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AI Startups Thrive, Raking in Record $27.1B Amid Tech Downturn
5-minute tech market update.
Kristoffer Lindström
July 04, 2024
TECH BRIEF
The AI boom is going strong despite a broader startup downturn. US AI companies bagged a whopping $27.1 billion in Q2, approximately half of all US startup funding for the period. This increase, the highest three-month collection in two years, comes with substantial backing to firms like CoreWeave, Scale AI, and Elon Musk's xAI. The strong funding trend is fostering a "Great Reawakening" in artificial intelligence entrepreneurship.
💡 Insight: Investor focus has shifted sharply towards AI start-ups, with a staggering $27.1 billion invested in three months, representing nearly half of all U.S. start-up funding. Despite these companies' significant computing costs, the potential returns are too enticing to ignore, marking AI as a rare growth beacon amid a broader tech downturn.
Apple will gain observer status on OpenAI's board, an action resulting from Apple's decision to include ChatGPT in its artificial intelligence offering for iOS devices. Phil Schiller, Apple's former marketing head, was selected for the post. While details may yet change, the move associates Apple more closely with Microsoft, OpenAI's main AI provider and largest financial backer. Apple's ties with OpenAI do not currently include monetary deals, rather they are aimed at offering AI features on devices in China in partnership with Baidu and Alibaba.
A social media app, noplace, has topped the App Store after its public launch. The app allows users to customize profiles and status updates echoing Myspace's ethos, and it encourages socialization with friend-finding features. The app aims to provide a more communal experience by merging personal content with shared interests. Currently focused on text-based updates, noplace employs AI for suggestions and content curation. Founded by Tiffany Zhong, the app has raised over $19 million and competes with other Gen Z-focused apps like Wizz and Yubo.
Rising lawsuits and the scarcity of quality data are creating challenges for AI companies and changing the economic landscape for investors. High-profile cases, like major music labels suing Suno and Udio due to alleged copyright infringement, signal that high-quality training data isn't free. These developments might favor the big tech companies with vast in-house data and could reshape generative AI development, as data owners gain leverage. Also, changes in data consent and copyright legalities will likely impact future AI business operations.
In just one year since its launch, Meta's social media platform, Threads, has attracted over 175 million monthly active users. These numbers mainly reflect 'flyby' traffic, with regular use yet to be determined. Threads relies significantly on promotions via Instagram and the same account system. Potential arenas for growth include markets like Japan, and advertising may be introduced next year. Despite Threads not contributing significantly to Meta's revenue yet, its consistent growth allows the potential for future cultural impact.
QUICK
OpenAI Swiftly Rectifies Security Flaw in ChatGPT Mac App - OpenAI recently patched a security vulnerability in their ChatGPT Mac app that stored conversations in plain text, easily accessible for unauthorized users. The flaw was highlighted by Pedro Jose Pereira Vieito.
Telegram Expands Stars Use Case to Paid Content and Promotions - Telegram is extending its digital currency, Stars, for paid content and conversion to Toncoin. The app is introducing business-centric features and enhanced user discovery methods.
Brazil Halts Meta's AI Training Using Instagram, Facebook Posts - Brazil's data protection agency has halted Meta's use of Brazilians' social media posts to train AI, citing potential risks to user rights. Meta has five working days to demonstrate policy changes or face daily fines.
Amazon Discontinues Astro Business Robots After a Year - Amazon discontinues Astro for Business robot, providing full refunds and a $300 credit. The firm is redirecting its resources to home robotics.
Bezos Plans $5bn Amazon Share Sale After Record Stock High - Jeff Bezos plans to sell $5bn worth of Amazon shares after the stock achieved an all-time high of $200.43, outpacing Dow Jones' gain.
BUSINESS QUOTE OF THE DAY
"I've failed over and over and over again in my life. And that is why I succeed."
-Michael Jordan
The takeaway: Embrace failure as a stepping stone to success.
Example: Jordan’s early career was marked by setbacks, but his perseverance led him to become one of the greatest basketball players of all time.
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