VOLUME 38

Good morning. Other than TikTok suing the U.S. government, everything is generally business as usual. We have some big updates in the world of Hollywood acquisitions, AI and gaming featured in today’s report that you don’t wanna miss!

Also, today we’ve featured a couple articles from guest contributor Shaymus O’Brien who I’m excited to present. Me and Shaymus met at a run club in LA a few years ago and have been friends since. He offered to write some guest articles and I thought, why not! Enjoy.

— Jacob Pace

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TikTok Sues the U.S. Government

The Fast Track After constant threats and endless months of “will they/won’t they”, the United States finally passed legislation this past month that will effectively force the app’s Chinese ownership to divest themselves entirely or face a complete ban within the United States.

This has prompted TikTok stakeholders to file a lawsuit that would seek to stop the enforcement of this newly passed bill, citing violations to constitutional protections of free speech. Lawsuit notwithstanding, the scale & scope of the bill alone was itself already going to necessitate lengthy timeline of execution procedures before it could be enforced, and with the aforementioned lawsuit now added into the mix, it could be years before either a ban or sale actually goes into effect.

The Takeaway What this issue comes down, for both sides, is the users. The U.S. is seeking to ban the app due to the data harvesting it conduct upon its users, the lack of data security it provides its users, and for the algorithm that many lawmakers allege influences & manipulates it’s users, predominantly younger ones. On the other side of the fence, TikTok is claiming that a ban of its platform is tantamount to silencing the voices of all 135 million of its US-based users (which not-so-coincidentally also represents TikTok’s largest user base). Ultimately, it’ll be years before any real action is seen, but the odds skew in favor of TikTok losing in the long run as this is rare instance of bipartisan agreement.

To put it simply, when Republicans & Democrats can agree that they don’t like you, you’re in trouble.

— Shaymus O’Brien

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Warren Buffett Compares AI to Nukes

What’s going on? Apparently someone showed Warren Buffett an AI-generated doppelgänger of himself that was floating around online and it spooked him enough to talk about it at his recent annual meeting with Berkshire Hathaway. For context, Berkshire Hathaway holds an annual meeting for shareholders that is widely regarded as a 'Woodstock for Capitalists’. While the initial mood of this year's meeting was more somber due to the absence of the late Charlie Munger, Buffett’s longtime business partner, he still shared valuable insights on Berkshire Hathaway’s performance, investment philosophies, and general economic outlook.

During the meeting, Buffett expressed concerns about the rising potential for AI-driven scams, calling it 'the next big growth industry.' In fact, Buffett believes this technology is so dangerous, that he even compared its risks to nuclear weapons, warning that AI could create realistic and misleading content capable of fooling even the most vigilant​

He expressed his concern about the uncontrollable nature of such powerful technologies, stating, 'The power of that genie scares the hell out of me, and I don't know any way to get the genie back in the bottle, and AI is somewhat similar. It's partway out of the bottle, and it's enormously important.'"

However, Arvind Krishna, CEO of IBM, has a different perspective. In an interview with Yahoo News, Krishna downplayed the dangers, stating, 'I actually have no such fear. So I'm putting it in black and white... Thinking that the rate of progress, which has been 100 times over the last 3 or 4 years, is going to be another 100 to 1000 times is a little fantastical.' He emphasized that current infrastructure requirements make such exponential growth unlikely and stressed the importance of not overestimating AI risks to avoid stifling technological innovation.

— Jacob Pace

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FaZe Clan Hits the Reset Button

The Fast Track The premier name in the world of Esports has recently announced a major roster shakeup that all but guarantees a total overhaul of the brand. Launched over a decade ago, FaZe Clan has been one of the marquee organizations responsible for propelling gaming culture into the mainstream. With its roots it’s trickshots & Call Of Duty Montages, what started as a collective of friends blossomed into a multi-million dollar organization, but as the saying goes, more money, more problems. As the brand became more corporate, it became more disconnected from its fanbase, and in recent years had seen a drastic fall off from the public consciousness until one of the brand’s founders, FaZe Banks, put the world on notice via X that the brand was laying off/kicking out everyone except for a handful of talent.

The Takeaway It is beyond difficult, to the point of being practically impossible, for a brand to be both corporate & cool, and this is exactly what FaZe experienced. The org was built on the authentic relationships of a legitimate friend group. As their success grew, these friends grew apart, in no small part due to the influx of celebrity signees, brand sponsorships, and mass member adds that collectively diluted the essence of the name “FaZe Clan” to the point of it being unrecognizable. While it’s not yet clear what direction this new version of FaZe clan will go in, what we do know is this, it will focus predominantly on IRL (in-real-life) streamers & crypto content, directed largely by FaZe Banks who’s now back at the helm as the public face of the company.

— Shaymus O’Brien

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Sony and Apollo Submit $26 Billion Dollar Offer to Buy Paramount

What’s the deal? If you didn’t already know, Paramount — owner of CBS, Nickelodeon, MTV, Comedy Central and its namesake movie studio — is up for sale. After the expiration of a 30-day exclusive negotiating window with Skydance that ended last Friday, a new potential buyer for Paramount emerged: Sony Pictures Entertainment and Apollo Global Management. In fact, the the two companies are so serious, that they submitted a formal letter with an all-cash offer of $26 billion — now that’s a big chunk of change! If accepted by the board, this could lead to Paramount going private. I actually had no idea Paramount was a public company, so this is news to me as well.

If successful, Sony and Apollo plan to sell everything off except for the main studio (this would include CBS, Nickelodeon, MTV, Comedy Central). The plan is to merge Paramount’s studio with Sony’s to make it one mega studio.

However, some observers familiar with antitrust laws believe the deal could still face government scrutiny since the Sony-Apollo takeover of Paramount would be a '5-to-4' merger, leaving only four major studios: Disney, Warner Bros. Discovery, Universal Pictures, and Sony Pictures Entertainment. President Biden's antitrust regime, under the Department of Justice and the Federal Trade Commission, has taken a tough stance against a range of acquisitions over the past few years. We'll see how this one unfolds.

— Jacob Pace

As always, thanks for reading! And to whoever is making Warren Buffett doppelgängers, please stop. This man needs his sleep.