SaaS apocalypse
German PE firm Thoma Bravo had the second-biggest PE loss ever, writing off Medallia after buying it for $6.4bn in 2021. Medallia manages customer feedback and service, which of course is a really clear obvious thing to do much better and cheaper with AI (plus they probably overpaid). There will be more of these.
Only idiots think people will vibe-code their own SAP, but it looks like 1: software will get way more competitive and quite possibly lower-margin; 2: for some use-cases AI will replace existing solutions with a better cheaper technology (funny though it is to call AI cheap in June 2026); and 3: there will be lots of swirl as things get bundled and bundled, value gets peeled off and moved around (this is where you say ‘headless!’ and ‘harness!’ to sound clever), and the entire industry is held upside-down and shaken. Just as with any industry shift, including the emergence of SaaS itself, that means the death of some companies that don’t manage the transition, some of which look obvious (like this one - call centre companies are also heavily shorted right now) and some of which are inherently hard to to predict. Meanwhile, PE had 15 years where interest rates were low and you knew what effects the tech would have, and now neither of those statements are true. LINK
A UK social media ban?
The UK is looking at banning social media for people under 16, following Australia and a growing trend globally. Enforcement will be managed by Ofcom, the UK’s TMT super-regulator. Setting aside the frankly fuzzy evidence of harm, this is a tough thing to implement: you’re forcing tech companies to collect IDs, which they hate for privacy and security reasons, and we saw in Australia that it’s not that hard for children to get round this (especially if their parents let them use their devices). There are also definitional questions, which come down to your theory of harm - are you worried about content, or recommendation systems, or messaging? Do you ban SMS too, or Google? More pragmatically, this is a costless headline that sounds good, from a lame-duck prime minister with an instinct for state intervention to solve every problem and a pathological inability to make hard decisions, and here all the hard decisions will have to be taken by someone else. LINK
Meanwhile, India blocked Telegram because people used it to cheat in medical exams, which is just silly. LINK
Amazon’s AI cards
Amazon isn’t really on the radar for foundation models (though it hosts all of them on AWS), but AI will clearly transform the Amazon business. This week it had two big lists of announcements; on the one hand expanding product recommendation and discovery, and on the other talking about what this means for advertisers (reminder - with $70bn of ad sales in the last 12 months, Amazon is the world’s third-largest media-owner after Alphabet and Meta). ADVERTISERS, SHOPPING
RAM pricing
One effect of the surge in investment in AI is a crunch in memory supply: manufacturers are giving priority to high spec memory used in AI data centres, which means that in the last couple of months supply and hence pricing for the memory used in consumer electrics has been squeezed. This week Tim Cook said that Apple, which normally holds prices fixed over product lifecycles, will have to raise prices later in the year: this will probably be hundreds of dollars for many products. LINK
Snap Spectacles
I sometimes point out in presentations that all the stuff we were excited about before ChatGPT is still there. E-commerce is 20% of US retail (and 40% of UK non-food retail), TV is streamed (see the next item), the entire car industry is being overturned, and people are still working on smart glasses. This week Snap unveiled its latest attempt to stay relevant, $2195 ‘glasses’ that are really so bulky that we should probably still call them an HMD or headset. Lots of people have mocked just how big they are (although this is actually kind-of on-trend), but like Apple’s Vision Pro, this still all feels years from being ready. And of course, as we could have said 5 or 10 years ago, we don’t really know if people will want to do this even once all the engineering is solved. LINK
Fox buys Roku
This is one of those stories that you wish you’d said was obvious before rather than after it was announced. As TV shifts to streaming, the screen actually knows what you watch, and ads can be just as dynamic and personalised in TV shows as they are online, so how does that happens and who has the data? Roku is one answer, and Fox just bought it for $22bn. LINK
Midjourney pivots to medical
Midjourney pioneered prosumer AI image generation, but never really built a product around it and is now mostly left behind by multi-modal models from the big labs. There are many ways it could have reacted to that, but I don’t think anyone expected this: an attempt to disrupt medical imaging, selling a new full-body ultrasound scanner. The idea is that you can do frequent, cheap and (apparently) harmless full-body scans to look for changes. This is very far from my field, but the thesis is that we all have many masses but most of these are harmless, so the danger of doing an invasive biopsy on all of them to check for cancer is greater than the benefit, and now you can monitor all of them cheaply at no risk to see if any are growing. That sounds good to me, but 🤷🏻♂️. LINK
New cars
Uber continues to expand its AV partnerships. Meanwhile, Waymo paid $200m to buy the vehicle proving ground in Arizona that Apple built for its cancelled car project. UBER, WAYMO
On the other side of the shift, BMW issued a profit warning as its sales in China continue to shrink, like all foreign car car companies there. For all that people seem to hate the new Ferrari EV, I find it far easier to see a future for Ferrari in electric and automaton, as an eternal luxury brand, than for BMW or Mercedes. LINK
Shenanigans
Three amusing stories to group together. First, Substack is launching an ad product. The founders were very vocal in declaring that things like recommendation systems, news feeds and ads were stupid and evil, and now they’re doing all of them. LINK
Second, the $500 ‘Trump Phone’, which is sold as ‘American-made’, is of course an old HTC (in MAGA terms, 'CHINESE') from 2024 that’s been spray-painted gold. LINK
And finally, Amazon’s studio has dropped a nearly-complete and apparently very good movie about Sam Altman, which of course has no connection at all to Amazon’s deals with OpenAI. LINK
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