The Briefing

By Martin Peers

Supported by

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!

Guess what: Meta Platforms is still in the AI model game. You might have forgotten that fact, given that it’s been a little while since we’ve seen much new on the AI front from the Facebook owner. But CEO Mark Zuckerberg took to Threads on Wednesday to reveal the new model family, known as Muse, and its first member, Spark.

Meta stock jumped 6.5% on the news, although the market was up strongly, so not all of that was a reaction to the new model. Still, the release is good news. The New York Times had reported last month that Meta had put off the release of its new models because they fell short of rival models’ performance. Given that Meta spent many billions building a new team of engineers, led by former Scale AI CEO Alexandr Wang, any meaningful delay would have been a disaster.

So will Spark light enough of a fire in the AI market to change Meta’s trajectory? Maybe. Meta seems to be aiming at the consumer market—Zuckerberg noted that the new Meta AI would be “particularly strong” in areas such as “health, social content, shopping, games.” While many consumers are likely already set on their favorite chatbot—most likely OpenAI’s ChatGPT or Google’s Gemini—there may be quite a few still undecided. Meta’s AI chatbot is installed on its social media apps, which reach about 3.5 billion people. That should give it a leg up if it can get some positive buzz for the new AI models.

That’s a big if, of course. What makes this interesting is what Meta’s success could mean for OpenAI. Right now, the ChatGPT firm’s biggest hope in driving revenue growth may be advertising, seeing as Anthropic seems to have the enterprise market sewn up. But the two companies that know how to sell digital advertising best are Meta and Google. Both are already using their AI tech to turbocharge their ad businesses. If Meta can make progress on the chatbot front, OpenAI will have an even harder time building a decent ad business in ChatGPT.

Treating Options as Debt

The high cost of stock compensation has become an even more hotly contested issue this year as investors have turned negative on enterprise software firms, which are big proponents of stock comp. Here’s an idea that deserves more attention: treating the potential cost of some employee options and restricted stock as debt.

That’s how the UBS HOLT stock valuation model treats stock compensation that can be exercised but hasn’t been, according to my colleague Ken Brown, who wrote about the HOLT model today. Imagine if accounting authorities mandated that approach as the standard! It would have quite the impact by inflating companies’ debt levels.

Consider how it would affect one company, Netflix, which has long leaned heavily on stock options to pay employees. As of Dec. 31, Netflix reported that 127.7 million options were outstanding that had vested, with an average exercise price of $36.07—well below Netflix’s stock price of just below $100.

Netflix calculated that the total value of these options—the difference between the stock price and the exercise price—was $7.4 billion as of Dec. 31, when the shares were a little lower than they are today. Netflix had about $14.5 billion of regular debt at that point, so if analysts were to treat the option value as extra debt, it would increase the total significantly.

In Other News

• Meta Platforms has taken down an internal, employee-built leaderboard tracking how many tokens staffers were using. The dashboard, which employees referred to as Claudeonomics, showed companywide total usage over a recent 30-day period of over 60 trillion tokens, The Information reported on Monday.

• Former Andreessen Horowitz general partner Anjney Midha has secured $1.3 billion for the first fund for AMP, his newly formed venture firm, The Information reported.

• Perplexity’s annualized revenue run rate has more than doubled since the end of last year to $500 million as of this week, said a person familiar with the situation, as demand for the AI firm’s new agent-based product drives subscription growth.

• Alibaba Group senior executive Jingren Zhou, who is in charge of AI model development, will stop serving as Alibaba Cloud’s chief technology officer and concentrate on his AI role, according to an internal memo.

• OpenAI CFO Sarah Friar said in a CNBC interview that the company would reserve a portion of shares it sells in its eventual IPO with individual investors, as SpaceX is doing, CNBC reported.

Today on The Information’s TITV

Check out today’s episode of TITV in which we explore the answer to Tomasz Tunguz’s question: Will Anthropic surpass Nvidia?

Recommended Newsletter

Start your day with Applied AI, the newsletter from The Information that uncovers how leading businesses are leveraging AI to automate tasks across the board. Subscribe now for free to get it delivered straight to your inbox twice a week.

A message from Genspark

Can AI Really Become Your New Employee?

Genspark Claw gives every executive a personal AI operator on a secure cloud-hosted computer- able to navigate apps, execute complex workflows, and turn intent into action. This is where AI stops assisting and starts contributing. Try it now.