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Greetings! Sam Altman seems to be trying to set a new world record for creating a vertically integrated tech company in as little time as possible. The deal he and former Apple design chief Jony Ive announced Wednesday, under which OpenAI will buy Ive’s AI hardware startup io at a valuation of $6.5 billion, is striking on a number of levels. And not just because OpenAI’s gauzy blog post is reminiscent of a baby announcement, complete with a touching photo of the happy couple and the headline “Sam & Jony introduce io.” (The Information broke the news that OpenAI was in discussions to buy the startup last month and in 2023 first reported that Ive and Altman were collaborating.) More important, Altman has now assembled an enterprise that is involved at every stage of the AI stack, from developing the AI models as well as the specialized AI chips and data centers that run them, to applications like AI agents that help people shop, and now—through Ive’s startup—hardware devices specially designed for AI. Altman undoubtedly is moving so fast to assemble all these pieces because he’s up against several well-heeled tech giants that are well positioned to do the same. While Google is probably the only other big company that is already vertically integrated—if you treat its Pixel phones as the AI hardware device—both Microsoft and Amazon have the hardware capabilities to compete across all these different fronts as well. The only big tech company that isn’t as well situated is Apple—Ive’s former home. Ive seemed to take a shot at Apple when he said, in a video posted on OpenAI’s site, that the “products we are using” to connect with technology nowadays are “decades old” and “it is just common sense” to try to come up with something “beyond these legacy products.” It is Apple’s iPhone and MacBook laptops that many people are currently using to connect with ChatGPT, of course. In the video, Altman praised both the iPhone and the MacBook but noted that a prototype AI-hardware product developed by io was “the coolest piece of technology that the world will have ever seen.” Ive’s alliance with OpenAI will rub salt into an open wound at Cupertino, Calif., given that Apple’s stumbles in developing its own AI software features have been well documented. But Ive’s new efforts point up the fact that there’s been little sign the company is contemplating new AI-specific hardware devices. (In fact, Meta Platforms has taken more of the initiative in that regard with its AI-powered Ray-Ban smart glasses). Apple, given its riches and hardware expertise, should have been the company to take the lead in AI hardware. The fact that its former design chief is now doing that for someone else is an indictment of its failures. As for the deal, we don’t yet know what new products io was working on, or how far they are from manufacturing, so it’s a little hard to assess the valuation put on the startup. Still, the price seems high for a firm with nothing but prototypes. Sure, OpenAI is getting some talented staff, but not Ive exclusively. Despite taking a new role overseeing design at OpenAI, Ive will not become an employee and will keep his LoveFrom design firm, as we reported. But hey, Silicon Valley hero-worships Ive (at a Stripe conference earlier this month, CEO Patrick Collison introduced Ive as someone so famous he “barely even needs a surname”). Whether Ive’s genius for design is as relevant for the AI age as it was for smartphones is now the $6.5 billion question. The Justice Department should pay attention to what Google is telling the marketing world. Earlier this month in a Washington courtroom, Google’s legal team argued that the company was facing so much competition from OpenAI and AI search providers that court-imposed constraints on its search business were unnecessary. But Google had a different narrative at an advertising conference on Wednesday. In talking to a room full of advertisers and marketers, Google argued that its media properties were so dominant advertisers had to spend money on them to reach customers. In the opening keynote, Google’s chief business officer, Philipp Schindler, cited statistics that 83% of people say they’re using Google or YouTube daily, “significantly higher than any other online platform,” alongside a host of other statistics emphasizing Google’s dominance. After a federal judge ruled last fall that Google has an illegal monopoly in general search engines, the government asked the court to force Google to give up its search distribution deals, share data with rivals and even divest the Chrome browser. Google is seeking lighter remedies and plans to appeal its initial loss. The question is whether Schindler’s statistics will hold once the remedies are in place.—Erin Woo • Google is starting to experiment with showing ads in its chatbot-style AI Mode search tab, ads chief Vidhya Srinivasan announced on Wednesday at the company’s Google Marketing Live conference (more here). • Figure Technology, the fintech firm co-founded by former SoFi CEO Mike Cagney, said it sold a pool of $50 million loans backed by the borrowers’ crypto assets to Janus Henderson’s private credit arm, Victory Park Capital. • Nvidia CEO Jensen Huang called U.S. controls on export of AI chips to China a failure, saying the restrictions empowered Chinese chip developers and caused Nvidia’s market share in the country to decline. • Microsoft planned to release a mobile store that would have let iPhone users purchase Xbox games last year, but it has been unable to do so because Apple wouldn’t let it collect payments through the store without taking a cut, Microsoft said in a court filing on Tuesday. The Information Weekend covers what happens when Silicon Valley logs off—the trends and people shaping culture, technology and everything in between. Subscribe for free today. | 
