Lab Weekly — 06/07/2024

Outlook 2024 APAC POV, Plus, the latest news on Apple’s AI partnership and Paramount’s merger saga, and must-know stats

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Outlook 2024: APAC POV

With the era of passive growth over, here’s how brands can navigate the downstream effects and ensure sustained growth in APAC. Written by Sharon Soh, Chief Planning & Audience Officer, UM APAC

In case you missed it…

The Backlash to Google’s AI Search, Explained

Why Google Search telling people to eat rocks is just the tip of the iceberg that’s about to hit online media ecosystem

Microsoft Rallies Developers Around Copilot

Following the developer events from Google and OpenAI last week, Microsoft laid out the next chapter of its AI playbook this week with two events. Taken together, the deluge of announcements coming from Microsoft this week paints a picture of a company eager to jumpstart the AI revolution in personal computing.

AI Arms Race Enters New Phase of Scale and Multimodality

Multimodality is the new battleground for AI companies as major players seek to break AI out of the predominantly text-based interface. Here’s what the latest updates from OpenAI and Google tell us about the state of consumer-facing AI development.

Windows’ New Recall Feature that Screenshots Everything Labeled a Security Disaster [The Verge]

For a refresher, this new Recall feature, available only on Microsoft’s upcoming Copilot+ PCs, is designed to use local AI models to screenshot everything you see or do on your computer and then give you the ability to search and retrieve anything in seconds. Despite Microsoft’s promises of a secure and encrypted data processing protocol for Recall, cybersecurity expert Kevin Beaumont has found that the AI-powered feature has some potential security flaws.

Some analysts were quick to point to Microsoft’s lack of user trust, which the company has eroded over the years with bad practices on Windows. Therefore, without fully understanding how this new AI feature is supposed to work or knowing the aforementioned ‘potential security flaws,” some Windows users are already rejecting Recall outright. The company simply doesn’t have the type of goodwill that someone like Apple has with its users to introduce a feature that could be construed as constantly spying on users, similar to the way that Meta doesn’t have the user trust to make Portal a widely adopted device either.

I wrote in February that a crucial adoption hurdle for AI search lies in how much regular users trust the search results AI serves up, and the recent backlash against Google’s wide rollout of AI Overviews has not inspired much confidence in that regard. AI Overviews now appear on less than 15 percent of searches after last week’s outcry, an analysis found. This new round of backlash to Recall now serves as another reminder that tech companies still have a ways to go in closing the AI trust gap.

Related: Windows 11’s new Recall feature has been cracked to run on unsupported hardware [The Verge]; Cara, an artist-run and anti-AI app for creatives, jumped to the top of the App Store last week, growing from 40,000 to 650,000 users in a week [TechCrunch]

Apple Set to Announce OpenAI Partnership on Monday at WWDC [Bloomberg]

The tech industry will be all eyes on Apple next week, as the company’s annual worldwide developer conference (WWDC) kicks off on Monday. A partnership between Apple and OpenAI has been circling the rumor mill for a while now. This partnership would give OpenAI access to Apple’s vast user base, and in return, Apple gains cutting-edge AI models (and all the Nvidia GPUs that OpenAI has access to) to enhance its services, especially Siri. An earlier report suggested that a revamped, ChatGPT-powered Siri will allow users more voice control over individual app functions.

Bloomberg noted that this deal with OpenAI is just a temporary measure while Apple continues to develop its own AI capabilities. The companies have not disclosed the terms of the deal, but it’s clear that this partnership could significantly impact Apple’s strategy in the AI space. Apple would certainly want to keep some of the AI processing on-device, but given the way that the current AI infrastructure is set up, most of the AI tasks will have to be processed on cloud servers. Before Apple can build out its own AI cloud infrastructure, of course it’d make sense to partner with OpenAI and outsource that part of the backend support for now.

Two crucial questions remain to be answered: one, how exactly Apple will integrate ChatGPT into the next iOS and, two, would it partner with other AI companies beyond OpenAI. Taken together, what Apple chooses to do in these two aspects will shape how the next phase of the AI arms race plays out. Let’s hope the WWDC event next week brings some clarity to both questions.

Related: Apple reportedly planning to overhaul Siri with more advanced AI and allow users more voice control over individual app functions [Bloomberg]; A look at Apple’s AI efforts so far and how the company fell behind in the AI race [WSJ]; Apple will reportedly debut a new password manager app Passwords at its upcoming developer conference [Bloomberg]

Paramount And Skydance Agree To Terms Of A Merger Deal [CNBC]

On Monday, CNBC reported that the two companies have agreed to the terms of a merger deal, which could presumably take the competing offer from Apollo Global Management and Sony Pictures off the table. Yet, the latest report from Financial Times says that Shari Redstone, who controls about 80% of Paramount’s voting stock, has not given her sign-off for the deal to go through. FT says Redstone received the latest deal terms over the weekend but made no comment on the transaction at Tuesday’s annual meeting. As a result, Paramount’s trio of co-CEOs reportedly postponed the company’s all-hands meeting originally scheduled for Wednesday, citing ‘speculation regarding potential M&A.” ’So, all in all, this latest chapter in Hollywood’s ongoing consolidation saga might not be over just yet.

One outcome that I find interesting is that, no matter who buys (or doesn’t buy) Paramount, the new owner will face tough choices about what to do with Paramount+. On one hand, the streaming service has remained subscale at 67.5 million subscribers, despite its quarterly subscriber growth and multinational reach. As it stands, Paramount+ simply does not have the scale to compete against the likes of Netflix or Disney+, with 270 million and 117 million subscribers worldwide, respectively. Plus, its churn rate remains high. On the other hand, whoever ends up with Paramount likely cannot afford to shutter the streaming service completely, due to either the sunk cost fallacy, or, more reasonably, the fear of losing a foothold in a market where audiences have grown accustomed to having live sporting events, including the Super Bowl, available digitally. If nothing else, having an ad-supported service that can capture the ad revenue from the cord-cutters would be tough for the new owner to give up.

Related: Paramount Global, Charter ink multi-year renewal that will bring Paramount+, Bet+ to Spectrum TV customers [Variety]; Max raises prices across its ad-free plans [The Verge]

Situational Awareness:

IKEA will pay you real money to work in its virtual Roblox store [Wired]

Remember that remote cafe cashier who zooms in from the Philippines? Well, here we’ve unlocked another layer of remote / virtual work. And if Asana’s AI teammates turn out to be decently competent, pretty soon we won’t know whether our virtual IKEA salesperson is human or AI.

After China, Zara expands live shopping experiment to Europe and US [Reuters]

It is interesting to see Zara being the one retailer still willing to give Live Shopping another spin after TikTok and Instagram have both failed to make it happen in the Western markets. Also interesting to note is that Zara has chosen to host live shows on its app and website instead of a third-party social media platform, so as to ensure control over aesthetics.

Wix’s new tool taps AI to generate smartphone apps [TechCrunch]

With the AI coding revolution happening, this app-building solution seems like a natural next-step. Interesting to see if this service will result in more apps from brands or small businesses, or simply more junk mobile games.

Google’s Illuminate AI can turn academic papers into audio discussions [Google Illuminate]

This goes beyond conventional text-to-voice, in the sense that the model is essentially writing and performing the script by itself to turn academic papers into easily accessible, NPR-style podcast content. Wondering if it’ll work on other written sources as well.

Instagram confirms it is testing an unskippable ad format with a countdown timer that briefly prevents feed scrolling [TechCrunch]

The enshittification of social platforms continues! Increasing ad visibility at the expense of the consumer experience may not actually work well for increasing engagement or conversion.

• 43% of Gen Z think ads in games ruin the experience, the ZBD Gen Z Gamer study found based on a survey of more than 2,000 Gen Z gamers in the U.S. 65% of Gen Z gamers play video games for more than 3 hours every day, the study found, and 72% say they can be their authentic selves while playing online.
• Think Snapchat is still just for kids? Think again. Close to 25% of Snapchat users are 35 or older, Patrick Harris, Snap’s president of the Americas, recently revealed in a YouTube video about the company’s ad platform.
• 2024 will be the U.S. restaurant industry’s biggest year ever in sales — $1.1 trillion by the end of December, per National Restaurant Association estimates, Axios reports. Total spending at U.S. food service establishments is expected to rise 5.4% this year, to $1.106 trillion, per the National Restaurant Association’s annual “State of the Restaurant Industry” report.
• Gen Z still loves fast food . YPulse’s most recent Food Shopping and Trends report data shows that a whopping 94% of 13–39-year-olds have visited a fast food restaurant like McDonald’s, Wendy’s, or Taco Bell in just the past month.

If you find our insights valuable and would like to have a deeper conversation on technology and media innovations, or need to sound smarter in a client meeting or a pitch, please feel free to reach out to Chelsea Freitas, our VP of Strategy, at chelsea@ipglab.com.

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