Elon Musk threatened to stymie Tesla’s development in artificial intelligence and robotics if he isn’t granted more control of Tesla.
In a late Monday post on X, Musk said he is “uncomfortable growing” Tesla’s capabilities “without having ~25% voting control.” Without that control, Musk said he would “prefer to build products outside of Tesla.” Tesla bulls see the electric vehicle maker’s advancements in AI as a key differentiator that could add as much as $500 billion to the company’s value.
As of April, Musk owned around 13% of Tesla, although options which have vested but not exercised would bump him up to 20.6%. In another post Monday, Musk said that the board has been holding off on updating his compensation package pending the results of a lawsuit in Delaware which seeks to invalidate Musk’s 2018 pay package which is worth as much as $55 billion.
Walt Disney Co.‘s board decided not to recommend Nelson Peltz’s board candidacy to shareholders because he had not presented a “single strategic idea” in two years of seeking a seat and “seemed oblivious to the ongoing secular change in the media industry,” the company revealed in a securities filing. The comments come as Peltz’s proxy contest to win seats on Disney’s board is ramping up.
The company also said the board decided not to recommend Peltz’s other nominee, former Disney CFO Jay Rasulo, because the media business had changed so much since he had left the company and that “an outdated perspective on the business would be damaging to the ongoing strategic transformation underway.”
The securities filing also detailed the history of Disney’s interactions with Peltz, which the company said numbered more than 20 since last February, when Peltz ended his last proxy contest against Disney. It said that in a meeting between CEO Bob Iger and Peltz in November, Iger asked Peltz what he would recommend the board do to lift the company’s stock price, and Peltz “responded that he was not there to put forth a plan, he was only there to get a Board seat.”
Google is cutting hundreds of jobs in its 30,000-person ad sales unit as part of a broader reorganization, Chief Business Officer Philipp Schindler told employees in an email Tuesday morning. It’s the latest round of layoffs after the company last week cut more than 1,000 people across numerous divisions, part of an effort that could boost margins and offset increased compensation for artificial intelligence staff locked in a battle with OpenAI.
The ads reorganization, which The Information previewed last month, comes as Google is relying more on machine-learning techniques to help customers buy even more ads on its search engine, YouTube and other services. These tools don’t require much employee attention and they carry relatively few expenses, so the ad revenue carries a high profit margin. (A Google spokesman, Chris Pappas, said the layoffs were not directly related to Google’s AI advances.)
Managers will begin notifying affected employees tomorrow, Schindler said. The cuts will be concentrated on teams focused on selling ads to large customers. Google plans to invest more in its Google Customers Solutions unit, which has typically focused on smaller customers.
Japanese fashion retailer Uniqlo filed a lawsuit in Tokyo against Shein over alleged copyright violation of a popular shoulder bag.
Uniqlo said in a statement that Shein copied the design of the Japanese brand’s round mini shoulder bag. “The company filed this complaint because it has determined that the form of the imitation products sold by SHEIN closely resembles that of its own product,” the statement said. On Uniqlo’s U.S. site, the bags are sold at $19.99 apiece.
Shein has been gearing towards an initial public offering in the U.S. The company also faces another legal complaint from rival Temu over alleged anticompetitive practices.
Apple shipped more smartphones than any company in 2023, claiming the top spot for the first time, according to research firm IDC.
The iPhone maker shipped around 235 million phones last year, giving it a global market share of roughly 20%. That’s more than Samsung’s shipments of around 227 million. The South Korean company had previously held the top spot since 2010, IDC said.
IDC said while overall smartphone shipments were at their lowest in a decade because of a weak global economy, it expects shipments to recover in 2024. It added that Apple’s success comes as consumers buy more premium devices and because of intense competition among Android devices, which is fragmenting the market.
The U.S. Supreme Court has declined to hear the legal case between Apple and Epic Games, allowing a lower court’s decision to stand that requires Apple to open up its App Store to alternative payment systems.
However, the outcome still allows Apple to introduce measures discouraging developers from using alternative payments, ensuring that it will continue to capture the majority of commissions from in-app purchases.
As a result of the ruling, Apple revised guidelines to its App Store on Wednesday to allow developers to steer users away from Apple’s in-app payments system via links to websites. But Apple’s rules still require developers to pay a commission of as high as 27% and limits where developers can place such links and how they function.
Morgan Stanley reported a weaker fourth-quarter profit on Tuesday due to a handful of one-time charges, but showed stable or higher revenue in all of its major business units.
The profit was affected by $535 million in charges related to a deposit insurance assessment that most U.S. banks faced and a settlement over impropriety in block trading. On a conference call with Wall Street analysts, new CEO Ted Pick—who took over from James Gorman at the start of the year—said Morgan Stanley’s strategy would remain consistent with what Gorman pursued through a series of acquisitions and business-model shifts during his tenure. Under Gorman, Morgan Stanley expanded in wealth and investment management, which accounted for roughly 58% of Morgan Stanley’s revenue last year, compared with about 33% before the bank agreed to buy Smith Barney 15 years ago.
However, Morgan Stanley’s more recent purchases—of online brokerage ETrade and equity compensation platforms Shareworks and Solium—have pressured wealth management’s profitability, Pick said. That’s because new customers from ETrade and Shareworks and Solium are less focused on high-margin counseling from financial advisors than self-directed investments or workplace services. As a result, margins will be in the mid-20s instead of 30% or higher, Pick said, although he expects them to grow over time.
Goldman Sachs reported a 58% rise in quarterly profit to $1.9 billion on Tuesday, helped by significantly higher revenue in its asset and wealth management unit, as executives reaffirmed plans to meet or exceed longer term targets.
Goldman is in a transition period as it winds down consumer lending operations, sells investments in real estate and securities and pushes for growth in businesses where it has historically been strong but sees opportunities to gain market share. That transition caused some pain last year as the bank took losses on certain investments, laid off employees and acknowledged strategic blunders that had caused internal disputes and irritated shareholders.
On a conference call, CEO David Solomon and CFO Denis Coleman outlined progress on goals that management laid out when announcing a path forward for the bank in October 2022 and updated last year at its February investor day. The bank met or exceeded some of those goals, especially in asset and wealth management. Goldman is on track to meet or exceed other targets for efficiency, pretax profit margins and shareholder returns over the next couple of years, executives said.
JPMorgan Chase will pay $18 million to settle charges it impeded hundreds of clients and brokerage customers from blowing the whistle on potential breaches of the law by asking them to sign confidential settlement agreements.
The Securities and Exchange Commission said in a release Tuesday JPMorgan Securities’ agreements with at least 362 retail customers, who had been issued settlements of more than $1,000, did not permit them to voluntarily contact the SEC. The SEC said customers were forced to choose between receiving settlements or referring possible illegal activity to the agency. Director of the division of enforcement at the SEC, Gurbir Grewal said: “Whether it’s in your employment contracts, settlement agreements or elsewhere, you simply cannot include provisions that prevent individuals from contacting the SEC with evidence of wrongdoing.”
JPMorgan did not admit or deny the SEC’s findings, but has agreed to stop breaking the whistleblower protection rule, which bans market participants from taking action that can impede individuals from talking directly with the agency about possible securities law violations.
Private equity behemoth Apollo Global Management and venture capital firm 25madison have launched 25m Evolve, a new enterprise software incubator that will invest in new artificial intelligence technologies and potentially help deploy them across other businesses including Apollo’s portfolio companies.
The AI venture marks the latest collaboration between the two companies. Apollo invested in 25madison, which has backed legal artificial intelligence start-up Paxton AI and TMRW Sport – Tiger Woods and Rory McIlroy’s technology-focused investment vehicle – alongside investors including Ari Emanuel’s entertainment and sports group Endeavor in 2021.
Aaron Sobel, a private equity partner at Apollo, currently sits on 25madison’s board.
Greetings!
The year is still young, but so far it hasn’t been auspicious for Apple. A federal court today ruled against the iPhone maker on its latest appeal regarding a blood oxygen monitoring feature in the Apple Watch, almost certainly meaning Apple will disable the feature on the device while it pursues further appeals. Meanwhile, on Tuesday the U.S. Supreme Court refused to hear Apple’s appeal of a California ruling relating to the App Store, which means the company must allow developers to offer alternative payment methods in their iOS apps. And more legal troubles may lie ahead: Bloomberg reported Wednesday that the Justice Department could sue Apple on antitrust grounds as soon as March.
Let’s not overstate the impact of any of these individual episodes. It’s hard to imagine the absence of the blood oxygen feature will affect sales of the Apple Watch much, if at all, in the near term. And while Apple is now allowing app developers to offer customers an alternative way to pay, the core issue behind that case—Apple’s steep commission—is barely changing. The company has cut its maximum commission by 3 percentage points to 27%, hardly a resounding victory for developers. As one lawyer, quoted in The Wall Street Journal, said, Apple is doing the bare minimum to comply with the legal order. Not only that, but the richest company in tech is trying to get the plaintiff in the case, Epic Games, to cough up $73 million in legal costs.
As for the Justice Department, while a stream of news outlets has reported that it may be close to filing the case, most also say it has made no final decision. And even if a suit is filed, its resolution could be years off, making its impact highly uncertain. The real challenge for Apple remains its lack of growth, which investors finally appear to have recognized. Apple shares have dropped 5% so far this year, a worse performance than for most other big tech companies.
It’s possible Apple’s growth will rebound somewhat this year. The smartphone market is expected to expand in 2024 after two years of shrinkage, which should give iPhone sales a boost. But given how consumers are holding onto their phones for longer periods, investors shouldn’t get their hopes up. To really jump-start growth, Apple probably needs a new device, such as its Vision Pro mixed-reality headset, to go on sale next month, or the addition of generative artificial intelligence to the iPhone, which could spark a bigger replacement cycle. It’s a good bet that early sales of the Vision Pro will be unexceptional, given the high price point ($3,500) and the usual teething issues with a new device, such as its weight. To persuade consumers they need a new iPhone sooner than they might think, Apple probably needs to add more AI capabilities. If it can do that this year, it can turn 2024 into a winning streak after all.
Vision Pro’s Weighty Entertainment Value
Speaking of Apple and its forthcoming Vision Pro, Bloomberg broke news on Wednesday that Netflix won’t launch an app for the new headset, depriving Apple of some bragging rights for the new device just a couple of weeks before it goes on sale.
Lots of entertainment will still be available via apps, of course, including from Disney, which unveiled a list of its offerings on Tuesday. Disney and Apple have a long history, so this shouldn’t be a surprise. Netflix’s stance, though, may make more sense, given the amount of commentary we’re seeing about the weight of the headset, as demonstrated by this report earlier this week. It suggests that the Vision Pro is so heavy people feel the weight after 15 minutes. (Some fun memes have popped up on X on this topic).
So imagine you’re watching your favorite movie with the Vision Pro, and a few minutes in you feel the headset is giving you a headache or a neckache. That doesn’t sound like a great experience. Netflix may be right in holding off until Apple can make the Vision Pro less of a pain in the neck.
In Other News
Sheryl Sandberg, Meta’s former chief operating officer, is leaving the company’s board (more here).
Amazon is building a new subscription for Alexa called Alexa Plus, which will have better conversational capabilities, according to Business Insider.
YouTube is laying off roughly 100 people who have focused on helping creators and additional partners to the video platform (more here).
Sam Altman, OpenAI’s CEO, said his biggest priority as of now is launching the next version of the AI juggernaut’s large language model, which is likely to be referred to as GPT-5 (more here).
China internet regulators are reviewing Shein’s cybersecurity and matters related to the company’s data privacy, according to The Wall Street Journal.
Amazon is investing in Diamond Sports Group, which runs regional sports programming on television (more here).
