|
Thanks for reading The Briefing, our nightly column where we break down the day’s news. If you like what you see, I encourage you to subscribe to our reporting here.
Greetings! We could have a big deal coming soon. DoorDash looks likely to buy UK-based meal and grocery delivery firm Deliveroo for about $3.6 billion in cash, judging by a statement from Deliveroo on Friday that was also posted by DoorDash on its website. The U.S. delivery firm made an offer at that price earlier this month and Deliveroo said Friday it “would be minded to recommend such an offer to Deliveroo shareholders”—a very British way of putting it. Negotiations are beginning to hammer out the details. What transparency! DoorDash is one of those no-fuss companies that chugs along, churning out money, and posting solid growth routinely, without drama. (Its market capitalization on Friday was about $79 billion, so it’s not small but not huge). Buying Deliveroo would strengthen DoorDash’s international presence, which got a lift with its 2022 purchase of Finnish firm Wolt for $2.8 billion in stock. Deliveroo, which operates in Europe as well as the UK and the United Arab Emirates, reported revenue last year of about $2.7 billion. That compares with DoorDash’s $10.7 billion. And given that Deliveroo had nearly $900 million in cash on its balance sheet as at Dec. 31, the net cost to DoorDash could be a little below $3 billion. The two companies appear to be a good fit in terms of the business. And their leaders even have rhyming names: Deliveroo’s CEO and founder is Will Shu, while DoorDash co-founder and CEO is Tony Xu. (Here’s an interview we did with Shu in 2021). So it could be the Xu-Shu team. Perfect! Advertising and shopping, two industries living in a symbiotic relationship, have underpinned the growth of the internet over the past three decades. It shouldn’t be surprising, then, that both seem likely to play a key role in making new artificial intelligence chatbots into money-makers. Just how much became clear this week. Firstly, in this scoop about OpenAI’s long range revenue projections, we learned that the ChatGPT creator expects revenue from AI agents and new products tied to free users to contribute tens of billions of dollars to OpenAI’s top line by 2029. We don’t know how OpenAI plans to make money from free users, but it could either be advertising or taking a cut of shopping transactions initiated through a search on ChatGPT. OpenAI already has Operator, an AI agent that can shop online for people, and others have also appeared, including one from Amazon. Another story we published this week offered new examples of how the AI-shopping trend is developing. That story’s main point was that AI agents now available don’t work too well for shopping. That point was echoed by a Google executive testifying this week in a Google antitrust hearing in Washington. Sissie Hsiao noted that AI chatbots so far are “not really great” at shopping. She went on to explain that data used to train a large language model won’t include “the latest coolest jacket… [which] might have just appeared in the world.” That means it won’t show up in a search by a chatbot. Hsiao said that “over time retailers” could feed data directly to AI models to show what products are available. (Credit to my colleague Erin Woo for her reporting from the courthouse). Why does any of this matter for advertising? Because a big portion of ad dollars spent on Google search, Amazon and Meta Platforms’ social media apps are aimed at driving shopping. If people switch their shopping searches to AI chatbots, advertisers will want to follow them. That means OpenAI, or other AI startups like Perplexity, could both build shopping businesses and take share of the ad market from the big tech incumbents. It’s a dynamic part of the market but one definitely worth following. President Trump’s tariff tsunami is hitting the economy. Temu and Shein on Friday steeply raised prices on Chinese imports, as both had warned last week they would do, lifting the price of one dress available on Shein to $21.49 from $12.07 a few weeks ago. Ouch. Those price rises follow similar moves by many smaller merchants we reported on a few weeks ago. And as much as higher prices will hurt, worse is to come. Apollo’s chief economist Torsten Slok said in his daily email on Friday that daily container traffic from China to the U.S. “is collapsing” and he predicted next month would see “significant layoffs in trucking, logistics and retail.” Shades of the Covid-era disruption to supply chains. That’s bad news for logistics firms like Flexport: Its CEO, Ryan Petersen, has been active on X warning of what’s happening. Then there’s the impact on advertising, which flows through to big tech firms like Google and Meta Platforms, both of which rely on ecommerce-driven ads. When Google reported first quarter earnings on Thursday night, chief business officer Philipp Schindler had little to say about the macroeconomic outlook other than the elimination of duty-free status for imports below $800 in price—historically the category for most Temu and Shein imports—“will obviously cause a slight headwind to our ads business in 2025 primarily” from retailers based in Asia. That’s code for Temu and Shein, both of which bought lots of ads on Google and Meta Platforms’ apps in the past couple of years. Expect more commentary on this when Meta reports earnings on Wednesday, while Amazon executives are likely to address the situation on their earnings call on Thursday. Trump’s tariffs have caused turmoil on Wall Street in the past month or so. Now the turmoil is about to hit Main Street—and tech companies big and small. The ripple effects of Trump’s tariffs are being felt across the business world. This week we took a deep dive into Apple’s efforts to avoid the worst of the China tariffs by shifting some production of the iPhone to India. China, whose relations with India have long been tense, isn’t making it easy. Our Google reporter Erin Woo spent a lot of time in a Washington courthouse watching the hearing determining how Google will have to change its operations to comply with the antitrust ruling that it has an illegal monopoly in search. Her reports are here, here, here, here, here, here, here and here. (Meanwhile, Google faces a hearing next Friday for potential remedies for its illegal monopoly in ad tech). In the world of AI, we revealed Amazon’s cloud capacity issues relating to the use of Anthropic’s AI models. And we broke news on Scale AI’s 2024 financial performance. Start your weekend reading with Sahil Patel’s exploration of the NFL’s longrunning courtship of Netflix. It shows how power in the sports media world has been upended as traditional TV has fallen on hard times, displaced by tech-run streaming services. • China this week quietly dropped its retaliatory 125% tariffs on certain semiconductors imported from the U.S., signaling an effort to alleviate the impact of an ongoing trade conflict in the crucial sector, according to CNN’s interview with import agencies in the country. • Apple plans to assemble all the iPhones sold in the U.S. from India as soon as next year, as U.S.-China trade tensions force the company to pivot away from China, the Financial Times reported on Friday, citing two people familiar with the matter. • Axiom Space has elevated chief revenue officer Tejpaul Bhatia to the CEO role, succeeding co-founder Mike Suffredini. The Information Weekend covers what happens when Silicon Valley logs off—the trends and people shaping culture, technology and everything in between. Subscribe for free today.
| 
