Welcome to the Techmeme Ride Home for Thursday, June 13th, 2024, I'm Brian McCullod today. Apple isn't paying OpenAI anything for their partnership. Guess they'll make it up on volume. More details on how much money OpenAI is making. The surprise galaxy watch FE, and do you think you'd have the skills to compete in the Excel World Championships? Here's what you missed today in the world of tech. This is sort of shocking to me.
Sources are saying Apple isn't paying OpenAI at all as part of their partnership and aims instead to eventually make money from AI by striking revenue-sharing deals with chatbot owners, going Mark Irman and Bloomberg. Apple believes pushing OpenAI's brand and technology to hundreds of millions of its devices is of equal or greater value than monetary payments. But even if money wasn't a major factor in the Apple OpenAI deal, remuneration could come into play later.
Under the current structure, the partnership could become costly for OpenAI, which needs to pay Microsoft a host, chatGPT on that company's Azure Cloud Computing Systems, the more people use chatGPT, the more OpenAI's expenses rise. And the integration into Apple's devices, while optional for users and limited to the company's recent products, threatens to add significantly to the computing budget.
ChatGPT will be offered for free on Apple's products, but OpenAI and Apple could still make money by converting free users to paid accounts. OpenAI's subscription plans start at $20 a month, a fee that covers extra features like the ability to analyze data and generate more types of images. Today, if a user subscribes to OpenAI on an Apple device via the chatGPT app, the process uses Apple's payment platform, which traditionally gives the iPhone maker a cut.
Apple's deal with OpenAI is an exclusive, and the iPhone maker is already discussing offering Google's Gemini chatbot as an additional option. That agreement should be in place later this year. Apple has also held talks with Anthropic as a potential chatbot partner, people familiar with the matter told Bloomberg earlier this year. The idea is to ultimately offer a range of AI services to users, similar to the way Apple has different search engine options in its Safari browser.
Eventually, Apple aims to make money from AI by striking revenue sharing agreements, whereby it gets a cut from AI partners that monetize results in chatbots on Apple platforms according to the people. The company believes that AI could chip away at the billions of dollars it gets from its Google search deal, because users will favor chatbots and other tools over search engines. Apple will need to craft new arrangements that make up for the shortfall.
Apple's own AI services won't be as costly to deliver because most of them are handled on the devices themselves rather than through cloud computing. Still, the company is ramping up its data center operations to support new online AI services that handle more advanced tasks.
But maybe for Sam Altman, it's no worry no cry, because sources say OpenAI's annualized revenue has hit $3.4 billion, up from the $1 billion in the summer of 2023 that was estimated at $1.6 billion in late 2023, with $3.2 billion coming from subscriptions to its chatbots and API feeds. Quoting the information. OpenAI was last valued at about $86 billion in a recent sale of employee shares.
The latest revenue figure suggests OpenAI is being valued at about 25 times forward revenue on the lower end of recent fund raising for private AI startups. It's also just a little above where AI chipmaker Envidea's stock is valued on the public market according to S&P global market intelligence.
Most of OpenAI's revenue about $3.2 billion on an annualized basis comes from subscriptions to its chatbots as well as fees from letting software developers access its models through an application programming interface. Microsoft has typically taken a cut from some of OpenAI's sales of AI models because those models run on Microsoft's cloud. OpenAI also receives a cut from Microsoft's sales of OpenAI models to Microsoft's own Azure cloud customers.
OpenAI's cut now amounts to about $200 million on an annualized basis of roughly 20% of the revenue Microsoft is generating from that business, Altman told staff. Apple's news this week that it will integrate chat GPT into its products could give OpenAI a further boost, though the terms of that deal including whether Apple is paying OpenAI at all are unclear, although we just got that from German.
At the same time, OpenAI has plans to roll out an array of new products including a search engine, a video generating model, and AI powered software that can take actions on users' computers which could further boost revenue. That revenue rate puts the chat GPT maker far ahead of its rivals. Last fall for instance, rival andthropic told investors it was generating revenue at a $100 million annualized rate with plans to reach more than $850 million in annualized revenue by the end of 2024.
Cohear a Canadian OpenAI rival who is generating just $22 million in annualized revenue in April and quote. Meanwhile, AI search engine perplexity says it is working on revenue sharing deals with publishers even as Forbes has been vocally critical of the company alleging it misused content from Forbes and others. Quoting semaphore. Forbes last week accused perplexity of plagiarizing one of its articles and investigation into former Google CEO Eric Schmidt's drone company.
He also mentioned the reporting in one of its five minute AI generated podcast episodes. Employees and executives at Forbes took to X to criticize perplexity's co-founder and CEO, Errorvind Srinivas, among the criticisms was that perplexity's citations of the original Forbes article were not sufficiently prominent, which may have led some readers to infer that perplexity authored the article.
Perplexity said it was already working on revenue sharing deals with high quality publishers even before this criticism. But the company aims to unveil its plan soon. The deals would be a first of its kind revenue stream for media companies providing a framework to earn recurring income. In contrast, OpenAI is paying media companies up front to use their archives for training new AI models.
It's debatable how long OpenAI and other foundation model companies will need that data, meaning the deals could be one-offs. Perplexity was originally available via the Discord chat app and later the web, rather than answer questions based on training data perplexity goes out and searches the internet for results, citing the original sources within the answer. Last month, it launched a new Pages feature. Users can take a search result and turn it into a page similar to a Wikipedia entry.
Then at some point, a perplexity user created a page from a search about an article by Forbes about Schmidt's secretive new drone business. John Pachowski, a Forbes executive editor and veteran tech journalist, was livid. Our reporting on Eric Schmidt's Stealth drone project was posted this AM by at Perplexity AI. He posted on X. It rips off most of our reporting. It cites us and a few that re-block this as sources in the most easily ignored way possible.
Perplexity's knockoff of our reporting feels like a crystallization of the Cannes journalism survive AI conversation. The company took our pay-walled work without our permission and competitively broadcast it across the web video mobile as though it were itself a media outlet he wrote in another X-Post and quote. Sony has rolled out an update to Discord on PS5 to integrate that app into the console's dashboard and let users join calls directly, starting in Japan and Asia, quoting the verge.
To start, select the Discord tab in Gamebase within the PS5 control center and choose the Discord server or DM group you'd like to join, explain Sabrina Meditz, Senior Director of Product Management for the PlayStation platform experience. Then select your preferred voice channel. This will reveal more details such as who is already in the channel, chatting. You'll also receive a PS5 console notification when another Discord user calls you, allowing you to join right away.
This latest PS5 update puts the Discord experience nearly on par with what Microsoft offers on the Xbox. Microsoft first offered Discord support on Xbox in July 2022 for testers before then rolling out an improved experience without the need for a phone in November of that same year. Discord on Xbox was also updated to let you stream your gameplay to friends last year.
Sony is also rolling out the ability to share your PlayStation network profile on any messaging or social app with a new share profile option in the PlayStation mobile app next week. The feature generates a shareable link or QR code so people can easily add you as a friend and quote.
But don't expect a tweet from your Nintendo Switch anymore, that's because Nintendo has removed X support from the Switch via a new firmware update, following in the footsteps of Sony and Microsoft which removed X support from their consoles in 2023 after X introduced new fees for API usage. The decision to remove support came after Elon Musk's social media platform began charging more for business use of its API, the interface used by third party developers to access Twitter data.
Nintendo didn't give an explicit reason for the removal of support but big companies like it, Sony and Microsoft could be charged around $42,000 a month to uphold integration according to wired. It notably continued to support Facebook however, which does not charge for using its API.
At the time Nintendo announced its plan to pull the integration from Switch, X slash Twitter itself responded, insisting it was dedicated to enhancing the gaming community's experience on the social media platform and that it still has a strong relationship with Nintendo. The gaming community is one of the largest and most vibrant communities on our platform and we are dedicated to enhancing and supporting gaming related features, X slash Twitter said in its own now deleted post.
Our partnership with Nintendo remains strong and we are working together to ensure a smooth transition for all users. We will continue collaborating with partners to bring new and exciting experiences to our global gaming community. How many times did I quote from our next sponsor just last week? Probably, almost every day. If you do listen to the show every day, you know the great work the Washington Post does. The Washington Post helps you go deeper on the news that matters most to you.
Your journalists bring you the facts and provide clarity about what's happening in the industry, revealing the role tech giants and regulators play in our lives, the dangers and wonders of breakthrough technological developments and the national conversation around things like AI. Also, did you know the Post offers a cool feature for audio lovers like you? You can conveniently listen to articles in addition to reading them so you can catch up on the news during your commute.
Think the Post only covers politics, that's not true at all. You name it, they cover it from climate and culture to crosswords and cooking. The Washington Post helps you discover a world of surprising stories, important insights and actionable advice. From May 21st to June 3rd, you can go to WashingtonPost.com slash ride to subscribe for just 25 cents per week for your first year. That's 90% off their typical offer so this is truly a steal.
Once again, that's WashingtonPost.com slash ride to subscribe for just 25 cents per week for your first year. If you happen to listen to this ad after June 3rd, know that we still have an amazing 50 cents per week offer just for our podcast listeners. 10 seconds on the clock. How many things can you name that are always growing? Hopefully your relationships, your skills, your customer base, how about your business on Shopify?
Shopify is the global commerce platform that helps you sell at every stage of your business from the Launcher Online Shop stage to the first real-life store stage. All the way to the, did we just hit a million order stage? Shopify is there to help you grow whether you're selling scented soap or offering outdoor outfits. Shopify helps you sell everywhere from their all-in-one e-commerce platform to their in-person POS system wherever and whatever you're selling. Shopify's got you covered.
Shopify helps you turn browsers into buyers with the internet's best converting checkout 36% better on average compared to other leading commerce platforms. And sell more with less effort thanks to Shopify Magic, your AI powered all-star. And you don't have to just sell your own stuff anymore with Shopify Collective. You can curate products to sell from the brands you love, giving your customers more variety and your business more sales.
Shopify keeps my 25-year-old e-commerce company running smoothly, see what it can do for you. Sign up for a $1 per month trial period at Shopify.com slash ride, all lower case. Go to Shopify.com slash ride now to grow your business. No matter what stage you're in, shopify.com slash ride. Surprise! Samsung has unveiled the $199 Galaxy Watch FE in a single 40-millimeter size with a 1.2-inch OLED display, Xenos W920 chip NFC GPS and 16GB of storage on sale from June 24th.
So there are now three Galaxy Watch models with this on the low end, but those are pretty decent specs for that price, I think, quoting the verge. It makes sense that Samsung's doing this now. The Galaxy Watch series used to be relatively affordable compared to the competition, but in the past two years, Samsung's raised the starting price of its watches by $50 to keep up with inflation.
The FE will retail at $199 for the Bluetooth-only version and at $249 for the LTE version, which is more in line with what its watches used to cost. This also makes Samsung's smartwatch lineup look a bit more like Apple's with a budget model, flagship model, and a more premium option. Like other entry-level models, the FE foregoes some bells and whistles to get that more palatable price. For example, the FE only comes in a single 40-millimeter size with a slightly smaller 1.2-inch OLED display.
The FE also has the last gen Xenos W920 chip instead of the W930. With 1.5GB of RAM and 16GB of storage. Most of the sensors remain the same, but you do give up the temperature sensor that was introduced last year. The battery is also smaller at 247 milliamp hours. The verge asks if the FE will support fast charging, but did not get a response. That said, you're not giving up that much.
Despite being the budget model, the FE has the same sapphire crystal lens, IP68 rating, and 5 ATM of water resistance. It's also got the same one-click strap mechanism, NFC payments, and built-in GPS. Connectivity wise, you get LTE, Bluetooth 5.0, and Wi-Fi. Also like the flagship watches, the FE has one UI, watch 5, and Wear OS 4, abnormal high low heart rate notifications, EKGs, body composition analysis, and personalized heart rate zones. Announcing the FE now is a bit of a surprise.
Samsung typically unveils its wearables at its summer unpacked event, which is expected to take place next month in Paris. That said, this year's event could be a truly stacked one for Samsung's wearable lineup. On top of a new Galaxy Watch 7, we're expecting to see a new Galaxy Watch Ultra and the Galaxy Ring. All things considered, the relatively simple FE would have easily gotten lost in the shuffle. The Bluetooth version of the Galaxy Watch FE goes on sale in the US starting June 24th.
The LTE version arrives later this year. Finally today, did we know this was a thing? And by this I'm referring to the Microsoft Excel World Championship. An annual tournament hosted by the Financial Modeling World Cup, where competitors solve Excel puzzles for prizes. Goatting the verge. It's happy hour in Las Vegas and the MGM Grand Casino is crawling with people. The National Finals rodeo is in town. The NBA's inaugural in-season tournament is underway.
The Raiders play on Sunday and the U2 residency is going strong at the giant sphere, so it seems everyone in every bar and at every slot machine is looking forward to something and wearing a cowboy hat. Even for a town built on non-stop buzz, this qualifies as a uniquely eventful weekend. The Night Wager that if you wanted to see the most exciting drama happening at the MGM on this Friday night.
You'd have to walk through the casino and look for the small sign advertising something called the Active Cell. This is the site of the play in round for the Excel World Championship. And it starts in five minutes. There are 27 people here to take part in this event, 28 registered, but one evidently chickened out before we started. Which will send its top eight finishers to tomorrow night's finals.
There one person will be crowned the Excel World Champion, which comes with a trophy and a championship belt and the ability to spend the next 12 months bragging about being officially the world's best spreadsheeter. Eight people have already qualified for the finals. Some of today's 27 contestants lost in those qualifying rounds. Others just showed up last minute in hopes of a comeback.
At 6pm on the dot, Andrew Glinavitch, the founder and CEO of the Financial Modeling World Cup, the organization hosting these championships, takes the modular stage in the ballroom. He loads an unlisted YouTube link, which begins explaining today's challenge known as a case. It's a puzzle called Potions Master and it goes roughly like this. You are training to be a potions master in Excelberg, but you're terrible at it.
You have a number of ingredients, each of which has a certain number of associated points. Your goal is to get the most points in each potion before it explodes, which it does based on how much of a white ingredient you've added. The Potions Master case, like so many of the puzzles conquered by these competitive
accelerers, is not particularly complicated. This is a flashier, faster, deliberately more arcadey version of spreadsheeting, more like trying to win 10 simultaneous games of chess on easy mode rather than painstakingly taking on a grandmaster. If you like, you can solve the whole thing manually, figure out when the white number gets too high, count the total points until that spot, then double check it because there's a lot of numbers and eventually answer the first question.
Competitive Excel has been around for years, but only in a hobbyist way. Most of the people in this room, full of actuaries, analysts, accountants, and investors play Excel the way I play, Scravel, or do the crossword, exercising your brain using tools you understand. But last year's competition became a viral hit on ESPN and YouTube, and this year the organizers are trying to capitalize. After all, someone points out to me, poker is basically just math, and it's all over TV.
Why not spreadsheets? Excel is a tool, it's a game, and now it hopes to become a sport. Nothing more for you today, talk to you tomorrow.