Daily Archives: October 30, 2024

Why Jeff Bezos blocked the Washington Post endorsement

Good morning. If you thought Larry Ellison was going to run Paramount, think again.A month ago, Skydance Media told the FCC that the Oracle founder would have voting control of the media company formerly known as ViacomCBS when Skydance closes its $8 billion deal. It has now filed a revision saying no, it’s actually son David who calls the shots.

Why the confusion? David, 41, was always intended as CEO of the combined company, should regulators approve their merger, but companies controlled by his father, 80, are contributing the bulk of the cash necessary to get the deal done. 

Fans of corporate governance (and Succession) can agree: Clarity beats screaming “I’m the eldest boy” any day of the week. —Andrew Nusca

P.S. My editor asked me to tell you that Target CEO Brian Cornell, who I interviewed at Fortune Brainstorm Tech way back in 2017, is speaking at Fortune Global Forum in NYC next month. Interested? Request an invitation here.

Want to send thoughts or suggestions to Data Sheet? Drop a line here.Why Jeff Bezos blocked the Washington Post endorsementAmazon founder Jeff Bezos at the COP26 UN Climate Change Conference in Glasgow on November 1, 2021. (Photo: Alain Jocard/AFP/Getty Images)A longtime advisor to Jeff Bezos at Amazon believes the last-minute decision by leadership at the Washington Post, which Bezos has owned since 2013, to abandon presidential endorsements reflected a classic Bezos business principle about protecting your self-interest by avoiding unnecessary mistakes. Bezos has said that canceling the Post’s planned endorsement of Kamala Harris was a “principled decision” taken to improve public trust in the media. Former Amazon public relations chief Craig Berman says Bezos’ interest in space company Blue Origin, his competition with Elon Musk, and fear of the consequences should Trump win the White House are more likely his motives.“I would characterize it as a very convenient principle,” Berman told Fortune. Blue Origin still needs revenue to operate and government contracts are a major source of those for the rocket company. Blue Origin has a $3.4 billion NASA deal to build a lunar “lander” and competes with Musk’s SpaceX not only for government deals, but for talent and launch pads as well. The problem for Bezos is that Musk has recently remade himself as a staunch Trump ally. “It’s personal; it’s his baby,” Berman says of Bezos and Blue Origin. “That’s the one that matters to him right now.” —Jason Del ReyApple refreshes Mac Mini with much smaller footprintThe Mac now comes in its mini-est Mini form yet.Apple has given the Mac Mini its biggest revamp in over a decade, drastically shrinking its footprint to just 5×5 inches.Gone are the USB-A ports, but there are five USB-C ports, three of which handle Thunderbolt, plus Ethernet, HDMI, and the usual audio jack. The Mini starts at $599 and comes with up to 8TB in storage.This is part of Apple’s big week of fall announcements, which so far generally involve adding the new M4 generation of processors (this and the new iMac) or switching from the old proprietary Lightning standard to USB-C (the new Magic Mouse, Keyboard, and Trackpad.) New MacBook Pros are also rumored to be on the menu.Ensuring an even rollout of the latest Apple processors could help the company show off what its new, and so far unenthusiastically received, Apple Intelligence can do. —David MeyerMore than 25% of new Google code is generated by AIGoogle parent company Alphabet reported its quarterly results on Tuesday. Compared to the same period a year ago, total revenue was up 15% to more than $88 billion, search revenue was up 12% to more than $49 billion, and profit was up 34% to $26 billion. Cloud revenue and YouTube ad revenue were also up by double-digit percentages.But the most interesting insight came from the company’s subsequent earnings call. “More than a quarter of all new code at Google is generated by AI, then reviewed and accepted by engineers,” Google CEO Sundar Pichai said. “This helps our engineers do more and move faster.” Google has understandably worked AI into what feels like every corner of its product offerings, from its core search business to its Android mobile devices to enterprise cloud services. (And yes, even Waymo robotaxis.) But how AI is changing work at the company itself, with its 180,000 employees on six continents? That’s a far more tangible case study. —ANIntel CEO ‘fumbled’ company’s revival, report saysA new Reuters report quotes an array of people in and around Intel who say that CEO Pat Gelsinger has committed unforced errors en route to reviving the Silicon Valley icon.The chief executive’s public comments about Taiwan’s precarious relationship with China reportedly led an offended TSMC, the world’s largest pure-play chipmaker, to revoke a discount with its founder calling him “discourteous.” What’s more, Gelsinger’s public projections also outpaced internal realities, according to dozens of current and former employees interviewed for the story, plus documents. (“We have made immense progress,” Intel’s response to the article reads in part, “and we’re going to finish the job.”)There’s little doubt Gelsinger inherited a challenge in 2021; rivals had already passed Intel in making leading chips for phones and AI. The question now is whether he’s “compounded those problems,” as one source in the story puts it, in his turnaround bid. Wall Street analysts expect Intel this year to record its first annual net loss since 1986. —ANElon Musk’s xAI fundraising at a $40 billion valuationWith all the chatter about Microsoft-backed OpenAI, it’s hard not to wonder what’s going on at the rival AI organization started by co-founder Elon Musk.Now we know. A new Wall Street Journal report says the not-quite-two-years-old company is talking to investors to raise money at a $40 billion valuation. To put that in perspective, that’s about a third of OpenAI’s latest valuation…but a hair short of the market capitalization of Ford Motor Co. and Kraft Heinz.Whether you believe in the valuation or not, there’s no question the company needs the cash. The pursuit of so-called “frontier AI”—considered the most advanced, cutting-edge models that push the boundaries of what artificial intelligence can achieve—requires extensive and costly computational infrastructure. Here’s some back-of-the-napkin math for context: xAI’s Memphis datacenter wants to scale from 100,000 to 200,000 Nvidia GPUs. The chipmaker’s flagship model costs about $30,000 each. Presto, change-o: $3 billion.)That xAI is younger than its more established rivals means it’s keen to spend to catch up. Its previous funding round, announced a mere five months ago, raised $6 billion at a $24 billion valuation from investors including Valor Equity Partners, Vy Capital, Andreessen Horowitz, Sequoia Capital, Fidelity, and Prince Alwaleed Bin Talal. —ANMore data—Is Meta best positioned for the AI gold rush? One observer thinks so.—Electronic Arts raises its 2025 outlook. With thanks to the late John Madden.—OpenAI is building its first in-house chip, employing Broadcom and TSMC to do so.—Snap beats Wall Street expectations in latest earnings. Advertising is…back?—K-12 school ransomware attacks are rising. Under-resourced for defense.Endstop triggeredA meme of two muscled arms clasping with the captions, “Chinese hackers” and “Russia hackers” and “Targeting U.S. government officials ahead of Election Day”Andrew NuscaThis is the web version of Data Sheet, a daily newsletter on the business of tech. Sign up to get it delivered free to your inbox.

Vendor’s Demand for Payment of an Invoice Triggers Duty to Defend Under Washington Law

Applying Washington state law, the United States District Court for the Western District of Washington has held that an insurer had a duty to defend a demand for payment under a vendor invoice for usage fees incurred due to hackers’ use of a software service. Advaiya Solutions Inc. v. Hartford Fire Ins. Co., Case No. C23-0685-KKE, 2024 WL 4253171 (W.D. Wash. Sept. 20, 2024).

An insured technology consulting company purchased software services for a client. The consultant purchased the software services from a vendor, who in turn purchased the services from the provider. Based on the client’s use, the provider would invoice the vendor, who would invoice the consultant, who would invoice the client. Hackers gained access to the client’s software, incurring about $334,000 in usage fees. The vendor and consultant disputed liability for the fees, with the vendor arguing that the consultant failed to enable two-step authentication and the consultant arguing that the vendor failed to apply a $30,000 limitation on charges.

The consultant submitted the vendor’s demands for payment to its insurer seeking coverage under its claims-made enterprise liability policy. The insurer denied coverage on the basis that the demand for fees was not a demand for “damages” because the policy specifically carved out from damages “any kind of: refund, rebate, redemption coupon, offset, return or credit that has been paid to or by any of you, or that is owed to or by any of you; examples include but are not limited to any of the following: any licensing fee or other fee, royalty, subscription or access charge or other charge.”

The insured consultant then filed an action for breach of contract and declaratory judgment, asserting that the insurer owed a duty to defend under the policy. In response to the insured’s motion for summary judgment, the insurer argued that (1) the vendor’s demand for payment was not a claim because it was not a formal legal proceeding against the insured; (2) the vendor’s demand was excluded by the carve-out for fees from the definition of damages; and (3) the vendor did not allege a wrongful act, as required by the policy.

The court rejected these three arguments. The court determined that the vendor’s demand for payment constituted a claim because the policy defined “claim” as a “written demand . . . for damages” and thus the duty to defend was not limited to lawsuits, as the insurer could appoint an attorney to address the vendor’s demand. The court also determined that the fee carve-out from the definition of damages did not necessarily apply to bar coverage because the carve-out required that fees be “owed to or by” the insured, and the charges were incurred by a third-party hacker and not by services provided to the insured. The court determined that “[t]his is not . . . an effort by [the insured] to pass on its routine business expenses to its insurer” and the insured had demonstrated that the vendor’s demand “could conceivably constitute damages under the Policy.” Finally, the court determined that although the vendor’s demand did not expressly allege a wrongful act, the insurer was obligated to consider and investigate extrinsic evidence to decide whether it was “conceivable” that the amount sought was caused by a wrongful act. Here, the court determined that it was “conceivable” because an incident report prepared after the hack included recommended actions to be taken by the insured to prevent similar incidents in the future and the vendor’s terms of service required the insured to ensure that its customers implemented information security best practices, but two-step authentication for access to the software was not enabled.

[View source.]

Vendor’s Demand for Payment of an Invoice Triggers Duty to Defend Under Washington Law

Applying Washington state law, the United States District Court for the Western District of Washington has held that an insurer had a duty to defend a demand for payment under a vendor invoice for usage fees incurred due to hackers’ use of a software service. Advaiya Solutions Inc. v. Hartford Fire Ins. Co., Case No. C23-0685-KKE, 2024 WL 4253171 (W.D. Wash. Sept. 20, 2024).

An insured technology consulting company purchased software services for a client. The consultant purchased the software services from a vendor, who in turn purchased the services from the provider. Based on the client’s use, the provider would invoice the vendor, who would invoice the consultant, who would invoice the client. Hackers gained access to the client’s software, incurring about $334,000 in usage fees. The vendor and consultant disputed liability for the fees, with the vendor arguing that the consultant failed to enable two-step authentication and the consultant arguing that the vendor failed to apply a $30,000 limitation on charges.

The consultant submitted the vendor’s demands for payment to its insurer seeking coverage under its claims-made enterprise liability policy. The insurer denied coverage on the basis that the demand for fees was not a demand for “damages” because the policy specifically carved out from damages “any kind of: refund, rebate, redemption coupon, offset, return or credit that has been paid to or by any of you, or that is owed to or by any of you; examples include but are not limited to any of the following: any licensing fee or other fee, royalty, subscription or access charge or other charge.”

The insured consultant then filed an action for breach of contract and declaratory judgment, asserting that the insurer owed a duty to defend under the policy. In response to the insured’s motion for summary judgment, the insurer argued that (1) the vendor’s demand for payment was not a claim because it was not a formal legal proceeding against the insured; (2) the vendor’s demand was excluded by the carve-out for fees from the definition of damages; and (3) the vendor did not allege a wrongful act, as required by the policy.

The court rejected these three arguments. The court determined that the vendor’s demand for payment constituted a claim because the policy defined “claim” as a “written demand . . . for damages” and thus the duty to defend was not limited to lawsuits, as the insurer could appoint an attorney to address the vendor’s demand. The court also determined that the fee carve-out from the definition of damages did not necessarily apply to bar coverage because the carve-out required that fees be “owed to or by” the insured, and the charges were incurred by a third-party hacker and not by services provided to the insured. The court determined that “[t]his is not . . . an effort by [the insured] to pass on its routine business expenses to its insurer” and the insured had demonstrated that the vendor’s demand “could conceivably constitute damages under the Policy.” Finally, the court determined that although the vendor’s demand did not expressly allege a wrongful act, the insurer was obligated to consider and investigate extrinsic evidence to decide whether it was “conceivable” that the amount sought was caused by a wrongful act. Here, the court determined that it was “conceivable” because an incident report prepared after the hack included recommended actions to be taken by the insured to prevent similar incidents in the future and the vendor’s terms of service required the insured to ensure that its customers implemented information security best practices, but two-step authentication for access to the software was not enabled.

[View source.]