Tech Brew Ride Home - Tue. 05/06 – OpenAI Backtracks

Episode Date: May 6, 2025

OpenAI backtracks in a major way, saying its nonprofit entity will remain in control of business operations. Huge consolidation happening all at once in the food delivery space. New Surface hardware from Microsoft. Huge investment in European defense tech startups. And Shein and Temu turn to Europe to stay afloat. Sponsors: LinkedIn.com/ride Links: OpenAI reverses course, says its nonprofit will remain in control of its business operations (TechCrunch) OpenAI Reaches Agreement to Buy Startup Windsurf for $3 Billion (Bloomberg) DoorDash strikes £2.9bn deal for Deliveroo (FT) Microsoft shrinks its Surface Laptop down to 13 inches, priced at $899 (The Verge) Microsoft’s smaller Surface Pro has a 12-inch display and starts at $799 (The Verge) Capital flies into Europe’s defence drone start-ups (FT) Exclusive: Shein, Temu ramp up advertising in UK and France as US tariffs hit (Reuters) Learn more about your ad choices. Visit megaphone.fm/adchoices

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. Welcome to the TechMean right home for Tuesday, May 6, 2025. I'm Brian McCullough today. Open AI backtracks in a major way saying its nonprofit entity will remain in control of business operations. Huge consolidation happening all at once in the food delivery space. New surface hardware from Microsoft, huge investments in European defense tech startups, and Shian and Temu turn to Europe to stay afloat. Here's what you miss today in the world of tech. Well, this is quite the sudden reversal. Open AI has backtracked and now since.

says its nonprofit entity will remain in control of its business operations after what they are calling a, quote, constructive dialogue with civic leaders and the Delaware and California attorneys general. Quoting TechCrunch, according to the company, OpenAI's business wing, which has been under the nonprofit since 2019, will transition to a public benefit corporation or PBC. The nonprofit will control and also be a large shareholder of the PBC. OpenAI was founded as a nonprofit and is today overseen and controlled by that nonprofit, OpenAI board chairman Brett Taylor wrote in a statement on the company's blog. Going forward, it will continue to be overseen and controlled by that nonprofit. Open AI says that it made the decision, quote, after hearing from civic leaders and engaging in

constructive dialogue with offices of the Attorney General of Delaware and the Attorney General of California, we thank both offices and we look forward to continuing these important conversations to make sure Open AI can continue to effectively pursue its mission, Taylor said. The stakes were high for OpenAI, which needed to complete its for-profit conversion by the end of this year or next, or risk relinquishing some of the capital the company has raised in recent months, according to reports. It's unclear what consequences may befall OpenAI now that it's reversed course. In a letter to staff on Monday, also published on OpenAI's blog, CEO Sam Altman says he thinks OpenAI may eventually require trillions of dollars to fulfill its goal of making

the company's services broadly available to all of humanity. OpenAI's nonprofit will become a big shareholder in the PBC in an amount supported by independent financial advisors, wrote Altman. We are moving to a normal capital structure where everyone has stock. We look forward to advancing the details of our plan in continued conversation with them, our partner Microsoft, and our newly appointed non-profit commissioners, end quote. On that last bit, Bloomberg is reporting that Microsoft remains a big holdout among investors in terms of accepting this restructuring, seeking assurances that the changes will protect it's $13.75 billion investment in OpenAI. Quote,

Microsoft is still actively negotiating details of OpenAI's proposal, the people said. Microsoft declined a comment. In a statement, OpenAI said, quote, we continue to work closely with Microsoft and look forward to finalizing the details of this recapitalization in the near future. But Microsoft isn't the only party that OpenAI needs buy-in from the state attorneys general of California and Delaware are responsible for overseeing the conversion. Open AI needs to do a fair market valuation on the nonprofit stake in the future for-profit entity and is asking state AGs for input. A simplified for-profit structure is considered more attractive to investors, but on a call with reporters, Altman said

the revised approach would still accomplish the same aim, even with the nonprofit in control. With the proposed structure, Altman specifically said SoftBank Group is prepared to move forward with its full $30 billion investment as part of a recently announced funding round. But Microsoft's approval will be key. Only OpenAI insiders, Microsoft, and other early investors currently have a direct say in approving the restructure, according to two people. As a result, only that group gets to weigh in on the restructuring plan, the people said. But among investors, OpenAI is currently only negotiating with Microsoft, one person said. Microsoft also has a unique relationship with OpenAI compared with other investors because

of its licensing and revenue sharing agreements with the startup. Microsoft is currently negotiating some aspects of the contract, along with its equity stake and other issues, according to one person familiar with the discussions. In addition to winning over Microsoft and state officials, OpenAI is also battling a legal challenge over the restructure from billionaire Elon Musk, end quote. Well, on that bit, Elon Musk's attorney has come out to say that Open AI's nonprofit reversal is a, quote, transparent dodge that fails to address the core issues. And quote, the founding mission remains betrayed, end quote.

I would love to know what happened behind the scenes here. I mean, Occam's razor, this, and it's sort of looking. looks like OpenAI realized that the AGs weren't going to OK the full for-profit conversion, so this buys them some time, maybe. I mean, the real issue, even if we put aside the fact that even this public benefit conversion needs approval and fair value of the enterprise still needs to get sorted out, which could complicate fundraising going forward. Looming in the background are those investors in recent rounds who have the right to

take their money back if they don't like how this shakes out. Not only do I think Open AI is not out of the woods yet, I'm not even sure this move materially changes things. They still need to make all the stakeholders happy in ways that this move barely resolves, in my opinion. Real quickly, Bloomberg's sources say that OpenAI has reached an agreement to acquire WindSurf, an AI coding tool formerly known as Kodium for around $3 billion. The deal has not yet closed, though, and one wonders if that previous news complicates this. The acquisition could help Open AI take on rising competition in the market for AI-driven coding assistance systems capable of tasks like writing code based on natural language prompting.

Bloomberg News previously reported that the two companies were in discussions about an acquisition. WindSurf, formerly called Exa Function, had recently been in talks with investors, including Kleiner Perkins and General Catalyst, to raise funding at a $3 billion valuation. The company was valued at $1.25 billion in a deal led by General Catalyst last year, end quote. Man, the other big news today is consolidation in the food delivery space. DoorDash has agreed to acquire UK food delivery company Deliveroo for 2.9 billion pounds in cash. Deliveroo has struggled since its London IPO at a 7.6 billion pound evaluation in March 2021. DoorDash also plans to acquire New York City-based hospitality tech company seven rooms for $1.2 billion in cash.

Seven rooms works with more than 13,000 restaurant groups. And if that's not enough, Uber is acquiring an 85,000. percent stake in Turkish food delivery platform, Trenul Go for around $700 million in cash. Trenual Go had more than 200 million orders in 2024. But back to DoorDash, quoting the FT. Consolidation is gathering pace in the food delivery sector as companies bet that increasing size will help them grow. Earlier this year, Prosses, the European investment arm of South African Group Naspers struck a 4.1 billion-euro deal to take Europe's biggest food delivery group, Just the takeaway private. Deliveroo and DoorDash said,

on Tuesday that their boards had agreed the final terms of the cash deal. DoorDash's operations are focused in the U.S., Canada, Australia, and New Zealand, and do not overlap with those of Deliveroo, which was founded by Chief Executive Will Shoe in 2013. The Financial Times previously reported that DoorDash hoped the lack of overlap meant the deal would not be blocked by competition regulators. DoorDash has expanded abroad, notably through a $7 billion-year-all-stock deal for finished delivery app, Walt, in 2021. The company operates in more than 30. countries, end quote. And quoting Bloomberg. The company's buying spree highlights Doordash's ambitions outside of the U.S. where it already commands about two-thirds of the food delivery market. A takeover

of Deliveroo will expand its reach to more than 40 countries, Doordash said. The two companies combined had a gross order value of about $90 billion last year and have 50 million monthly active users. DoorDash's acquisition of seven rooms will give it a consumer-facing reservation platform similar to OpenTable or Resi that works with more than 13,000 restaurant groups. Its clients include Marriott International, MGM Resorts, and Wolfgang Puck. In 2022, DoorDash worked with seven rooms to pilot restaurant reservations within the DoorDash app in New York, Los Angeles, and Chicago. In addition to restaurant delivery, DoorDash also offers white label services to build ordering interfaces for restaurants' websites and phone answering systems. We believe both seven rooms and deliveru will expand our ability to build world-class services that increase our potential to grow local commerce and support our financial goals,

DoorDash said in a statement Tuesday, end quote. And I've actually got some new hardware for you today as well. Microsoft has debuted the $899 and up, Surface Laptop 13 with a smaller 13-inch screen, an 8-core Snapdragon X plus, 16 gigabytes of RAM, and 256 or 512 gigabyte options in terms of storage, shipping from May 20th. Quoting the Verge.

The most obvious difference with this smaller Surface laptop is the 13th. inch display. Microsoft currently uses a 13.8 inch display in the larger surface laptop 7 with a higher resolution of 2304 by 1536 and 201 pPI, but the surface laptop 13-inch model will use a 13-inch panel with a resolution of 1920 by 1280 and 178 pPI. This smaller panel also only runs at 60 hertz instead of the 120 hertz found on the surface laptop 7. There's also no HDR support on the surface laptop 13-inch. disappointingly, Microsoft has also ditched Windows Hello facial recognition support on the smaller surface laptop, so you'll have to use a fingerprint reader that's positioned on the power button if you want to log into this laptop without a password or pin code. Microsoft has kept Windows Hello facial recognition on its smaller Surface Pro 12-inch model, though,

and there's still a 1080P front-facing camera on the surface laptop 13-inch. Another disappointing aspect is that the Surface laptop 13-inch is still not fanless. Microsoft made the switch to a fanless design on the new Surface Pro 12-inch, but it's keeping a fan inside the smaller laptop variant to help keep it running cool. This should mean that the Surface laptop 13-inch will throttle less than the Surface Pro 12-inch, but we'll have to test that during reviews, end quote. If that doesn't float your boat, though, Microsoft has also unveiled the $799-plus Surface Pro 12, a fanless arm tablet with a 90-hertz display to USBC 3.2 ports and a revamped $150 keyboard shipping from May 20th.

Quoting the verge again. Microsoft is using a 12-inch LCD display on the Surface Pro 12-inch with a resolution of 2196 by 1464, 220 pPI. The company has stuck to the usual 3-2 aspect ratio found on surface devices, but this time it's using a 90-hertz panel instead of the 120 hertz found on the 13-inch Surface Pro 11. There's no OLED option on the Surface Pro 12-inch either. The changes to the display on this smaller Surface Pro aren't the only major differences, though. Microsoft has reworked the entire chassis here, and gone are the vents you'll find on the larger Surface Pro to help cool the device.

Microsoft has used a fanless design with the Snapdragon X Plus chip, allowing the company to have a rounded chassis that looks and feels a lot nicer than the 13-incher. Microsoft had to create a new Surface keyboard for this type of smaller Surface Pro because the older type covers would have simply been too big for this new 12-inch form factor. That's led to a total redesign of the Surface keyboard and even how it connects to the Surface Pro 12-inch. It still magnetically attaches, but Microsoft is using a different connector, which means the keyboard is no longer angled and lays flat. The new Surface Pro 12-inch keyboard also lacks an insert for the Surface Pen. You can now purchase the stylus separately and attach it to the rear of the device where it will also charge. Microsoft says it has done a lot of work to ensure the Surface Pen won't simply detach when you slide the Surface Pro 12-inch into a bag, and during my hands-on, I wasn't able to easily detach it from the rear of the device.

It felt rather sturdy, end quote. European drone startup quantum systems has raised 160 million euro sources, say, at a greater than 1 billion euro valuation. And Tecover hit a 1 billion plus pound valuation, as VCs are increasingly pouring money into European defense startups. Quoting the FTE, new investors are flocking to the market for defense or dual-use technology, which can be used in both civilian applications and on the battlefield. The latest rounds come as the makers of drones deployed in Ukraine's war with Russia. Scale up production as Europe races to boost its defense

capabilities following the Trump administration's threats to withdraw U.S. military support in the region. Munich-based Quantum Systems has raised 160 million euro led by Balderton Capital in the London-based venture firm's first defense tech investment alongside strategic backers Hensolt and Airbus Defense and Space. The deal, which also includes existing investors, including U.S. U.S. Venture Capitalists and Palantir co-founder Peter Thiel values quantum at more than one billion euro, according to people familiar with the terms. The goal is to make the battlefield transparent and have real-time aerial intelligence from every part of the front line, said Florian Siebel, co-founder and chief executive of quantum systems. You can only shoot if you know where to shoot,

so you need eyes in the sky, end quote. Separately, tech ever, which was founded in Portugal in 2001, said it raised tens of millions of euros from its existing investors, led by long-term existing backer Ventura Capital. Its new valuation is beyond one billion pounds. Ricardo Mendes, chief executive of Tecover, told the F-T, but he refused to specify the exact amount raised. TechEver last year raised 70 million euro in a round led by Bali Gifford that was also backed by the NATO Innovation Fund. Investment in European startups working on defense and related technologies jumped 24% in 2024 to $5.2 billion, according to figures from the NATO Innovation Fund and Research Group deal room, end quote.

Finally, today I'm going to grab bag two different things into one segment here. First up, Amazon has updated its iOS Kindle app to add a prominent orange get book button, enabling purchases via the mobile browser, one of the first big dominoes to fall after that recent Epic v. Apple ruling, quoting the verge. Before today's updates, buying books wasn't a feature you'd find in the Kindle mobile app following App Store rule changes Apple implemented in 2011 that required developers to remove links or buttons leading to all. alternate ways to make purchases. You could search for books that offered samples for download, add them to a shopping list, and read titles you already own, but you couldn't actually buy

titles through the Kindle or Amazon app or even see their prices. To avoid having to pay Apple's 30% cut-in in-in-app purchases and the 27% tax on alternative payment methods Apple introduced in January 2024, Amazon previously required you to visit and log in to its online store through a device's web browser to purchase e-books on your iPhone or iPad, which were then synchronized to the app. It was a cumbersome process compared to the streamlined experience of buying e-books directly on a Kindle e-reader. Amazon probably isn't going to change its mind about avoiding Apple's 30% cut on e-book sales, but the update to the Kindle app now makes it much easier to purchase e-books on your iPhone for those times when your Kindle e-reader doesn't have a reliable Wi-Fi

connection, end quote. And according to Censor Tower, Sheehan's ad spend rose 35% month-on-month in France and the UK in April. while Temu's jumped 40% again, month-on-month and 20% month-on-month, respectively in those two countries amid Trump's de minimis ban. Quoting Reuters, Kimber Madarazzo, marketing professor at Pepperdying Grazio Business School, said Sheehan and Temu probably won't be able to gain as many customers in Europe as they were in the United States. She said the two companies are now focusing on retaining the American shoppers they already have, a counter to their new international digital advertising strategies. Advertising in the UK is helping Sheehan and Temu secure more app downloads,

since their tower said, with Sheean downloads increasing 25% month over month and Temu more than doubling. Despite the increase in advertising and app downloads, daily active users of the apps have increased only marginally month over month, though. Sheean's UK daily active users increased 5%, and Temu's increased 10%. On a year-to-year basis, Temu increased its ad spending in the UK by 20% in France by 115%. Sheen increased it by 45% in France and 100% in. in the UK from last year in April. Temu's daily average U.S. ad spending on Facebook, Instagram, TikTok, Snap, X, and YouTube declined a collective average of 31% in the two weeks from March 31st to April 13th,

compared with the previous 30 days. Censor Tower estimated Schian's daily average U.S. ad spend on Facebook, Instagram, TikTok, YouTube, and Pinterest fell a collective average of 19% over the same period, end quote. Nothing more for you today. Talk to you tomorrow.