April 07, 2024: Q2 Off To A Choppy Start

Markets closed the week rebounding from intra week loses. For the week, Dow Jones lost 2.3%, S&P 500 fell 0.95%, Nasdaq composite declined 0.8%. Rubrik files to go public as tech companies see a thawing of IPO market. Chipmaker Cerebras Systems is targeting a listing in the second half of the year at the earliest, and may seek a valuation in the IPO that would value it above the US$4 billion figure achieved in its 2021 funding round. Tiger Global closed a US$2.2 billion fund, 63% lower than target. Tesla delivered fewer cars in the first quarter than it has in any quarter in more than a year, marking the end of an era of growth at the electric vehicle maker. Elon Musk said Tesla will present its new Robotaxi in August. Google is considering charging a fee for artificial intelligence features in its search results. Microsoft is working on an Xbox AI chatbot. The Company will also separate Office, Teams products globally as regulatory pressures mount. Apple exploring a ‘mobile robot’ that ‘follows users around their homes’. AT&T confirmed a data breach and reset millions of customer passcodes. Retail giant, Walmart, is investing tens of millions of dollars into community solar projects as part of its broader push to purchase clean electricity. In Canada, Sophic Capital client Legend Power Systems Inc. (LPS-TSXV, LPSIF-OTC) reported record purchase orders of over $2.5 million, sending the stock up over 45% for the week. Sophic Client Xcyte Digital (XCYT-TSXV) purchased assets of A+ Conferencing. This first transaction from Xcyte’s deep M&A funnel, nearly doubles the Company’s revenue run-rate. Sophic Client OneSoft Solutions Inc. (OSS-TSXV, OSSIF-OTC) reported results for fiscal 2023 and reiterated fiscal 2024 guidance of ~44-54% y/y revenue growth. Dye & Durham (DND-TSX) announced pricing of its refinancing transactions. Toronto-based FinTech startup Brim Financial has secured $85 million in its Series C financing.

Sophic Capital client Legend Power Systems Inc. (LPS-TSXV, LPSIF-OTC) reports record purchase orders of over $2.5 million. Stock closes week up over 45%.

Legend Power® Systems, reported record bookings for the second quarter of fiscal 2024. With north of $2.5 million in signed purchase orders with deposits for the quarter, this represents the largest bookings quarter ever for the Company. Additionally, this total includes the largest single purchase of SmartGATEs in the Company’s history. With multi-system orders for two returning commercial real estate companies totalling nearly $2 million as well as a multi-system order for a new US based ESCO. Legend Power is delivering on expected pipeline conversions. These sales result in initial payment terms that are greater than the expected 25% of bookings due to a “system only” sale, which requires a 50% payment upon ordering. The firm is also announcing the first SmartGATE delivery to the US Federal Government. The first system was delivered to the Department of Homeland Security and is expected to be installed in the next 60 days. The City of New York has closed its first round of bids for school projects, which includes the SmartGATE solution in the specification and the award is expected to result in bookings in the near future. “These orders from both existing and new customers are a testament to the value the SmartGATE offers”, added Randy Buchamer, CEO of Legend Power. “With initial deposits now being the norm we are seeing an immediate improvement in our balance sheet and we expect this trend to continue as the sales pipeline converts to bookings. We expect further bookings momentum throughout 2024.” https://bit.ly/4ajdOha

Sophic Client Xcyte Digital (XCYT-TSXV) purchases assets of A+ Conferencing. Transaction nearly doubles Xcyte’s revenue run-rate.

Xcyte signed an asset purchase agreement with A+ Conferencing, pursuant to which a wholly owned subsidiary of the Company acquired all of the assets of A+, a Texas-based conferencing services limited partnership (the “Transaction”). The consideration for the Transaction is comprised of a revenue share, whereby Xcyte will receive 70% of the gross revenue derived from the acquired business each quarter (subject to certain adjustments). This revenue share expires five (5) years from the signing of this agreement. Xcyte will make a cash payment of US$300K at the closing of the Transaction (the “Closing”) today. Xcyte will also execute a promissory note in the principal amount of US$200K, which will be payable by Xcyte in four equal quarterly installments of US$50K, commencing on July 1, 2024 to the Seller. During the twelve months ended December 31, 2023, A+ generated US$1.4 million in revenue and approximately US$207K in normalized EBITDA (unaudited). During the same period, being the twelve months ended December 31, 2023, Xcyte generated revenue and a normalized EBITDA loss of approximately US$1.2 million and US$915K respectively (unaudited). “We believe combining A+ and Xcyte’s conferencing businesses will bolster our service offering, enabling us to begin to scale our revenue and EBITDA as we progress the Company to its medium term growth goals,” said Xcyte CEO, Randy Selman. “This acquisition is the first from our deep M&A funnel, and is intended to help Xcyte grow our infrastructure, talent and client base, and accelerate our organic growth.” https://bit.ly/43MsXVu

Sophic Client OneSoft Solutions Inc. (OSS-TSXV, OSSIF-OTC) reports Q4 and annual results for fiscal 2023 and reiterates fiscal 2024 guidance.

Revenue for Fiscal 2023 was $10.4 million, a 51% or $3.5 million increase over Fiscal 2022. Revenue in Q4 2023 was $2.9 million, a 33% increase over Q4 2022. Gross profit for Fiscal 2023 increased 60% from $4.9 million to $7.8 million. Gross margin for Fiscal 2023 increased to 75% from 71% as is explained later in this report. Gross profit for Q4 2023 increased 44% or $0.7 million, from $1.6 million in Q4 2022 to $2.3 million in Q4 2023. Gross margin improved quarter over quarter from 71% to 77%.Cash and cash equivalents increased by $0.5 million to $4.9 million in Fiscal 2023, an improvement from Fiscal 2022 where these assets decreased by $1.2 million from the previous year. Adjusted EBITDA, a Non-GAAP measure, improved from a loss of $2.0 million in Fiscal 2022 to a near-breakeven loss of $0.1 million in Fiscal 2023. In Q4 2023, Adjusted EBITDA improved by $0.5 million from a loss of $0.4 million in Q4 2022 to positive $0.2 million. The Company reiterate Fiscal 2024 revenue guidance of $15 million to $16 million, representing a 44% to 54% increase, respectively, over Fiscal 2023 revenue. Most of 2024 revenue is expected to come from increased use of SaaS solutions due to existing and new customers onboarding more pipeline miles and commercialization of some of the new modules that are under development. https://bit.ly/3TJ1uQ0

Dye & Durham (DND-TSX) announces pricing of refinancing transactions.

Dye & Durham Limited announced that Dye & Durham Corporation, a wholly-owned subsidiary of Holdings, has priced and allocated US$350 million aggregate principal amount of its senior secured Term Loan B Facility and will enter into its $105 million revolving credit facility and, together with the New Term Loan Facility, and priced US$555 million aggregate principal amount of its 8.625% senior secured notes due 2029. The New Senior Secured Notes will mature in 2029 and bear an interest rate of 8.625% per year payable semi-annually. The Refinancing Transactions are expected to close on April 11, 2024, subject to the satisfaction of customary closing conditions. The Company intends to use the net proceeds of the offering of New Senior Secured Notes together with the proceeds of the initial borrowings under the New Senior Secured Credit Facilities and cash on hand to (i) refinance the Company’s existing credit facilities, (ii) repurchase some or all of Dye & Durham’s 3.75% convertible senior unsecured debentures due 2026 (the “2026 Debentures”) and (iii) finance working capital needs and for general corporate purposes. The refinancing of the Company’s existing credit facilities addresses the risk that the existing credit facilities’ maturity would have accelerated in the event that any of Dye & Durham’s 2026 Debentures remained outstanding as of September 30, 2025. https://tinyurl.com/bdzkknca

Brim Financial closes $85-million Series C led by EDC to fund US expansion.

Toronto-based FinTech startup Brim Financial has secured $85 million in Series C financing. The round was led by Export Development Canada, with support from Vistara Growth and existing backers White Owl Group, Epic Ventures, and Zions Bank. Brim plans to use this capital to fuel its United States (US) expansion. The firm intends to expand its US presence, invest in product development, form “strategic alliances,” and ramp up hiring to support these goals. Brim’s Series C marks a big round amid tough market conditions, especially for FinTech. Founded in 2017, Brim is a certified credit card issuer that sells technology infrastructure to help other financial institutions—including banks, FinTech firms, credit unions, and large companies—launch and run their own credit card and loyalty programs for their customers more efficiently. Since its $25-millionSeries B round three years ago, Brim has inked partnerships with Mastercard and TrueNorth and rolled out its credit-card-as-a-service platform to clients like Laurentian Bank, Western Canada’s Affinity Credit Union, Canadian Western Bank, and Air France-KLM. Brim also cracked Deloitte’s 2023 Technology Fast 50 list of Canada’s fastest-growing tech companies in the number 20 spot. According to Brim, its Series C round comes “on the back of strong revenue growth, increasing market share, and expansion into the business and commercial segments.” https://tinyurl.com/2mykhech

Carbonova secures $6 million to turn GHGs into carbon nanofibers.

Calgary-based cleantech startup Carbonova, which aims to convert greenhouse gas (GHG) emissions into carbon nanofibres for everyday essentials, has closed $6 million in funding. The financing, raised via a simple agreement for future equity, was led by Korean chemical and textile manufacturer Kolon Industries with support from Ottawa’s Natural Gas Innovation Fund Capital, a cleantech-focused venture firm. This latest capital builds on the $2.5 million Carbonova previously secured in February 2023 from two federal government agencies, the now-embattled Sustainable Development Technology Canada and the National Research Council of Canada’s Industrial Research Assistance Program. https://tinyurl.com/5ab63h4s

Coinbase secures restricted dealer license in Canada, pushing expansion abroad amid SEC crackdown.

Coinbase has been granted a registration license in Canada, the company told CNBC, allowing it to make deeper inroads abroad as it faces a regulatory crackdown in its U.S. home market. The firm said it has been registered in Ontario as a restricted dealer under the Canadian Securities Administrators (CSA), an umbrella organization of Canada’s provincial and territorial securities regulators. Authorization means that the company now meets the Canadian regulators’ strict requirements for crypto assets dealing and can operate legally in the country. Last year, Canada introduced new guidelines for crypto exchanges that limit how much certain investors can invest in crypto, as well as introduce mandatory registrations for crypto firms. The policy changes led Binance, the world’s largest crypto exchange by trading volumes, to quit its activity in Canada, saying it was “no longer tenable” to operate there. Rival crypto exchange Kraken said last year that it had filed a pre-registration undertaking (PRU) with the Ontario Securities Commission, effectively starting the process to become a registered dealer in Canada. Coinbase filed its PRU in March 2023 and subsequently officially launched in the country in August that year. The company says it is the first international crypto exchange to receive restricted dealer registration in Canada. https://tinyurl.com/5n9ymv4c

Rubrik files to go public as tech companies see thawing of IPO market.

Rubrik, a 9-year-old data security software vendor, filed to go public on Monday, the latest venture-backed company to make moves toward the public market after an extended lull dating back to late 2021. The Silicon Valley company got its start selling hardware that companies could use to back up their data in a modernized fashion relative to traditional players in the space. Rubrik then had to evolve to the cloud, where it now gets most of its revenue from software that “detects, analyzes, and remediates data security risks and unauthorized user activities,” according to its IPO prospectus. Competitors includes Dell, IBM, Veeam and Cohesity. Rubrik plans to trade on the New York Stock Exchange under the ticker symbol “RBRK.” Revenue in the fiscal year ended January rose about 5% to US$627.9 million. The company’s net loss widened to US$354.2 million from US$277.7 million a year earlier. Following a dry spell that lasted over two years, the IPO market is showing signs of life in recent weeks. In March, social media company Reddit and data center technology vendor Astera Labs went public on consecutive days. Both popped out of the gate, boosting optimism that more companies may line up to test the market. Prior to that, the last two venture-backed tech IPOs in the U.S. were Instacart and Klaviyo in September 2023, but those deals received tepid responses on Wall Street and failed to crack open the window. After a record IPO year in 2021, soaring inflation and rising interest rates pushed investors out of tech and other risky assets, leading to a drying up in tech investing in the public and private markets. https://tinyurl.com/yd385c7z

Chipmaker Cerebras Systems picks Citigroup for IPO.

The Silicon Valley company chose the lender after holding discussions with potential advisers on the US listing, the people said. Cerebras is targeting a listing in the second half of the year at the earliest, and may seek a valuation in the IPO that would value it above the US$4 billion figure achieved in its 2021 funding round, Bloomberg News reported in January. Tech IPO successes last month by social media platform Reddit Inc. and semiconductor connectivity company Astera Labs Inc. have set the stage for more listings. Cloud and data security startup Rubrik Inc., digital marketing software firm Ibotta Inc. and commodities dealer Marex Group Plc are among the companies that have all filed in the past two weeks for IPOs. Cerebras raised US$250 million in a series F financing round in 2021, valuing it at over US$4 billion, according to a statement at the time. The round was led by Alpha Wave Ventures, Abu Dhabi Growth Fund and G42. Cerebras’s existing investors include Altimeter Capital, Benchmark Capital and Coatue Management, the statement showed. https://archive.is/auyGU

Shein reportedly doubled annual profit to US$2 billion.

Fast fashion retailer Shein doubled its annual profit to US$2 billion profit in 2023, the Financial Times reported, citing four people close to the company. That result, along with revenue growth of more than 40% as of the third quarter last year, would bode well for the company’s planned U.S.-based initial public offering—if regulators allow it. Shein is awaiting approval from regulators in China, where the company has deep roots, and the U.S., where it has faced some scrutiny of the labor and environmental impact underpinning its products. It also faces some potential growth challenges, as The Information has reported. The IPO would be a major boon to investors including HongShan, formerly Sequoia China, as well as General Atlantic. https://tinyurl.com/5cmzaa9m

Tiger Global closes US$2.2 billion fund, 63% lower than target.

Tiger Global Management has raised US$2.2 billion for its latest venture fund, according to a person briefed on the fund’s close. The capital was 63% less than the US$6 billion goal it set for the new fund in 2022 and just a sliver of the US$12.7 billion it raised for its previous venture fund in 2021. The modest size of the latest private investment fund follows a sharp reversal in valuations for startups, which have hammered a number of firms including Tiger, one of the most prolific dealmakers during the past funding boom. As of mid-year 2023, the US$12.7 billion fund had a paper loss of 18%, calculated as an annualized return net of management fees. https://tinyurl.com/mrxm33u2

Silver Lake confirms Endeavor buyout.

Entertainment firm Endeavor is going private in a buyout led by its biggest shareholder, private equity giant Silver Lake, just three years after it went public. Among the investors backing the buyout are Mubadala Investment Co. and Goldman Sachs Asset Management. Silver Lake, which had flagged the possible buyout last October, when Endeavor said it was considering strategic alternatives, said Tuesday it would pay $27.50 a share for stock it doesn’t own. Some shareholders, such as the management team including Ari Emanuel, will roll over their combined 12.6% voting stake, however. Excluding their interest and Silver Lake’s existing stake, the buyout should cost the private equity firm US$7.6 billion, which it said would be financed in part through equity and bank financing. The buyout ends a generally disappointing experience on the public market for Endeavor, which sold shares to the public in an initial public offering in May 2021 at US$24 a share. While the stock initially ran up as the market rallied, last year’s market correction sent the stock down to around US$18 by the time Endeavor decided to consider strategic alternatives. https://tinyurl.com/mry947u8

Intel shares drop after it disclosed US$7 billion loss from chip manufacturing unit.

Intel’s stock price fell around 4% in after hours trading, after the company said sales at its chip manufacturing unit, known as Intel Foundry, fell 31% to US$18.9 billion last year while losses rose 35% to US$7 billion. Intel said it expects its operating losses to peak this year, then achieve “break-even operating margins midway between now and the end of 2030.” Intel disclosed the highly anticipated information in a securities filing on Tuesday and is the first time it has done so. CEO Pat Gelsinger wants the foundry business to make chips for other companies, not just Intel. Last year, only about 5% of Intel’s foundry revenue came from other customers, though Intel has said such customers have signed US$15 billion worth of contracts over an unspecified period of time. The U.S. government last month agreed to give the company US$8.5 billion in funding and $11 billion in loans as part of an effort to increase the number of advanced semiconductors made in the country. https://tinyurl.com/2zstxtwp

Tesla car production and deliveries decline.

Tesla delivered fewer cars in the first quarter than it has in any quarter in more than a year, marking the end of an era of growth at the electric vehicle maker. Tesla shares fell 6% in early morning trading Tuesday following the release. In a press release Tuesday, Tesla reported that it produced 433,371 cars in the first quarter, and delivered 386,810 cars to customers. That’s compared to 440,808 cars produced and 422,875 delivered to customers in the first quarter of 2023. The company attributed the decline in production and delivery to an update to its Fremont factory, and shutdowns resulting from the Red Sea conflict and alleged arson at Tesla’s Berlin Gigafactory in early March. It also follows declining consumer interest in electric vehicles in the US. Last week, Tesla CEO Elon Musk reportedly ordered sales employees to demonstrate Tesla’s “full-self driving” technology to all prospective Tesla buyers, while acknowledging that it will slow down the delivery process by adding more steps to the sales process. https://tinyurl.com/zf8fawu8

Amazon Web Services lays off hundreds of physical stores tech, sales staff.

Amazon Web Services on Wednesday laid off a few hundred employees in its division that works on technology for physical retail stores, as well as several hundred more people in its sprawling sales, marketing and global services division, a company spokesperson said. AWS is making cuts in its physical retail tech group one day after The Information reported that Amazon plans to remove its Just Walk Out checkout technology from many of its Amazon Fresh grocery stores in favor of smart shopping carts. The group, which Amazon moved from its retail division to AWS in 2022, also works on other retail tech like the Amazon One palm scanner. Meanwhile the cuts in AWS’s 60,000-strong sales, marketing and global services division are likely part of a broad reorganization under sales chief Matt Garman. Amazon has been trimming staff in waves of cuts since late 2022 after its corporate headcount more than doubled from 2019 to 2022, according to internal figures reported by The Information. Wednesday’s cuts were first reported by Geekwire. https://tinyurl.com/yc5ws73b

Steve Cohen says his financial firm can already save US$25 million by using AI.

You can count billionaire investor Steve Cohen among those who believes artificial intelligence is already making an impact on the business world. The Point72 founder told CNBC’s Andrew Ross Sorkin on “Squawk Box” that his financial firm has found ways for even the early AI models to save the company money. “I’ll give you one little anecdote. My CTO comes to me and says I can save the firm US$25 million by using these LLMs to improve our efficiency,” Cohen said, referencing his chief technology officer and the large language models like ChatGPT. “Now, we’re a nice sized firm. We’re not a huge firm. So imagine what big companies can do. And that’s just one thing, so it gives you a little bit of a look into what’s possible,” he added. The excitement around AI has been one of the driving forces in the market rally of 2023 and early this year. The primary beneficiaries so far have been chipmakers like Nvidia and tech giants such as Microsoft that have direct business ties to these AI models, but another optimistic premise holds that the new technology will help all types of companies become more efficient. Cohen called AI a “really durable theme” for investing and said that basically every company needs to be thinking about how it can change business. “If you’re a company and you’re not thinking about this, you’re going to wake up one day and go ‘we’re in trouble,’” he said. https://tinyurl.com/5n7wmrvm

Google reportedly considers charging for AI search features.

Google is considering charging a fee for artificial intelligence features in its search results, the Financial Times reported, in what would be a major shift after decades of offering the service for free. It isn’t clear what features Google is discussing, and the report said it wouldn’t involve removing ads from search results. The company last year began offering conversational responses to some queries, similar to the way ChatGPT and other chatbots answer questions, above a traditional list of links or short answers. The potential paid search service shows how Google is contending with a maturing ads business. Company executives have increasingly emphasized subscription services such as YouTube TV service and extra storage in apps like Gmail and Google Photos. For US$20 a month, storage customers can also access the most advanced version of Gemini, a rival to OpenAI’s ChatGPT. The OpenAI chatbot is developing web search results aimed at competing against Google, The Information reported earlier this year. Google also faces competition from startups such as Perplexity, which uses Google rankings data to present its own results. https://tinyurl.com/24r9j5w3

Microsoft is working on an Xbox AI chatbot.

Microsoft is currently testing a new AI-powered Xbox chatbot that can be used to automate support tasks. Sources familiar with Microsoft’s plans tell The Verge that the software giant has been testing an “embodied AI character” that animates when responding to Xbox support queries. The Xbox AI chatbot is connected to Microsoft’s support documents for the Xbox network and ecosystem, and can respond to questions and even process game refunds from Microsoft’s support website. https://tinyurl.com/3ffmubna

Apple’s Spatial Personas for the Vision Pro bring your FaceTime callers into the room.

Apple just released a new Vision Pro feature called “Spatial Personas.” Personas are visual representations of users (avatars) and have been available since the headset launched on February 2. So technically, the feature is just an upgrade to the existing tech, but a significant one. Personas are avatars that look like their users. In that sense, they are similar to Memojis on iPhone. The primary difference is that Personas look way more lifelike. Users set up the realistic avatar by allowing the Vision Pro to perform a 3D face scan, which it uses to create a digital likeness. The avatar appears in a movable 2D tile during FaceTime calls or other multiuser activities, like SharePlay. The Vision Pro uses AI to sync the avatar to match the user’s head, mouth, and hand movements. The effect is like having a floating animated portrait in your session space. However, this new feature eliminates the “picture frame” aspect. Since the Persona only has a head, shoulders, and hands, it looks more like a floating ghost rather than an actual person. Despite the apparition-like appearance, it does create a more personal sensation of the other user being in the room. Part of this is due to real-time movement tracking. If users move closer or farther away or even change positions in the room, this is tracked and translated to the virtual space as if they are there. If you don’t like that your colleague moved in front of the diagram he is explaining, simply pinch his avatar (“I’m crushing you” style) and move it where you want it. https://tinyurl.com/bdzfcjzv

Apple exploring ‘mobile robot’ that ‘follows users around their homes’.

Apple is exploring various “personal robotics” projects in an effort to create its “next big thing,” according to Bloomberg’s Mark Gurman. One of these projects is described as a “mobile robot” that would “follow users around their homes,” while another is said to be an “advanced table-top home device that uses robotics to move a display around”. Apple is investigating the use of AI algorithms that would help robots “navigate cluttered spaces within people’s homes,” the report says. Apple has apparently wanted to create robots that can “handle chores, like cleaning dishes in a sink,” but Gurman said this feat is unlikely this decade due to “extraordinarily difficult engineering challenges.” Apple’s home robot could compete with the likes of Amazon’s Astro, which serves as a mobile virtual assistant and provides home security monitoring. As for the table-top device, Gurman said one idea was for its display to “mimic the head movements” of a person on a FaceTime video call. However, he said Apple has faced technical challenges related to “balancing the weight of a robotic motor on a small stand,” and some Apple executives have apparently debated whether to develop such a device. The robotics projects are said to be in the very early stages of research, and it is unclear if any of them will ever be released to the public. For now, these are just moonshot ideas, but they are fascinating ones to learn about. https://tinyurl.com/2rphjczu

Musk says Tesla will present its new Robotaxi in August.

Tesla will unveil its new driverless robotaxi on August 8, CEO Elon Musk said in a post on X Friday. The robotaxi, a fully autonomous vehicle that can be used to provide ride-hailing services, is one of two new cars Tesla was expected to produce in the nearterm as part of its next-generation platform. The second of those cars, a US$25,000 conventional vehicle, was widely expected to come out first and is viewed by investors as central to Tesla’s long-term strategy and growth goals. In the past, Musk has described his vision for a fleet of shared, full-autonomous Teslas, some owned by individuals and some owned by Tesla, that can be summoned from anywhere and transport people while they sleep, read, “or do anything else.” Musk’s announcement follows a Reuters report that Tesla has canceled its plans to produce the US$25,000 car, instead shifting its focus to the robotaxi. Musk accused Reuters of “lying” immediately following the report, though didn’t specify what was incorrect. https://tinyurl.com/tjrasenn

Spotify is planning to raise prices in the US and other markets.

Spotify is planning to raise prices for its streaming service across several key markets starting this month, Bloomberg reported Wednesday. The move represents the Swedish audio platform’s latest attempt to become profitable. Beginning this April, Spotify will raise prices by US$1 and US$2 in the U.K., Australia, Pakistan and two other countries, before increasing streaming subscription prices in the U.S., its biggest market, the report said. The company will also split its subscription plan into two tiers. One plan comes bundled with access to audiobooks, while another price plan will allow users to listen to music and podcasts only. The company is considering other subscription tiers in the future. Spofty declined to comment. Despite a strong presence in music streaming, Spotify loses money because it pays out most of its revenue as royalties to music companies that own the rights to music that plays on the service. Spotify has diversified by offering podcasts and audiobooks, with mixed success. https://tinyurl.com/msvt6z78

Discord plans to sell ads.

Discord, the chat app popular with gamers, plans to soon begin selling advertisements. The Wall Street Journal reported that the ads will begin appearing on the app in the coming weeks and will initially be from videogame makers. The decision to begin showing ads is a departure for Discord, whose CEO, Jason Citron, has long said ads would be too intrusive on the app. In the past, Discord has mainly gotten revenue from selling subscriptions to its users for its Nitro service, which gives them the ability large files to the app and other perks. https://tinyurl.com/mpwumx72

Microsoft to separate Office, Teams products globally as regulatory pressure mounts.

Microsoft will begin selling its Office software without its Teams collaboration app globally, the company announced on Monday. The move comes six months after Microsoft unbundled Office and Teams for European customers as it faced an antitrust probe over its practice of selling the two products together. The company previously included its Teams app by default for corporate customers who purchased its Office software. That practice drew criticism from competitors such as Slack, which in 2020 complained to the European Commission, an antitrust regulator, about the practice, kicking off a formal investigation. Microsoft’s move to unbundle the products globally could help stave off regulatory action in Europe and in the U.S., where the FTC is investigating software bundling practices by Microsoft, Amazon, and others. Companies with existing Office licenses can keep Teams included for free, while new customers will have to pay an additional US$5.25 per user per month for Teams. Meanwhile, Office subscriptions without teams will drop by roughly US$2 per user, Microsoft said in a blog post on Monday (by comparison, Slack’s cheapest enterprise tier begins at US$7.25 per user per month). https://tinyurl.com/5fnbdmrt

AT&T confirms data breach and resets millions of customer passcodes.

AT&T has acknowledged that a data leak making the rounds online contains information from more than 7.6 million current customers and 65 million former customers. The company has reset the security passcodes of active customers affected, and says that leaked information “may have included full name, email address, mailing address, phone number, social security number, date of birth, AT&T account number and passcode.” https://tinyurl.com/54acezua

Federal report blast’s Microsoft’s security ‘weakness’ over Chinese hack.

A far-reaching hack of federal agencies last summer was the result of a “cascade of Microsoft’s avoidable errors,” according to a report published by a federal review board this week. The report, which was written by a board composed of a dozen government officials and private cybersecurity experts, blasts Microsoft for failing to initially detect the hack, maintaining worse security standards than other major cloud providers, and for making allegedly misleading public statements about the root cause of the hack. The federal government disclosed last June that the email accounts of several top officials, including Commerce Secretary Gina Raimondo, were compromised by Chinese hackers who exploited a flaw in Microsoft’s email software. The report published this week is the result of an investigation by the Cyber Safety Review Board, a federal agency that Homeland Security Secretary Alejandro Mayorkas convened in August to review the hack. In the report, the board calls on Microsoft CEO Satya Nadella and the company’s board to “make fundamental, security-focused reforms across the company and its full suite of products” to prevent a similar hack in the future. The report also expresses alarm that Microsoft still hasn’t identified the root cause of the hack, and dings Microsoft for initially publishing a blog post last September that claimed it did know the root cause of the hack, only to correct that blog post last month in response to the Review Board’s questions. In a statement, a Microsoft spokesperson said the company is hardening its cybersecurity and is reviewing the report’s recommendations. The report is the latest sign of mounting dissatisfaction towards Microsoft’s cybersecurity problems among federal agency customers. https://tinyurl.com/mrxh87kj

YouTube says OpenAI’s use of its videos would violate terms.

YouTube, the Google-owned video giant, said Thursday that if OpenAI used its videos without permission to develop Sora, an artificial intelligence video generator, that would violate YouTube’s rules. “Our Terms of Service prohibit unauthorized scraping or downloading of YouTube content,” spokesman Jack Malon said. In an interview with Bloomberg earlier Thursday, YouTube CEO Neal Mohan echoed that comment and added that Google may have used YouTube data to train Gemini, its flagship conversational AI model, in line with licensing contracts it has with content creators. The Information reported last year that Google was using YouTube data to train Gemini. In an interview with the Wall Street Journal last month, OpenAI chief technology officer Mira Murati claimed she didn’t know whether Sora was trained on YouTube videos, and the company hasn’t disclosed where the data came from. The Information previously reported that OpenAI used YouTube data to train Whisper, a model that converts speech to text. Some of Whisper’s training data was also used for GPT-4. OpenAI didn’t immediately respond to a request for comment. https://tinyurl.com/y84yzazd

Amazon pulls plug on cashierless system in US grocery stores.

Amazon.com Inc. is removing its cashierless Just Walk Out system from grocery stores, a retreat from an ambitious technology designed to let shoppers skip the line. Amazon will pull the system as it remodels existing Fresh grocery stores and won’t feature it in new locations that will start opening later this year, an Amazon spokesperson said. Amazon plans to rely more heavily on its Dash Cart, which lets shoppers scan items as they go. But the company has dialed back the complexity of the technology. The carts initially used a set of cameras to automatically identify what shoppers had grabbed from the shelf. Newer versions stripped out some cameras, and shoppers are now asked to hold the item in front of a pair of scanners, which can read bar codes among other cues. Shoppers can also use a touchscreen to ring up merchandise, such as produce, that lacks bar codes. https://archive.is/jigIW

Samsung to fortify U.S. chip revival by swelling its Texas investment to US$44 billion.

Samsung Electronics plans to more than double its total semiconductor investment in Texas to roughly US$44 billion, according to people familiar with the matter, a significant breakthrough in the U.S.’s quest to make more of the world’s cutting-edge chips. The South Korean company’s new spending will be concentrated in Taylor, Texas, where Samsung is building a semiconductor hub and has other nearby existing operations, the people said. The additions include a new chip-making factory, and a facility for advanced packaging and research and development. https://tinyurl.com/wzw3utc8

Walmart makes big community solar play.

Retail giant Walmart is investing tens of millions of dollars into community solar projects as part of its broader push to purchase clean electricity. Walmart’s investment can help bring low-cost solar to thousands of households and companies left out of the rest of the solar boom. Walmart is investing US$73 million in 19 solar projects to be developed by Pivot Energy, of which 15 are community solar. In a separate deal, Walmart is investing in 5 community solar projects from developer Reactivate. The total electricity produced by the projects will be enough to power about 13,000 homes and could save US$8 million annually on customers’ electricity bills, including US$6 million in low- and moderate-income communities. The deal with Pivot Energy is a tax equity investment, and Walmart will get the clean energy tax credits. Walmart announced the community solar projects as part of nearly 1 GW of contracts for solar farms across Arkansas, Louisiana and Mississippi. Walmart announced earlier this year at the Consumer Electronics Show that it plans to invest in 10 GW of clean energy projects, including 2 GW of new community solar projects. Walmart has a goal to become net-zero emissions by 2040. https://tinyurl.com/bdhrwn8u