📱 TECH

Closed Contacts

With the roll out of Apple's latest mobile OS (iOS 18), a key—if obscure—feature has some wondering if it spells the end for new social media apps.

To back up a minute, as Kevin Roose writes in the New York Times, the "contact sync" feature of iPhones had allowed social media start-ups in the past to "find their footing, by quickly connecting millions of iPhone users to people they already knew, and suggesting other users for them to follow. That early momentum helped kick-start their viral growth, propelling them to the top of the App Store charts."

As Nikita Bier, a start-up advisor, lamented on X: "RIP Social Apps, 2005-2023." He added that the number of people willing to share their contacts with new apps has "nose-dived", but signaled an area of hope. "From the handful of dashboards I've seen, the retention rates on AI companion/girlfriend apps are extraordinary. …For better or for worse, LLMs might be the new Contact Sync. If we can't find our friends on apps anymore, people will find something else to talk to."

But how many new social media apps are there really? Seems pretty hard to compete with TikTok, Instagram, Snapchat, and X at this point. Still, for those who tried, 9to5Mac writes, "Apple is ultimately helping ‘make the rich richer,’ in a sense." That's not to say Apple made an unnecessary choice. In fact, 9to5Mac continues, "maybe there are tweaks to the permission process that could make things more user-friendly, but overall, the move toward greater transparency and granularity with contact sharing seems like a very good thing."

"Of course, iPhone users can still upload their whole address books if they choose," Roose adds in the Times. "(There’s also Android, which still requires users to make an all-or-nothing choice.) But it’s reasonable to assume that the added friction of a second screen will result in fewer contacts being shared."

Privacy Concerns

Apple's contact sync move comes amid a larger wrestling by the Tech giant with privacy matters. In 2021, Apple sued NSO Group, an Israeli firm which makes the notorious spyware Pegasus. Apple claimed at the time that "NSO Group and its clients devote the immense resources and capabilities of nation states to conduct highly targeted cyber-attacks, allowing them to access the microphone, camera, and other sensitive data on Apple and Android devices,” reports InfoSecurity. However, earlier this year, Apple dropped the suit citing risks to its Threat Intelligence program. As InfoSecurity adds, Apple believes the case may publicly reveal "sensitive information relating to its cyber defensive measures" that other spyware makers could use.

Verdict

Apple's move to limit contact sharing with apps is in line to the company's "privacy-first" ethos. And though it does seem to favor existing social media apps like TikTok and Meta's app suite, new upstarts to the space were already limited.

🤖 ARTIFICIAL INTELLIGENCE

OpenAI Doubles

With the completion of its latest funding round, Silicon Valley darling and AI pioneer OpenAI has nearly doubled its valuation from earlier this year (and almost quintupled it from 2023) to land at $157 billion.

As CNBC reports, the names of those involved in the $6.6 billion funding round were not released in this week's press release, but Thrive Capital led the round with participation from Microsoft, Nvidia, and SoftBank.

“The new funding will allow us to double down on our leadership in frontier AI research, increase compute capacity, and continue building tools that help people solve hard problems,” OpenAI wrote in the press release.

Beyond leading the investment round, Reuters details that Thrive Capital received a special deal "to invest another $1 billion next year at the same valuation if the AI firm hits a revenue goal."

While that revenue target was not revealed, Reuters notes that OpenAI's "flagship product, ChatGPT, is expected to bring in $2.7 billion in revenue this year, jumping from $700 million in 2023. The chatbot service, which charges a $20 fee every month, has about 10 million paying users."

In addition to the new funding, OpenAI has "long been in talks to restructure itself as a for-profit company. But that is not expected to happen until sometime next year, according to two people with knowledge of the company’s plans. Under the terms of the new investment round, OpenAI has two years to transform into a for-profit business or its funding will convert into debt," writes the New York Times.

Non-Compete Investment?

In a rare move, OpenAI asked its investors to not invest in rival companies like Anthropic or Elon Musk's xAI, reports the Financial Times.

Additionally, "two AI applications firms, including AI search startup Perplexity and enterprise search firm Glean, were also named in OpenAI's conversation with investors, suggesting OpenAI plans to sell more of its tools to enterprises and end users to grow revenue streams."

Verdict

It show come as no surprise that the darling of Silicon Valley and the leader of the current AI boom has seen its valuation skyrocket over the last two years. However, as the company continues to grow, the pressure is mounting to prove that its revenue model is sustainable.