Tag Archives: Finance

OpenAI reportedly plans to increase ChatGPT’s price to $44 within five years

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OpenAI is reportedly telling investors that it plans on charging $22 a month to use ChatGPT by the end of the year. The company also plans to aggressively increase the monthly price over the next five years up to $44.

The documents obtained by The New York Times shows that OpenAI took in $300 million in revenue this August, and expects to make $3.7 billion in sales by the end of the year. Various expenses such as salaries, rent and operational costs will cause the company to lose $5 billion this year.

OpenAI is reportedly circulating the documents the NYT reported on as part of a drive to find new investors to prevent or lessen its financial shortfall. Fortunately, OpenAI is raising money on a $150 billion valuation, and a new round of investments could bring in as much as $7 billion.

OpenAI is also reportedly in the midst of switching from a non to for-profit company. The business model allows for the removal of any caps on investor returns so they’ll have more room to negotiate for new investors at possibly higher rates.

This article originally appeared on Engadget at https://www.engadget.com/ai/openai-reportedly-plans-to-increase-chatgpts-price-to-44-within-five-years-225413308.html?src=rss

Intel reportedly rebuffed an offer from ARM to buy its product unit

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Intel's fortunes have declined so rapidly over the past year that chip designer ARM made a "high level inquiry" about buying its crown jewel product unit, Bloomberg reported. However, Intel said the division wasn't for sale and turned down the offer, according to an unnamed insider. 

There are two main units inside Intel, the product group that sells PC, server and networking chips and a chip manufacturing foundry. ARM had no interest in Intel's foundry division, according to Bloomberg's sources. ARM and Intel representatives declined to comment.

Intel's fortunes have been on the wane for years, but the decline over the last 12 months has been especially dramatic. Following a net $1.6 billion loss in Q2 2024, the company announced that it was laying off 15,000 employees as part of a $10 billion cost reduction plan. Last week, the company also revealed plans to transform its ailing foundry business into an independent subsidiary. Intel lost half its market value last year and is now worth $102.3 billion.

ARM sells its processor designs to Qualcomm, Apple and other manufacturers (mostly for mobile phones) but doesn't build any chips itself. Purchasing Intel's product division would completely transform its business model, though that scenario seems highly improbable.

With Intel wounded at the moment, rivals have been circling. Qualcomm also expressed interest in taking over Intel recently, according to a report from last week. Any mergers related to ARM and Qualcomm would be regulatory nightmares, but the fact that the offers exist at all shows Intel's vulnerability.

Intel has other avenues to boost investment. Apollo Global Management (the owner of Yahoo and Engadget) has offered to invest as much as $5 billion in the company, according to a recent Bloomberg report. Intel also plans to sell part of its stake in chip-maker Altera to private equity investors. 

This article originally appeared on Engadget at https://www.engadget.com/computing/intel-reportedly-rebuffed-an-offer-from-arm-to-buy-its-product-unit-120044228.html?src=rss

New report details OpenAI’s plan to switch to for-profit mode

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A major shakeup is in the works at OpenAI. Reuters reported that the artificial intelligence research company is restructuring its business from a non-profit board into a for-profit corporation. The publication also says Sam Altman would be given equity in the new corporation.

OpenAI’s move to for-profit wouldn’t eliminate its non-profit entity entirely. The non-profit would own a stake in the new for-profit venture but it won’t have nearly the power as it did. An OpenAI spokesperson gave a statement that’s identical to the one they gave to Fortune’s initial report about the restructuring. Couldn’t they at least have used OpenAI’s software to word a different statement?

"We remain focused on building AI that benefits everyone, and we’re working with our board to ensure that we’re best positioned to succeed in our mission. The non-profit is core to our mission and will continue to exist.”

The move to for-profit would also provide a big payday for chief executive officer Sam Altman. Reuters says he would receive equity in the company once the restructuring is complete. The for-profit company’s worth could go as high as $150 billion, according to some estimates. The for-profit model would also remove the cap on investors’ returns.

Altman has reportedly been trying to move OpenAI to a more traditional for-profit company for some time. It’s not known exactly when the switch will happen since details of the deal are still going through all of the legal motions.

This article originally appeared on Engadget at https://www.engadget.com/ai/new-report-details-openais-plan-to-switch-to-for-profit-mode-214354224.html?src=rss

New report details OpenAI’s plan to switch to for-profit mode

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A major shakeup is in the works at OpenAI. Reuters reported that the artificial intelligence research company is restructuring its business from a non-profit board into a for-profit corporation. The publication also says Sam Altman would be given equity in the new corporation.

OpenAI’s move to for-profit wouldn’t eliminate its non-profit entity entirely. The non-profit would own a stake in the new for-profit venture but it won’t have nearly the power as it did. An OpenAI spokesperson gave a statement that’s identical to the one they gave to Fortune’s initial report about the restructuring. Couldn’t they at least have used OpenAI’s software to word a different statement?

"We remain focused on building AI that benefits everyone, and we’re working with our board to ensure that we’re best positioned to succeed in our mission. The non-profit is core to our mission and will continue to exist.”

The move to for-profit would also provide a big payday for chief executive officer Sam Altman. Reuters says he would receive equity in the company once the restructuring is complete. The for-profit company’s worth could go as high as $150 billion, according to some estimates. The for-profit model would also remove the cap on investors’ returns.

Altman has reportedly been trying to move OpenAI to a more traditional for-profit company for some time. It’s not known exactly when the switch will happen since details of the deal are still going through all of the legal motions.

This article originally appeared on Engadget at https://www.engadget.com/ai/new-report-details-openais-plan-to-switch-to-for-profit-mode-214354224.html?src=rss

Visa slapped with a DOJ antitrust lawsuit

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The Department of Justice (DOJ) filed an antitrust lawsuit against Visa. The lawsuit alleges that the financial firm holds a monopoly over debit network markets allowing it to charge banks and markets with exorbitant fees that get passed onto consumers and keep rival companies like PayPal and Square from competing on their level.

Bloomberg first reported on Monday that the DOJ planned to file an antitrust suit against Visa following a multiyear investigation into Visa’s business practices starting in 2020. Visa attempted to acquire the fintech startup Plaid with a $5.3 billion bid but the DOJ filed a lawsuit blocking the deal claiming the acquisition would eliminate a competitive threat that challenged Visa’s powerful control of debit markets.

Visa dropped the bid a year later to avoid any further legal entanglements but the DOJ continued investigating Visa’s business practices.

The DOJ alleges in its latest lawsuit that Visa’s “web of exclusionary agreements” with banks and businesses helped strengthen its market dominance and “smother” any potential competitors. Attorney General Merrick Garland said in a statement that Visa “unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market.

“Merchants and banks pass along those costs to customers, either by raising prices or reducing quality or service,” the statement reads. “As a result, Visa’s unlawful conduct affects not just the price of one thing — but the price of nearly everything.”

Visa's General Counsel Julie Rottenberg told Engadget in an emailed statement that the DOJ's lawsuit is "meritless" and that they plan to vigorously defend themselves in court. 

"Today's lawsuit ignores the reality that Visa is just one of many competitors in a debit space that is growing, with entrants who are thriving," Rottenberg said by email. "When businesses and consumers choose Visa, it is because of our secure and reliable network, world-class fraud protection, and the value we provide. We are proud of the payments network we have built, the innovation we advance, and the economic opportunity we enable."

This article originally appeared on Engadget at https://www.engadget.com/big-tech/visa-slapped-with-a-doj-antitrust-lawsuit-204710873.html?src=rss

Visa slapped with a DOJ antitrust lawsuit

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The Department of Justice (DOJ) filed an antitrust lawsuit against Visa. The lawsuit alleges that the financial firm holds a monopoly over debit network markets allowing it to charge banks and markets with exorbitant fees that get passed onto consumers and keep rival companies like PayPal and Square from competing on their level.

Bloomberg first reported on Monday that the DOJ planned to file an antitrust suit against Visa following a multiyear investigation into Visa’s business practices starting in 2020. Visa attempted to acquire the fintech startup Plaid with a $5.3 billion bid but the DOJ filed a lawsuit blocking the deal claiming the acquisition would eliminate a competitive threat that challenged Visa’s powerful control of debit markets.

Visa dropped the bid a year later to avoid any further legal entanglements but the DOJ continued investigating Visa’s business practices.

The DOJ alleges in its latest lawsuit that Visa’s “web of exclusionary agreements” with banks and businesses helped strengthen its market dominance and “smother” any potential competitors. Attorney General Merrick Garland said in a statement that Visa “unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market.

“Merchants and banks pass along those costs to customers, either by raising prices or reducing quality or service,” the statement reads. “As a result, Visa’s unlawful conduct affects not just the price of one thing — but the price of nearly everything.”

Visa's General Counsel Julie Rottenberg told Engadget in an emailed statement that the DOJ's lawsuit is "meritless" and that they plan to vigorously defend themselves in court. 

"Today's lawsuit ignores the reality that Visa is just one of many competitors in a debit space that is growing, with entrants who are thriving," Rottenberg said by email. "When businesses and consumers choose Visa, it is because of our secure and reliable network, world-class fraud protection, and the value we provide. We are proud of the payments network we have built, the innovation we advance, and the economic opportunity we enable."

This article originally appeared on Engadget at https://www.engadget.com/big-tech/visa-slapped-with-a-doj-antitrust-lawsuit-204710873.html?src=rss

Intel is separating its ailing foundry business from the main company

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Intel is turning its foundry business, which manufactures chips for other companies, into an independent subsidiary. The company has revealed its plan in a note to employees from its CEO Pat Gelsinger, published over a month after Intel disclosed that it's cutting 15 percent of its workforce. Intel is laying off more than 15,000 people as part of its $10 billion cost-reduction plan to regain financial stability following a second-quarter net loss of $1.6 billion. Gelsinger explained in his new memo that turning the foundry into a subsidiary "will unlock important benefits," particularly the ability to evaluate and take external funding directly. 

Gelsinger said that there will be no changes to the foundry's leadership, but the subsidiary will establish its own operating board with independent directors to govern it. According to CNBC, Intel is even considering making the foundry a separate publicly traded company. Intel is in the midst of modernizing its existing fabs and building new ones for its foundry business, which is costing the company billions of dollars, in an effort to catch up to its chipmaking rivals like TSMC and Samsung. The company has reportedly spent around $25 billion a year on its foundry business over the past two years, but that has yet to translate into profit. 

In April, the company revealed in a presentation to investors that the business posted $7 billion in operating losses for 2023, even larger than the $5.2 billion in losses that it incurred the previous year. It had a revenue of $18.9 billion, down 31 percent from its 2022 revenue of $27.49 billion. Gelsinger warned investors at the time that Intel expects its foundry business' operating loss for 2024 to be even bigger and that it doesn't expect to break even until 2027. The foundry's finances aren't the division's only problem: Its next-gen manufacturing process referred to as "18A" reportedly failed crucial tests to prove that it's ready to be used for mass production. 

In addition to announcing that the foundry business will become a subsidiary, Gelsinger also disclosed in the memo that Intel will be selling part of its stake in Altera, another chipmaker that it purchased for $16.7 billion in 2015. 

This article originally appeared on Engadget at https://www.engadget.com/general/intel-is-separating-its-ailing-foundry-business-from-the-main-company-110043046.html?src=rss

Former MoviePass CEO reportedly pleads guilty to securities fraud

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Mitch Lowe, one of two MoviePass leaders indicted by the Justice Department in 2022, has pleaded guilty to securities fraud charges. The former CEO admitted to conspiring to deceive the public and investors about the service’s sustainability. Variety reports that the details of Lowe’s plea agreement haven’t been made public.

Prosecutors claim Lowe knew from the start that the company’s $9.95 “unlimited” plan was a short-term gimmick to attract subscribers and inflate stock. He’s also accused of making false statements in press releases, interviews and SEC filings about MoviePass’ long-term viability.

Those statements included allegedly lying about the company’s ability to become profitable on subscription fees alone and having tech that could generate revenue from customer data. He also claimed MoviePass was profiting from multiple revenue streams despite not having any income beyond subscriptions.

Prosecutors also accused Lowe and Ted Farnsworth, former CEO of MoviePass’ parent company Helios and Matheson, of preventing subscribers from getting what was promised from the “unlimited” subscription. The company settled with the FTC in 2021 over allegations that it intentionally invalidated subscriber passwords to freeze their accounts, blocking their ability to get the movie tickets the service promised. MoviePass and its parent company declared bankruptcy in 2020.

Although no sentencing date has been set, Lowe is free on bond and has a status conference court date scheduled in Miami for March 2025. The 72-year-old former executive faces a maximum of five years in federal prison.

“Mitch is a good man who is looking to move forward with his life,” Lowe’s attorneys, Margot Moss and David Oscar Markus, said in a statement to Variety. “He has accepted responsibility for his actions in this case and will continue to try to make things right.”

Meanwhile, Farnsworth is still in custody. He was initially freed on a $1 million bond that was revoked in August 2023 after the feds accused him of misusing nearly $300,000 in company funds. Farnsworth's former boyfriend, who he met on an escort site, was paid $147,000, and received a Cadillac worth $144,000; after the pair split up, the feds say he falsely accused his ex of stealing the vehicle.

This article originally appeared on Engadget at https://www.engadget.com/big-tech/former-moviepass-ceo-reportedly-pleads-guilty-to-securities-fraud-201131284.html?src=rss

23andMe will pay $30 million to settle 2023 data breach lawsuit

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23andMe is close to settling a proposed class action lawsuit filed against the company over a data breach that compromised 6.9 million users' information. According to the preliminary settlement filing, the DNA testing company has agreed to pay $30 million to affected customers, as well as to conduct annual computer scans and cybersecurity audits for three years. A website will be built to notify people eligible to a portion of the settlement fund and to facilitate payments. Affected users will also be sent a link where they can delete all their information from the service, and they'll be able to enroll to a three-year Privacy & Medical Shield + Genetic Monitoring program for free. A judge still has to approve those terms. 

In October 2023, the company admitted that the DNA Relatives profile information of roughly 5.5 million customers and the Family Tree profile information of 1.4 million DNA Relative participants had been leaked. It later revealed in a legal filing that the bad actors started breaking into customer accounts in late April 2023 and that they had access to its systems until September that year. It said that the hackers used a technique called credential stuffing, which uses previously compromised login credentials to access customer accounts. 

The breach led to several class action lawsuits filed against the company, including one that accused 23andMe of failing to notify the plaintiffs that they were specifically targeted for having Chinese and Ashkenazi Jewish heritage. In the settlement agreement [PDF] for the consolidated lawsuit, 23andMe noted that it "denies the claims and allegations set forth in the Complaint" and that it "denies that it failed to properly protect the Personal Information of its consumers and users." 

According to Reuters, 23andMe describes its financial condition as "extremely uncertain." In its financial report for the 2024 fiscal year, it revealed that it earned a total revenue of $220 million, down 27 percent from a $299 million revenue the year before. A huge chunk of the settlement money will come from cyber insurance, though, which the company expects to cover $25 million out of the $30 million total. 

This article originally appeared on Engadget at https://www.engadget.com/cybersecurity/23andme-will-pay-30-million-to-settle-2023-data-breach-lawsuit-150058702.html?src=rss

OpenAI is reportedly moving away from its complicated non-profit structure next year

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Sam Altman has told OpenAI staff members during their weekly meeting that the company is changing its rather convoluted non-profit corporate structure next year, according to Fortune. The CEO said OpenAI will move away from being controlled by a non-profit entity and will transition into a more traditional for-profit organization. He didn't delve into the specifics of how the company will achieve that goal and what OpenAI's corporate structure will look like exactly. A spokesperson only told Fortune that it remains "focused on building AI that benefits everyone" and that non-profit is "core to [its] mission and will continue to exist."

OpenAI started as a non-profit organization in 2015 that relied on money from donors. In a page explaining its structure, it said that it only raised $130.5 million in total donations over the years, which it says made it clear that "donations alone would not scale with the cost of computational power and talent required to push [its] core research forward." The then-purely non-profit organization created a for-profit subsidiary in order to solve that problem. As Fortune explains, OpenAI's non-profit entity currently controls its for-profit arm, which in turn controls a holding company that takes investments from companies like Microsoft. 

Under this structure, the profit that can be allocated to investors, including Microsoft, has a cap. Anything OpenAI makes beyond the cap will go to its non-profit division. And the company's revenue is booming, according to a report by The Information published in June. OpenAI reportedly doubled its annualized revenue in the first half of the year, thanks to the subscription version of ChatGPT.

The company's complex structure also allowed OpenAI's non-profit board of directors to oust Altman in 2023, because they "no longer [have] confidence in his ability to continue leading OpenAI." Five days later, however, the board was disbanded and replaced, while Altman was reinstated as CEO. 

This article originally appeared on Engadget at https://www.engadget.com/ai/openai-is-reportedly-moving-away-from-its-complicated-non-profit-structure-next-year-130014948.html?src=rss