Big Tech

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Tech titan's warning

Former Google CEO Eric Schmidt at Axios' AI+ Summit in D.C. today. Photo: Eric Lee for Axios Eric Schmidt, the billionaire former Google CEO, laid out a "simple rule" for Silicon Valley during my interview with him at our AI+ Summit in D.C. today: "Don't fire a Steve Jobs." Why it matters: The tech luminary was referring to OpenAI CEO Sam Altman, who he called a "genuine hero." Altman's firing — in many ways — mirrors how Jobs left and later returned to Apple before turning it into a Big Tech powerhouse. "These founder CEO types are unusual, they're incredibly valuable and they change the world." In Schmidt's mind, Altman wound up empowered after the board's botched firing — and OpenAI will move faster. Once the OpenAI staff showed loyalty to Altman with a mass open letter, Schmidt said, the outcome was inevitable: "How much more feedback do you need?" ? Zoom in: Schmidt said he's optimistic that AI will offer vast benefits, Axios managing editor for tech Scott Rosenberg writes. "I defy you to argue that an AI doctor or an AI tutor is net negative. It's got to be good for the world." ? Key moments from the summit: Schmidt: Guardrails "aren't enough" ... Senate debate surprise ... AI book recs.

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? Big tech trips

Illustration: Annelise Capossela/Axios

High-profile stumbles by Microsoft and Google in the corporate rush to deploy generative AI are the result of known flaws rather than surprise problems, Axios' Ina Fried writes. Why it matters: The more half-baked AI features and products tech giants unleash upon the public, the less the public is going to trust and embrace the new technology. Microsoft last week delayed the broad release of a feature for PCs, Recall, over privacy and security concerns. Google has faced blowback over its move to incorporate AI summaries atop search results. ? Zoom out: Hundreds of billions of dollars are pouring into the AI market. The competitive frenzy is causing companies to floor it on product rollouts. Keep reading ...

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? Tech to Wall Street: Stop worrying

Data: Company earnings reports. Chart: Axios Visuals Big Tech's message to investors on back-to-back earnings calls this week was: "Stop worrying about the billions we're spending on AI — everything's going to be just great," Axios' Scott Rosenberg writes. Why it matters: Over the past month, Wall Street began questioning the growing cost of buying high-end chips and building data centers. Google, Microsoft and Meta, each in different ways, told Wall Street to relax. Those companies all continue to grow and remain jaw-droppingly profitable (charted above), providing an enviable financial foundation for their most ambitious dreams. "When you go through a curve like this, the risk of underinvesting is dramatically greater than the risk of overinvesting for us here," Google CEO Sundar Pichai told analysts last week. Keep reading ...

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? Intel's worst day

Data: Yahoo Finance. Chart: Axios Visuals The market's fading love affair with Big Tech has suddenly collided with a steady stream of worrying macro data, Axios' Pete Gannon writes. State of play: The tech-heavy Nasdaq Composite shed 2.4% yesterday, ending the day in correction territory from its recent high on July 10. Intel, the chipmaker, jolted markets as well, falling hard after Thursday's massive earnings miss. Yesterday was the company's worst day on Wall Street in 50 years. Go deeper.

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Big Tech leans away from moderation

Illustration: Sarah Grillo/Axios

Big Tech seems to be shifting to the right — at least rhetorically — on content moderation. Several social platforms have course-corrected after what they consider a content moderation overreach during the 2020 election and the pandemic. Ahead of the 2024 race, they are standing their ground, Axios Media Trends author Sara Fischer writes. ? The latest: Meta CEO Mark Zuckerberg accused the Biden administration of pressuring Facebook to "censor certain content" related to COVID-19. "I believe the government pressure was wrong, and I regret we were not more outspoken about it," he wrote in a letter to the House Judiciary Committee. Zuckerberg and former Twitter CEO Jack Dorsey have both said their platforms mishandled stories about Hunter Biden. And the arrest of Telegram CEO Pavel Durov galvanized tech figures — like Elon Musk — who consider themselves "free-speech absolutists." ? Yes, but: Walking the walk on free-speech absolutism allegedly allowed Telegram to become a hotbed of criminal activity.

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? AI bill divides tech world

Illustration: Eniola Odetunde/Axios

A California effort to regulate AI has split the tech world — with some leaders trying to crush what they see as overreach by a single state, and others grudgingly supporting the effort, Axios' Ina Fried and Ashley Gold write. Why it matters: The move comes as regulators in Europe have again taken the lead on legislation. Congress has yet to act, putting U.S. states in the driver's seat. ? Zoom in: Anthropic has offered cautious support for the bill, which requires AI developers to comply with certain rules before developing their models. OpenAI opposes it, saying it could "stifle innovation." Elon Musk said Monday that California "should probably pass the SB 1047 AI safety bill," arguing its risk to the public justified regulation. "This is a tough call and will make some people upset," he said.

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? Deal could reshape tech

Data: Yahoo Finance. Chart: Axios Visuals A Qualcomm-Intel merger — still a longshot — could become the next president's first major antitrust case, Axios' Dan Primack writes. Why it matters: A deal would reshape the tech industry — and reflects the rapid fall from grace for Intel, once the world's largest chipmaker. Qualcomm informally approached Intel about a takeover, which would be the largest tech merger of all time. Bloomberg reported yesterday that Apollo Global Management, a private equity firm, offered Intel an investment of as much as $5 billion — a vote of confidence in the chipmaker's turnaround strategy. ? The big picture: Intel's troubles began before the rise of generative AI, but it didn't recognize how the market was about to change — namely in favor of the types of chips made by rival Nvidia.

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Biden administration leaves ‘foundational’ tech legacy, technologists say

As he’s poised to leave office in two months, President Joe Biden will leave a legacy of “proactive,” “nuanced,” and “effective” tech policy strategy behind him, technologists across different sectors told States Newsroom.

https://floridaphoenix.com/2024/12/06/biden-administration-leaves-foundational-tech-legacy-technologists-say/?

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? Tech's tariff playbook

Illustration: Annelise Capossela/Axios

U.S. tech giants are awkwardly navigating two paths through the minefield of President Trump's global trade war, Axios' Ina Fried and Scott Rosenberg write. Why it matters: Companies such as Apple and Nvidia are altering their short-term supply chains and diversifying their product sourcing to minimize the cost of Trump's tariffs. At the same time, they're doing everything they can to get on Trump's good side, hoping it will pay off in carve-outs or other favors. ? Zoom in: Tech companies began efforts to diversify their production beyond China during the first Trump administration, and those efforts expanded after the pandemic. Much of that production moved to countries (Vietnam, India) that are targets of Trump's now-paused reciprocal tariffs. For tech's biggest firms, the game of Trump management involves rituals of appeasement in the form of public announcements of extravagant — and ostensibly new — investments. The game has four rules. Pick a crazy high investment number in the hundreds of billions of dollars, then hedge it by using terms like "up to" and "planned." Roll together projects that were already in the pipeline with new spending plans to boost the final tally. Be sure to credit Trump by name, or otherwise signal he made the deals possible, or just don't contradict him when he takes credit. In a few months or years, feel free to change course or back out as needed. Keep reading ...

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A red state cracks down on Big Tech’s bad behavior. South Carolina’s state-owned power utility Santee Cooper has enacted a higher rate for electricity-guzzling businesses like cloud computing and artificial intelligence data centers to ensure fair energy rates for all of the state’s customers.

• Last year, tech giants like Google and Meta flocked to South Carolina to build data centers with state subsidies — but now South Carolina’s senate has voted to limit such tax and energy incentives for the tech industry.

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? Web's slow death

Illustration: Aïda Amer/Axios

The AI-fixated tech industry is rapidly dismantling the old web, with no game plan for how to replace it, Axios' Scott Rosenberg writes. Why it matters: Chatbots have already begun to intercept web traffic and drain publishers' revenue. Now tech giants and startups aim to remodel the devices and browsers we use to access web pages, using AI to summarize or pre-empt the content that people and publishers post online. Firefox debuted an experimental browser tool last week that provides AI summaries when users hover over links. Also last week, the Browser Company, maker of the Arc browser that's beloved by some power users, announced it was pivoting to focus on a new AI-powered browser called Dia. Keep reading ...

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? Tech giants play AI musical chairs

Illustration: Sarah Grillo/Axios

There are five consumer-tech giants — but only three leading AI foundation models, Axios' Scott Rosenberg writes. Why it matters: When the dealmaking music stops, someone's going to be left out. Apple is talking with both Anthropic and OpenAI about using their foundation models to power Siri, after in-house efforts to upgrade Apple's voice assistant have faltered, Bloomberg reports. Once cutting edge, Siri is now a glaring anachronism in a world enthralled by the verbal and vocal agility of LLMs — and an irritating reminder to everyone at Apple of how far they've lagged behind in the voice-assistant competition. The big picture: Every big player in tech is working on their own foundation models — the biggest and most ambitious large language models that fuel ChatGPT and all the other services at the heart of the generative AI revolution. OpenAI, Anthropic and Google seized the high ground early and have stayed ahead of the pack, both in scale, innovative advances and subtle refinements. ? Zoom in: Most of tech's five trillion-dollar giants — Google, Microsoft, Meta and Amazon — already have a match in the foundation-model game, but there's constant movement, and the music is still playing. But that means Apple's choices are limited. The primary options are OpenAI and Anthropic — both of which Apple has explored partnering with, according to Bloomberg. Apple could still decide to redouble its internal efforts instead. The company has a long history of avoiding shipping half-baked products and letting projects take as long as they need.

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Zuck's AI moonshot

Illustration: Aïda Amer/Axios

Mark Zuckerberg — in an unprecedented, multibillion-dollar talent raid — has dramatically reset the market for blue-chip AI builders, and further complicated the government's ability to stack its own technology bench, Jim VandeHei and Mike Allen write in a "Behind the Curtain" column. Why it matters: The Meta CEO is trying to lure talent from OpenAI and other tech companies with offers that can top $100 million in total compensation for the first year alone — beyond most star athletes' pay. Top-tier pay packages being offered by Meta for AI researchers can reach up to $300 million over four years, WIRED reports. A tech-news feed on X used a baseball card motif to portray an OpenAI researcher being "TRADED" to Meta. The talent derby has sent compensation soaring across AI, as rivals scramble to keep top talent and entice others not to flirt with Meta and other suitors. It's partly a continuation of an ongoing recruiting war — OpenAI built its lab with the help of some massive comp packages. Zuckerberg unveiled his dream team this week as Meta Superintelligence Labs (MSL), after meeting personally with potential recruits at his homes in Palo Alto and Lake Tahoe. ?️ The big picture: America has witnessed staggering valuations for startups. But never before have we seen company-valuation-sized salaries for people, rather than ideas or enterprises. That's injecting a new layer of drama and next-level economics for the biggest companies — many the size of nation-states — racing to win the AI wars. Collateral damage: The U.S. government is already struggling to recruit top researchers and scientists. A remotely talented AI specialist can now assume that riches in the tens of millions are attainable. So why sacrifice to serve in government? China, by contrast, can command top talent to work on government projects. A front-page Wall Street Journal story yesterday, "China Is Quickly Eroding America's Lead in the Global AI Race," said AI models from Chinese companies, including DeepSeek and Alibaba, are becoming popular in Asia, Europe, the Middle East and Africa. ? Zoom in: Zuckerberg's biggest single bet was investing $14 billion in Scale AI, and bringing co-founder Alex Wang to Meta as chief AI officer. Former GitHub CEO Nat Friedman will lead Meta's work on AI products and applied research. Eleven other new AI star hires were listed in Zuckerberg's internal memo announcing Meta Superintelligence Labs. Altman hit back at Zuckerberg's spree this week, telling OpenAI researchers in a Slack message that Meta "has gotten a few great people for sure, but on the whole, it is hard to overstate how much they didn't get their top people and had to go quite far down their list," WIRED reports. "I am proud of how mission-oriented our industry is as a whole; of course there will always be some mercenaries," Altman added. "Missionaries will beat mercenaries." Column continues below.

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Part 2: What Zuck sees

Mark Zuckerberg wears augmented reality glasses during a Meta event in California last year. Photo: David Paul Morris/Bloomberg via Getty Images Tech investors tell us that until very recently, the revenue outlook for AI models was unclear, and there was a debate about the return on capital spending. Now it's apparent that leading AI companies will do hundreds of billions in revenue per year, Jim and Mike continue. OpenAI is enjoying rampaging growth: The company said last month that it has $10 billion in annual recurring revenue, just 2½ years after the launch of ChatGPT — up from $5.5 billion last year. OpenAI has projected for investors that, fueled by AI agents and other new products, sales could total as much as $125 billion in 2029 and $174 billion in 2030, according to documents seen by The Information. Anthropic — a rival AI company led by Dario Amodei, an OpenAI alumnus — has hit a pace of $4 billion in revenue annually, up almost four times from January, The Information reported this week. At those rates of growth, you can see what Zuckerberg is seeing — and why he's suddenly pouring massive spending into making sure Meta remains a dominant AI player. The backstory: Zuckerberg is repeating a winning playbook. By 2012, he realized Facebook was behind on the mobile web. He famously redirected the entire company toward catching up. Facebook bought Instagram for $1 billion and later WhatsApp for $16 billion — racing ahead in areas where others had innovated. But this time he's betting on individuals, rather than successful enterprises. ? Reality check: Meta has spent a fortune on Llama, its large-language model (LLM), in an effort to develop a frontier model that can compete with OpenAI's ChatGPT, Anthropic's Claude and Google's Gemini. In a splashy story about "The List" of AI geniuses Zuckerberg is courting, The Wall Street Journal said Meta's "laggard history in generative AI has made some recruits hesitant." Bubbles can burst. AI salaries and data-center costs won't be sustainable without the ultimate payoff being unimaginably huge. And the more these companies spend, the bigger that payoff needs to be. As uncovered by a survey Axios reported last month, many small businesses using AI aren't even paying for it. The other side: Altman, noting that OpenAI has built "a culture that is good at repeatable innovation," said last month on a podcast hosted by Jack Altman, his younger brother, that Meta was making "giant offers to a lot of people on our team — like $100 million signing bonuses" and more than that in annual compensation. "We're set up such that if we succeed ... then everybody will do great financially," Sam Altman said. "t's incentive-aligned with mission-first, and then economic rewards and everything else flowing from that." Scott Rosenberg, Ben Berkowitz and Zachary Basu contributed reporting.

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"Liberation Day" on April 2 was about President Trump trying to impose a new global trade system. His sweeping tariff orders yesterday, 120 days later, were a reset to create a more practical regime, Axios' Ben Berkowitz writes.

• Why it matters: Trump scrapped most of the highest levies and the erroneous formula behind them. In the process, he settled on a framework that most major partners seem willing to grudgingly accept.

Driving the news: The government published a list of 68 countries — plus the EU — last night with new tariff rates set to start Aug. 7.

• Any countries not on the list will face a 10% rate.
• Many nations got a substantial break from their April levels. A few countries saw rates rise, including Switzerland and some African nations such as Cameroon and Chad.

Bloomberg cited a senior administration official as saying countries were roughly divided into three groups:

1. 10% for those where the U.S. has a trade surplus.
2. Around 15% for those with a deal, or where the U.S. runs a modest deficit.
3. Higher for those with no deal and larger deficits.

?️ The big picture: Tariffs are now higher than they've been in a century or more. That's already starting to show up in inflation data, and economists expect to see more in months to come.

• But for all the panic over the steep rates Trump proposed in April, the 10%-15% tariffs he's now imposed are closer to a cost of doing business than a crippling barrier.

The intrigue: In a separate order, Trump raised duties on Canada to 35% from 25%.

• The Canadian relationship has been fraught with tension, a stark contrast to Mexico, which got a 90-day extension to make a better deal.

Go deeper: Rates kick in Aug. 7.

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? $4 trillion club grows

Data: YCharts. Chart: Axios Visuals Microsoft briefly entered the $4 trillion club alongside Nvidia yesterday. Apple, Amazon, Alphabet and Meta could be next, Axios Markets author Madison Mills writes. The company's stock rallied after it reported blowout quarterly earnings, pushing its market cap above $4 trillion yesterday morning before it dipped just below ($3.965 trillion). ? Be smart: It's hard to visualize $4 trillion, but let's try. If Nvidia and Microsoft were countries, they'd have the fourth- and fifth-largest GDPs in the world, respectively. Nvidia is worth the equivalent of 14% of the U.S. GDP. If you stacked $4 trillion in $100 bills, you could reach the edge of space and back 10 times. Go deeper: The problem with Big Tech's valuations.

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• ? Meta is splitting its AI division into four groups and potentially reducing headcount amid a major shake-up, the N.Y. Times reports. Gift link.

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Lawmakers and activists call for action after AP reveals US tech role in China’s surveillance state

WASHINGTON (AP) — Lawmakers and activists across the political spectrum called on American tech firms to stop selling surveillance equipment to Chinese police and for Congress to examine the issue after The Associated Press reported that U.S. technology had played a far greater role than previously known in enabling human rights abuses by Beijing.

https://apnews.com/article/chinese-surveillance-silicon-valley-uyghurs-tech-xinjiang-60df0358dff99e326c16c9ea48dae82c?

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? 3 blockbuster IPOs

Illustration: Sarah Grillo/Axios

The three most valuable private U.S. tech companies — Elon Musk's rocket maker SpaceX and AI labs OpenAI and Anthropic — are preparing for public offerings as early as this year. The listings bonanza is expected to raise tens of billions of dollars, the Financial Times reports: "Those three deals alone would outstrip the total haul from about 200 US IPOs in 2025 and represent a potential gold mine for investment banks, law firms and investors." Gift link.

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⏮️ America's other power booms

Data: GridStrategies. Chart: Erin Davis/Axios Visuals The latest boom in power is scrambling our communities, politics and power bills, with big tech companies making promises seeking to ease said scramble, Axios' Amy Harder writes. The U.S. has been able to meet soaring electricity demand in decades past at even higher growth rates than experts are predicting now. ? Reality check: "The magnitude of current load is far above that of the '70s and '80s," said power expert and consultant Rob Gramlich, president of consulting firm Grid Strategies LLC. Go deeper ... Get Axios Future of Energy.

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🤖 OpenAI opens Amazon door

Photo illustration: Lindsey Bailey/Axios. Photo: Chip Somodevilla/Getty Images

OpenAI's revised pact with Microsoft — its first major investor — enables a likely expansion with Amazon and a bigger push into enterprise, Axios' Ina Fried writes. Why it matters: OpenAI is increasingly focused on business revenue, something made significantly easier if it can offer its services via whichever cloud its potential customers already use. A rewritten deal ends Microsoft's exclusive rights to sell OpenAI's models, caps Microsoft's cut of OpenAI revenue and scraps a controversial provision that would have changed the companies' business relationship once AGI was achieved. Go deeper: What Microsoft and OpenAI get in the deal.

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🎰 Tech's biggest lottery ticket

OpenAI headquarters in San Francisco. Photo: Smith Collection/Gado/Getty Images About 75 OpenAI employees each sold $30 million worth of shares — more than $2 billion just for that group — last October as part of the largest wealth-creation boom in tech history, The Wall Street Journal's Berber Jin scoops. Why it matters: It's a "sneak peek into the flood of money" that'll hit San Francisco, Austin and Wall Street with coming monster public offerings — as soon as this year — by OpenAI, Anthropic and Elon Musk's SpaceX (which now includes his xAI). Total value will be in the trillions. 🧮 By the numbers: 600+ current and former OpenAI employees sold shares last October, collectively making $6.6 billion. Each was allowed to sell up to $30 million. About 75 took the full amount, per the Journal. Rarely have such riches gone to non-founders. OpenAI researchers and engineers are among those cashing in. "No other tech boom in history has lavished that magnitude of wealth on such a swath of employees even before a public listing," the Journal notes under the headline, "How a Job at OpenAI Became the Greatest Lottery Ticket of the AI Boom." OpenAI president Greg Brockman disclosed last week at the Musk-OpenAI trial in Oakland that his stake in the company is worth nearly $30 billion. Keep reading (gift link).

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🤖 New data: Republicans like AI more than Dems

Data: Axios/Harris Poll. Chart: Danielle Alberti/Axios Democrats have become more skeptical of AI and the industry behind it, while Republicans are significantly more likely to trust most AI companies, according to our annual Axios Harris Poll 100 brand reputation rankings. Why it matters: This represents a significant shift in just two years, since the White House changed hands and AI advancements accelerated, Axios' Margaret Talev writes. Sam Altman's OpenAI is the tip of the spear. its reputational score was just 1 point higher among Republicans than Democrats in 2024. That gap has widened to 12 points today. TikTok, Nvidia, Meta, X and other AI or AI-driven companies also show a widening partisan gap. Data: Axios/Harris Poll. Chart: Axios Visuals 🔬 Zoom in: AI companies aren't viewed equally — and those with narrower partisan gaps generally received higher reputational scores. Anthropic ranks No. 15 in the overall reputation ranking of the most visible brands in America, with a 1-point partisan gap. OpenAI ranks No. 68. By the numbers: 44% of Republicans say their opinion of AI has become more positive in the past year, compared with just 35% of Democrats. 40% of Democrats expect AI to greatly or somewhat harm their career opportunities and wages in the years ahead, versus 32% of Republicans. Full rankings ...