OpenAI CEO Sam Altman.
When do competitors become existential threats? This is likely a top concern for executives at enterprise software companies like ServiceNow, Salesforce, and Snowflake, all of which have announced partnerships with OpenAI at various times. However, OpenAI appears to be making significant efforts that could potentially put at least some of these same partners out of business. As reported last Friday, during a recent investor presentation, OpenAI leadership indicated that the company expects its future enterprise products and AI agents to displace software from tech firms such as Salesforce, Workday, Adobe, Slack, and Atlassian.
On Monday, OpenAI announced a new series of partnerships with consulting firms to help sell its advanced AI agent management software to businesses. Undoubtedly, OpenAI is skilled at marketing, and many of its announcements contain an element of hype. Given the company's existing ties with some consulting firms, the incremental value of these latest deals is unclear. Meanwhile, consulting firms will partner with any entity that helps them sell more services. They already have AI-related collaborations with companies like Snowflake, Anthropic, Microsoft, and Google. McKinsey stated in its announcement that it "works with a wide range of leading technology providers... to bring clients the best innovations across the full spectrum of AI."
Despite the hype, OpenAI's moves in this area undoubtedly pose a threat to enterprise software companies. Furthermore, the threat is not limited to the creator of ChatGPT; Anthropic, which also partners with Salesforce, ServiceNow, and Snowflake, is pursuing a similar strategy to capture market share from these same companies. The company behind Claude is scheduled to hold an event on Tuesday to detail its enterprise agent plans. Software stocks faced another selloff on Monday, potentially in anticipation of this event, even as the broader market declined. The Nasdaq fell 1.2%, while individual stocks like Salesforce, Figma, ServiceNow, and Snowflake dropped between 3% and 9%.
Given that these stocks are down approximately 30% year-to-date, one might wonder why executives at these companies do not reconsider their partnerships with OpenAI and Anthropic. Significant uncertainty about a company's future can negatively impact business relationships. A widely circulated report from Citrini Research offers a particularly pessimistic view of AI's impact on the software industry.
Potential Suitors for PayPal
Who might acquire PayPal? Bloomberg reported on Monday that a competitor is considering a bid for the struggling payments pioneer. An acquisition could be a catalyst for a turnaround. As former PayPal executive David Marcus recently posted on X, "This company once had all the advantages and could have been the most impactful, central payments company of our time. Over time, it lost its edge, product excellence, and ability to compete in a market that is being reshaped and reinvented."
PayPal's stock has plummeted 85% over the past five years, reducing its market capitalization to around $41 billion. So, which company could acquire and integrate it? For Stripe, which processes payments for many businesses, especially digital ones, would such a deal make sense? Probably not. Although PayPal owns Braintree, a Stripe competitor, there is likely a significant cultural gap between the declining pioneer and the more agile, founder-led Stripe.
What about Jack Dorsey's Block, which operates Cash App, a direct competitor to PayPal's Venmo? A merger could raise regulatory concerns. However, with Apple attempting to enter the payments app market, Block might argue that acquiring Cash App is necessary for survival. Regardless of the potential buyer, PayPal's future remains a key topic to watch.
Other News
Nvidia plans to collaborate with Taiwanese chip design company MediaTek to launch a new chip for consumer laptops and desktops in the first half of this year. Uber has agreed to acquire SpotHero for an undisclosed sum. SpotHero is an app that allows drivers to reserve parking garage spots based on location. The acquisition will enable Uber to offer more services to ride-hailing passengers who use their own cars and connect them to rides after parking. A stablecoin issued by World Liberty Financial, a cryptocurrency company linked to former U.S. President Donald Trump's family, briefly lost its peg to the U.S. dollar on Monday. The company cited a "coordinated attack" on a co-founder's X account. AI chip and system design company Cerebras Systems has confidentially filed for an initial public offering, its second attempt to go public. The company is meeting with potential investors and could debut as early as April, according to sources. It previously withdrew IPO plans last year. Shopify has informed merchants that it has begun placing ads within ChatGPT to promote merchants on its platform, representing an expansion of Shopify's existing advertising network.
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