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Greetings! Amazon CEO Andy Jassy needs to send a thank-you card to Walmart CEO Doug McMillon—because it looks like Walmart just helped bail out Amazon. President Donald Trump’s signal on Tuesday that he might reduce tariffs on Chinese imports from the current level of 145% followed a meeting the president held with McMillon and the CEOs of Target and Home Depot on Monday. They warned Trump that his tariffs were likely to lead to higher prices and empty shelves in U.S. stores, Axios reported. While Jassy wasn’t at the White House, I have no doubt he’s relieved someone else delivered the message. The irony is that Trump’s tariffs on China were probably going to hit Amazon harder than Walmart. Since Amazon relies much more heavily than Walmart on outside sellers who set their own prices, it’s likely that shoppers would start noticing price hikes on Amazon before seeing them on Walmart. Indeed, many Amazon sellers had already started raising prices in the weeks since “Liberation Day.” Plus, Amazon’s ad business, which brought in $56 billion last year, is made up mostly of merchants paying to boost their products in search results—the first kind of spending many sellers are going to cut when they go into survival mode. While Walmart also has a similar online ad business, it’s a much smaller percentage of overall revenue. What’s more, Walmart gets more of its revenue from selling groceries than Amazon does, and groceries are far less exposed to tariffs—particularly tariffs on Chinese goods—given that most are produced domestically or imported from closer neighbors like Latin America. Plus, people still have to buy food in a recession, and Walmart is a much better option for cash-strapped shoppers than Amazon’s Whole Foods Market. All these factors help explain why Amazon shares have benefited much more from Trump’s recent comments than those of the retailers whose CEOs actually went to the White House. Amazon stock has surged 7% this week, while Walmart is up 2%.
Speaking of tariffs, what exactly is a tariff anyway? As Meta Platforms tries to fight regulation, the company is trying to redefine the term. Today, the EU hit Meta with a $226 million fine and—more importantly—said it would force the company to change how it operates Facebook and Instagram in Europe. The EU said Meta’s practice of making European users choose between paying a subscription fee or giving it their consent to use personal data for targeting ads did not comply with the bloc’s Digital Markets Act. (The EU also said Apple had violated the DMA—more on the fines here.) In response to the news, Meta’s chief global affairs officer, Joel Kaplan, published a statement saying that the EU “forcing us to change our business model effectively imposes a multibillion-dollar tariff on Meta.” It makes sense for Meta to hate the DMA, but it should be obvious that regulating a company’s products is not the same thing as forcing it to pay a duty on its imports or exports. It’s as if Ford claimed that the U.K., where cars drive on the left, had imposed tariffs by forcing automakers to put steering wheels on the right-hand side of vehicles they sell in the country. Clearly Kaplan is trying ape Trump’s language in an effort to get the president on Meta’s side in trade negotiations with Europe. It may well work. But as the EU considers putting actual tariffs on ads and other digital services sold by U.S. tech companies—which would almost certainly be much more devastating to Meta’s business than today’s move—Meta should probably be more careful about throwing the word “tariff” around.
- Google’s Gemini AI chatbot last fall was lagging rival services run by OpenAI and Meta Platforms but it was ahead of services from Microsoft, Anthropic and Perplexity, according to data shown in court on Wednesday. As of last month, Gemini worldwide was seeing 35 million daily active users and 350 million monthly active users. Google analysts estimated that ChatGPT was seeing 160 million daily active users and 600 million monthly active users, according to the slide (more here).
- A Perplexity executive on Wednesday testified that Google’s distribution contracts with phone manufacturers and mobile carriers have blocked his company’s efforts to achieve similar deals, as the Department of Justice attempts to convince a federal judge to end those contracts as part of remedies to address Google’s illegal search monopoly (more here).
- ChatGPT has drawn away some search queries from Google, a senior Google executive testified on Wednesday, but primarily “homework and math” queries which don’t generate much in ad revenue. The executive, Sissie Hsiao, said “so far we have not seen cannibalization of commercial queries or [queries with] commercial intent” (more here).
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ServiceNow’s revenue rose 18.5% in the first quarter to $3.09 billion, the company said Wednesday, the second consecutive quarter topline growth has decelerated slightly. But the biggest part of ServiceNow’s business, software subscriptions, exceeded previous projections.
- Tesla’s planned robotaxi service has begun testing with employees in Austin and San Francisco, the company said Wednesday on X.
- Elon Musk’s Neuralink is raising $500 million at a valuation of $8.5 billion, Bloomberg reported Wednesday.
- Tether, the world’s largest stablecoin issuer, and SoftBank are funding a new publicly traded company, called Twenty One Capital, that will invest in bitcoin. The company will launch with about $3.9 billion in bitcoin and will trade on the stock market through a merger with Cantor Fitzgerald’s special-purpose acquisition company Cantor Equity Partners.
- Amazon’s competitor to SpaceX’s Starlink, known as Project Kuiper, is struggling to scale up production of its satellites to hit a key U.S. government deadline, Bloomberg reported Wednesday.
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