WSJ : Meta Urges California Attorney General to Stop OpenAI From Becoming For-Pr

Meta Urges California Attorney General to Stop OpenAI From Becoming For-Profit
Mark Zuckerberg’s company is siding with Elon Musk in a fight against the developer of ChatGPT

Meta META -1.66%decrease; red down pointing triangle Platforms is urging California’s attorney general to block OpenAI’s planned conversion to a for-profit company, siding with Elon Musk in a battle between Silicon Valley’s most powerful artificial intelligence players.

In a letter to Attorney General Rob Bonta dated Thursday, Meta said allowing the ChatGPT maker to become a for-profit company would set a dangerous precedent of allowing startups to enjoy the advantages of nonprofit status until they are poised to become profitable.

“OpenAI’s conduct could have seismic implications for Silicon Valley,” Meta wrote in the letter. “If OpenAI’s new business model is valid, non-profit investors would get the same for-profit upside as those who invest the conventional way in for-profit companies while also benefiting from tax write-offs bestowed by the government.”

Representatives for OpenAI and Bonta didn’t immediately respond to requests for comment.

Meta is one of OpenAI’s biggest competitors and has invested billions of dollars to develop its own AI technology that matches or exceeds ChatGPT. OpenAI is also closely allied with two large Meta rivals: Microsoft, which is OpenAI’s biggest investor, and Apple, which integrated ChatGPT into its own AI product.

Meta hasn’t previously weighed in on the long-running feud between Musk, who co-founded OpenAI in 2015 and then left amid a power struggle in 2018, and OpenAI Chief Executive Sam Altman.

Musk, who runs a rival company called xAI, has filed a series of legal complaints against OpenAI, the most recent of which was filed last month. He has accused OpenAI of betraying its original nonprofit mission by creating a for-profit arm and colluding with its largest investor, Microsoft, to dominate the development of AI.

In its letter, Meta said it supported an effort by Musk and Shivon Zilis, a business and personal associate, to represent the interests of the public in deciding whether OpenAI will be allowed to become a for-profit company.

“Although we ask your office to take direct action, we believe that Mr. Musk and Ms. Zilis are qualified and well-positioned to represent the interests of Californians in this matter,” Meta wrote.

Meta CEO Mark Zuckerberg and Musk have butted heads in the past. At one point last summer, the two tentatively agreed to fight each other in a cage match, though it never happened.

Musk didn’t respond to requests for comment.

OpenAI recently completed a $6.6 billion funding round valuing it at $157 billion and told investors they could have their money back if it doesn’t become a for-profit company within two years.

On Friday, OpenAI published a series of internal documents meant to rebut Musk’s request last month for a preliminary injunction blocking it from transitioning to a for-profit company.

Musk has argued he was manipulated into believing OpenAI would be a purely nonprofit venture when he initially invested in it.

OpenAI said the documents show that Musk, in fact, previously backed the idea. “When he didn’t get majority equity and full control, he walked away and told us we would fail,” the company wrote on its blog. “Now that OpenAI is the leading AI research lab and Elon runs a competing AI company, he’s asking the court to stop us from effectively pursuing our mission.”

The documents show Musk had his wealth manager register a public-benefit corporation—a for-profit company that is also committed to a social good—called Open Artificial Intelligence Technologies Inc., in Delaware in September of 2017. Two days earlier, Musk wrote OpenAI co-founder Ilya Sutskever an email proposing a for-profit structure in which he would “unequivocally have initial control of the company.”

The Wall Street Journal couldn’t independently verify the authenticity of the documents OpenAI published.

The documents show that, from the earliest days of OpenAI, Musk was somewhat skeptical about its nonprofit structure. When Altman wrote Musk in November 2015 proposing a nonprofit, Musk pushed back, saying the structure didn’t seem optimal. “Probably better to have a standard C corp with a parallel nonprofit,” he responded, referring to a typical for-profit business structure.

In August of 2017, a bot created by OpenAI beat one of the world’s best players at a one-on-one match of Dota 2, a complex multiplayer videogame. Musk emailed his OpenAI co-founders, including Altman, Greg Brockman and Chief Scientist Sutskever, saying, “Time to make the next step for OpenAI. This is the triggering event.”

Over the next six weeks, according to the documents OpenAI published, the co-founders discussed creating a for-profit entity, with Musk proposing a structure in which he would have majority ownership. During this period, Zilis, who was acting as the liaison between Musk and OpenAI, texted Brockman that Musk “sounded fairly non-negotiable on his equity being between 50-60.” Musk then wrote Sutskever an email in September of 2017 proposing that he have initial control.

In January 2018, Musk suggested in an email to Altman, Brockman, Sutskever and Zilis that OpenAI merge with Tesla or else face “certain failure relative to Google.” He left the company later that year.

Musk has become an increasingly aggressive antagonist of OpenAI since it launched ChatGPT in November of 2022, setting off the current boom around generative AI.

Almost immediately, Musk cut off OpenAI’s access to Twitter data.

He also began criticizing a structure set up by Altman in 2019 in which OpenAI has a for-profit subsidiary in which Microsoft and others invested. The for-profit subsidiary’s value skyrocketed following ChatGPT’s debut.

“I’m still confused as to how a non-profit to which I donated ~$100M somehow became a $30B market cap for-profit. If this is legal, why doesn’t everyone do it?” Musk posted in March 2023.

FT : Porsche holding company warns of writedown in Volkswagen stake of up to €20

Porsche holding company warns of writedown in Volkswagen stake of up to €20bn
Management and unions at carmaker will hold a fifth round of talks on Monday over planned factory closures and job cuts

Porsche SE expects to write down its stake in Volkswagen by up to 40 per cent, as the uncertainty over potential plant closures and strikes forced Europe’s largest carmaker to withhold its annual financial plan.

The Porsche-Piëch family’s holding company on Friday said it expected to write down the value of its stake in VW by between €7bn and €20bn, as the lack of financial data from the company meant it had to rely on analyst expectations.

For the same reasons, it expected to write down its stake in sports car maker Porsche AG, which was partially listed in 2022, by €1bn to €2bn.

Porsche SE added that the book value of both stakes would “continue to be significantly higher than their respective stock market values”.

As of September, Porsche SE valued its 53.3 per cent stake in the voting stock of VW at €51.5bn and its 25 per cent plus one share holding in the voting stock of Porsche AG at €10.5bn.

The announcement of the anticipated writedown comes as VW prepares to enter the fifth round of negotiations with union IG Metall on Monday, amid a stand-off with workers over plans to close some German factories and lay off tens of thousands of workers.

IG Metall and VW’s powerful works council have fiercely resisted the restructuring plans, which executives have argued are necessary due to a structural decline in European sales of cars.

Chief financial officer Arno Antlitz in September warned that VW’s flagship brand now sells roughly 500,000 fewer cars annually than it did before the pandemic.

Over the same time period, the brand’s share of sales in China — its most profitable market — has nearly halved, amid a consumer shift towards electric vehicles and hybrids and growing competition from local competitors there such as BYD.

But worker representatives have argued that simply cutting costs will not address the decline in sales and have accused executives of making poor product decisions.

On Monday, workers at the majority of VW’s German plants downed tools for the second time in a month, walking out from their shifts four hours early — twice as long as the walkouts in the week prior.

IG Metall has warned that if VW does not abandon its plan to close factories, strikes will become more intense.

WWD : Capri Puts Versace and Jimmy Choo Up for Sale: Sources

Capri Puts Versace and Jimmy Choo Up for Sale: Sources
The company is said to be working with Barclays to sell off the luxury brands as it focuses in on the Michael Kors turnaround.

Bankers and would-be buyers are buzzing about what comes next for Versace and Jimmy Choo — and where they land next year.

Financial sources told WWD that Capri Holdings, which owns both brands, is working with Barclays to try to find buyers for the businesses.

Neither Capri nor Barclays responded to requests for comment Friday.

The process is just beginning and it’s not clear whether the brands would be sold together or separately — or at all. A data room with confidential information on the businesses is being set up now for potential buyers. One source said Barclays suggested that it would like to start receiving indications of interest before Christmas.

While a buyer could swoop in and cut a deal, it’s possible that Barclays ends up running an auction process that would see dealmakers putting in offers over multiple rounds. Typically, bidders would first have access to data on the brands to make initial bids and then access to management as they refine their offers.

The sale process is not exactly a surprise.

Capri was widely seen as considering its options for both brands since the company’s $8.5 billion buyout by Tapestry Inc. was dropped following an antitrust challenge from the government. While Tapestry agreed to pay $57 a share for the company, Capri’s stock has lost significant value and closed down 1.2 percent to $21.36 on Friday.

Michael Kors is by far the company’s biggest business and is in need of a turnaround. Selling off the other divisions would give Capri time and resources to continue that effort.

Capri has at least toyed with the idea of spinning off the divisions before.

In late 2022, Capri’s board met with Barclays bankers and “reviewed certain potential strategic alternatives.” They included a sale of all of Capri, an initial public offering of equity interests in Versace and Jimmy Choo as well as the sale of the two luxury brands.

At the time, the bankers said there were only a “limited number” of buyers for Capri and that there would “less strategic interest in acquiring” Versace and Jimmy Choo together.

Once the negotiations started with Tapestry, Capri continued to play the field with John Idol, chairman and chief executive officer, meeting with potential suitors. According to regulatory documents, one was with the “chairman and chief executive officer of a multi-industry holding company” who discussed the possibility of buying both Versace and Jimmy Choo or investing in any IPO. Another was “the chairman and chief executive officer of an international luxury goods company,” who wanted to circle back to “prior conversations” about buying both brands.

Those options were all dropped when Capri moved forward with Tapestry.

After that deal fell through last month, those prior talks might have been given new life.

Idol laid out his plans for the fashion group in an analyst call last month and was asked about seeking strategic alternatives for Versace and Jimmy Choo.

“We’re a public company,” Idol said. “We have always been open to conversations with any company that has an interest in any of our assets, as we would always do and always have done.

“Our first commitment is to rebuild all three of these houses to get them on a growth trajectory and to create value for our shareholders through revenue growth, through operating margin growth and ultimately through net income growth,” he said.

Although Michael Kors is the big focus, Idol also sketched out the path ahead for Versace.

There’s work to do on both brands, which have been hit by softening luxury demand and a particular slowdown in China.

Each business also had their own idiosyncratic headwinds.

Versace is known for a kind of loud luxury that could be coming back into fashion, but didn’t fit with the quiet luxury trend. And Jimmy Choo, with for its sky-high stilettos, has seen the occasion business slow after the post-COVID-19 bounce back.

Versace’s first-half revenues fell 22.1 percent to $420 million, while Jimmy Choo held up better, with revenues down just 0.6 percent to $313 million.

Idol called Versace “one of the world’s most storied luxury houses with a 46-year heritage” and said it could bounce back by “engaging and energizing both new and loyal consumers, broadening our product offering, improving store productivity and returning our wholesale business to growth.”

“We believe we removed too many unique Versace statement items, which resulted in a less exciting brand and product identity,” the CEO said. “We also significantly reduced our offering of products for aspirational consumers as we tried to elevate the brand.”

Going forward, Versace plans to balance fun and elegance while better courting the aspirational luxury shopper.

At Jimmy Choo, Idol said the business has been expanding its casual offering and would now “respond more quickly to this shift in trend.” (Jimmy Choo could have some competition from Tapestry’s Stuart Weitzman brand, which sources say is still being shopped around).

At least that’s the direction Capri has set out for the two brands. Whether they ultimately get there might well depend on the next owner.

Then again, as Idol knows only too well, not every deal that is planned is ultimately completed.

L'Informé : Canal+ : le jackpot de Maxime Saada

Canal+ : le jackpot de Maxime Saada
L’introduction en Bourse de la chaîne cryptée va permettre à son état-major d’empocher moult actions gratuites et primes exceptionnelles, au moment où un plan social de 250 postes a été annoncé.

Triste anniversaire pour les 40 ans de la chaîne cryptée. Ce 6 décembre, les syndicats de Canal+ apprennent « avec consternation le choix de la direction de faire un plan social », écrivent-ils tous en chœur dans un communiqué. On vient de leur annoncer la suppression de 250 postes. Pas sûr que les intéressés apprécient que, dans le même temps, leur état-major s’augmente allègrement, selon nos informations. À commencer par le président du directoire Maxime Saada. Tout confondu, il pourrait empocher jusqu’à 9,2 millions d’euros bruts (hors retraite chapeau). Des émoluments dignes du CAC 40, où la moyenne s’élevait à 7,1 millions l’an dernier.

Dans le détail, son salaire fixe, déjà passé de 1,2 à 1,3 million d’euros bruts il y a deux ans, puis à 1,55 million il y a un an, va grimper à 1,6 million au 1er janvier 2025. À cela s’ajoute un bonus variable, qui pourra désormais aller jusqu’à 1,5 an de salaire fixe, contre 1,1 précédemment. Le maximum peut donc désormais atteindre 4 millions d’euros bruts, contre 3,25 millions actuellement, soit une hausse de 23 %.

Mais ce n’est pas tout. L’état-major va empocher deux primes exceptionnelles : l’une pour la scission de Canal+ vis-à-vis de son ancien propriétaire Vivendi, l’autre pour l’acquisition du sud africain MultiChoice. Pour Maxime Saada, chacune de ces primes s’élèvera à un an de salaire, soit au total 3,2 millions d’euros (la première sera versée en cash, la seconde en cash ou en actions au choix de l’intéressé).

L’introduction à la Bourse de Londres, prévue ce lundi 16 décembre, est aussi l’occasion de distribuer quelques zakouskis supplémentaires. Durant les six prochaines années, les dirigeants pourront aussi recevoir un chèque en cas d’augmentation du cours de l’action -un mécanisme peu courant et qui rapportera gros en cas d’envolée en Bourse. Pour Maxime Saada, il s’élèvera à 0,5 % de la hausse de la capitalisation boursière par rapport à l’année précédente.

Les managers bénéficieront également d’un vaste plan d’attribution d’actions gratuites, octroyées selon les performances financières, et qui pourra représenter jusqu’à 0,5 % du capital du groupe. Par exemple, si le groupe vaut 6 milliards d’euros, alors cela représenterait 30 millions d’euros. Pour sa part, Maxime Saada aura droit à des titres représentant 1,25 fois son fixe, soit 2 millions d’euros. Tout ceci n’étant apparemment pas suffisant, un programme supplémentaire de distribution d’actions sera présenté à la prochaine assemblée générale.

Last but not least, l’heureux élu a aussi droit à une retraite chapeau qui coûte un million d’euros par an à son employeur (le membre du directoire Jacques du Puy a aussi droit à une retraite complémentaire).

Prudent, le patron de la chaîne a négocié un parachute doré s’il est mis à la porte, ou s’il quitte son poste de son plein gré suite à un rachat. Dans ce cas-là, il aura droit à un an et demi de rémunération, soit au minimum 6,2 millions d’euros pour son fixe et son variable. En outre, les membres du directoire bénéficient d’une clause de non-concurrence, qui prévoit le versement de 30 % à 60 % de leurs émoluments durant 6 à 12 mois après leur départ.

À noter que Vivendi distribuait aussi des actions gratuites aux hauts cadres du groupe – Maxime Saada en avait reçu pour 430 000 euros l’an dernier. Mais la valeur de l’action Vivendi va mécaniquement chuter lors de la scission. Le versement d’une compensation est donc envisagé, comme cela avait déjà été fait lors de la cotation d’Universal Music. Maxime Saada avait alors reçu 210 000 euros en cash.

Vincent Bolloré, interrogé en début d’année sur le salaire de Maxime Saada par la commission d’enquête sur la TNT de l’Assemblée nationale, avait répondu : « Maxime Saada pourrait gagner beaucoup plus à l’extérieur, parce que c’est un garçon d’une qualité  extraordinaire, mais aussi une vedette internationale. Demain, il pourrait aller chez Disney, partout… C’est un type formidable ».

À titre de comparaison, le précédent patron de Canal+, Bertrand Méheut, disposait d’un salaire fixe de 900 000 euros, plus d’un variable pouvant aller jusqu’à 2 ans de salaire fixe, soit au total 2,7 millions d’euros maximums.