TheChek News Flow

Google has made a big head start but faces growing challenges from OpenAI and others

More than three years after the release of ChatGPT shook Google to its foundations, the AI advertising wars are finally breaking out. OpenAI opened hostilities at the end of last week by outlining its plans to bring search-like ads to its chatbot. The news, though, did not even cause a ripple in the new-found equanimity of Alphabet investors.

The lack of drama reflects a heightened appreciation of how entrenched Google is, as well as the belated success it has had with its own AI models. But the disruption from the technology is in its early stages. The ways people find information and make purchases online, and what part ads play in the mix, are very much up for grabs.

OpenAI’s path to this point has had a certain inevitability about it, closely echoing Google’s early days. Both companies initially showed a distaste for the idea of advertising before conceding that, if your ambition is to reach everyone, this is an effective way to monetise.

Days earlier, meanwhile, Google began testing a way for advertisers to place product ads alongside the AI-powered results it now delivers inside its search engine.

This emerging competition is very much what US federal judge Amit Mehta had in mind last year when deciding not to take more drastic action to curtail Google’s search monopoly. The rise of AI, he said, represented a powerful new form of competition. Since that ruling, momentum has swung heavily towards Google, thanks to its well-received new Gemini 3 model and a deal to underpin Apple’s AI. Its advantages in terms of distribution and personal data also look daunting.

As a standalone chatbot, Gemini lags behind ChatGPT. But injecting AI into its search engine has given Google instant access to one of the biggest online audiences. Earlier this month it also started to draw more personal data into Gemini, letting users connect their Gmail accounts and other Google services to the AI system. This move, which it calls Personal Intelligence, stands to greatly enhance its ad targeting.

That is a very different environment from when Mehta made his ruling. Yet even if Google has a powerful head start, it is far too early to predict how this will play out. AI is likely eventually to be highly disruptive to the advertising market as new forms of online behaviour powered by the technology catch on.

One indication of how Google is preparing for this was its release this month of something called the Universal Commerce Protocol. A technology standard to help retailers build their own shopping agents and interact with others, this is part of a growing base of technology that could start to replace human attention — the lifeblood of online advertising — with a growing degree of machine-to-machine interaction.

UCP joins a list of other protocols designed to automate online activity. This started a little over a year ago with Anthropic’s Model Context Protocol, which enables AI assistants and agents to tap into data held on other companies’ servers, and has since grown to include standards for agents to interact with other agents (A2A) and to make payments on behalf of users (AP2). If internet users find the services made possible by these technologies a more convenient way to get things done, old forms of online engagement are likely to wither.

Advertising is still likely to play an important part, even as machine-to-machine interaction becomes more prevalent. At some level, purchases reflect customer preferences, and influencing that preference will always have value. But how and where that influence happens will change.

The use of shopping agents, for instance, may shift where advertising is placed. If shoppers use a retailer’s own agent to sort through its inventory, then this should give a boost to advertising on the retailer’s site. But if they instead rely on a service such as ChatGPT as their primary agent, and even complete their purchases there, then retailers stand to lose not only advertising, but an important point of connection with their customers. At the same time, automation could eat into the volume of advertising as people rely on agents to act for them and spend less time researching. If so, then ads delivered at the right moment will become even more valuable.

It is too early to tell how this will ultimately affect the search ad market. It may become bigger, as AI tempts people to bring more of their purchases online. Or it might shrink, as automation replaces human attention. Either way, OpenAI’s first tentative steps into advertising mean Google will no longer have this market largely to itself.

The display, scheduled for Jan. 26 during Paris Couture Week, will not go on as "the maison is currently engaged in a thorough reflection."

Giambattista Valli will not stage a haute couture show on Jan. 26 for his Paris-based brand, raising questions about its future, WWD has learned.

According to market sources, parent company Artémis has been quietly exploring a sale of the company in recent months, the process led by banking firm Rothschild & Co.

Responding to a WWD inquiry, Artémis said Thursday that the house is “currently engaged in a thorough reflection on the organization of its activities in order to ensure their long-term sustainability,” and it confirmed that the show on the first day of Paris Couture Week would not go ahead.

A spokeswoman for Valli referred all inquiries to Artémis, the private investment arm of the billionaire Pinault family that took an initial minority stake in Giambattista Valli in 2017, assuming majority control in 2021.

Artémis also holds investments in such varied companies as Puma, Courrèges, Christie’s, CAA and the publications Le Point and Point de Vue. The company has also been looking to dispose of its stake in Puma.

Born in Rome, Valli launched his signature brand in Paris in 2005 after spending seven years designing ready-to-wear at the elbow of Emanuel Ungaro. Before that, his résumé included stints at Roberto Capucci, Fendi and Krizia in Italy.

In 2011, he took the plunge into haute couture, and once marketed a diffusion line dubbed Giamba. In recent years he made waves with his annual bridal capsule, dubbed the Love Collection and sold via trunk shows.

Vall is synonymous with feminine daywear with a Parisian accent, and grandiose eveningwear in draped chiffon and layered tulle.

Paris Couture Week runs from Jan. 26 to 29 in the French capital, with Dior and Chanel showing the first high fashion collections under new creative directors Jonathan Anderson and Matthieu Blazy respectively.

Sharp annual decline in most expensive boroughs underscores impact of Budget uncertainty

House prices in inner London fell at the fastest pace since the global financial crisis in November, highlighting the impact of speculation about a shake-up of property taxes in the November Budget and affordability pressures in the city.

The 4.6 per cent annual drop in prices in the heart of the capital followed a 4.3 per cent contraction in October and marked the biggest decline since the financial crash, when they fell at double-digit rates as the economy shrank.

The largest falls were recorded in the most expensive boroughs, according to data published by the Office for National Statistics on Wednesday, though prices in London remain by far the highest of any UK region.

Average prices in Westminster dropped by an annual rate of 15.5 per cent to £866,000, while prices in Kensington and Chelsea plunged 16.3 per cent to an average of £1.19mn.

Both areas have historically been popular with overseas buyers, with some advisers reporting departures and dwindling numbers on the back of changes to “non-dom” tax rules.

By contrast, prices in outer London — which includes boroughs such as Bromley, Waltham Forest and Havering — continued to rise. Havering and Bromley registered annual increases of 5.2 per cent and 6 per cent respectively.

The rises in outer London resulted in an overall fall in average house prices of 1.2 per cent in the city in the year to November, taking them to about £553,000. This compared with a 2.6 per cent decline in the year to October.

Richard Donnell, executive director at property portal Zoopla, said speculation about higher taxes on expensive homes in the run-up to chancellor Rachel Reeves’ November Budget had “hit demand and market activity at the upper end of the housing market”.

In the fiscal event Reeves announced a council tax surcharge from April 2028 on properties worth more than £2mn, most of which are in London and the South East.

Although they were not announced, wider changes to the tax regime — including a redesign of the stamp duty system and the introduction of capital gains tax on some primary residences — had been the subject of speculation for months as Reeves sought to fill a hole in the public finances.

Ollie Marshall, director of buying agency Prime Purchase, said some of the rumoured measures “may not have come to pass but led to a market hiatus for most of the year”.

The ONS data on Wednesday showed average UK house prices rose at an annual rate of 2.5 per cent to £271,000 in November, up from 1.9 per cent in October and the first acceleration since June.

Ian Boreham, ONS head of housing market indices, said the North East was the English region with the highest growth in prices, at 6.8 per cent in the year to November, while “London was the only region showing an annual fall”.

Tom Bill, head of UK residential research at real estate group Knight Frank, said affordability was “still shaping the map of UK house price growth, which means more expensive areas like inner London are seeing prices retreat”.

A rise in asking prices in January indicated that the Budget could “have been worse”, he said, but the economy remained weak despite a drop in mortgage rates on the back of Bank of England interest rate cuts.

The ONS data also showed that annual growth in private rents declined from 4.4 per cent in November to 4 per cent in December, the lowest since spring 2022 and well below a peak of 9.1 per cent in 2024.

Last month’s figure was also well below the 4.7 per cent annual rise in total wages in the three months to November, helping tenants’ finances after a prolonged squeeze.

Zoopla’s Donnell said rental inflation was slowing across the country as “improved affordability for first-time buyers and a large drop in international migration means weaker rental demand”.

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US offshore wind projects win legal reprieve

Offshore wind scored a hat trick, or for our American readers, went 3 and 0, last week.

Donald Trump’s administration in December suspended the leases of five offshore wind projects, citing national security concerns such as the risk of radar interference.

Ørsted, Equinor and Dominion Energy immediately sued on behalf of their projects, strenuously denying that they pose any risk and pointing to their advanced construction status.

Three judges cleared the way for construction to continue, notching a blow to the White House’s crusade against offshore wind.

Judges Royce Lamberth and Carl Nichols (a Trump appointee) said separately that Ørsted and Equinor had demonstrated “irreparable harm” to their projects, while Judge Jamar Walker said the government’s case was “too broad” to apply to Dominion’s project.

The stakes were high for the companies, which have sunk billions of dollars into the wind farms. Ørsted’s Revolution Wind project has cost $6.2bn, and the president’s attacks on offshore wind forced the company to raise $9bn in a rights issue in October. Equinor’s Empire Wind has cost $5bn and Dominion’s Coastal Virginia Offshore Wind is the most expensive at $11.2bn.

They could also provide electrons critical to powering the AI boom. CVOW will power up to 660,000 homes upon completion and is located near “data centre alley”, the world’s largest hub for internet traffic. Electricity bills in Virginia have risen nearly 11 per cent over the past year — putting CVOW at the centre of vital questions about how to power data centres and keep utility bills affordable.

Its targeting marks an escalation in the war on offshore wind. CVOW had avoided the wrath of the Trump administration during the tenure of Virginia’s Republican former governor, Glenn Youngkin.

But the election of Democrat Abigail Spanberger last November seems to have lumped CVOW in with other blue-state projects, which have had stop-work orders levied at them.

The companies have the green light to keep building. But never trust Trump to let a grudge go. The underlying lawsuits continue, and at a recent meeting with oil executives, he warned “my goal is to not let any windmills be built”. A White House spokesperson said the administration “looks forward to ultimate victory on the issue”.

One potential rub for the offshore wind developers was hinted at in Empire and CVOW’s hearings, where Judges Nichols and Walker noted the government’s concerns relate to the wind farms’ operations, not construction.

The government’s argument — that building a nuclear bomb could be harmful even if it’s never detonated — didn’t fly. But the caveat suggests room for the government to make the claim that up-and-running wind farms do pose a danger in the future. (Martha Muir)

Is Europe too reliant on US gas?

Four years ago, the EU was plunged into an energy crisis when its reliance on Russian pipeline gas was brutally exposed following Moscow’s full-scale invasion of Ukraine.

It was a harsh lesson for Brussels, which had failed to diversify gas supplies following the interruption of imports during an earlier dispute between Moscow and Kyiv in 2006.

Once bitten, twice shy, as the saying goes, and since February 2022 the EU has diversified away from Russian gas — mainly by buying liquefied natural gas from an ally, the US.

The US share of EU gas imports has risen from 5 per cent in 2021 to 23 per cent in 2025, and is projected to rise to 30 per cent this year as LNG replaces Russian flows, according to a new report by Oxford Economics, a consultancy.

The arrangement has been good for both parties and in December Brussels made a commitment to phase out Russian gas permanently by late 2027.

US LNG exports have reduced energy price volatility and played an important role in lowering inflation. The availability of flexible LNG cargoes has weakened the traditional relationship between heating demand, gas storage levels and price.

“Despite cold weather and low storage levels, the European Dutch TTF Benchmark was 20 per cent lower year-on-year in Q4 2025,” according to the Oxford Economics report.

The transatlantic LNG trade has boosted US industry, which is building capacity at breakneck speed along the Gulf Coast in spite of warnings of a looming supply glut.

Trump has been a strong advocate for the industry, extracting a pledge from EU member states to buy $750mn of US energy over three years as part of a trade deal agreed in July.

Though he has backed off his threats to invade Greenland and impose tariffs on EU member states, Trump’s recent rhetoric is sure to cause European policymakers to question just how much they should tie their future energy security to US LNG.

“The Trump administration has demonstrated a willingness to use economic dependencies,” said Jack Reid, graduate economist at Oxford Economics. “Given the lack of alternative suppliers, even an increase in the market’s perceived risk of disruption would put upward pressure on European gas prices.”

Reid said unilateral action from the US to limit gas to the EU remains a tail risk and is not part of the firm’s baseline view. It would impose economic costs and legal blowback from the LNG export industry, which Trump has sought to champion.

But in such a volatile geopolitical environment — and with three years of Trump’s presidency remaining — it would be a brave politician who does not prepare for the previously unthinkable.

Asked for its response to whether Europe would start to debate its reliance on US LNG in the wake of Trump’s comments, the Center for LNG, a US industry group, said the sector was in a “unique position to meet the energy needs of the EU as they look to completely phase out Russian energy by 2027”.

“The flexibility of US contracts, security of supply and market-driven participants enable a dynamic relationship that benefits parties on both sides of the Atlantic. As the transatlantic energy co-operation between the US and EU continues to grow, driven by the surge in commercial activity in 2025 in advance of the 2027 deadline, we expect to see more US LNG arrive to replace Russian energy.”

Here’s a question: How much are big tech companies cutting back on sending money to shareholders as they ramp up their AI development spending? It’s a good time to ask: On Friday, Oracle is due to pay out its latest quarterly dividend of 50 cents a share. That will amount to $1.4 billion going out the door, which Oracle can ill afford. After all, the software and cloud firm burned through $10 billion in cash in the second quarter, thanks to a big increase in capital expenditures related to its AI cloud expansion.

And the financial pressure on Oracle is only going to intensify. In the fiscal year that ends in May, analysts estimate it will burn $22.9 billion in cash, according to S&P Global Market Intelligence. That compares with the $900 million cash burn it sustained last fiscal year and is a big switch from the $11.8 billion in free cash flow it produced in fiscal 2024. Analysts are currently projecting Oracle will continue burning cash until fiscal 2029. Cutting the dividend, at least for a few years, would be a smart way to save cash. At the current payout rate, Oracle’s dividend will cost $5.7 billion this fiscal year, up from $4.7 billion last fiscal year.

Oracle in the past couple of years has slashed the money it spends buying back stock, one of the other ways companies return money to shareholders. As recently as 2021, Oracle repurchased $21 billion, an amount that shrank to just $600 million in fiscal 2025. Its dividend, in contrast, has risen 56% in that time period! Because Oracle is borrowing money to cover its cash shortfall, it is effectively borrowing more than it would if it suspended the dividend. Perhaps it will decide to cut off the dividend when it reports earnings in a few weeks, but there’s a couple of reasons why it likely won’t.

One is that co-founder and executive chair Larry Ellison is the biggest individual recipient of the dividend. He owns about 40.6% of the stock. As a result, he will earn about $2.3 billion of the dividend this year. That money surely comes in handy to support his lifestyle and perhaps to pay the interest on the loans he has taken out against his Oracle stock. Ellison is financially backing his son David’s $108 billion takeover bid for Warner Bros. Discovery right now: Cutting off the dividend could be problematic for the family. The other argument against a dividend cut is that there are some investment funds that only invest in dividend-paying stocks. Suspending the dividend could prompt those investors to sell Oracle, putting more pressure on its stock price. Still, for Oracle, whether to continue sending billions out the door on the dividend is a question that deserves more scrutiny.

Better Late Than Never

Apple is finally taking action to compete for AI-interested consumers. The Information today scooped the news that Apple is developing an AI-powered wearable pin the size of an AirTag that will be equipped with a couple of cameras, a speaker and microphones—allowing it to take pictures, videos and audio from a user’s surroundings. Apple is moving quickly on the device in hopes of releasing it by 2027—ensuring that it can compete with OpenAI, which hopes to come out with the first of its AI-powered devices before then.

Meanwhile, Bloomberg reported Wednesday that Apple plans to revamp Siri by turning it into an AI chatbot, running on an AI model developed by Google. The Siri plans, combined with the AI hardware, should position Apple to compete more effectively as AI becomes more mainstream—and without spending the hundreds of billions other companies are forking out for AI.

On Wednesday, OpenAI Chief Financial Officer Sarah Friar said that the upcoming inference chip was “taped out,” implying the company had shared the final design with its chip manufacturer.

Anthropic recently projected that its 2025 revenue would be $4.5 billion, marginally lower than its previous optimistic projection of nearly $4.7 billion. Still, its 2025 revenue is nearly 12 times higher than its 2024 revenue of $381 million, a remarkable growth rate for a company that size. (In comparison, OpenAI generated revenue of more than $13 billion in 2025, up from around $3.7 billion in 2024.)

The revenue gap between the companies has been shrinking, as OpenAI is currently generating a little more than double what Anthropic is generating per month: $1.7 billion compared to $750 million.

Coding Bonanza

Anthropic’s AI for coding and white-collar tasks—Claude Code and Cowork, respectively—has been the biggest AI success story of the past month, drawing parallels with the excitement OpenAI generated among businesses and software engineers in early 2023.

Anthropic privately has disclosed it has at least nine customers spending more than $100 million a year on its products, according to one of the people. Microsoft’s spending on Anthropic, for instance, was on track to hit $500 million, in part for Microsoft’s GitHub CoPilot. Other popular coding tools such as Cursor and Cognition also are large customers of Anthropic.

About 86% of Anthropic’s 2025 revenue was expected to come from its sale of AI models to such businesses through an application programming interface, the company estimated. The rest of its revenue comes from subscription revenue from its Claude chatbot, which competes with ChatGPT.

OpenAI, too, has been gaining business customers. In fact, its enterprise business may still be larger than Anthropic’s when including API and chatbot sales to businesses. OpenAI generates roughly 40% of revenue from business customers, according to a person familiar with its financials. That implies roughly $5.2 billion of OpenAI’s revenue is from business customers, as compared to Anthropic’s $3.9 billion.

While both companies’ sales are growing at a nearly unprecedented rate, some lenders are apprehensive about lending money to data center projects involving such firms because they don’t plan to generate free cash flow until near the end of the decade.

Their cash burn has left equity investors in the firms undaunted, however. Anthropic as of mid-December expected to lose about $5.2 billion, based on its earnings before interest, taxes, depreciation and amortization, last year, according to its most optimistic projections. OpenAI earlier projected a loss of $21.2 billion before interest and taxes, though its projected cash burn was less than half that amount.

Anthropic is in talks to raise more than $10 billion at a $350 billion valuation before the financing in a round led by Singapore’s GIC and Coatue Management. Nvidia and Microsoft previously committed to investing up to $10 billion and up to $5 billion, respectively, in Anthropic. Investors last valued Anthropic at $170 billion before the financing in a $13 billion September round.

OpenAI, meanwhile, is in talks to raise as much as $100 billion in a round that could value it around $750 billion before the investment.