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Greetings! The end of the Temu-Shein era of cheap prices may be hurting digital ad firms just as much as bargain shoppers. Snap on Tuesday said the Trump administration’s closure of the duty-free import loophole—which allowed Temu and Shein to ship cheap stuff from China without paying duties—was affecting its ad business. Google forecast a similar impact from the changes last week. Meta Platforms, which got a big lift from an ad splurge by Temu and Shein in 2023, seems likely to complete the trifecta when it reports on Wednesday. Of the three companies, Snap is the most exposed to any weakness in the ad market, simply because it isn’t seen as a must-have ad buy. If marketers are going to cut back, they’re likely to sacrifice Snap before other digital outlets. It shouldn’t be surprising, then, that Snap said on Tuesday that after a “solid” first quarter, it was seeing some “headwinds” early in the second quarter, which started April 1, and it revised down its expense outlook for the year as a result. Snap also said it wasn’t issuing guidance for the second quarter. Its long-depressed stock promptly fell 13%. Ouch. On a call with analysts, Snap Chief Financial Officer Derek Andersen cited the impact of the duty-free import change as an example of the “headwinds.” The statement, and Google’s comment last week, are a reminder of what a boon the China-affiliated retailers have proven to be for U.S. companies—until now. That was particularly evident in 2023, the year after Temu launched. Meta, for instance, said its revenue from China-based advertisers—including those “reaching people in other markets”—accounted for 10% of overall revenue in 2023 and “contributed 5 percentage points to total worldwide revenue growth,” which was 16%. While the changes to the duty-free loophole don’t go into effect until Friday, both Temu and Shein have already raised prices. Whether the two online shopping services can prosper while charging more is a big question, but it makes sense they’d cut back on marketing costs. After all, the advertising value of emphasizing low prices doesn’t work quite so well when prices have nearly doubled. Meta Platforms now has a stand-alone app for its AI chatbot, bringing it into line with everyone else. But unlike everyone else’s, Meta’s AI app looks a lot like a social media feed—with a scrolling feed that shows what other people are using AI for. The idea is to encourage people to use AI by giving them real-life examples. ChatGPT’s creator OpenAI has been working on a similar idea, we reported recently. Will having a social media–like feed as part of the app drive more usage—or drive people away? That’s a real question given how much of the feed consists of playful images people have created, interspersed with text-based prompts (ranging from the serious to the silly, such as “give me some ridiculous advice”). One person asked Meta AI for “cognitive exercises that help lessen cognitive decline.” Meta AI didn’t offer the most obvious answer: Get off social media!
- A senior Google cybersecurity executive testified on Tuesday that forcing Google to share data or spin off its Chrome browser, as the Department of Justice has proposed to remedy Google’s illegal search monopoly, would jeopardize user security on those products.
- UPS plans to cut about 20,000 jobs and close 73 facilities as the U.S. delivery firm handles fewer packages for Amazon, the company said Tuesday.
- Thrive Capital announced a new vehicle called Thrive Holdings, aimed at “investing in, acquiring, and operating businesses for the long term,” said the New York venture firm’s founder, Joshua Kushner, in an X post.
- Spotify reported 15% growth in revenue to 4.2 billion euros, driven by its premium subscription business. Advertising revenue grew 8%, although, excluding the impact of foreign exchange volatility, growth in advertising was just 5%. Spotify said pricing in podcast ad inventory was soft.
- Mastercard announced on Tuesday a set of tools to make it easier for artificial intelligence agents to handle card payments and make purchases on behalf of users, a move that comes as AI companies tout online shopping as a key area where AI agents can automate tasks.
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