The phone companies were sharing our data?! Get outta town.
On Monday, the Federal Communications Commission fined Verizon, AT&T, T-Mobile, and Sprint — which is owned by T-Mobile — a combined $200 million for illegally sharing access to customers' location information. The highly sensitive information was sold to data miners and then "wound up in the hands of bail-bond companies, bounty hunters, and other shady actors," FCC Chair Jessica Rosenworcel said in a statement. The phone carriers plan to challenge the fine. They argue the main reason they share the data is to aid in roadside assistance and medical emergencies, and that they're not responsible for violations made by data miners. The internet is like the Hotel California – you can check out any time, but you can never leave.
ChatGPT creator OpenAI is winning hearts and minds in the media the old-fashioned way – with money.
On Monday, the Financial Times said it struck a deal with OpenAI to allow the generative AI darling to license the FT's content. That means not only can OpenAI train its models on old FT articles (possibly something it was doing already) it can also use verbatim FT snippets when conversing with human users. This is a big feather in OpenAI's cap given the FT's standing as both a legacy media company and a publisher with a paywalled business model.
mAInstream Media
The news media's relationship with Silicon Valley was already tense before generative AI came along and dialed the tension up to 11. First, there's the question of whether companies building large language models (LLMs) that underpin AI chatbots like ChatGPT have been using publishers' content without permission. Then there's the problem of whether chatbots themselves constitute a mass workaround for news sites' paywalls, neatly summarizing copy that's supposed to be locked away from the broader internet.
Some publishers have initiated an all-out war. The New York Times sued OpenAI for copyright infringement in December, and a handful of digital outlets joined the fray in February.Meanwhile, OpenAI has struck licensing deals with other publishers, offering cash for copy:
Axel Springer, the German publishing company behind Business Insider and Politico, announced a licensing deal with OpenAI in February. That same month, OpenAI's biggest investor, Microsoft, struck a deal to pay digital outlet Semafor to integrate AI products into its website.
OpenAI has fewer allies in legacy media, although it did notch a licensing deal with the Associated Press last July. None of the involved parties have disclosed terms, but The Information reported in January they can run between $1 million to $5 million per year.
Felix Simon, a researcher at the Oxford Internet Institute, told The Daily Upside that deals with large publishers could provide some legal cover for OpenAI. "Such deals can potentially provide legal clarity and stave off potential lawsuits from publishers," Simon said. But OpenAI's deals also could be intended to box out its AI rivals. "We currently see strong competition for high-quality data, not just from publishers, which can be used for more elemental training purposes of new model iterations or to provide up-to-date responses to user queries," Simon said.
Mr. Altman, Tear Down This Wall: According to Simon, publishers that sign AI licensing deals are taking a risk. "It is understandable that many large publishers are keen to strike such deals while there is money going around, especially considering that they were not compensated for their data training up these systems in the first place," he said. He added that publishers "could also risk cannibalizing their paywalls in the long term if users that usually would have subscribed will be satisfied with the reply from an AI system (even if the same prominently links to the FT or other outlets as a source)." What's a little light cannibalism between friends?
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It's a cliché at this point for Millennials and Gen Z to blame their financial woes on the Baby Boomer generation. But clichés exist for a reason.
Spending by older, affluent Americans is helping grow the economy, which is great. But it's also contributing to a delay in the Federal Reserve cutting rates, which is bad for the younger, less wealthy people constantly battling stubborn inflation and high borrowing costs, the Associated Press reported.
Out with the New, in with the Old
On paper, the American economy is doing well. The unemployment rate was at a low 3.8%, as of March, while GDP accelerated at a 2.5% annualized pace last year. And even Wall Street's resident worrier, JPMorgan Chase CEO Jamie Dimon, recently said he was impressed by the economy's "unbelievable" boom.
Total assets held by all Americans have surged to $147 trillion from $98 trillion at the end of 2018. However, the problem for younger Americans is the amount of wealth held by the older generation — and their willingness to spend it:
People 55 and over own nearly 75% of all household wealth. With gains in both the housing and stock markets, older people are spending more on expensive services like travel, entertainment, and healthcare, keeping prices in those sectors high, the AP reported. Also, many older Americans already own homes and cars, so they're less affected by high-interest rates.
Just a month ago, the Fed was talking about potentially three rate cuts in 2024, but with consumer confidence strong and the economy continuing to grow, those cuts aren't as justifiable. Americans will be lucky to see one by the end of the year, further delaying the younger set saving for down payments on cars, homes, and businesses.
"The Baby Boomers are the richest retiring generation we've ever had," Edward Yardeni, president of Yardeni Research, told the AP.
Run for the Shadows: This isn't to say older Americans are a vacation-house-owning, cruise-taking, fancy-wine-drinking monolith looking down on the rest of us. A recent study in AARP found that 20% of Americans 50 and older have no retirement savings, and 61% think they'll run out of money during their golden and twilight years.
The kid doesn't stay in the picture. Paramount Global held its first-quarter earnings call on Monday, and at least one notable name wasn't present: CEO Bob Bakish.
As the media conglomerate very publicly pursues a sale, the longtime executive has found himself increasingly on the outs. During its earnings call, the company made his exit official.
Dead Reckoning
Perhaps more than any of its legacy media peers, Paramount has suffered from the industry's trio of interconnected plagues: Linear television is dying, the theatrical box office is destabilized, and the path to profitability in streaming is murkier than anticipated. The total on-platform demand share for streamer Paramount+ — which essentially includes Paramount's entire content library, spanning decades — ranked last among the seven major streamers included in data firm Parrot Analytics' first-quarter industry report.
It's a reason why Paramount's market cap has plummeted to under $9 billion from around $30 billion in 2019 when CBS and Viacom completed their merger. It's no wonder Shari Redstone, non-executive chairwoman who inherited the longtime family-controlled business, is ready to sell. But the company's dual-class share structure is complex, with the fruits of any cash-out sale to be directed almost entirely to the Redstones — but not regular Class B shareholders.
It's why the chaotic sale process has sparked a shareholder rebellion, with Bakish at the center of it all:
Redstone is at the tail end of a 30-day exclusive negotiating window with potential buyer Skydance Media, the production company backed by KKR, Redbird Capital, and run by David Ellison. An initial offer would have essentially bought out Redstone's Class A shares for $2 billion, while regular shareholders would get stock in the newly formed company, but no payout; shareholders and Bakish, unsurprisingly, balked at this deal.
Meanwhile, a $26 billion all-cash rival joint bid by private equity giant Apollo Global, possibly in partnership with Sony Pictures, has been submitted. This offer would include Class B shareholders in any payout, though Redstone fears the PE giant would eventually sell the storied company piecemeal.
You're Fired: Skydance submitted its "best and final" offer on Monday, multipleoutlets reported, including a $3 billion cash infusion to pay down debt and, mostly, to buy back stock from the Class B proletariat. That theoretically assuages some of the concerns previously voiced by Bakish, though after nearly 30 years with the company he won't be around to see what happens next. Hey, Bob, fret not: We hear there may soon be a CEO opening across town at Disney.
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Extra Upside
Room service: 40,000 Marriott, Hilton, and Hyatt hotel workers to stage rallies, demanding pay hikes.
Pizza time: Domino's continues to surpass sales expectations thanks to all its promotional deals.
Mr. Altman, Tear Down This Wall: According to Simon, publishers that sign AI licensing deals are taking a risk. "It is understandable that many large publishers are keen to strike such deals while there is money going around, especially considering that they were not compensated for their data training up these systems in the first place," he said. He added that publishers "could also risk cannibalizing their paywalls in the long term if users that usually would have subscribed will be satisfied with the reply from an AI system (even if the same prominently links to the FT or other outlets as a source)." What's a little light cannibalism between friends?
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