Apple tries to close the A.I. gap
Heading into Apple’s Worldwide Developers Conference on Monday, big questions are hanging over the tech giant, from muted sales for its Vision Pro headset to growing competition in China and regulatory scrutiny on both sides of the Atlantic.
Those aren’t going away, but the focus at the event will be on what Tim Cook, Apple’s C.E.O., reveals about artificial intelligence — and whether the company can catch up to competitors.
Apple has lagged behind its rivals. The share prices of companies that are seen as A.I. leaders, like Nvidia and Microsoft, have soared since OpenAI introduced ChatGPT in November 2022. Big Tech C.E.O.s have fallen over themselves to show they are in the race. But Apple hasn’t yet introduced a new A.I. offering, held back by its typical caution, according to The Wall Street Journal.
(The New York Times has sued OpenAI and Microsoft over use of copyrighted articles related to A.I. systems.)
Apple tends to keep future product plans a closely held secret. The A.I. boom has put that tactic under pressure; Cook unexpectedly told analysts last month that generative A.I. offerings were in the cards.
“It was quite fascinating to see Apple, for once, dragged into a conversation that was not on its own terms,” Leo Gebbie, a tech analyst, told The Financial Times.
The focus will be on Siri. Apple has reached a deal with OpenAI to embed its technology into the iPhone, writes the Times’s Tripp Mickle. That is intended to make Apple’s digital assistant capable of performing a wider range of functions and be more conversational.
Apple will stress privacy and security. Expect the company to say its offerings are more secure because many functions will be processed on the device rather than at a data center, addressing a growing consumer concern that large language models sometimes misuse data.
The company has a history of profiting despite being late to market. The iPhone and Apple Music are just two examples. One reason: Its huge user base means any new tech it releases has huge potential reach with consumers and developers.
Bloomberg reports that Monday’s announcements could also kick off a wider push into hardware. And Apple is still in talks with Google to further bolster its A.I. offerings.
Investors haven’t given up hope. The stock is up since Cook announced that A.I. offerings were imminent — though not up nearly as much as Nvidia or Microsoft — signaling it’s way too early to write off Apple.
HERE’S WHAT’S HAPPENING
The euro and European stocks sink as election results come in. Parties tied to President Emmanuel Macron of France and Chancellor Olaf Scholz of Germany performed poorly in European Parliament voting this weekend, threatening existing climate and immigration policies. The results prompted Macron to call for snap legislative elections; Ursula von der Leyen, the president of the European Commission, is scrambling for votes to remain in power.
Inflation and the Fed loom large for investors this week. The central bank is widely expected to leave interest rates unchanged at a meeting of its open markets committee on Wednesday. But Consumer Price Index data will be released ahead of the meeting, giving decision makers fresh inflation data. After Friday’s blockbuster jobs report, the big question is: Will the Fed cut rates before Election Day on Nov. 5?
Norway’s sovereign wealth fund plans to vote against Elon Musk’s pay package. The investing giant is the latest institutional shareholder to say it would vote against a measure to re-approve the Tesla C.E.O.’s multibillion-dollar compensation deal. The vote on Thursday will be closely watched for what it means for Tesla’s future, especially if Musk refocuses on other parts of his business empire.
Will Smith breaks a losing streak for the box office. “Bad Boys: Ride or Die” grossed more than $56 million in domestic ticket sales for its opening weekend, surpassing expectations. It’s welcome news for Hollywood, which has worried about the weak performances of movies like “Furiosa” that were forecast to be huge hits — and for Smith, whose career took a hit after he slapped Chris Rock at the 2022 Academy Awards.
A new twist in a bidding war for an ammunition maker
Shareholders in Vista Outdoor had been set to vote on Friday whether to sell the company’s ammunition business to a Czech company, while a rival bidder, MNC Capital, had sought to stop the deal.
That vote has now been postponed. But Vista remains opposed to MNC’s takeover efforts — and is expected to say that it’s now weighing another bid for its ammo division.
Vista will say an unidentified bidder has offered more than $2 billion for the business, known as the Kinetic Group and whose brands include Remington and CCI. The company didn’t offer much detail on the new party, other than to say it was a “U.S.-based investment firm” that previously had bid for Kinetic.
Vista will say the new bid was “reasonably expected” to be superior to the $1.96 billion deal it has struck with the Czechoslovak Group, and that a deal with the unidentified bidder could be struck by June 14.
Meanwhile, Vista has rejected the latest takeover proposal by MNC, which recently raised its offer for the whole company to $3 billion. MNC has argued that it’s not only offering a better deal than CSG, as the Czech company is known, but isn’t subject to the national security review the CSG offer is undergoing.
Vista has consistently disagreed, saying that its breakup would generate more value for shareholders. It has gotten support from the influential proxy advisory firm Institutional Shareholder Services, which recommended that investors back the CSG deal.
Shareholders appeared unconvinced that the MNC bid would succeed: Vista’s stock closed on Friday at $35.78, below the $39.50-a-share that proposal offered.
Vista is delaying its shareholder vote to July 2 to allow more time to negotiate with the new bidder.
All eyes on the Redstones
This could be a defining week for the Redstone family. The media dynasty must decide whether to sell its stake in Paramount, the entertainment empire that includes CBS, MTV and the movie studio behind “Top Gun.”
Advisers worked through the weekend on the potential deal with Skydance Media, three people familiar with the matter told DealBook’s Lauren Hirsch and The Times’s Ben Mullin. They requested anonymity to discuss confidential information.
A deal would be complicated. It would involve two steps: Skydance buying control of National Amusements, which owns the Redstones’ stake in Paramount, and then merging the media conglomerate with Skydance itself. Advisers for Skydance and National Amusements have been working on indemnification and whether to give minority shareholders a vote, mechanisms that would give the Redstones further legal protection.
As of Sunday night, National Amusements hadn’t scheduled a vote, leaving the other parties in limbo.
The Redstones have other options. A bidding group that includes the producer Steven Paul — perhaps best known for his work on the “Baby Geniuses” franchise — and the tequila and hair care entrepreneur John Paul DeJoria is also courting National Amusements.
Those potential buyers would likely draw less regulatory scrutiny than Skydance. But they may not be able to offer the kind of investment capital or technological expertise as Skydance, whose founder is David Ellison, son of the Oracle co-founder Larry Ellison.
A Chinese E.V. giant’s soccer diplomacy
The aftershocks from this weekend’s European Parliament elections will most likely hit, among other things, Europe’s ambitious climate agenda. On that issue, there’s bound to be further drama in Brussels and on the soccer field starting Friday.
That’s when the Euros — formally the UEFA European Championship — kicks off in Germany. The monthlong soccer tournament, which is expected to attract half a billion TV viewers, has an unlikely sponsor: BYD, the highflying Chinese electric vehicle maker whose low-cost models have left many of Europe’s carmakers in the dust.
The European Union may hit Chinese E.V. makers before the first match, Vivienne Walt reports for DealBook. The bloc is expected to rule as soon as this week on whether to slap tariffs on Beijing-subsidized companies, including BYD, to rebalance the continent’s car market.
It would be the latest instance of the West’s tough stance on Chinese E.V.s. The Biden administration has banned such vehicles from the U.S. market, calling them a “security threat.”
And ahead of the E.U. elections, Luca de Meo, Renault Group’s C.E.O., warned that Chinese competitors could sink Europe’s auto sector.
Europe can’t afford a trade war. China has threatened to retaliate against high E.U. tariffs, perhaps on imports of European cars, aviation and pork exports. That would especially hurt German carmakers like Volkswagen and BMW that do big business in China; they’re eager to avoid trade barriers, creating a potential split among European manufacturers that Beijing could try to exploit.
At the same time, the E.U. wants to encourage E.V. sales to meet its 2035 climate targets — a policy that Fabrice Leggeri, a far-right French politician, told France 24 Television last night was a gift to China’s E.V. companies.
The E.U. may start with small penalties. Analysts suggest the bloc could impose temporary tariffs of roughly 20 percent on Chinese companies, leaving room for Beijing and Brussels to negotiate later this year after the newly elected E.U. Parliament selects a European Commission president and trade officials.
“The commission will have to strike a very, very careful balance, to give domestic producers a competitive edge, to catch up in this innovation game that they have completely missed,” David Kleimann, a trade expert for ODI, a Brussels think tank, told DealBook.
A big problem is that China dominates the E.V. supply chain. Manufacturers can sell cars for a fraction of Western models and still earn a profit. Unless E.U. tariffs surpass 40 or 50 percent, “it won’t make much of a difference” to Chinese E.V. makers’ bottom line, Kleimann said.
Meanwhile, BYD will have a huge captive audience soon. Its logo will be all over the televised matches, and its E.V.s will be on display at host stadiums and at fan zones across Europe.
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