It was a very busy week for news and articles. Almost all of the content has already been sent. In case you missed any of it:
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Table of Contents
1. Reddit (RDDT) – Data Licensing Drama
This piece is also relevant for those interested in Alphabet and Cloudflare.Reddit is apparently considering cutting Google's access to data for model training and outputs. The $60M/year deal is about to expire, and Reddit is either posturing for more money (very possible) or beginning to rethink whether or not this data is just too special and valuable to be selling. It's probably a combination of the two, as I'm sure they'd be happy to share all of this data with Google at the right price. The news is weighing on Reddit shares as they also battle with Anthropic about their data usage for those models. This is making investors question the viability and noisiness of the data licensing revenue stream. Their core app business is much larger than this, but it was still 6% of revenue in Q1, so it is material.
The most likely outcome in my mind is that more headlines about noisy negotiations will likely come and the two will probably end up settling and signing a new contract.
In other related news, there are publishers like Politico also considering whether or not Google's emerging AI channels are worth participating in. This is as these publishers see declining traffic stemming from AI proliferation and wonder whether or not they're being compensated enough to share information that allows users to avoid clicking into their sites. Like with Reddit, I think this is all about getting the best deal these publishers can possibly get. Threatening cancellation is a way to put pressure on Alphabet and potentially push concessions... especially considering USA Today, Reuters, The Economist and more all seem to be teaming up in this regard.
Last thing. All of this news makes Cloudflare's "Act 4" all the more important. As a reminder, this is their product category dedicated to helping publishers secure and monetize any proprietary data housed on their own websites as the chat bot era rages on. It's their support for making sure publishers can control the flow of data and are paid when that flowing happens. That's part of the reason why Cloudflare has continued to fetch such a premium multiple through all of the software turmoil. They're viewed as the best candidate to help in this important area.
2. Nu (NU) – Small Acquisition
Nu is acquiring Banco Porto Real in Brazil to obtain an official banking license. It had been using a few other financial service licenses to offer its full suite. This gives it a formal banking charter, which is a new requirement in Brazil to have “bank” in a company name. No change to capital requirements. No change to the customer experience. It’s a tiny, tiny purchase. They have just $5.5M in corporate capital. They told shareholders they planned to do this in December.
3. Intel (INTC) – Brief Earnings Snapshot
