Last week, Dow Jones rose 0.65%, S&P 500 gained 1.1% and Nasdaq composite was up 0.9%. Investors could now pause to see big earnings and economic news, including a Fed meeting this coming week. While Wall Street cheers on Silicon Valley, tech companies are downsizing at an accelerating clip. So far in January, some 23,670 workers have been laid off from 85 tech companies. Chipmaker Cerebras systems is weighing an IPO as soon as 2024. ASML shares closed at a record high after an earnings beat, and orders pop. Elon Musk’s xAI is in talks to raise US$6 billion. The FTC started an inquiry of AI Deals involving Microsoft, OpenAI, Google, Amazon, Anthropic. Google launched a generative AI tool for search ad buyers. Figma will offer new equity packages to employees at a price that values the company at US$10 billion, 50% lower than the US$20 billion Adobe was willing to pay for the design startup in a since-scuttled deal. Tesla shares fell 10% as a vague outlook disappointed Wall Street. Some Apple Vision Pro deliveries were pushed to April, and demand remains unclear. In Canada, we are optimistic that we are beginning to see increased capital flowing into small cap innovation after nearly three years. Sophic clients, Kraken Robotics, OneSoft Solutions, and Renoworks Software are at or near their 52 week highs. Kneat upsized its previously announced bought deal public offering to $17.4 million. MediaValet will be acquired in an all-cash transaction, at a premium of 30% and 22% to the Company’s closing price and 20-day volume-weighted average price, respectively. EMERGE signed a definitive agreement to sell WholesalePet for US$9.25 million, and plans a major debt reduction. New Sophic Capital client, ADM Endeavors provided a corporate update, and expects consistent organic growth in 2024 and beyond. Renoworks announced the new Renoworks Pro Partner program and introduced Renoworks API Hub to fuel market growth.

Canadian Technology Capital Markets & Company News

New Sophic Capital client ADM Endeavors (ADMQ-OTCQB) provides corporate update.

Just Right Products Inc., the wholly owned subsidiary of ADM Endeavors, announces a corporate update, including preliminary Q4 2023 results. Revenues of US$1.3 million, representing 43% year-over-year growth. Adjusted EBITDA of US$134K, which grew 200% over the year-ago quarter. Net income of US$116K, a 200% increase over the fourth quarter of 2022. At the end of the quarter the Company had cash of US$300K and access to a line of credit for US$3.5 million and is well capitalized to execute on its growth plans. Over the course of 2023, ADM has placed an emphasis on longer term, stable customers, which separates the Company from others in the sector. The majority of major promotional product and decorated apparel companies focus on large corporate clients and operate through a broker model on a global scale. ADM differentiates itself by focusing on cities, counties, schools, and government agencies by going direct to consumer, and currently operates primarily in the Dallas / Fort Worth area where the markets are large and fragmented. This strategy has been working and should drive consistent organic growth in 2024 and beyond. ADM is expected to bring a new, 80,000 sq. ft. facility online in the Fall of this year. ADM expects to receive building permits and commence construction in the coming months. Beyond acting as a new manufacturing facility, the building will host a retail storefront. This storefront will increase ADM’s school uniform footprint and enable the addition of a medical uniform segment and workwear segment to the product mix. In the Dallas / Fort Worth area, ADM dominates the government vendor sector. Unlike major competitors who rely on carriers, ADM handles all embellishments in house, ensuring quicker service and lower product costs. ADM’s dedicated delivery route, operated by full-time drivers, further accelerates delivery compared to traditional carriers. This successful model could be replicated in other regions through strategic acquisitions of existing decorators or brokers. One of ADM’s competitive advantages is having control of manufacturing. By having all manufacturing done in-house, ADM can quickly adjust to meet specific requests and strict requirements. There exists the opportunity for consolidation of regional competitors, bringing the target manufacturing in-house. The previous year served as a period of regrouping and restructuring for ADM as the Company faced the challenge of recovering from a US$2.5 million revenue loss in YouTube influencer merchandise sales. This experience underscored the importance of diversifying the customer base and building resilience against economic downturns. Today, ADM has no single client making up more than 3% of their total revenue mix. In 2022, ADM had single customers representing as much as 20% of sales. We encourage investors to review the new ADM Investor Presentation and subscribe here for Company news and investor updates. https://bit.ly/3Ueh7AN

Sophic Capital Client Renoworks (RW-TSXV) announces Renoworks Pro Partner program and introduces Renoworks API Hub to fuel market growth.

This program is designed to meet the visualization demands of channel partners, specifically technology solutions providers, sales coaching organizations, and marketing agencies working closely with contractors and remodelers. The program may also foster collaboration, knowledge sharing, market expansion, and mutual success between Renoworks and its partners. Additionally, Renoworks is releasing its enhanced Renoworks API Hub, a centralized repository of visualization and data-based APIs. The Renoworks API Hub simplifies the integration of Renoworks’ cutting-edge visualization features and solutions into partners’ applications, ensuring seamless and efficient functionality. The Renoworks Pro Partner Program’s primary goal is to enhance the modern contractor workflow while driving growth for both Renoworks and its industry channel partners. Through strategic collaborations, including co-selling, co-promotion, referral and partner integration activities, this program aims to accelerate the adoption of Renoworks digital solutions while also bringing awareness to unique partner technologies, innovative contractor sales practices, and marketing strategies across the industry. https://bit.ly/3SbBz2y

Kneat (KSI-TSX) announces upsize of the previously announced bought deal public offering to $17.4 million.

kneat.com, inc. amended its agreement with a syndicate of investment dealers led by Cormark Securities Inc. and have agreed to increase the size of its previously announced $15.0 million “bought deal” public offering. Pursuant to the upsized deal terms, the Underwriters have agreed to purchase 5,351,200 common shares from the treasury of the Company, at a price of $3.25 per Common Share and offer them to the public by way of short form prospectus for total gross proceeds of approximately $17,391,400. The Company has granted the Underwriters an option to purchase up to an additional 15.0% of the Common Shares of the Offering on the same terms exercisable at any time up to 30 days following the closing of the Offering. In the event that the Over-Allotment Option is exercised in its entirety, the aggregate gross proceeds of the Offering shall be $20,000,110. The Company intends to use the net proceeds of the Offering for growth initiatives, working capital and general corporate purposes. Closing of the Offering is expected to occur on or about February 14, 2024, and is subject to regulatory approval including that of the Toronto Stock Exchange. http://tinyurl.com/r7tdptyn

MediaValet (MVP-TSX) announces definitive agreement to be acquired by an affiliate of STG in an all-cash transaction.

MediaValet entered into an arrangement agreement pursuant to which, subject to shareholder and other customary approvals, an affiliate of STG will acquire all of the issued and outstanding common shares of the Company for $1.71 per Share in cash pursuant to a statutory plan of arrangement under the Business Corporations Act (Alberta). The Transaction values MV at approximately $80 million. The Consideration of $1.71 per Share represents a premium of 30% and 22% to the Company’s closing price and 20-day volume-weighted average price, respectively, per Share on the TSX for the period ending on January 23, 2024. http://tinyurl.com/y5afe99h

EMERGE (ECOM-TSXV) announces signing of definitive agreement to sell WholesalePet for US$9.25 million, and plans major debt reduction.

EMERGE has entered into a definitive agreement to sell WholesalePet for US$9.25 million in cash to Tiny Fund I, LP. In conjunction, EMERGE expects to pay down the majority of its senior credit facility on closing, in addition to fully satisfying the deferred payment owed to WholesalePet. Additional cost savings expected from reduced HQ overheads. Following the Transaction, EMERGE will retain 4 brands across 2 main verticals, Grocery and Golf, in Canada and the U.S., namely truLOCAL, Carnivore Club, UnderPar and JustGolfStuff. truLOCAL, our premium meat subscription/ grocery brand, is EMERGE’s largest business by revenue. In conjunction with the sale of WSP, EMERGE expects to utilize the majority of the transaction proceeds to pay down its senior credit facility on closing, which is expected to be reduced to $5.85 million from $15.85 million prior to the completion of the Transaction, and C$25M originally. The Company’s interest expense savings following the aforementioned debt repayment is expected to be approximately $1.38 million annually. http://tinyurl.com/2a2pb4yf

Spellbook secures $27 million Series A to scale “AI copilot for lawyers”.

Toronto-based legaltech Spellbook, which provides legal practitioners a generative artificial intelligence (AI)-powered tool for contract review and drafting, has secured US$20 million ($27 million) in Series A funding. Spellbook said its customer base has grown 300 percent over the past seven months. The all-equity round, which closed this month, was led by Inovia Capital and saw participation from returning investors, including Thomson Reuters Ventures, The Legaltech Fund, Bling Capital, Moxxie Ventures, Concrete Ventures, N49P, Path Ventures, and Good News Ventures. Spellbook said in a statement that, with this Series A round, its total funding to date now exceeds US$30 million. Founded as Rally out of St. John’s, Newfoundland in 2018, the company’s self-described “AI copilot for lawyers” uses large language models (LLMs) like OpenAI’s GPT-4 to help legal practitioners draft and review contracts. Through a Microsoft Word integration, users can prompt Spellbook to review contracts and it will generate comments and suggestions. For example, a lawyer could ask Spellbook to create a contract draft with aggressive negotiation tactics, or to repurpose an existing contract by changing key names or location-based terms.  http://tinyurl.com/3u2haxx9

Bagel Network closes $4.18 million for machine learning data network.

Toronto-based artificial intelligence (AI) and Web3 startup Bagel Network has closed a $4.18 million (US$3.1 million) pre-seed funding round as it looks to launch its machine learning (ML) data network. The round was led by CoinFund, with participation from Protocol Labs, Borderless Capital, Maven11 Capital, Graph Paper Capital, and Breed VC. Founded in 2023 by CEO Bidhan Roy, Bagel Network is developing a marketplace where machine learning engineers, researchers, and artificial intelligence (AI) agents work together to build, trade, and license datasets. http://tinyurl.com/3kx2fejs

Global Markets: IPOs, Venture Capital, M&A

Chipmaker Cerebras systems weighs IPO as soon as 2024.

AI supercomputer maker in early talks with potential advisers Backers include Alpha Wave Ventures, Abu Dhabi Growth Fund Chipmaking startup Cerebras Systems Inc. is weighing an initial public offering as soon as this year, according to people familiar with the matter. The Silicon Valley company has held early discussions with potential advisers for an offering that would value it above the US$4 billion figure achieved in its 2021 funding round, the people said. It is targeting the listing in the second half of the year at the earliest, one of the people said. http://tinyurl.com/bdhmb25f

Amer Sports targets up to US$8.7 billion valuation in US IPO.

Wilson tennis rackets maker Amer Sports is targeting a valuation of up to US$8.7 billion for its U.S. initial public offering, the company said on Monday, as it moves toward a much-anticipated listing that could test investor appetite for richly valued firms. The IPO market is looking to stage a rebound as bets of a soft landing firm up, after an arid two-year spell when economic uncertainty and high interest rates sapped interest for new listings. Amer Sports, whose world renowned Wilson brand is associated with several legendary athletes including Roger Federer, Russell Wilson and Jamal Murray, said it plans to raise up to US$1.8 billion by selling 100 million shares priced between US$16 and US$18 each. The Wilson tennis racket has been used by 643 Grand Slam title winners so far. Reuters reported last week that the company was planning to price its IPO by the end of the month. Founded in 1950, Amer Sports operates in three segments and is home to iconic sports and outdoor brands including Arc’teryx, Salomon, Atomic and Peak Performance. The company plans to list on the New York Stock Exchange under the symbol “AS”. Goldman Sachs, BofA Securities, JPMorgan, Morgan Stanley, Citigroup and UBS Investment Bank are the lead underwriters for its offering. http://tinyurl.com/ybzmuaty

Elon Musk’s xAI in talks to raise US$6 billion.

Elon Musk’s artificial intelligence startup xAI is in talks to raise US$6 billion in funding at a proposed US$20 billion valuation, according to the Financial Times. Representatives from the startup have targeted family offices in Hong Kong and sovereign wealth funds in the Middle East as potential investors, according to the report. Musk founded xAI in 2023 to compete with OpenAI’s ChatGPT and Google’s Bard. In December, the startup disclosed that it was raising US$1 billion. The US$1 billion funding round is primarily backed by Musk, The Information previously reported. The new, larger funding round will be xAI’s Series B, according to two people briefing on the funding. In a post on X late Friday, Musk denied the report. “xAI is not raising capital and I have had no conversations with anyone in this regard,” he said. http://tinyurl.com/2p9etjd8

Figma employee equity deal cuts valuation to US$10 billion.

Figma will offer new equity packages to employees at a price that values the company at US$10 billion, 50% lower than the US$20 billion Adobe was willing to pay for the design startup in a since-scuttled deal, according to a person close to the company. The startup is offering the roughly 500 employees who joined the startup after Adobe announced its acquisition plans 16 months ago extra shares worth 70% of the equity they were entitled to. Workers who have been at the company for longer will be eligible for additional shares in the fall. The two firms abandoned their deal in December, citing anti-trust concerns. Forbes first reported on the new valuation and compensation plan. Figma has also announced a one-time voluntary exit program allowing employees to leave the firm in return for three months’ pay while holding on to their vested equity regardless of how long they’ve been at the company. Adobe’s acquisition offer, made at the height of the pandemic funding market, was double the valuation of its last private funding round. http://tinyurl.com/2hfja4zs

Canva holders are said to near expanded US$1.5 billion share sale.

Australian software company Canva Inc. is close to completing a share sale that’s set to raise more than US$1.5 billion, according to people familiar with the matter. The share sale by a group of investors including current and former employees of the privately held firm would value the company at around US$26 billion, the people said, roughly the same as in its previous round. Canva is working with Goldman Sachs Group Inc. on the round, though it’s not raising new capital, they said. Canva generated more than US$2 billion in annualized revenue in 2023, the people said, asking not to be identified as the information isn’t public. Deliberations are ongoing and details may change, the people said. Representatives for Canva and Goldman Sachs declined to comment. The round comes as Canva ramps up competition with Adobe Inc., with both firms introducing artificial intelligence features last year. Adobe, long the dominant maker of software tools for graphics professionals, saw the implosion in December of a US$20 billion deal to acquire Figma, another rival. Canva’s platform has gained popularity among smaller companies and Gen Zs since its inception in 2013, and more recently sought to attract larger enterprise customers. FedEx Corp., Starbucks Corp. and Zoom Video Communications Inc. are among firms that have embraced its platform. The all-in-one design product has 170 million monthly active users in 190 countries, according to the company. It counts backers including Franklin Templeton, Bessemer Venture Partners and Blackbird Ventures. http://tinyurl.com/3bzmf3t5

Tech layoffs balloon in January as Wall Street rally lifts Alphabet, Meta, Microsoft to records.

The S&P 500 is trading at a record and the Nasdaq is at its highest in two years. Alphabet shares reached a new pinnacle on Thursday, as did Meta and Microsoft, which ran past US$3 trillion in market cap. Don’t tell that to the bosses. While Wall Street cheers on Silicon Valley, tech companies are downsizing at an accelerating clip. So far in January, some 23,670 workers have been laid off from 85 tech companies, according to the website Layoffs.fyi. That’s the most since March, when almost 38,000 people in the industry were shown the exits. The swarm of activity comes ahead of a barrage of tech earnings next week, when Alphabet, Amazon, Apple, Meta and Microsoft are all scheduled to report quarterly results. Investors lauded the cost-cutting measures that companies put in place last year in response to rising inflation, interest rates hikes, recession concerns and a brutal market downturn in 2022. Even with an improving economic outlook, the thriftiness continues. Layoffs peaked in January of last year, when 277 technology companies cut almost 90,000 jobs, as the tech industry was forced to reckon with the end of a more than decade-long bull market. Most of the rightsizing efforts took place in the first quarter of 2023, and the number of cuts proceeded to decline each month through September, before ticking up toward the end of the year. http://tinyurl.com/4yj9aac4

Apple becomes China’s top smartphone vendor for first time.

Apple became the biggest smartphone vendor in China by shipments for the first time in 2023, according to research firm IDC. While Apple’s shipments in China last year declined 2.2% year on year, it still outperformed the country’s overall smartphone shipments, which dropped 5%. In China, the world’s largest smartphone market, Apple and its local competitors continue to face challenges due to economic headwinds and weak consumer sentiment. China’s total smartphone shipments in 2023 dropped to 271.3 million units, the lowest volume in a decade, according to IDC. In the fourth quarter, Apple was the top vendor with a 20% market share, even though its shipments declined 2.1%. By contrast, local competitor Huawei, whose shipments jumped 36%, was ranked in the top five for the first time in two years. http://tinyurl.com/45vuwa5z

ASML shares close at record high after earnings beat, orders pop.

ASML Holding, opens new tab shares gained nearly 10% to close at a record high on Wednesday following fourth-quarter earnings that beat expectations and a growing order backlog that points to a computer chip market recovery. Europe’s largest technology company by market value maintained an outlook for flat sales in 2024 as it faces new restrictions on sales to China, but executives acknowledged that estimate is conservative. Shares in the Dutch company closed at 775.80 euros in Amsterdam, a 9.7% rise that took the company’s market capitalisation above 300 billion euros (US$327 billion) for the first time. Net profit rose 9% to 2.0 billion euros (US$2.2 billion) on sales of 7.2 billion euros in the fourth quarter. That topped analyst expectations of a 1.87 billion euros net profit on revenue of 6.9 billion euros, according to LSEG data. The company registered orders of more than 9 billion euros in the quarter, more than triple third-quarter levels, but kept its outlook for flat sales in 2024. New orders came from chip-makers planning to bring capacity online in late 2024 or in 2025 amid strong demand for artificial intelligence chips. http://tinyurl.com/yc6ybhve

Tesla shares fall 10% as vague outlook disappoints Wall Street.

Tesla shares dropped 10% on Thursday following anemic fourth quarter earnings and a tepid forecast for the year to come. The electric vehicle maker’s stock has now fallen 25% so far this year, dragging its market cap down to US$586 billion, nearly half its all-time high of US$1 trillion in 2021. Investors appear to be reacting to Tesla’s forecast of “notably lower” growth in car sales in 2024. But analysts are also frustrated that the company gave few specifics about what the company expects over the next year. “I still struggle to think of another company who provided such scant level of details on the forward-year outlook,” wrote Morgan Stanley’s Adam Jonas. “Our team is left with the impression that either (a) visibility is poor, or (b) there are downside risks in the broader EV market outside of Tesla’s control.” Wedbush Securities analyst Daniel Ives said he was “dead wrong” to expect Tesla executives to “step up like adults in the room,” to give Wall Street guidance on the strategic and financial future of the company. “Instead we got a high level Tesla long term view with another train wreck conference call,” Ives wrote. http://tinyurl.com/4zwdtuyc

IBM revenue rises 4% amid AI demand.

IBM reported revenue rose 4% last quarter, driven in part by demand for its AI products and services as well as hybrid cloud. The computing giant also said free cash flow will improve this year. “We’re seeing very good increased demand overall” for generative AI offerings, IBM CFO James Kavanaugh said in an interview with Yahoo Finance. “We’ve got thousands of clients we’re having interactions with. Our use cases and pilots are up about fivefold.” IBM earnings per share of US$3.87 beat the $3.76 average of Wall Street estimates, and revenue of US$17.4 billion topped the US$17.29 billion forecast for the fourth quarter. Of particular interest to analysts and investors is the company’s free cash flow, which IBM predicted will rise to about US$12 billion this year from US$11.2 billion in 2023. Revenue will rise by a mid-single-digit percentage, with software trending slightly above that and consulting expected to expand 6% to 8%, Kavanaugh said. http://tinyurl.com/s5ckmn4m

Emerging Technologies

Some Apple Vision Pro deliveries pushed to April, demand still unclear.

Some consumers said Sunday that their Apple Vision Pro orders could take as long as six weeks to ship, though it wasn’t clear if that was because of strong demand or weak supply for the product. Some models of the headset, such as the more expensive 1 terabyte version, are still available for pickup on Feb. 2 launch day at certain Apple retail stores in the U.S. Other models show ship times of as early as Feb. 19, according to Apple’s website. The varied ship times could be due to a bottleneck in the accessories rather than the headset itself. The light seal, which goes around the face, has many different sizes depending on the shape of a person’s head. Some of those seals could be in short supply. The real test will be to see how quickly the Vision Pro reaches 1 million orders. The Apple Watch hit that number in its first day, while the iPad took 28 days. The iPhone took 74 days to reach it. http://tinyurl.com/yeytakhu

Samsung races Apple to develop blood sugar monitor that doesn’t break Skin.

Samsung Electronics Co. is exploring the development of noninvasive glucose monitoring and continuous blood pressure checking, setting its sights on ambitious health-care goals in a race with Apple Inc. and other tech giants. The work is part of a broader push to put health features in a range of devices, including its just-announced Galaxy Ring, said Samsung executive Hon Pak, who is overseeing the effort. The company aims to eventually give consumers a complete picture of their well-being via sensors on different parts of the body and around the home. Health tracking is already a key selling point of smartphones and watches, with Samsung, Apple and Alphabet Inc.’s Google using the features to attract and retain customers. Creating sensors for continuous blood pressure tracking and glucose monitoring would be particularly valuable breakthroughs. Apple has been working for years on a glucose reader that wouldn’t require users to prick their skin for blood — a potential boon for millions of diabetics. “If we can do continuous blood pressure and glucose, we’re in a whole different ballgame,” Pak, Samsung’s mobile digital health chief, said during a wide-ranging interview. “I think that’s where everyone is trying to get to. We’re putting significant investment toward that.” The remarks follow Samsung’s announcement last week that it’s working on a ring with health sensors. The Galaxy Ring product is scheduled to be released before the end of 2024 and will come in a range of colors and sizes, Pak said. The company is eyeing activity and sleep tracking for the ring, with more health features to come later. Smart rings from companies like Oura offer an alternative for people who don’t like to wear a watch but still want to track their health metrics and sleep patterns. “The ring represents that community of people who want health tracking that is more comfortable and less obtrusive,” Pak said. “It’s meeting a need of a specific population of people who want to track and measure, but in a different way.” https://archive.is/Ti8a3

Apple pivots to electric car after self-driving efforts stall.

Apple has scaled back plans to build a self-driving car and instead will release an electric car comparable to a Tesla by 2028, Bloomberg reported. Apple aims to include an advanced driver assistance system that sits between Level 2 and Level 3, which means there will be some autonomy but with a human still required to take control of the car if needed. This would be comparable to Tesla’s Autopilot feature. Apple’s decision comes nearly a decade after it began its car efforts and has come full circle with its original goal in 2014. Bloomberg said Apple’s board repeatedly pressed its leadership last year about the project, which The Information reported struggled with achieving Level 5 full autonomous driving. Apple had hoped to release a car by 2026 with enough autonomous driving to allow users to stop paying attention to the road when on highways, Bloomberg previously reported. http://tinyurl.com/yuaf8b4n

Media, Streaming, Gaming & Sports Betting

Netflix adds 13.1 million subscribers in Q4.

Netflix added 13.1 million subscribers during the fourth quarter of 2023, a significant year-over-year increase of 12.8% and its largest fourth quarter ever, the company said. It ended the quarter with 260.3 million global paid subscribers. The company said its revenue and subscriber growth stems from consumers opting for paid-sharing plans following the streaming service’s crackdown on password sharing as well as recent price increases. Meanwhile, fourth-quarter revenue grew 12.5% to $8.8 billion, with Netflix forecasting a 13.2% year-over-year revenue growth to US$9.2 billion for the first quarter of 2024. Earlier on Tuesday, Netflix announced it had acquired the rights to stream WWE’s “Monday Night Raw” program exclusively in the U.S., Canada, the U.K. and Latin America, with other markets being added over time. The deal, for which Netflix will pay WWE owner TKO US$5 billion over 10 years, is part of streaming giant’s efforts to expand its library of live and sports and sports-adjacent content. Netflix co-CEO Ted Sarandos said on the company’s earnings call that it hopes the WWE deal can also fuel its fledgling ad business. On the advertising front, Netflix said subscribers for its ad-supported tier grew 70% quarter over quarter, with the ads plan now accounting for 40% of all Netflix sign-ups in the markets it’s available in. Netflix co-CEO Greg Peters reiterated comments he has made previously that Netflix is looking to build its ads business over a long period. He acknowledged that Netflix has “years of work ahead of us” for the ads business to have a “material” impact on overall revenue. http://tinyurl.com/2ww4b84u

Streaming pirates are Hollywood’s new villains.

Illegal subscription services that steal films or TV shows bring in US$2 billion a year in ads and subscriber fees. Ever since taking on Netflix Inc. at its own game, old Hollywood has struggled to turn a profit in streaming, with the likes of Disney+, Peacock and Paramount+ losing billions of dollars each year, sparking concerns on Wall Street that the services will never be as profitable as cable once was. But the age of streaming has been a boon for some unintended winners: pirates that use software to rip a film or television show in seconds from legitimate online video platforms and host the titles on their own, illegitimate services, which rake in about US$2 billion annually from ads and subscriptions. With no video production costs, illicit streaming sites such as myflixer.to and projectfreetv.space have achieved profit margins approaching 90%, according to the Motion Picture Association, a trade group representing Hollywood studios that’s working to crack down on the thousands of illegal platforms that have cropped up in recent years. http://tinyurl.com/3cvj9nay

Adtech, Privacy & Regulatory

FTC Starts Inquiry of AI Deals Involving Microsoft, OpenAI, Google, Amazon, Anthropic.

The Federal Trade Commission said Thursday it is launching an “inquiry” into Microsoft’s investment in OpenAI and the investments Google and Amazon made in Anthropic. The agency said it is studying whether the software giants’ deals with the two leading generative artificial intelligence startups could hurt competition in the AI sector. The FTC didn’t elaborate but said the companies had 45 days to respond to questions it sent to them. As regulators in the U.S. and elsewhere have increasingly challenged bigger tech firms’ attempted acquisitions of smaller firms, partnerships have become more appealing. Microsoft, Google and Amazon have committed billions of dollars each into the two leading generative AI startups in exchange for commitments from the startups to use the incumbents’ cloud servers. The cloud providers also are selling the startups’ technology to cloud customers and using it in their own products. The FTC’s announcement follows similar probes by antitrust regulators in the UK and in Europe examining whether Microsoft’s investment in OpenAI is tantamount to a merger that must be approved by the regulators. As part of their partnership, Microsoft is entitled to 75% of OpenAI’s future profits until its $13 billion investment commitment to the startup is paid back, and 49% of subsequent profits, up to a theoretical cap. The FTC has also been eyeing whether Microsoft’s new non-voting observer seat on OpenAI’s board should be considered a merger, The Information previously reported. In a statement, Rima Alaily, head of Microsoft’s competition law group, said Microsoft’s deal with OpenAI is “promoting competition and accelerating innovation” and that Microsoft would comply with the investigation. A Google spokesperson said in a statement that Google hopes the probe “will shine a bright light on companies that don’t offer the openness of Google Cloud,” which has not required that Anthropic use Google as its sole cloud provider. Amazon declined to comment. http://tinyurl.com/3h74wp4d

Google launches generative ai tool for search ad buyers.

Google said Tuesday it had launched an artificial intelligence chatbot for ad buyers in the U.K. and U.S., with plans to make the tool available to all English-language advertisers in the next few weeks. The chatbot, which Google previewed last May, helps advertisers automatically generate text and images for ads in Google search results. The tool uses one of Google’s Gemini large language models, the company said in a blog post. The move shows how Google is using Gemini to boost revenue-producing products for advertisers, in addition to improving consumer services such as its search engine. In the past year, Google has spent billions of dollars developing new LLMs, which could transform its search engine and other apps. Now the company wants to get a return on its investment. The new chatbot for advertisers suggests ways to get better performance from ads, such as recommending particular images based on the text in the ads. Google said its data show that advertisers who use the new tool are 42% more likely to find the resulting ads to be “good” or “excellent.” Google has long used older forms of AI to automate tools for advertisers and, as a result, has needed fewer salespeople in some roles. The company’s ad business continues to recover from a post-pandemic lull. Revenue rose 11% overall to $77 billion in the third quarter of 2023, an improvement from the 3% and 7% year-over-year growth Google posted in the prior two quarters. http://tinyurl.com/yznmkhz3

Apple to still review, charge fees for sideloaded apps in Europe.

Apple still plans to review apps that are sideloaded on iPhones in Europe and charge developers behind those apps a commission on their digital sales, The Wall Street Journal reported. The news comes as Apple prepares to comply with a new European law known as the Digital Markets Act, which requires so-called gatekeepers like Apple to ensure equal access to their operating systems. That means Apple needs to give developers the option to bypass the App Store in European countries to distribute apps through their own websites or other means. The revelation could irk European lawmakers given that developers might still be subjected to high fees and other restrictions, leaving their situations unchanged. Apple already has been accused of bad faith in its compliance with a court order that allows developers to link users to outside payment systems. Those developers are charged only slightly lower fees and will be subjected to onerous auditing and other rules. http://tinyurl.com/5fanzce5

Fintech, Blockchain & Cryptocurrency

Electricity demand at data centers seen doubling in three years.

Cryptocurrency, AI to dominate demand, IEA report finds Increase in demand will be covered by renewables, nuclear. Global electricity demand from data centers, cryptocurrencies and artificial intelligence could more than double over the next three years, adding the equivalent of Germany’s entire power needs, the International Energy Agency forecasts in its latest report. There are more than 8,000 data centers globally, with about 33% in the US, 16% in Europe and close to 10% in China, with more planned. In Ireland, where data centers are developing rapidly, the IEA expects the sector to consume 32% of the country’s total electricity by 2026 compared to 17% in 2022. Ireland currently has 82 centers; 14 are under construction and 40 more are approved. http://tinyurl.com/msjzb6f6

Sophic Capital Client Insights

Sophic Client UGE International (UGE-TSXV, UGEIF-OTC): A “Sun-sational” Take on Community Solar. This Sophic Insights report discusses incentives for U.S. adoption, market size & leaders in the space.

Community solar is a structure whereby a solar energy project provides power to a set of subscribers (aka the “community”), typically a mix of households, organizations, and businesses. These systems are located in a central location and provide electricity to the participating community members through credits on their utility bills. Subscribers do not need to be close to the solar project so long as they are in the same electric utility territory as the project. Since a physical connection between the project and its subscribers is not necessary, community solar allows individuals and businesses who may not have the physical space or financial means to install their own solar panels to participate in the benefits of solar energy. Doing so increases the addressable market opportunity and overall adoption of solar energy, leading to positive environmental and economic impacts. In the United States, community solar projects provide electricity to the local utility for redistribution, generating credits which are sold to subscribers at a discount (usually about 10%) to the utility rates. Subscribers still consume energy the way they always have (via their local utility), but their utility bills reflect credits purchased from the community solar project. In other words, they can ‘go green’ while saving money and at no cost. https://bit.ly/3u6gPBu


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