June 02, 2024: Roller Coaster Tech Week

While Nasdaq topped 17,000 for the first time, earnings losers hit tech names hard. Nasdaq was down 1.1% for the week, despite a strong bounce into the close. S&P 500 lost 0.5%, and Dow Jones fell 1%. Cloud computing startup CoreWeave is preparing for a 2025 IPO. The company was last valued at US$19 billion. AI Startup Perplexity is in talks to raise money at a US$3 billion valuation (3x last round). Elon Musk’s xAI has completed a US$6 billion fundraising round. Salesforce stock plunged 16% after the company warned that a cautious attitude among buyers of enterprise software. MongoDB shares dropped 26% on weak growth. Trading app Robinhood said it would repurchase shares worth up to US$1 billion over a two to three year period starting from Q3. Bloomberg journalist Mark Gurman reported in his Power On newsletter that Apple and OpenAI have reached a deal for OpenAI to provide chatbot functionality in iOS 18. OpenAI two months ago revived a robotics team it disbanded four years ago. Chinese Tesla rival BYD says its new hybrid cars can go 1,250 miles without stopping for gas or charging. In Canada, Sophic Client UGE, entered into an arrangement agreement for a going-private transaction. The all-cash consideration of $2.00/sh represents a 270% premium to the closing price of the stock on the last trading day immediately prior to the announcement. Tribe Property Technologies will acquire Toronto-based DMSI Holdings, and announced a private placement led by PROPELR Growth Fund. Sophic Clients, Kraken and Plurilock reported record Q1 2024 financial results. Sophic Client, Ionol reported continued growth in Q1 2024. Sophic Client, Clear Blue reported Fiscal 2023 financial results.

Sophic Client UGE International (UGE-TSXV, UGEIF-OTC) enters into arrangement agreement for going-private transaction.

UGE International Ltd. and NOVA Infrastructure Fund II, announced that they have entered into an arrangement agreement pursuant to which the Purchaser will acquire all of the issued and outstanding common shares of the Company. Under the terms of the Arrangement Agreement, the Purchaser has agreed to acquire all of the Common Shares, other than Common Shares to be rolled over by certain management representatives and shareholders of the Corporation into the private entity that will carry on the business of the Company, for an all-cash consideration of $2.00 per Common Share. The Consideration represents a 270% premium to the closing price of the Common Shares on the TSX Venture Exchange on May 28, 2024, the last trading day immediately prior to the announcement of the Transaction. The Rolling Shareholders, taken together, own, control or direct an aggregate of 11,502,082 Common Shares (representing approximately 34.2% of the issued and outstanding Common Shares on a non-diluted basis) and will be rolling over an aggregate of 10,372,941 Rolling Shares (representing approximately 30.8% of the issued and outstanding Common Shares on a non-diluted basis). The remaining 1,129,141 Common Shares held by the Rolling Shareholders will be sold to the Purchaser for the Consideration. The break fee will be $2.2 million, subject to increase to an amount equal to the Purchaser’s transaction expenses to a maximum of $5.2 million. The Transaction must be approved by not only two-thirds of the votes cast by shareholders and certain other securityholders, but also by a majority of the minority in accordance with MI 61-101, and by the Ontario Superior Court of Justice, which will consider the fairness and reasonableness of the Transaction to all shareholders. All of the Rolling Shareholders as well as all of the directors and executive officers of the Company have entered into voting and support agreements representing, in the aggregate, 37.0% of the issued and outstanding Common Shares (on a non-diluted basis), pursuant to which they have agreed to, among other things, vote in favour of the Transaction at the Shareholder Meeting. The Company expects to hold the Shareholder Meeting to consider and vote on the Transaction in July 2024. If approved at the Shareholder Meeting, the Transaction is expected to close shortly thereafter, subject to court approval and other customary closing conditions. https://bit.ly/3yxevoU

Tribe Property Technologies (TRBE-TSXV) to acquire Toronto-based DMSI Holdings and announces private placement led by PROPELR Growth Fund.

Tribe has entered into an agreement to acquire (the “Acquisition”) Toronto-based DMSI Holdings Ltd (“DMSI”), including its three subsidiaries. DMSI achieved consolidated unaudited revenue of over $12 million in 2023 and positive Net income before taxes of $2.4 million. The Acquisition propels Tribe’s proforma annualized revenue run-rate to over $31 million and significantly improves the Company’s profitability profile. In addition, the Acquisition expands the Company’s footprint in residential rental and commercial property management, making Tribe one of the largest rental property management companies in Canada. To complete the Acquisition, the Company also announces a non-brokered private placement to raise aggregate gross proceeds of up to $3,500,000 which will be led by PROPELR Growth (“PROPELR”), a highly respected, late-stage growth equity investment fund, and will also include the participation of the operators of DMSI. https://tinyurl.com/yj4wbsnk

Sophic Client Kraken Robotics (PNG-TSXV, KRKNF-OTC) reports record Q1 2024 financial results.

Consolidated revenue for Q1 2024 was $20.9 million compared to $7.6 million, an increase of 175% over the comparable quarter. Revenue mix was 76% Product / 24% Service. Gross margin percentage in Q1 2024 was 45% compared to 59% in Q1 2023 with the change related to revenue mix by project in the quarter when compared to the prior year. Adjusted EBITDA for the quarter was $4.1 million compared to an Adjusted EBITDA of $0.9 million in the comparable quarter. Adjusted EBITDA margin in the quarter was 20% compared to 12% in the year ago quarter. Net income in the quarter was $2.2 million, compared to net loss of $1.3 million in Q1 2023. Subsequent to Q1 2024 the Company entered into a new Credit Agreement with a Tier 1 Canadian bank and closed a bought deal financing for gross proceeds of $20.1 million which consisted of 21,185,300 common shares at $0.95 per Common share. Annual financial guidance remains unchanged, Kraken expects revenue between $90.0 million to $100.0 million and Adjusted EBITDA in the $18.0 million to $24.0 million range. Capital and intangible expenditures in 2024 are expected to range from $6.0 million to $7.0 million. https://bit.ly/3VjUGdP

Sophic Client Plurilock (PLUR-TSXV, PLCKF-OTCQB) reports record first quarter fiscal 2024 financial results.

Gross margins increased to 21.9% in Q1 2024 from 13.6% in Q1 2023, driven by increases in Critical Services mix and margin improvements in margin throughout the Company’s portfolio. Services sales increased 66% driven by Plurilock’s focus on Critical Services and traction it is seeing with new clients. Adjusted EBITDA improved to a loss of $0.4M in Q1 2024 from a loss of $1.0M from stronger margins and cost containment versus the prior year. Total revenue for the three months ended March 31, 2023, was $11,574,930 as compared to $15,767,328 for the year three months ended March 31, 2023. Revenue for the three months ended March 31, 2024 and 2023, included revenue from both the Technology Division and the Solutions Division. Revenue for the three months ended March 31, 2024, is lower than the comparative period as a result of the timing on a few large orders and lower volume from the Integra acquisition (“INC”) offset partially by +66% growth in professional services sales. On January 3, 2024, the Company received a US$4.7 million sale order from a US public library. On January 24, 2024 the Company received a US$2.5 million cybersecurity sale order from the US hospital system. The Company remains committed to reaching cash flow breakeven by growing Plurilock Critical Services as well as continuing to identify more opportunities to achieve financial and operational efficiencies across all business units. At the end of December 2023, Plurilock enacted a plan in accordance with this strategy and expects to realize approximately $2.0 million in savings on an annualized basis. https://bit.ly/4bERZcx

Sophic Client Ionik (INIK-TSXV, INIKF-OTCQX) announces continued growth in first quarter 2024.

Revenue of US$42.3 million, an increase of 30% over the same period of the prior year (“Q1 2023”), and 10% over the prior quarter, attributable to revenue generated from 2023 acquisitions including Schiefer Media, Inc. (SCS), OpenMoves, LLC and S44 LLC (SHIFT44). Gross profit increased 28% to US$14.4 million (34% margin), compared to US$11.3 million (35% margin) in Q1 2023, reflecting top line revenue growth. Adjusted EBITDA of US$3.4 million, an increase of 37% over Q1 2023, with growth derived mainly from 2023 acquisitions. Cash flow from operating activities of US$5.0 million, a 230% increase compared to Q1 2023. Cash generated from operations was predominantly utilized to pay down and service senior debt obligations. https://bit.ly/4dZ5XaG

Sophic Client Clear Blue Technologies (CBLU-TSXV, CBUTF-OTC, 0YA-FRA) announces Fiscal 2023 financial results.

Revenue was $5,403,589, a 105% increase from $2,636,972 in F2022, due to strong revenues in the back half of the year. Recurring revenue $1,032,056, a 26% increase from $819,054 in F2022. Gross margin increased to 46% versus 37% in F2022. This very high gross margin percentage is indicative of the unparalleled value of our Smart Power IP. Non-IFRS Adjusted EBITDA was $(1,959,397) as compared to $(3,760,719) for the previous period, a 48% improvement. As of December 31, 2023, bookings increased 24% to $2,469,846 compared to $1,991,275 as of December 31, 2022, with delivery anticipated over the next three years. Cash decreased from $853,330 as of December 31, 2022 to $534,451 as of December 31, 2023. As of December 31, 2023, the Company has received approximately $3,762,239 of a $4,000,000 Federal Economic Development Agency for Southern Ontario interest-free loan facility and $746,929 of a $750,000 National Research Council of Canada Industrial Research Assistance Program grant. An additional $125,000 extension to original funding was approved subsequent to year end. To date, the Company has received $3,202,943 of a $5,000,000 from Sustainable Development Technology Canada grant. Q1 revenue is projected to be approximately $800,000, marking a 206% increase from the previous year’s $262,137. From a trailing four-quarter perspective, TFQ Q1 2024 is estimated at approximately $5,900,000, up from the previous period’s $1,674,003, reflecting a 253% increase. Overall, management is reiterating its previous guidance of 2024 revenue expected to be significantly greater than 2023 and 2022 revenue which were $5.4M and $2.6M respectively. https://bit.ly/3R62aOT

BCV leads second round in Relay, as SMB-focused FinTech closes $44 million Series B.

Toronto-based FinTech startup Relay has secured approximately $44 million (US$32.2 million) in Series B funding led by existing investor Bain Capital Ventures (BCV) to build on its growth and fuel its product development plans. Relay caters to small and medium-sized businesses (SMBs) in the United States, helping them manage their cash flow through its business banking software platform. The FinTech firm’s latest financing comes three years after Relay’s $18.2 million Series A round, which was also led by BCV. https://tinyurl.com/mvccb52t

Riot Platforms (RIOT-NASDAQ) publicly discloses rejected US$950 million proposal to acquire Bitfarms (BITF-TSX).

Colorado-based Riot Platforms has disclosed a proposal it made to acquire fellow Bitcoin mining company, Toronto-based Bitfarms, for US$950 million. Riot proposed to acquire all outstanding shares of Toronto-based Bitfarms for US$2.30 per common share, which it said in a statement represents a 24 percent premium to Bitfarms’ share price on May 24. Riot said it has accumulated a 9.25 percent equity stake in Bitfarms, claiming to be the largest shareholder in the company. Riot also laid out its strategic rationale for acquiring Bitfarms, claiming the combined company would be the largest Bitcoin miner globally. Riot also said Bitfarms would benefit from Riot’s “strong financial profile,” noting it has more than US$700 million in cash on hand and 8,872 Bitcoin as of April 30, which it said were both roughly 10 times greater than that held by Bitfarms. The disclosure comes weeks after Bitfarms reported its lowest monthly earnings in over two years, following the fourth Bitcoin halving. Bitfarms traded at US$2.22 on the Nasdaq at press time, up almost 10 percent compared to its price at the start of the trading day. https://tinyurl.com/2ambt6y5

Consensus crypto conference coming to Toronto in 2025.

A long-running, crypto-centric conference has announced it’s coming to Toronto for the first time in 2025. Consensus looks to bring together industry players from around the world to talk about digital assets, blockchain, Web3, and artificial intelligence (AI). Consensus 2025 will take place from May 14 to May 16, 2025, at the Metro Toronto Convention Centre. https://tinyurl.com/mpd9tbsf

Cloud computing startup CoreWeave prepares for 2025 IPO.

Cloud computing startup CoreWeave, one of the biggest beneficiaries of the artificial intelligence boom, has been on a fundraising spree over the past year from some of the deepest pockets on Wall Street. Now it’s planning an initial public offering. The startup has started early preparations to go public by the first half of next year, said a person with direct knowledge of the company’s plans. The plans set up what would be the largest AI-focused initial public offering after the recent wave of funding for private firms in the sector. The moves toward a listing are also a rare sign of life in the U.S. tech IPO market. The company, which was last valued at US$19 billion, plans to interview investment banks to handle the offering later this year, the person said. A spokesperson for CoreWeave did not respond to a request for comment. Founded seven years ago as a crypto mining operation, CoreWeave now runs at least 14 data centers filled with Nvidia’s coveted AI chips, renting out computing capacity to startups and other firms developing AI models and software. By designing the data centers around the Nvidia chips, CoreWeave claims its servers can process AI models faster and cheaper than rival cloud services. The company has raised about US$10 billion in equity and debt over the past year to cover the cost of buying Nvidia’s chips and building out the data centers. That includes more than US$1 billion in equity from Wall Street investors such as Coatue and Magnetar, and US$7.5 billion in debt from Blackstone, Carlyle and BlackRock that it raised this month. Nvidia is also a backer. Coreweave has grown rapidly and last year projected US$2.4 billion in 2024 revenue, The Information previously reported. Still, its growth prospects remain uncertain. CoreWeave is competing with an array of deep-pocketed tech firms, primarily larger cloud providers such as Microsoft and Amazon. https://tinyurl.com/5x5wnxca

AI Startup Perplexity in talks to raise money at US$3 billion valuation.

Bessemer Venture Partners is in talks to lead a US$250 million investment in Perplexity, a developer of an artificial intelligence-powered search engine, at a US$3 billion valuation, according to a person familiar with the matter. The new valuation would be triple what the San Francisco-based startup was valued at earlier this year. The new investment, which is Perplexity’s fourth funding round since March 2023, shows venture capital investors are still willing to pay high prices for generative AI startups, even as the high costs of developing the technology has forced many companies to sell themselves or consider doing so. The deal is not finalized and the terms could change. Last year, Perplexity considered selling itself, citing concerns about the cost of training AI models and competing with giants like Google, The Information reported. No deal happened, however, and the latest funding round suggests that Perplexity, which is led by former OpenAI researcher Aravind Srinivas, is continuing to go it alone. TechCrunch earlier reported on the company’s funding goals. Perplexity’s search product offers concise answers that, unlike OpenAI’s ChatGPT, come with linked source citations. Investors have been entranced by Perplexity’s rapid pace of growth. The company is generating over US$20 million in annual recurring revenue from subscriptions to the product, up from US$3 million in October, The Information reported. Still, it faces an uphill battle. It competes with Google and OpenAI, which is developing a search product powered by Microsoft’s Bing that, like Perplexity’s search app, will be able to search the web and cite its sources. https://tinyurl.com/ycys4a7s

xAI announces funding from Andreessen, Saudi Prince Bin Talal.

Elon Musk’s xAI has completed a US$6 billion fundraising round from investors including Valor Equity Partners, Vy Capital, Andreessen Horowitz, Sequoia Capital, and Saudi Prince Alwaleed Bin Talal, the company announced over the weekend. The Information earlier reported that xAI was raising US$6 billion at an US$18 billion valuation not including the investment to develop its chatbot Grok in competition with OpenAI. These investors have been long-time supporters of Musk’s endeavors. Valor is a Tesla and SpaceX investor, while Vy Capital backed Musk’s Twitter purchase. The Saudi Arabian billionaire prince, Bin Talal, first backed Twitter in 2015. In 2022, he publicly rejected Musk’s bid to take Twitter private but eventually acquiesced and rolled his US$1.9 billion stake into the privatized Twitter. https://tinyurl.com/5m8dh5pw

Sam Altman is considering turning OpenAI into a regular company.

The 39-year-old Stanford dropout has talked about turning OpenAI into a regular, for-profit company, The Information reported Wednesday, citing an unnamed person who’d talked to Altman. The company announced in a March 2019 blog post that it was shedding its status as a typical nonprofit to better realize its mission of building safe artificial general intelligence for the world. Altman’s leadership of the Microsoft-backed AI upstart has not been without controversy. In November, Altman was briefly ousted after OpenAI’s board said he was “not consistently candid in his communications” with it. https://tinyurl.com/28uwyr3r

China sets up third fund worth US$47.5 billion to support chip industry.

China has established a third government fund meant to grow its semiconductor industry, according to Chinese corporate filings. The size of the new China Integrated Circuit Industry Investment Fund, also known as the Big Fund, is roughly US$47.5 billion. It is China’s largest chip fund to date and dwarfs the previous two funds, which were roughly US$19 billion and US$28 billion, respectively. They were launched in 2014 and 2019. The newest fund comes as U.S. sanctions have curtailed China’s access to advanced chips and chip manufacturing. It is also part of Beijing’s ambitions to reduce its dependence on foreign technology. The fund was set up May 24 and its largest shareholder is China’s Ministry of Finance, while local government-backed investment funds and state-owned banks also contributed. Reuters previously reported on the possible new fund last year, saying that one main area of focus would be chip manufacturing. https://tinyurl.com/ymz25yef

HubSpot stock surges on Google takeover report.

Shares in marketing software firm HubSpot jumped 8% on Tuesday after CNBC anchor David Faber said that Google plans to purchase it in an all-stock deal. Faber’s comment adds further support to earlier reports that such a deal was in the works. Those expectations have galvanized investors in Hubspot, despite a slowdown in revenue growth as its small business customers reduce spending and it faces heightened competition from artificial intelligence-powered software. Wall Street analysts predict the growth slowdown will extend to 2025, according to Koyfin. HubSpot’s market capitalization rose to US$33 billion after Tuesday’s rally. The deal would be Google’s largest acquisition to date, ahead of its US$12.5 billion acquisition of Motorola Mobility in 2011. Google shares, meanwhile, barely budged on the news. https://tinyurl.com/48ubvku9

Amazon raises stake in Grubhub, embeds food delivery in app.

Amazon.com Inc. is increasing its stake in Grubhub to as much as 18% and expanding its partnership with the food delivery service to allow US users to order takeout directly on Amazon’s website and shopping app. Amazon already had a 4% stake in Grubhub, up from 2% when it announced its earlier deal with Grubhub in 2022. Under the new five-year agreement, Amazon will receive options for an additional 3% stake in Grubhub and another 1% a year from now, Grubhub’s Dutch parent Just Eat Takeaway.com NV said in a statement on Thursday. It will have the opportunity to increase the holding to 18%, depending on the performance of the partnership and the number of orders. Just Eat Takeaway’s shares rose 2.4% to €12.2 at 12:26 p.m. in Amsterdam trading on Thursday after earlier gaining as much as 5%. Amazon has made a habit of acquiring stakes in its major business partners, often through warrants, an effort to realize more of the financial windfall of the tie-up. The retail and cloud-computing giant has in recent years scooped up stakes in the airlines that fly Amazon cargo aircraft, an electric vehicle maker, a grocery distributor and software companies, among other firms. https://archive.ph/Pnkrq

Salesforce warns of more cautious buying habits among companies.

Salesforce stock plunged 16% after the company warned that a cautious attitude among buyers of enterprise software was affecting its revenue growth. Salesforce reported 11% higher revenue for the first first quarter, in line with the fourth quarter, but said second fiscal quarter growth would slow to between 7% and 8%. At the same time, Salesforce lowered full-year guidance for growth in an important segment of its business, subscription and support revenue. Still, Salesforce didn’t lower its overall revenue growth projection for this year, which remains 8% to 9%. That compared with 11% growth in 2024 and is a far cry from the growth of 25% or so that Salesforce used to routinely report. Salesforce reported that free cash flow rose 45% to US$6.08 billion. https://tinyurl.com/53bs6zcr

MongoDB shares drop 26% on weak growth as software sector woes continue.

Database provider MongoDB said Thursday that its sales would grow about 9% to between US$460 and US$464 million in the current fiscal quarter, sending its shares down 26% in after-hours trading. Mongo’s results capped a string of poor or middling quarterly earnings from enterprise software firms including Salesforce, Snowflake and UiPath. Those firms and others, including Adobe, have each invested in new artificial intelligence features but don’t appear to have gotten much of a business bump. That has contrasted with results from cloud providers including Amazon, Microsoft, Google and Oracle that have rented out specialized chips for AI made by Nvidia. In a call with analysts, Mongo CEO Dev Ittycheria blamed the weak growth projection on macroeconomic factors, and said the cloud providers were benefiting from companies training new AI models rather than from actual usage of the AI. On the plus side, the company generated US$63 million in cash in the quarter that ended April 30, up about 19% from the same period a year earlier. Shares of Mongo, which on Thursday had a market capitalization of about US$23 billion, before the after-hours drop, had already fallen nearly 20% this year. https://tinyurl.com/4e4pxt6n

Trading app Robinhood unveils maiden stock buyback plan of US$1 billion.

Trading app Robinhood Markets said on Tuesday it would repurchase shares worth up to US$1 billion over a two to three year period starting from the third quarter. The company has been rolling out new products such as a credit card for subscribers to its premium tier in its push to be a full-fledged financial services company. It has also benefited from the positive sentiment among retail customers, who are dipping back into equities trading on hopes of a soft landing for the economy. https://archive.ph/MGLN3

PwC to sell OpenAI’s ChatGPT for businesses.

Consulting firm PwC will sell OpenAI’s ChatGPT Enterprise product to its customers, as OpenAI tries to generate more revenue from businesses. The enterprise version of ChatGPT is faster than the consumer version and helps customers carry out tasks like summarizing documents, writing code, or drafting emails. PwC will also make ChatGPT Enterprise available to more than 100,000 of its employees, according to PwC partner Bret Greenstein. PwC advises roughly 1,000 corporate customers and will promote ChatGPT Enterprise as its “standard” chatbot offering, he said. The move brings OpenAI into more direct competition with bigger software vendors, such as Microsoft, which uses reseller partners like CDW and SoftWare One. Microsoft sells cloud based AI services, including access to OpenAI’s models, which Microsoft has the rights to resell through its multibillion-dollar partnership with the startup. OpenAI doesn’t disclose the per-seat cost of ChatGPT Enterprise, but its cheaper subscription tier, ChatGPT Team, starts at US$30 per user per month. https://tinyurl.com/2p4ybpdw

Apple signs deal with OpenAI for iOS, still wants Google as an ‘option’.

Bloomberg journalist Mark Gurman reported in his Power On newsletter that Apple and OpenAI have reached a deal for OpenAI to provide chatbot functionality in iOS 18. He added that this deal will be a “component” of Apple’s WWDC developer event in June. It seems like Apple isn’t keen on having all its cloud AI eggs in one basket, though. Gurman says the iPhone maker is still working on a deal with Google to offer Gemini as an “option,” but we shouldn’t expect this to be touted next month. Previous leaks suggested that Apple is working on its own Ajax AI model for on-device text analysis, smart replies, and summaries. So it stands to reason that ChatGPT and other OpenAI tech will be used for analyzing longer bodies of text, image generation, and similarly demanding tasks. Either way, the OpenAI deal should give Apple some breathing room as it undoubtedly works on its own chatbot, much like it previously offered Google Maps before launching Apple Maps. https://tinyurl.com/damn52kf

Tesla makes push to roll out advanced FSD self-driving in China.

Tesla is preparing to register its ‘Full Self-Driving’ software with authorities in China in the run up to its planned rollout of the technologically advanced feature this year, three people with knowledge of the matter said. The U.S. electric vehicle maker is also considering selling the software as a monthly subscription to users of its cars in China, its second-largest market, they said. A successful software registration with China’s Ministry of Industry and Information Technology will pave the way for Tesla to internally test Full Self-Driving (FSD) by having its employees drive on China’s public roads before delivering it as an upgrade to its Chinese users in the coming months, said two of the people. Reuters has reported previously that Tesla is also considering licensing FSD to other automakers in China. FSD sales in China would open a new source of revenue for the EV maker, which has seen its sales volumes there fall by 7.6% in the first four months of the year in the face of increased discounting and competition by Chinese EV makers. https://tinyurl.com/wx32xrex

Amazon gets FAA approval to expand US drone deliveries.

Amazon has received approval from the U.S. Federal Aviation Administration (FAA) to fly its delivery drones longer distances, the company announced on Thursday. Amazon says it can now expand its Prime Air service, which uses delivery drones to fly individual packages, to more customers. The FAA requires that operators maintain a line of sight to their drones until it approves technology that can safely monitor and control them without visuals. Amazon says it spent years developing Beyond Visual Line of Sight (BVLOS) technology for its drones to ensure they can detect and avoid obstacles in the air. The company showcased the technology for FAA inspectors to demonstrate that its drones can safely navigate away from planes, helicopters and hot air balloons. The announcement comes after Alphabet’s Wing received an FAA exemption last December to fly its drones beyond the visual line of sight. In a press release, Amazon said the approval allows it to, “serve more customers via drone and effectively expand and scale [its] drone delivery operations.” Amazon says it needed the FAA approval to achieve its goal of using drones to deliver 500 million packages per year by the end of this decade. Amazon isn’t the only tech company to operate drone deliveries, as Walmart introduced Wing drone deliveries to limited Superstores last year. Other companies working with Wing for drone deliveries include Walgreens and DoorDash. https://tinyurl.com/4a7zbve4

OpenAI restarted its robotics team.

OpenAI two months ago revived a robotics team it disbanded four years ago, a company spokesperson confirmed on Thursday. The move comes as firms developing humanoid robots, such as Figure AI and 1X Technologies, as well as robotics software makers like Physical Intelligence have made progress by using the same type of artificial intelligence that OpenAI uses for some of its products. OpenAI’s robotics work, which appears to be focused on software rather than hardware, also might irk some of the software-focused firms it has previously funded, such as Physical Intelligence. OpenAI, founded in 2015, shut down its robotics team in 2020 due to a lack of data it could use to train software for the robots, OpenAI co-founder Wojciech Zaremba said on a podcast in 2021. Since then, the ChatGPT maker has remained active in the field through investments in Figure AI, 1X and others, and has licensed its software to some of the companies as well. Forbes originally reported some details of the revamped robotics team. https://tinyurl.com/yc6zv42j

TikTok preparing a US copy of the app’s core algorithm, sources say.

TikTok is working on a clone of its recommendation algorithm for its 170 million U.S. users that may result in a version that operates independently of its Chinese parent and be more palatable to American lawmakers who want to ban it, according to sources with direct knowledge of the efforts. The work on splitting the source code ordered by TikTok’s Chinese parent ByteDance late last year predated a bill to force a sale of TikTok’s U.S. operations that began gaining steam in Congress this year. The bill was signed into law in April. The sources, who were granted anonymity because they are not authorized to speak publicly about the short-form video sharing app, said that once the code is split, it could lay the groundwork for a divestiture of the U.S. assets, although there are no current plans to do so. The company has previously said it had no plans to sell the U.S. assets and such a move would be impossible. https://archive.ph/lLdl1

TikTok ban lawsuit set for oral arguments in September.

The U.S. Court of Appeals for the District of Columbia scheduled oral arguments in TikTok’s suit challenging the government’s ban for September, after both the company and the Justice Department asked for a fast track schedule. TikTok and the Justice Department have asked for a ruling in the case by Dec. 6, which would give them time to pursue an appeal before the Supreme Court. Under the schedule set out by the appeals court, TikTok, its parent company ByteDance and a group of creators involved with the case need to file their briefs by June 20 while the federal government needs to file by July 26. Reply briefs from all sides are due by Aug. 15. TikTok has said that the expedited schedule will allow the legal challenge to be resolved without TikTok needing to seek a preliminary injunction to halt the ban. Currently, TikTok has until Jan. 19 to cut ties with ByteDance or be banned in the United States. https://tinyurl.com/2hb2fc8w

U.S. officials confirm cheap e-commerce import crackdown.

U.S. Customs and Border Protection said Friday that it had suspended multiple customs brokers from arranging imports under a trade rule that’s been critical to the growth of Chinese e-commerce sites like Temu and Shein, confirming a report in The Information on Wednesday. The brokers had been suspended from importing items under a program called Entry Type 86. The program speeds up how quickly brokers can get shipments processed by customs under a rule called de minimis, which exempts imports worth less than $800 from tariffs and has helped Temu and Shein offer lower prices than domestic retailers. Lawmakers and other critics have called de minimis a “loophole” that hurts American companies and makes it easier for items made with forced labor to evade detection. “To date, CBP has suspended multiple customs brokers from participating in the Entry Type 86 Test after determining that their entries posed an unacceptable compliance risk,” CBP acting commissioner Troy Miller said in the statement. “Any broker that has been suspended will be considered for reinstatement if it demonstrates to CBP that it has developed and implemented a remedial action plan.” https://tinyurl.com/2892893h

Biden vetoes bill overturning SEC crypto accounting rule.

US President Joe Biden on Friday vetoed a bill that would nullify crypto accounting guidance by the Securities and Exchange Commission, dealing a blow to the crypto industry. The guidance—known as SEC Staff Accounting Bulletin No. 121—directs public companies holding crypto for customers to keep the assets on their balance sheets. Critics say the guidance is especially burdensome for banks because it would require them to set aside assets worth a similar amount to protect against losses in order to comply with separate capital requirements. That has discouraged banks from entering the crypto custody business. Earlier this month, Congress passed the bill overturning the SEC guidance. In a statement, Biden said that the reversal of the guidance risks “undercutting the SEC’s broader authorities regarding accounting practices.” The administration is “eager to work with the Congress” to ensure a regulatory framework for digital assets, he said. https://tinyurl.com/36kpb9uj

Chinese Tesla rival BYD says its new hybrid cars can go 1,250 miles without stopping for gas or charging.

But the Chinese EV maker BYD says it can happen thanks to upgrades in its new hybrid powertrain system, which is set to launch on two recently revealed midsize sedans, Bloomberg reported. It’s the equivalent of about 81 miles per gallon, more than three times the US fuel-economy average for model-year-2022 cars. It’s also about 500 more miles of range than a hybrid 2023 Lexus ES gets, which last year topped Kelley Blue Book’s list of longest-range hybrids. A leap this big in hybrid technology would boost an already fervent interest in these cars, with their impressive fuel economies, lower up-front costs, and mitigated range anxiety. The models are wildly popular with both automakers and consumers as a bridge between traditional internal-combustion engines and fully electric models, especially as electric-vehicle sales plateau in many markets. In BYD’s case, hybrids make up the majority of its models sold, Reuters reported. Toyota, a relative latecomer to EVs with a plethora of hybrid options, has seen its strategy vindicated by this softening of the market. Ford said in April that it would expand its hybrid offerings as the segment helped cushion EV losses. GM also plans to bring more hybrid models to North America in response to changing demand. https://tinyurl.com/4sbpsswv