Business briefing

The daily business briefing: January 24, 2023

Microsoft announces a multibillion-dollar investment in OpenAI, Spotify announces 600 layoffs in latest tech cost cutting, and more

1

Microsoft invests billions in OpenAI

Microsoft announced Monday that it was investing billions of dollars in OpenAI, the startup behind the viral ChatGPT chatbot, The Wall Street Journal reported. The possible $10 billion deal would be part of Microsoft's effort to increase the use of artificial intelligence in its software products. Microsoft has already invested $3 billion in OpenAI. The Journal reported that OpenAI had been in talks this month to sell existing shares in a deal that would value the company near $29 billion, making it one of the most valuable startups out there with very little revenue. The Microsoft investment will give OpenAI money for computing power it needs for its products on Microsoft's Azure cloud platform, the Journal said.

2

Spotify becomes latest tech company to announce job cuts

Spotify Technology announced Monday that it would cut about 600 employees, roughly 6 percent of its 9,800-person workforce. The news, which followed a Bloomberg report that the streaming audio company was planning unspecified layoffs, added to a series of job cuts at some of the nation's leading technology companies. Google-parent Alphabet, Amazon, and Facebook-parent Meta Platforms are among the tech giants that have announced major layoffs as the economy slows and they find themselves with too many workers after ramping up hiring early in the pandemic to handle surging demand for their services as Americans shifted to working, shopping, playing, and studying online.

3

Union: Ford cutting 3,200 jobs in Europe

Germany's IG Metall union said Monday that Ford Motor plans to cut up to 3,200 jobs across Europe as it moves some product development work to the United States and cuts costs, according to Reuters. The automaker is under pressure from rising costs of electric vehicle battery materials and an EV price war Tesla started this month, Reuters reported, citing analysts. IG Metall said Ford plans to cut up to 2,500 product development jobs and 700 administrative positions, mostly in Germany. The union vowed to disrupt Ford's Europe operations if it goes ahead with the layoffs. Ford's Germany spokesperson declined to comment but noted that a Friday statement said Ford's shift to EV production would necessitate structural changes.

4

Stock futures struggle after Monday's gains

U.S. stock futures fell early Tuesday after Monday's big gains, as investors awaited more corporate earnings reports. Futures tied to the Dow Jones Industrial Average and the S&P 500 were down 0.3 percent at 6:45 a.m. ET. Nasdaq futures were down 0.4 percent. The tech-heavy Nasdaq jumped 2.0 percent on Monday on expectations that the Federal Reserve would slow its aggressive campaign to raise interest rates to fight high inflation. The Dow and the S&P 500 rose 0.8 percent and 1.2 percent, respectively. "Investors are under the impression that the Fed will likely raise rates by a lesser amount at the upcoming meeting. That's an encouragement to investors," said Sam Stovall, chief investment strategist at CFRA Research.

5

Landlord sues Twitter over unpaid rent on its S.F. headquarters

SRI Nine Market Square LLC has filed a lawsuit accusing Twitter of failing to pay nearly $6.8 million in rent on its San Francisco headquarters in December and January. The landlord said it got the December rent from most of Twitter's $3.6 million letter of credit security deposit, but the company still hasn't paid $3.1 million for January. The landlord, an affiliate of landlord Shorenstein and JPMorgan Chase funds that owns 1355 Market St., wants the court to increase Twitter's line of credit to $10 million, based on a lease clause triggered by Elon Musk's $44 billion purchase of the company in October. Twitter leases 462,855 square feet of office space in the building. Multiple landlords are suing Twitter for back rent. 

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