Chapter 1: Why is OpenAI shutting down Sora and its video models?
OpenAI's Sora is Nomura. Motley Fool Money starts now. Welcome to Motley Fool Money. I'm Travis Hoy. I'm joined today by Lou Whiteman and Rachel Warren. And guys, the OpenAI news continues to come out. Lou, we talked about this a little bit yesterday with Tyler Crowe on the show.
But the breaking news yesterday was that they are shutting down Sora, this sort of social media video app that they launched not too long ago, a few months ago. But not only that, they're actually shutting down making their own video models. Rachel, this seems like a huge shift for OpenAI. They're really focusing on kind of the enterprise side, coding, you know, their Codex product.
We talked about that.
Chapter 2: What challenges did Sora face before its shutdown?
It was so striking that they have put so much time and energy, even a billion dollar deal with Disney, to try to build up this video business, one of those spaghetti at the wall kind of things. And now they're just saying, you know what, we're done with that.
Yeah, I mean, there was a lot of viral buzz around Sora, but there had also been kind of some major challenges. So Sora had this ability to generate lifelike videos. I mean, it was generating unauthorized clips of people like Michael Jackson and Martin Luther King Jr. So there was fierce opposition from actors' unions, family estates.
There was even an issue they were having with the Japanese government demanding that OpenAI stop using copyrighted anime and manga characters in Sora V2. The other point I think to make here is very high computational costs required to run these models, very much putting a dent, I think, in the bigger dream of OpenAI for profitability.
Chapter 3: How does OpenAI's shift to enterprise focus impact its future?
Ahead of its reported IPO, potentially later this year, I think they're really refocusing on their upcoming SPUD model. AI agents, right, designed for coding and robotics. I think they're really trying to kind of cut their losses and reallocate their resources towards autonomous AI agents, enterprise-grade tools. It is interesting, the impact on Disney.
I mean, they have this three-year, billion-dollar partnership that included licensing over 200 characters for Marvel, Pixar, and Star Wars. That feels dead. You know, Disney publicly said they respect OpenAI's decision, but there was some reports that the news caught the company off guard that maybe they didn't even hear about it until about 30 minutes after a joint meeting.
So a lot going on there. I mean, for Disney's part, they're now an active free agent in the AI space. You know, they're reportedly engaging with other AI platforms to find a new partner. So that could be something interesting to see. I think now with this kind of leader out of the race, a lot of eyes are turning to Alphabet and Anthropic.
Anthropic has notably chosen to avoid video generators entirely. So maybe this is something that we're not going to see as much investment in the space. That remains to be seen, but it is a big shift for OpenAI from, I think, where a lot of people thought the business was going.
Yeah, Lou, it does seem like they're at least focusing. And we've asked a lot of questions about how are they going to build a sustainable business model? So this is maybe a step in the right direction. But the other interesting thing is it seems like they're kind of seeding a lot of this consumer space.
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Chapter 4: What are the implications of Congress's Clarity Act on stablecoins?
You know, if you want to make a video, go to Gemini. And that was the theory even 12 or 18 months ago was that Alphabet was going to be and Google were going to be disrupted. This is kind of seeding that entire area to them. You're giving them the Focus Award, Travis? Is that the thing? Yeah.
Well, I mean, for now, we'll see until they go public and then start throwing spaghetti at the wall again. I think this is a rare moment of honesty from OpenAI, a company that loves a good press release. For all of the bluster, for all of the statements about how wonderful it is, things are not going well. We're supposed to make bold statements here, Travis.
Chapter 5: How will the Clarity Act affect Coinbase and Circle's profitability?
This may not come true, but I am increasingly wondering if OpenAI will ever get to an IPO. The simple math here is that they were not making money on this. As Rachel said, just the sheer bandwidth needed was too much for the revenue. Also, I think it's fair to say that they didn't see a path for revenue, which is kind of the scarier thing.
And add into it the fact that even with a billion-dollar sweetener from Disney, if they would have kept going, they still couldn't justify it. I think the conclusion here is they were losing tons of money with no path to profitability. And hey, I guess credit to them for at least backing off. But look, Anthropic is doing it better.
Anthropic is using a lot fewer resources to actually grab the enterprise customer. So copying them makes sense. I don't know if the consumer matters here. I think the enterprise matters for now. And yeah, Anthropic is showing the way. Opening eye would be insane not to follow. So is the theory there, if you're looking at a potential IPO, that, hey, the consumer space is just going to be too hard.
Maybe Alphabet is already there with the ad business in particular, something that OpenAI really said they didn't want to do until it was kind of too late. So if you want to build a real business and go public, you have to go after these coding opportunities, these enterprise opportunities. And that's what they're focusing on, even though we've seen seemingly everything else.
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Chapter 6: What regulatory changes are coming for stablecoin rewards?
We've seen now Sora shut down. Is even ChatGPT going to be the future of the company or is it really just Codex at this point? It's weird to compare them to Alphabet because it's such a different set of circumstances. One is an established business that, in part, is backfilling. Let's be honest. It used to be Alphabet's going to get killed by OpenAI because search is going to be destroyed.
Instead, they're just transitioning search. But you have an established customer base and an established business It makes sense to stay in that business that you know so well. I think on the opening eye side, like Anthropic, starting from scratch, you need to earn customers.
The cost of acquiring a customer in almost any business is high, so you want to go after the customers with the highest payout. That's on the enterprise side. Again, we'll see what becomes a consumer AI. Maybe we all will pay hundreds of dollars a month for these magical tools that make our lives better. There's time to fight that out if and when that happens.
For now, if you are trying to build a business, you need to see your efforts generate revenue. And clearly, I mean, I don't think this is unique to AI or anything like that. Clearly, the enterprise is the customer to go to get that. Yeah, I think it makes a lot of sense in a lot of ways, especially if you are trying to get to the IPO.
But it's just striking how many things they've tried that were supposed to be the future of technology, the future of artificial intelligence, and they just didn't really work out. So we will see where OpenAI goes. I'm sure we're going to be talking about this again soon. When we come back, we're going to talk about crypto and what the future of stable coins looks like.
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The Civil War and Reconstruction was a pivotal era in American history. When a war was fought to save the Union and to free the slaves. And when the work to rebuild the nation after that war was over turned into a struggle to guarantee liberty and justice for all Americans.
I'm Tracy.
And I'm Rich.
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Chapter 7: How is Amazon positioning itself in the robotics market?
Look for The Civil War and Reconstruction wherever you find your podcasts.
Welcome back to Motley Fool Money with the Hidden Gems team. Yesterday, we saw shares of Coinbase and Circle plunge. I think Circle was actually down over 20%, at least one point. And the reason was Congress is pushing through this Clarity Act, which is going to set the rules for stable coins.
And one of the things that's been on the docket is our crypto company is going to be able to offer rewards for holding stable coins. This is something that Coinbase does on their platform. If you have
usdc stable coins they'll pay you i think it's three and a half percentage points right now as as a reward for that so looks a little bit like interest on a bank account even though it's a little bit different than that but this would make that illegal lou and the interesting thing here is
this would make it maybe a little less attractive to be holding those stable coins in an account like Coinbase. But if you do still hold them and you don't really care about that 3.5% because it's a more efficient payment method or whatever your logic is, this is actually going to make companies like Coinbase more profitable because they're not going to have that rewards expense.
So it's sort of an interesting reaction from the market. Stocks are down, but at least short term, Coinbase should make more money because of this ruling if it ends up passing. Yeah, I keep thinking that life comes at you fast when I see this. Sure, Travis. You know what? Banks would make more money if people just put their money in without demanding interest. So you're right, definitely.
But look, I don't know if this is fair, but I think it's the right call, okay? And look, life is not fair.
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Chapter 8: What does the future of automation look like for Amazon?
I'm not pro or anti stable coin. I'm not going to say that, but I want them to solve problems, not create problems. And for all of the flat. And do you not see the efficiency? Let's go there. Let's go there. Okay. For all of the issues we have with our US banking system, and it's not perfect, it does work. And it is the model the rest of the world bases itself on. We have a good thing here.
Just like in medicine, the first rule should be do no harm. And to the extent that these stable coins are a threat to that core system, I think regulators should be aware and trying to avoid harm to this system that serves us well. I keep saying this about FinTech, but it is so true. The house always wins. Regulators are risk adverse. That's a feature in the system. It's not a flaw.
If you want to come up with something better, it has to be significantly better than the status quo. Because again, the status quo for all of our complaints about it works really, really well. And most of the world wishes they had the problems we had.
I've been following stablecoins for quite a while, but the efficiency of moving money with stablecoins, if you own a business and you're paying 3% for credit cards, Having an alternative, which a company like Stripe does, they charge about half of the fee to take stable coins as they do to take credit cards. So that would be the disruptive angle.
Is Lewis saying it's good that we're not enabling some of this disruption from stable coins, which is going to just entrench companies like Visa and MasterCard? I guess, what are your thoughts looking at that? Because That seems like the angle that Coinbase or Circle is going for is, hey, this is better. It's more efficient.
But now we have regulatory capture coming in, which is always going to be a challenge.
Well, and I think another way to look at it is this. We have heard some pretty lofty ambitions for what stable coins can do for the consumer, for big business. And one of the hallmarks of adoption, one of the on-ramps that enables adoption is greater regulatory environment. and more regulations in place.
And so I think that in the long term, should this legislation pass, I actually think it's a good thing. When you think about companies like Coinbase, they've been leaning pretty heavily on USDC rewards to drive engagement and revenue. So obviously, this is kind of massive regulatory red line, so to speak.
If you think about, you know, the Genius Act and other recent bills have really essentially been trying to treat stable coins more like traditional cash and less like speculative investments, which, again, is a really important element of long-term adoption. So I think by cutting off rewards, regulators are hoping to prevent a massive, you know, drain of deposits from traditional banks.
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