjica. The executives wrote that Google was updating its AI principles because the technology had become much more widespread and there was a need for companies based in democratic countries to serve government and national security clients.

There's a global competition taking place for AI leadership within an increasingly complex geopolitical landscape. We believe democracies should lead in AI development guided by core values like freedom, equality, and respect for human rights. Hassabis and Manjika wrote, and we believe that companies, governments, and organizations sharing these values should work together to create AI that protects people, promotes global growth, and supports national security, end quote. Google's updated AI principles page includes provisions

that say the company will use human oversight and take feedback to ensure that its technology is used in line with, quote, widely accepted principles of international law and human rights. The principles also say the company will test its technology to mitigate unintended or harmful outcomes, end quote. Meanwhile, meta has defined the types of AI systems that it deems too risky to release, including ones capable of aiding in cybersecurity, chemical and biological attacks, quoting TechCrunch. As meta defines them, both high-yms, risk and critical risk systems are capable of aiding in cybersecurity chemical and biological attacks. The difference being that critical risk systems could result in a catastrophic outcome that cannot

be mitigated in a proposed deployment context. High risk systems, by contrast, might make an attack easier to carry out, but not as reliably or dependably as a critical risk system. Which sort of attacks are we talking about here? Meta gives a few examples like the automated end-to-end compromise of a best practice protected corporate scale environment and the proliferation of the high-impact biological weapons. The list of possible catastrophes in Mehta's document is far from exhaustive, the company acknowledges, but includes those that Meta believes to be the most urgent and plausible to arise as a direct result of releasing a powerful AI system. If meta determines a system is high risk, the company says it will limit access to the system internally and won't

release it until it implements mitigations to, quote, reduce risk to moderate levels. If, on the other hand, a system is deemed critical risk. Meta says it will implement unspecified security protections to prevent the system from being exfiltrated and stop development until the system can be made less dangerous, end quote. Sources are telling the verge that Sonos will release an Android-based streaming box in the coming months, price between $200 and $400 that combines content from Netflix, Max, and more. So, you know, after the year from hell, I guess they're swinging for the fences. Quoting the Verge. After the most tumultuous nine months in Sonos's history,

the brand is trying to find its footing again. Even as the work continues to rehabilitate the company's beleaguered mobile app, Sonos is planning to take a big swing in a new product category. It's getting into video for the first time. In the coming months, Sonos will release a streaming player that sources tell me could cost between $200 and $400, a truly staggering price for its category. I've seen images of the upcoming product,

which is deep into development, and about as nondescript as streaming hardware gets. Viewed from the top, the device is a flattened black square and slightly thicker than a deck of trading cards. But the Android-based streamer codenamed Pinewood is designed to be more than just another competitor to the Apple TV 4K, Nvidia Shield, or Roku Ultra. Don't get me wrong,

streaming is a huge focus for the product. Sources familiar with Pinewood tell me it has a beautiful interface despite the software being developed in partnership with a digital ads firm. Sonos plans to combine content. from numerous platforms, including Netflix, Max, and Disney Plus under a single unified software experience. Universal Search across streaming accounts will be supported. We've seen similar efforts to mask the fragmented nature of modern entertainment from Sonos's soon-to-be rivals, but I'm told this is a cornerstone of Pinewood's appeal. Sonos voice control will be integrated,

and Pinewood will also ship with a physical remote control that includes shortcuts for popular streaming apps. I see this as a welcome alternative to using your phone or voice to navigate around the software which could grow tiring. The hardware's potential extends well beyond these features. According to people familiar with its development, Pinewood serves as an HDMI switch and has several HDMI ports with pass-through functionality. You'll be able to plug external devices like gaming consoles or 4K Blu-ray players into it. Sonos engineers have been frustrated over the years by unpredictable issues between

its soundbars and certain TVs. These can include audio sync delays, brief signal dropouts, and other bugs that can prove challenging to reproduce, let alone fix. With Pinewood, Sonos aims to take greater control of the IOS stack. The box will be able to wirelessly transmit lag-free TV audio to the company's soundbars and other Sonos products. In some cases, it could upgrade home theater sound beyond a TV's original capabilities. Pinewood also unlocks a capability that Sonos customers have been requesting for years. You'll be able to configure a genuine surround sound system using the company's other speakers.

Instead of relying so heavily on a soundbar, you can create dedicated front, left, and right channels with say to era 300s. This will allow for far more advanced Dolby Atmos setups, but Sonos is still finalizing exactly which speaker arrangements will be supported, end quote. In 2024, ransomware attackers received around $813.55 million in payments from victims, which is down 35 percent on 2023's record $1.25 billion. Down 35 percent. Why? More victims are refusing to pay the ransom, which I think is good news. Victims' now feel that they have more power over their situation. I wonder what has happened to make that so, quoting chain aliasis. The total volume of ransom payments decreased year over year by approximately

35 percent, driven by increased law enforcement actions, improved international collaboration, and a growing refusal by victims to pay. In response, many attackers shifted tactics with new ransomware strains emerging from rebranded, leaked or purchased code, reflecting a more adaptive and agile threat environment. Ransomware operations have also become faster with negotiations often beginning within hours of data exfiltration. Attackers range from nation-state actors to ransomware as a service operations, loan operators, and data theft extortion groups such as those who extorted and stole data from Snowflake, a cloud service provider. Incident response data show that the gap between the amounts demanded and paid continues to increase. In the second half of 2024,

there was a 53% difference between the two factors. Reporting from incident response firms suggests a majority of clients opt not to pay altogether, which means the actual gap is larger than the below numbers suggest, end quote. Finally, today we had a couple of cute little product releases on yesterday's show, and here's one more. Apple yesterday debuted invites an app to help plan events like birthdays, graduations, and more with Image Playground and Writing Tool tie-ins. quoting Mac Rumors.

The app supports creating invitations that can be sent out to people. There are options to choose a background image from the Photos app. Choose one of Apple's built-in images or selected emoji background with font customization available. Apple automatically adds in information from the maps and weather apps so that invitees have all of the data they need for an event, such as weather conditions and directions. Apple design invites with Apple intelligence in mind. When creating an invite, there is an option to take advantage of Image Playground to create original images using text-based. descriptions. Writing tools can also be employed to find the ideal phrasing for an invitation. People who receive invites can RSVP, and there is a built-in method that allows the sender to track

who has responded. When the event happens, there's an option to create a collaborative event soundtrack so everyone can contribute music and a dedicated, shared album lets eventgoers see photos and videos and contribute their own. Invites is a iCloud Plus service, which means that it is available to iCloud Plus subscribers. ICloud Plus is price. starting at 99 cents per month, and it provides users with additional ICloud storage over the free 5 gigabytes that comes with any device. While anyone is able to respond to an invite that's sent out creating invites is limited to ICloud plus subscribers. Apple Invites is available for all iPhone models that run iOS 18 or later, and the app can be downloaded from the app store for free, end quote.

Again, just a fun little app and useful if you happen to be a subscriber, I guess. Well, if this holds up, then the whole race to commoditization of the intelligence part of the AI stack is happening faster than I imagined. Stanford and University of Washington AI researchers claim they have trained an AI reasoning model S1, distilled from a Gemini 2.0 model for under $50 in cloud compute. So when it comes to model training, $50 million isn't cool. You know what's cool? $50. Quoting Sherwood News. Researchers at Stanford and the University of Washington have developed an AI model that could compete with big tech rivals and trained it in 26 minutes for less than $50 in cloud compute credits.

In a research paper published last Friday, the new S1 model demonstrated similar performance on tests measuring mathematical problem solving and coding abilities to advanced reasoning models like OpenAIs 01 and Deepseeks R1. Researchers said that S-1 was distilled from Gemini 2.0 Flash thinking experimental, one of Google's AI models, and that they used test time scaling or presenting a base model with a data set of questions and giving it more time to think before it answers. While this technique is widely used, researchers attempted to achieve the simplest approach through a process called supervised fine-tuning where the model is explicitly instructed to mimic certain behaviors, end quote. and quoting TechCrunch. To sum, the idea that a few researchers without millions of dollars behind them can still innovate in the AI space is exciting. But S1 raises real questions about the commoditization of AI models. Where's the moat if someone can closely replicate a multi-million dollar model with relative pocket change? S1 is based on a small off-the-shelf AI model from Alibaba-owned Chinese AI Lab Quen,

which is available to download for free. To train S1, the researchers created a dataset of just one, 1,000 carefully curated questions paired with answers to those questions, as well as the thinking process behind each answer from Google's Gemini 2.0 Flash Thinking Experimental. After training S1, which took less than 30 minutes using 16 Nvidia H100 GPUs, S1 achieved strong performance on certain AI benchmarks, according to the researchers. Nicholas Mugganoff, a Stanford researcher who worked on the project, told TechCrunch, he could rent the necessary compute today for about $20. The researchers used a nifty trick

to get S1 to double-check its work and extend its thinking time, they told it to wait. Adding the word wait during S-1's reasoning helped the model arrive at slightly more accurate answers per the paper. Distillation has shown to be a good method for cheaply recreating an AI model's capabilities, but it doesn't create new AI models vastly better than what's available today, end quote. Various sources have seen an internal memo that suggests Google is eliminating its goal of hiring more employees from historically underrepresented groups and is reviewing some DEI programs after President Trump's recent executive orders. Quoting the journal, in an email to employees Wednesday, Google said it would no longer set hiring targets to improve representation in its workforce.

In 2020, amid calls for racial justice following the police killing of George Floyd, Google set a target of increasing by 30 percent the proportion of, quote, leadership, representation of underrepresented groups by 2025. Parent company Alphabet's annual report released, Wednesday omitted a sentence stating the company was committed to making diversity, equity, and inclusion part of everything we do, and to growing a workforce that is representative of the users we serve. That sentence was in its reports from 2021 through 2024. Google said it was evaluating whether to continue releasing annual diversity reports, which it has done since 2014. The evaluation is part of a broader review of DEI-related grants, training, and initiatives,

including those that the email said raise risk or that aren't as impactful as we hoped. Google also said it was reviewing recent court decisions and executive orders by President Trump aimed at curbing DEI in the government and federal contractors. The company is evaluating changes to our programs required to comply, the email said, end quote. And quoting the times. Like other tech giants, Google responded to a DEI backlash bolstered by Mr. Trump's election victory. Meta, which owns Facebook and Instagram, has eliminated many of its diversity teams, while Amazon has begun reviewing its DEI programs. On January 22nd, Mr. Trump signed an executive order instructing federal contractors to not engage in DEI, which he described as illegal discrimination. Through its

cloud computing arm, Google provides technology services to the federal government. Google has also started a DEI review that could result in the company's cutting additional programs and initiatives, Ms. Sikoni said in the email. The company will carefully evaluate programs, trainings, and initiatives, and will update them as needed, she said. The company will consider whether some of them raise risk, or aren't as impactful as we hoped. Google reported last year that 5.7% of its workforce was black, up from 3.7% in 2020, and 7.5% of its employees were Hispanic or Latino, compared with 5.9% in 2020, end quote. Remember the Super Bowl in the late 90s when all the ads were dot-com ads? Remember the Super Bowl of a few years ago when all the ads were for crypto?

So can we expect an AI Super Bowl ads bonanza sometime soon? Because sources say OpenAI, is expected to air its first TV ad during Super Bowl 59. Media Radar says AI companies spent $332 million on ads in 2024 over double their 2023 spend, quoting the journal. Though OpenAI has made minimal investment in advertising thus far, others in the sector haven't shied away from marketing. Companies in the AI industry spent $332 million on ads last year, more than double their 2023 spending level according to estimates from ad tracker Media Radar, Google Anthropic, and Microsoft ran ads during last year. year's Super Bowl, and quote, and quoting ad week. A commercial during Super Bowl 59, which this year

fetched upwards of $8 million for 30 seconds of airtime, would mark the company's biggest advertisement moment since its founding in 2015. The move comes after OpenAI appointed its first chief marketing officer, CMO Kate Rauch in December, signaling a bigger focus on marketing. Rouch was previously the CMO of cryptocurrency firm Coinbase, where she oversaw global marketing and PR. She was behind its 2022 Super Bowl ad that grabbed attention for featuring a colored QR code bouncing against a black background. Before that, she spent more than 11 years at Meta. AI will be a theme at this year's Super Bowl. Google Workspace is making its big game debut with a campaign spotlighting its AI tools, while GoDaddies is also pitching its AI tools in its Super Bowl ad. Yet previous ad campaigns

featuring AI have fallen flat with consumers. For example, in November, Coca-Cola received backlash for remaking its classic holiday ad with generative AI, while Google also sparked Iyer with its Dear Sydney Olympics ad spotlighting the tech, end quote. Putting this on your radar, Amazon has announced an Alexa focused event on February 26th in New York. Sources say the company will preview its long-delayed Alexa generative AI revamp, quoting writers. Once released, it would mark the most significant upgrade to the product since its initial introduction accelerated a wave of digital assistance more than a decade ago. Amazon on Wednesday sent press invites to an event to be held on February 26th in New York, featuring the head of its devices and services team, Panos Panay.

A spokesperson said the event is Alexa focused while declining to elaborate. The new generative AI-powered Alexa represents at once a huge opportunity for Amazon, which counts more than half a billion Alexa-enabled devices in the market, and a tremendous risk. Amazon is hoping the revamp, designed to be able to converse with users, can convert some. of its hundreds of millions of users into paying customers in an effort to generate a return for the unprofitable business. The AI service will be able to respond to multiple prompts in sequence, and company executives have said even act as an agent on behalf of users by taking actions for them without their direct involvement. That contrasts with the current iteration, which generally

handles only a single request at a time. Executives have scheduled a meeting known as the go-no-go for February 14th. There they will make a final decision on the street readiness of Alexa's generative AI revamp, according to the people, and an internal planning document seen by Reuters, Alexa's revamp carries with it, all the challenges inherent in, now familiar generative AI chatbots from OpenAI, Alphabet, and others, including the possibility of fabricated answers, known as hallucinations. With access to Alexa available in cars, televisions, thermostats, and mobile phones, it could become an essential daily tool for scheduling and even shopping. Initially, Amazon plans to roll out the new Alexa service to a limited number of users and will not

charge for it, the people said, though it has considered a $5 to $10 monthly fee. The company will also continue to offer what it is calling Classic Alexa, the version broadly available today for free. One of the people said Amazon has discontinued adding new offerings to Classic Alexa, end quote. And putting this on your radar as well, could we see a ban on social media for children in the U.S.? I feel like a lot of things are up in the air with this new administration, so who knows, but the Senate Commerce Committee has approved the Kids Off Social Media Act to ban under-13s from social media, clearing the way for consideration by the full Senate. Quoting Politico, in addition to banning social media for kids under 13, the bill requires schools that receive federal funding

to restrict access to social media on its network and devices. However, it's not clear that banning social media or phones at school is an effective way to address concerns over youth mental health. students at schools with restrictive phone and social media policies do not have better mental well-being than those at schools with more permissive policies, according to a Lancet study out of Europe. A Commerce Committee aide told Politico that because social media platforms already voluntarily require users to be at least 13 years old, the bill does not restrict speech currently available to kids. The panel approved the Kids Off Social Media Act, sponsored by the panel's chair, Texas Republican Ted Cruz, and a senior Democrat on the panel, Hawaii's Brian Schatz, by voice vote. the way for consideration by the full Senate. Only Ed Markey, Democrat Massachusetts, asked to be recorded as a no on the bill. When you've got Ted Cruz and myself an agreement on something,

you've pretty much captured the ideological spectrum of the whole Congress, Senator Schatz told Politico's Gabby Miller, end quote. Interesting. Reuters says that Trump's de minimis cancellation that we've been talking about is likely to hit Sheehan harder than online dollar store Temu, which has shifted to an Amazon-like bulk overseas shipment strategy. Quote, both sites grew exponentially in the U.S. in recent years, helped by the so-called de minimis rule, a measure that exempted shipments worth less than $800 from import duties. A June 2023 report estimated the Chinese retailers

accounted for more than 30% of all packages shipped to the U.S. each day under the rule. The rule began to come under scrutiny during the Biden administration, prompting both firms to start making preparations to rely less on it, but Temu made changes to its model faster, analysts and sellers told Reuters. Tamu is owned by PDD Holdings, while Sheehan is aiming to list in London in the first half of the year. Tech analysts Rui Ma said Temu rapidly expanded its semi-managed model as part of its groundwork, an Amazon-like strategy that sees goods shipped in bulk to overseas warehouses instead of directly to customers. Within months of first bidding to attract sellers keeping inventory in U.S. warehouses last March,

about 20% of Temu's U.S. sales were shipped for. from local sellers rather than directly from China, according to estimates from e-commerce market research for a marketplace pulse. Two China-based Temu sellers told Reuters that by the end of last year, half the products they sold to the U.S. were sent to warehouses there first. Tamu has also been increasing the proportion of goods it sends by C. Bassel Rickard, operations director at Siva Logistics, Greater China, said, an increase in Temu ocean freighting more goods in bulk and larger size, more valuable goods such as furniture was apparent in the second half of last year, reducing importing under the de-minimous threshold. In contrast, Sheehan remains more reliant on air freight

to directly ship the thousands of styles of ultra-fast fashion items it pumps out each week, Rickard said, although it has open centers in states including Illinois and California, as well as a supply chain hub in Seattle, end quote. Finally today, speaking of commerce versus e-commerce, again, it increasingly looks like, after years of trying, Amazon, just doesn't quite grok physical retail. Amazon has shrunk its Amazon Go store portfolio by around 50% since early 2023 to just 16 stores in four U.S. states as the company continues to stumble in its physical retail efforts, quoting the journal. The company in 2018 launched the Amazon Go convenience store where customers can grab a latte, bagel, or turkey sandwich, and walk out

without having to wait in line to pay. Amazon charges them electronically. But with the Amazon Go store in Woodland Hills, California, closing this month, the retailer has shrunk its Go portfolio by about half since early 2023 to 16 stores in four states. Instead, Amazon is focusing on licensing its Just Walkout Technology to other retailers, while it focuses its bricks and mortar ambitions on grocery stores. This is hardly Amazon's only misfire in the physical store universe. It has closed dozens of its other branded retail stores in recent years, including bookstores, fashion outlets, and its four-star locations stocked with best-selling items from its website. After a decade-long experiment with bricks and mortar stores, Amazon's dominance online

has yet to translate into a successful strategy for connecting with shoppers in the real world. Retail brokers and landlords said, they keep testing these concepts thinking one of them is going to connect with the consumer in a big way, said Jeff Edison, chief executive of Phillips Edison and company, a real estate investor that owns grocery anchored shopping centers. But can you think of any examples where they've actually done the bricks and mortar retail well? I can't. Amazon Go stores were launched to develop technological. that speeds up the buying process while saving on labor costs. They use cameras and sensors to track

customer purchases instead of traditional checkout counters, but reducing the number of employees available to help customers and giving priority to credit card payments over cash limits limits, limits sales and makes the shopping experience more cumbersome, said Nick Iglanian, president of retail advisory firm SiteWorks Retail. I don't really think they really understand retail, Englanian said. Running warehouses and shipping stuff efficiently is not the same as greeting a customer and saying, may I help you? And Amazon spokeswoman said, go-store employees greet customers at the door, restocked shelves, and are available to answer questions. While certain locations work better than others, the company continues to invest in its go-stores, including a recent redesign of its

suburban store in Mill Creek, Washington, where it added more items such as made-to-order pizza. Amazon also opened a new store in Bellevue, Washington last summer, end quote. Sources say that in a secret order last month, UK security officials demanded Apple-Creat a backdoor to access all cloud content any Apple user worldwide has uploaded. So that includes you and me. Even if you're not a UK citizen, they demanded this backdoor for any Apple user full stop. Quoting the Washington Post, the British government's undisclosed order issued last month requires blanket capability to view fully encrypted material, not merely assistance in cracking a specific account, and has no known precedent in major democracies. Its application would mark a significant

defeat for tech companies in their decades-long battle to avoid being wielded as government tools against their users, the people said, speaking under the condition of anonymity to discuss legally and politically sensitive issues. Rather than break the security promises it made to its users everywhere, Apple is likely to stop offering encrypted storage in the UK, the people said. Yet that concession would not fulfill the UK demand for backdoor access to the service in other countries, including the United States. The Office of the Home Sest, Secretary has served Apple with a document called a technical capability notice, ordering it to provide access under the sweeping UK Investigatory Powers Act of 2016, which authorizes law

enforcement to compel assistance from companies when needed to collect evidence the people said. The law, known by critics as the Snoopers Charter, makes it a criminal offense to reveal that the government has even made such a demand, and Apple spokesman declined to comment. Apple can appeal the UK capability notice to a secret technical panel which would consider arguments about the expense of the requirement and to a judge who would weigh whether the request was in proportion to the government's needs. But the law does not permit Apple to delay complying during an appeal. In March, when the company was on notice that such a requirement might be coming, it told Parliament, there is no reason why the UK government should have the authority to decide for citizens of the world, whether they can avail themselves of the proven security benefits that flow from end-to-end

encryption, end quote. The Home Office said Thursday that its policy was not to discuss any technical demands. We do not comment on operational matters, including, for example, confirming or denying the existence of any such notices, a spokesman said, one of the people briefed on the situation, a consultant advising the United States on encryption matters, said Apple would be barred from warning its users that its most advanced encryption no longer provided full security. The person deemed it shocking that the UK government was demanding Apple's help to spy on non-British users without their government's knowledge. A former White House Security Advisor confirmed the existence of the British order, end quote. So the only way to look at this, I think, is what the great cryptographer Matthew Green has said on Twitter, quote,

the UK is coming after all encryption, end quote. And all users. Like, you can't be like, hey, sucks to be a UK citizen if this happens. will be affected if you are an Apple user full stop. And the thing is, the UK market is big enough. I don't feel like Apple would be inclined to take a principled stand here. Amazon earnings, Q4 revenue up 10%, slightly beating estimates, net income up 89% to a whopping $20 billion. They can pile up cash when they really want to. But the stock is down nearly 4% as I write this. Want to guess why? Well, before we get to the big why, a slightly

different why ad revenue was only up 18% year-on-year, which suggests that growth in Amazon's ad business is slowing or might be hitting some sort of natural market limit. But yes, back to that big Y if you shouted at your ear pods, CAP-X, you're right. Amazon expects to boost its CAP-X to $100 billion in 2025, largely driven by AI, and up from 2024's around $83 billion in cap-ex in what Andy Jesse calls a once-in-a-lifetime opportunity, quoting CNBC. We spent $26.3 billion in CAP-X in Q4, and I think that is reasonably representative of what you expect in annualized cap-ex rate in 2025, Jesse said on a call with investors after the company released its fourth-quarter earnings report. The vast majority of that CAP-X spend is on AI for AWS, end quote.

Amazon has been rushing to invest in data centers, networking gear, and hardware to meet vast demand for generative AI, which has exploded in popularity since OpenAI released its chatGBT assistant in late 2022. Amazon has introduced a flurry of AI products, including its own set of Nova models, tranium chips, a shopping chatbot, and a marketplace for third-party models called Bedrock. Jassy tried to reassure investors on the call that the jump and spending will be worthwhile, calling it a once-in-a-lifetime type of business opportunity. I think that both our business, our customers, and shareholders will be happy, medium to long-term that we're pursuing the capital opportunity and the business opportunity in AI, Jassy said. We also have CAPEX that we're

spending this year in our stores business, really with an aim towards trying to continue to improve the delivery speed and our cost to serve, end quote. Look, this was the quarter of CAPEX spending announcements between just Amazon, Microsoft, Alphabet, and Meta, they announced nearly $75 billion in spending just this quarter. In 2024, those four spent a combined two hundred $346 billion on this stuff. And if you tally up their forecasts, they're expecting to spend $320 billion this year, 2025. Quoting the journal, the four biggest spenders on the data centers that power artificial intelligence systems all said in recent days that they would jack up investments further in 2025 after record outlays last year. Microsoft, Google, and meta-platforms have projected

combined capital expenditures of at least $215 billion for their current fiscal years, an annual increase more than 45%. Google shares are down about 7% since its earnings report Tuesday, which showed disappointing growth in its cloud computing business. Still, parent company Alphabet said it is accelerating investments in AI data centers as part of a surge in capital expenditures this year to about $75 billion from $52.5 billion in 2024. The spending will go to infrastructure, both for Google's own use and for cloud computing clients. I think part of the reason we are so excited about the AI opportunity is we know we can drive extraordinary use cases because the costs of actually using it is going to keep coming down, said CEO Sundar Pichai.

AI is, quote, as big as it comes, and that's why you're seeing us invest to meet that moment, he said, end quote. So a third of a trillion dollars expected to be spent just by these four companies this year. That's like completely impacting the larger economy level spending. Like that much spending, it's going to have an impact. And I guess that means we're in for a reckoning at some point. because this level of spending has to taper off at some point or level out, even to just take a breather, because that's exactly the thing. If these companies suddenly start spending less, then Wall Street might actually reward them. Cheer the pullback in spending on behalf of these individual companies, like their individual stocks might go up. But in terms of what that pullback

in spending would mean for the larger tech industry and even the global economy, it would probably, at the same time, cause Wall Street to freak the F out overall. A couple of things now that are probably about to happen, so I'll tell you now in case they get lost in the shuffle or happen over the weekend. First, sources are saying we might get that long-awaited overhaul of the iPhone as early as next week, but it's probably going to slip out as just a segment on this show because we're unlikely to get any kind of event, with Apple opting to reveal it on its website, apparently. So at some point next week, I'll be like, here's the iPhone SE specs, but no dog and pony show to cover, quoting Mark German and Bloomberg.

The company expects to announce the device as early as next week ahead of it going on sale later in the month, according to people with knowledge of the matter. The debut will mark a major shift for an oft-overlooked smartphone, which Apple first introduced in 2016, as an entry-level model. The existing version, released in 2022, has grown dated. It's the only iPhone that still has a home button and lacks face ID. The new version will look more like the iPhone 14 and also include Apple Intelligence, the company's AI software. There are already telltale signs that the new phone is coming. Inventory of the current iPhone SE has dried up at Apple retail stores in many parts of the U.S., which typically happens before a refresh.

The current SE costs $429, which is hundreds less than the $799 regular iPhone 16. Given the new features and design of the updated model, Apple may increase that price, but it's likely to remember in the same general range as entry-level smartphones from Samsung and Google. A new iPhone SE could be especially enticing in overseas markets like China, India, and other parts of Asia, where Apple is trying to bolster its business. The combination of high-end features and a roughly $500 price point could make it an attractive alternative to local brands, even though it will likely remain more expensive. Apple's sales fell 11% in China last quarter, but grew in other emerging markets, end quote. And this is what really could happen while we're not talking.

Sources are telling CNBC that SoftBank is set to invest $40 billion in OpenAI at a $260 billion pre-money valuation, and this is about to happen imminently. Open AI was last valued at $157 billion by private investors in October, of course. Quote, soft bank would pay out the funding, which would mean a $300 billion post-money valuation for Open AI over the next 12 to 24 months, with the first payment coming as soon as spring, favor reported Friday. SoftBank would be able to syndicate as much as $10 billion of the amount. The round was initially expected to award OpenAI evaluation of $340 billion, but a source familiar with the matter later told CNBC that the amount would be closer to $300 billion.

Part of the funding is expected to be used for OpenAI's commitment to Stargate, sources told CNBC. Stargate is a joint venture between SoftBank, OpenAI, and Oracle that was announced by President Donald Trump in January. plan calls for billions of dollars to be invested in U.S. AI infrastructure, end quote. Time for the weekend long read suggestions. First up, how epic is transforming Fortnite into a content platform paying, I did not know this, $350 million to creators just in 2024 alone. 36 and a half percent of the total playtime on Fortnite now is being spent in games made by creators, quoting the great Julia Alexander on her substack.

Fortnite is the perfect example of where these worlds meld, and Epic's creators program is a perfect example of where the games industry may be going. Epic games announced last week that the number of creators working within Epic's Unreal Engine for Fortnite program nearly tripled between 2023 and 2024, jumping from 24,000 contributors to more than 70,000. This resulted in nearly 200,000 in-game islands for players to experience, with an approximate 60,000 crater-made islands being played each day, according to the company. Clearly more, creators are looking to construct within the world they spend the vast amount of time in, and players are willing to experiment. It's the monetization part of the equation that is

particularly interesting, though. More than $350 million was paid to creators in 2024, up 11% compared to the same period measured in 2023. More than 37 creators made more than a million dollars. 14 creators made north of $3 million, and seven creators, or developer collectives, collected more than $10 million in revenue from the program. As Epic noted, quote, spent 5.23 billion hours playing games made by creators, a number that represents 36 and a half percent of total Fortnite playtime and continues to rise, end quote. Building Within and Building Four are two different acts. Building Within Fortnite is an opportunity to showcase creative prowess to an incredibly large player base. There are reportedly more than 30 million daily Fortnite players.

Building for Fortnite, however, is recognizing that the ultimate benefit is to epic games, to a centralized environment for a company focused on keeping players on its servers. That doesn't make Epic Games bad, nor does it make building within or for Fortnite a problem. It merely makes Fortnite look more like YouTube. The real question, then, is whether Fortnite can capture the magic of what makes YouTube work without falling into the company's same traps. What makes YouTube as powerful as it is boils down to a couple of unquestioned dominances, a creator contribution cycle that prevents substantial competition from forming in a hyper-specific format of product, growing and popularity globally while seeing value in new technologies and incorporating them before competitors

to capture more time spent than other mediums. YouTube's rise to its mega-monopolis status was built on the philosophy of Attention Merchant 101. If a product is free, then you're the product. We call this advertising, and if the goal is to increase the number of products to serve advertisers, then you need an unprecedented amount of content. The only way to get that quality, keeping in mind that actual quality turned out to be less of a concern than anticipated by traditional content magnates, was to incentivize a group of creatives and want-to-be celebrities by eliminating the barriers of entry to finding an audience and a promise of payment upon finding said viewers, end quote. And hey, speaking of games, The Sims just turned 25 years old. From the New York

Times, speaking of monetizing games in new ways, it's actually an old thing that games like the Sims were pioneering 25 and 30 years ago. Quote, The Sims was a sandbox for the American Dream when it was released on February 4, 2000, with right-pooling inspiration from biology, architecture, comics, and psychology to dictate the rules of his virtual dollhouse. It was an unusual proposal at a time when most games were goal-oriented and linear, and a predecessor to create your own adventure games like Minecraft that give players a pickaxe and carte blanche. Although more than 500 million people have played games in the Sims franchise, which is particularly popular with women, it was originally seen as a risk.

executives at the game studio Maxis had urged Wright to focus instead on the Simps City franchise, his urban planning simulator from 1989 that had put the company at the forefront of American game design. Everyone in the room hated the idea of the Sims, Wright recalled. Even before the Sims was released, developers invited people to create custom content, providing basic programming tools for the invention of in-game furniture. As more players adopted the software, content creators opened websites and offered subscription platforms that provided a steady income. The people who were really invested in the game weren't even playing the Sims, right said.

They were maintaining websites for the community. It was the beginning of a community-driven phenomenon that continued with the Sims online in 2002. A noble failure, right said, of the Wild West iteration where players could interact with one another. Users developed new personas, fueling a national debate about the limits of free expression online. Some players operated digital bordellos, others formed mafias. 25 years later, players are continuing to push the boundaries. Sure, there are glitzy houses and happy families in the Sims 4, but by modifying the game's code, players have created a health care system as Byzantine as the real American one,

and taught Sims how to wield pistols and knives. The game's official expansion packs offer their own weirdness. Sims can become vampires and witches. They can even play The Sims inside of the Sims, end quote.