The Pulse #102: Intel’s rough business outlook and full reorg
The Pulse #102: Intel’s rough business outlook and full reorg
Also: AI startup founders keep defecting to Big Tech, buggy app takes Sonos 6 months to fix, CrowdStrike faces huge bills for historic global outage, and more
The Pulse is a series covering insights, patterns, and trends within Big Tech and startups. Notice an interesting event or trend? Send me a message.
Today, we cover:
Industry pulse. Court rules Google broke antitrust law, Twitter/X quits San Francisco, Google kills Chromecast, does NVIDIA trains model on Netflix and YouTube videos?
Intel’s rough business outlook and major reorg. It’s a third consecutive year of falling revenue at Intel. The company is reorganizing itself to align with the “foundry model” of the chip-making industry.
Founders of well-funded AI startups keep leaving for Big Tech. Character.ai is the latest AI company founded just 2-3 years ago, to be hollowed out by a brain drain to Big Tech. Is it a sign that AI startups will struggle to monetize, grow, or raise funding?
Buggy app to take Sonos 6 months to fix. The new Sonos app is slow, full of bugs, and unreliable. It took the company 3 months to acknowledge the problem, and now all hands are on deck to fix it. It’s valid to ask how this app ever reached customers.
Fallout of CrowdStrike’s global outage. The security provider is blamed for the mother of all software crashes, last month. But there were several prior cases of operating systems being broken at the kernel level. Now Delta Air Lines is suing for $500M, the reputational damage is vast, and compensation payouts could be devastating.
1. Industry pulse
Google broke law by paying to be default search engine
The US Department of Justice (DOJ) sued Google, alleging the search giant broke antitrust laws by paying smartphone and browser vendors to be the default search engine on their products and devices. In 2021 alone, Google paid a combined $26B to Apple, Firefox, and other vendors for this, most of which ($18B) went to Apple.
A judge has now ruled the agreements were unlawful, stating:
“Google’s monopoly power, maintained by the exclusive distribution agreements, has enabled Google to increase text ads prices without any meaningful competitive constraint.”
There will be a hearing in September to decide what changes to its practices will be mandated for Google. An appeal by the tech giant looks inevitable; but as things stand, it will no longer be able to pay to be the default search engine on other platforms.
It’s a notable victory for the US regulator, proving that Google has used illegal means to maintain a search monopoly, with the consequence of stifling competition, while increasing its own ad pricing and revenue. It’s currently an open question as to what Google’s argument will be against this judgment – because the ruling appears reasonable and balanced.