Wall Street is getting jittery about corporate investment. DoorDash stock slumped as much as 20% in after-hours trading after the food-delivery service revealed it expects to “invest several hundred million dollars more” in upgrading its technology and expansion next year than it did this year. Given that DoorDash generates a couple of billion dollars a year in free cash flow, you wouldn’t think this statement would send investors running for the exits. Perhaps they’re just oversensitive on this topic, thanks to the massive AI investments made by the biggest tech companies. DoorDash’s stock recovered somewhat during its earnings call, as CEO Tony Xu outlined what the money would be used for, including making the company’s technology ready for AI, as well as expanding the ways DoorDash delivers meals or groceries to people’s houses. Instead of just using a gig worker in a car or on a bike, DoorDash envisions an array of different technologies for delivery through the air and on land. Some will come from other companies and some will be built internally. DoorDash has, for instance, designed its own robot to deliver meals, Dot. Xu said next year is when it will “commercialize some of these efforts.” It’s a lot for investors to, ah, digest.
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Wall Street is getting jittery about corporate investment. DoorDash stock slumped as much as 20% in after-hours trading after the food-delivery service revealed it expects to “invest several hundred million dollars more” in upgrading its technology and expansion next year than it did this year. Given that DoorDash generates a couple of billion dollars a year in free cash flow, you wouldn’t think this statement would send investors running for the exits. Perhaps they’re just oversensitive on this topic, thanks to the massive AI investments made by the biggest tech companies.
DoorDash’s stock recovered somewhat during its earnings call, as CEO Tony Xu outlined what the money would be used for, including making the company’s technology ready for AI, as well as expanding the ways DoorDash delivers meals or groceries to people’s houses. Instead of just using a gig worker in a car or on a bike, DoorDash envisions an array of different technologies for delivery through the air and on land. Some will come from other companies and some will be built internally. DoorDash has, for instance, designed its own robot to deliver meals, Dot. Xu said next year is when it will “commercialize some of these efforts.” It’s a lot for investors to, ah, digest.
The delivery firm would have had more luck with investors if it had unveiled an AI partnership. That’s what Snap, the slow-growing social media firm, did when it unveiled its third-quarter earnings at the same time as DoorDash. Snap has struck a deal with Perplexity to allow the AI startup to plug its search engine into Snapchat. In exchange, Snap gets $400 million in cash and stock. Snap’s stock jumped 20% on the news, although investors were presumably heartened by Snap’s revenue growth accelerating ever so slightly to a still-tepid 10%. Notably, its stock rally lost steam during the company’s call although the stock was still up 14%. Perhaps investors realized that, Perplexity partnership or not, Snap’s business remains challenged (more here).
Perplexity’s Secret Agents
It’s fashionable nowadays to talk about people having “agency,” which is simply a fancy way of saying they can decide for themselves what they do. That concept is likely to take on greater significance as AI agents—software that can take actions on behalf of users—enter the mainstream. One question, which Perplexity is trying to elevate in its battle with Amazon, is whether an AI firm is responsible for how its customers use its agents—or whether those customers are responsible. And that issue could have implications for all firms developing AI agents and all companies doing business online.
As we recounted Tuesday, the two companies are at loggerheads because Perplexity is allowing customers who use its AI agent to cruise around Amazon.com buying stuff, despite Amazon’s requests that it not do so. Late on Tuesday, Amazon sued Perplexity in federal court in Northern California, alleging that it was violating state and federal computer fraud laws by repeatedly accessing Amazon’s computer systems without authorization. Amazon claims Perplexity disguised its AI agent as a “human user to evade Amazon’s technological barriers.” Perplexity’s response, in public statements, was to turn that argument around by claiming: “Perplexity does not use Amazon. Amazon users choose to use Perplexity or any other AI assistant of their choice.”
Will Perplexity be able to fob off responsibility for its agents’ actions on its users? It may not be that simple. Amazon’s lawsuit focuses partly on the technology itself, alleging that the agent doesn’t make clear to Amazon’s systems that it’s not a person. That’s a problem for Amazon’s ability to sell ads, for one thing—advertisers want humans, not AI agents, to see their ads. But Amazon also says the problem with the agent is that it is “vulnerable to attacks from cybercriminals.”
This promises to be a fascinating dispute. Stay tuned for more developments. For more of our coverage of these issues, see here and here.
Quote of the Day
“We are continuing to get the company into a state of constantly stepping up into the scale we are at, so I don’t want to get wrapped around an IPO axle.”—OpenAI Chief Financial Officer Sarah Friar, speaking at a Wall Street Journal conference, was downplaying suggestions that the company is thinking of an IPO in the near term.
In Other News
• Ripple said it had raised a $500 million strategic investment at a $40 billion valuation from investors led by Fortress and Citadel Securities, as it builds out relationships with traditional financial firms.
• Apple is finalizing a plan to use Google’s AI model to power an overhauled version of its Siri voice assistant, according to Bloomberg. Apple will pay Google around $1 billion a year, the news outlet reported.
Today on The Information’s TITV
Check out our latest episode of TITV in which Akash speaks with Harvard Business School Professor David Yoffie about the current state of play in AI chips.
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