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Thanks for reading The Briefing, our nightly column where we break down the day’s news. If you like what you see, I encourage you to subscribe to our reporting here.
Greetings! Microsoft is on a hot streak. Its stock has soared in recent weeks and so far this year is up 17%, more than that of any other big tech name besides gravity-defying Meta Platforms. What makes Microsoft’s performance so striking is that the stock was not cheap before the rally—based on multiples of earnings and sales—and it is even less cheap now. The premium put on the software giant’s shares reflect the perception that it is an AI leader. But that rests on a shaky foundation, as became clear in our deep dive today on the standoff between Microsoft and its partner, OpenAI. In the past couple of years, Microsoft has benefited a lot from having access to OpenAI’s industry-leading technology. But that’s not necessarily going to continue forever—OpenAI has its finger on the equivalent of a kill switch that would cut off Microsoft’s access to the most advanced tech. OpenAI can do that by claiming it has reached the status of artificial general intelligence, a gobbledygook term for AI that’s smarter than humans. The brainiacs behind the OpenAI-Microsoft deal worried that given the danger this kind of extra-smart AI poses to humanity, big bad Microsoft shouldn't have access to it. (Microsoft has the right to disagree with OpenAI’s declaration of AGI, giving it a method of trying to block the kill switch, our story notes—but OpenAI still appears to hold the cards when it comes to deciding AGI has been reached). The rationale for this clause is dubious, to be sure. There’s no reason why advanced AI technology would be more dangerous in the hands of Microsoft’s executives than OpenAI’s. Nevertheless, the clause does exist, although the two companies are arguing over its future: Microsoft doesn’t want to be cut off anytime soon, as the story explains. Its own AI team doesn’t appear to be on a par with OpenAI’s, so losing access to that company’s tech would be problematic for Microsoft’s business of selling AI-powered services. OpenAI has become a real competitor to Microsoft, as we and others have written. What all that means is that the loss of OpenAI’s technology could threaten Microsoft’s giant software business. To be sure, Microsoft’s financial backing of OpenAI is expected to translate to a 33% equity stake if the two sides agree on a restructuring of OpenAI’s for-profit arm into a regular company. That stake would have enormous value, although perhaps not enough to offset what Microsoft loses from falling behind in AI. The ultimate irony is that the public company best positioned for success in AI is Alphabet’s Google, whose shares are in the doldrums thanks to worries about AI’s impact on search and antitrust uncertainties. Investors may be overestimating the dangers facing Google and underestimating those facing Microsoft. What is the purpose of shareholder votes at company meetings? You might ask that question after Netflix decided to keep a director whose reelection an overwhelming majority of shareholders voting at this month’s annual meeting opposed. Jay Hoag, a venture capitalist who is one of Netflix’s longest-serving directors—he joined the board in 1999, three years before the company went public—drew just 71.4 million votes in support of his reelection and 259.8 million votes against. By comparison, most other directors got between 316 million and 325 million votes in support of their reelection. What did Hoag do to deserve this break? In a securities filing on Tuesday, Netflix blamed shareholder opposition to Hoag to the fact that he only attended half of the board meetings last year, whereas other directors attended at least 75%. Board members decided, however, that his absences “did not indicate a lack of commitment to his duties,” adding that he attended 97% of meetings in the five years before 2024. He’s returned to that attendance pattern, Netflix added. As a result, the board decided on Sunday to reject an offer Hoag had made to quit the board. What makes Hoag’s poor attendance particularly surprising is that he is the lead independent director on Netflix’s board! That’s akin to the board chair not turning up half the time. Hoag doubtless has a good reason for playing hooky, and perhaps Netflix could have explained things a little more. Still, Hoag no doubt got the message. And shareholders are reminded that their votes really don’t count. • Bumble said it would lay off 30% of its workforce as returning CEO Whitney Wolfe Herd tries to turn the dating app around. The news sent Bumble shares up 25%. • Only 17% of Americans said they had paid for news, through either subscribing or donating money, according to a survey by Pew Research Center. In other words, 83% of Americans said they had not paid for news in the past year. • Data management software firm Rubrik is acquiring Predibase, a startup that helps companies train and fine-tune their AI models. • Kalshi, a New York–based prediction market, said it has raised $185 million in a new round led by Paradigm, a crypto venture fund, that valued the company at $2 billion after the investment. Dealmaker was named the “Best in Business” newsletter for its insightful coverage of private technology and the AI hype cycle. Start receiving the newsletter here. | 
