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Top stories today:1) Microsoft is developing its own AI chip, Athena2) Dominion settles with Fox News for $787.5M3) Apple's headset to feature gaming, fitness, sports, and most core iPad apps4) Meta expected to cut another 4K; 29% of cuts since peak

0. Data and calendar

1. Microsoft is developing its own AI chip, Athena

• 300+ people are working on it.

• 2019: when the Athena project started.

• OpenAI and Microsoft are already testing it. - The Information

Our view: Apple, Google, and Microsoft want to do it all themselves

• This is a long-term trend, accelerating most notably when Apple started manufacturing its own chips, dumping Intel.

• If NVIDIA is a $700B company, that's market cap that could be transferred to Microsoft if they can manufacture their own chips -- the financial reasoning behind these kinds of moves.

2. Dominion settles with Fox News for $787.5M

• 49% of what they initially asked for, $1.6B. - NYT

  • Fox parent News Corp. had $760M of net income in 2022, and $1.669B of EBITDA, meaning that 2023 profits could be significantly impaired by these lawsuits.

• Smartmatic's settlement could be $1.329B, if they can also get 49% of what was originally asked.

  • A trial date for Smartmatic has not been set, but a settlement could be announced at any time.

3. Apple's headset to feature gaming, fitness, sports, and most core iPad apps

• There's an app for that: "The offerings will include gaming, fitness and collaboration tools, new versions of Apple’s existing iPad features, and services for watching sports. The push will include optimized versions of the Safari web browser and Apple’s services for calendars, contacts, files, home control, mail, maps, messaging, notes, photos and reminders, as well as its music, news, stocks and weather apps."

• $3,000 price point.

• June: announcement (at WWDC).

• "Months later": product going on sale. - Bloomberg

Our view: the real test will be how well the apps interact with the real world (i.e. augmented reality, not purely virtual)

• We will need to test the headset ourselves to form a proper view of whether consumers are likely to adopt this technology.

• Light AR glasses are something we see the whole world using, as potentially an iPhone replacer/augmenter -- but that might take decades, as AR technology is still incipient and very heavy. Meta reportedly expects to have their first AR glasses in 2027, and Apple will probably be ready at the same time.

4. Meta expected to cut another 4K employees; since peak, 29% of staff has been cut

• Layoffs in many areas, including Facebook, Instagram, Reality Labs, and Whatsapp. - Vox, Bloomberg

• In related news, Horizon Worlds to be available for teens (13+). - Techcrunch 

Our view: 29% of cuts show seriousness

• Could Mark follow Elon and cut 80%? It would likely work out fine, but his VR and AI ambitions will likely stop him from doing that.

• On the VR news, as we always say, the main chance of virtual reality becoming popular is when it becomes augmented reality, or at least mixed reality. Apple might surprise us in WWDC and deliver exactly that product.

5. Instagram now allows for up to 5 links in a user's profile

Read more: Techcrunch.

Our view: this strongly threatens Linktree, and is a warning sign for those building on other people's platforms

• The more your business relies on others, the more it is at risk of being destroyed in a blink of an eye. In the tech world, this fact favors the mega-cap companies, especially Apple and Google, which essentially control mobile.

  • As a reminder, Apple recently changed its privacy permissions on the iPhone, which caused a hit to targeted ad-based apps, like Meta's Facebook and Instagram.

6. SEC Chair Gensler refuses to answer whether ETH is a security

Read more: The Block.

7. Trump x DeSantis now 52-36, from 57-31

Trump is now a 62% favorite on betting websites, vs 25% for DeSantis

8. Unrealized losses at largest banks decrease

But, in the case of Bank America, still represent 43% of its equity:

Our view: situation is OK until customers stop being uninformed/lazy and leave

• Customers have no rational reason to have low-yield deposits at banks, which is essentially the business model of banks, who on average pay 0.36% on deposits.

  • Customers can easily leave their unused funds in Treasuries, directly or via money-market funds. Fintechs like Mercury or Meow make it even easier.

• If there's a bank run, all these banks are certainly illiquid, and likely insolvent too. Not that the Fed would ever let that happen.

9. Other headlines

AI

• RedPajama project open sources 1.2T token dataset.

• Epic, electronic health records software, partners with Microsoft to use GPT-4.

• ChatGPT is being used for therapy by some.

Tech

• Netflix +1% in subscribers, now 232M, revenue +4% to $8.16B, profit -18% to $1.31B.

• Tesla cuts prices for 5th time since January, underscoring competitive markets.

• Taxes: Software firms could face higher bills if R&D has to be amortized over 5 years.

• Elon tries to attract advertisers at Miami-based Possible conference.

• Reddit, following Twitter and targeting LLMs, will now charge for its API.

• Google Pixel Fold to launch in June, will cost around $1700.

• EU planning $47B EU Chips Act to compete with the U.S. CHIPS Act.

• Pegasus: Mexican military became a large user of spyware.

• Alaska Airlines doing away with check-in kiosks.

• Only 1 fintech unicorn was born in Q1: Egypt-based MNT-Halan.

Biotech

• Covid: FDA now recommends single-dose bivalent Moderna or Pfizer vaccines.

• J&J sales near $25B with growth in cancer treatment, cardiovascular tech Abiomed.

Business

• UK March CPI: +0.8% MoM, +10.1% YoY (from 10.4%).

• Goldman sold part of its Marcus personal loans, rest is up for sale.

• Paris has been benefitting from Brexit, as banks leave London.

• Disney to cut 1000s of jobs, including 15% of entertainment division.

• Self-publishing: median author made $13K in 2022, vs $6K for traditional publishing.

Crypto

• FTX has a $250M offer from Tribe Capital to restart exchange.

• Did Gensler improperly promote Algorand?

• FTX lawsuit against Shaq, Brady claims Taylor Swift did research and avoided FTX.

• House stablecoin bill would (temporarily) ban algorithmic stablecoins.

• Optimism could launch their own L1: a16z mysterious tweet.

• Fed's Bowman: most of the benefits of a CBDC will be achieved by FedNow (for U.S. residents, agreed, for the world, no).

U.S. politics

• McCarthy's debt ceiling plan doesn't even have all House GOP votes.

• 4 Americans charged with using citizens as illegal agents of Russia: 1st Am. violation?

• Georgia's false electors start pointing fingers at each other; indictments likely.

• 3 Charlottesville rallygoers charged with burning objects with intent to intimidate.

• DeSantis goes to Washington, but GOP Congressmen aren't enthusiastic about him.

• More republicans start criticizing DeSantis on Disney war.

• Justice Thomas: Dems send complaint to federal judges committee.

• Bidens made $580K in 2022, and paid $138K in federal income taxes, 23.8%. (Trump has failed to deliver his tax returns, even though he promised them.)

• GrowSF aims to remove Tenderloin's Preston from power.

World

• China could soon deploy supersonic high-altitude spy drones on Taiwan: leaked docs.

• Russia trying to interfere with Ukrainian Starlinks: leaked docs.

• South Korea might extend military aid to Ukraine.

• WSJ reporter: Russian court upholds detention, denies bail.

• Russian memo: even they are concerned about being too reliant on China.

• China's defense minister lauds Putin for "promoting world peace."

• Macron wants China's help to bring Putin, Zelensky to negotiating table.

• Zelensky visits frontline areas, after Putin released images.

10. Interesting tweets, memes, and images

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