AI versus copyright, and why you shouldn't put all your eggs in one NFT basket

We're covering the latest in tech news from the weekend and what’s making headlines early in the week. This being the first week of the year, we had to go over a thing or two that broke just as 2023 gave up the ghost. Here's what we have on deck for you! Financial updates: Global stock market news, and the latest from crypto. On the decentralized front, strong price movements are driving trading volume. That's good news for exchanges around the world. AI versus Copyright: The New York Times suit against OpenAI that dropped in the final days of 2023 is still the biggest story in tech at the moment. If major LLMs are built on shaky grounds, what does that mean for the generative AI boom? X's value continues to fall, further evidence that social media is hard to monetize for nearly anyone who isn't Meta. Climatetech job growth could bode well for the startup genre. And, to close out, this Times story is fascinating if you want to understand where venture dollars are flowing. That’s it for today! More on Wednesday and Friday! Connect with Equity on X and Threads @EquityPod, and keep up with all of TechCrunch's podcasts @TechCrunchPods on TikTok. For episode transcripts and more, head to Equity’s Simplecast website. Equity drops at 7 a.m. PT every Monday, Wednesday and Friday, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts. TechCrunch also has a great show on crypto, a show that interviews founders and more! Credits: Equity is produced by Theresa Loconsolo with editing by Kell. Bryce Durbin is our Illustrator. We'd also like to thank the audience development team and Henry Pickavet, who manages TechCrunch audio products. Learn more about your ad choices. Visit megaphone.fm/adchoices

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  Hello and welcome back to Equity, the TechCrunch podcast where we unpack the numbers and the nuance behind the headlines. This is Alex. Good morning and welcome to 2024. We have slammed the door on 2023 and kicked open the door to an entire fresh new year. So welcome. Before we start, I do have a couple of very interesting and fun housekeeping notes. So please stick with me for 30 seconds. First up, we did have three really fun episodes come out between Christmas and the new year. So if this little dose of startup and tech news is not enough to fully say to you, we do have lots of great stuff out to keep you company as you get back to work, as you commute, as you avoid the last dregs of your family. And also Equity is

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  going to shake up its schedule this year. Nearly every year of the show, we have made at least slight tweaks to its format based on what we think best meets the moment and what you have asked for. So this year Equity Monday and Equity Friday are going to stay much as they are. Every Monday or Tuesday on weeks that start a day late, we will recap the weekend's critical tech events and then take a look at the week ahead. And Equity Friday is going to remain our roundtable news roundup. It's the original Equity. We're not going to touch it. However, Equity Wednesday, our weekly interview show for the last few years, is going to change. What are we doing? We are going to shorten and tighten it and make it all about really cool startup stuff.

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  Equity Monday always covers a bit of economic and financial news, which is good and useful, but we've heard from folks that they want even more startup stuff. So who are we to not give you exactly what you want? So expect Equity Wednesday to be a more condensed, more focused show from here on out. But interviews are not going away. We're still going to do them as we think they are important to keep you up to date with the latest trends and startups. So expect those to come out here and there as bonus episodes as we go. All right. Sound good? Let's get into that new year. And on the show today, we have how the world's financial markets are starting 2024, crypto's re-re-re rebirth, copyright and AI starting off the year at each

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  other's throats, X's latest valuation, and then a little bit of climate tech hype. Let's go.

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  Let's start as we always do with a quick overview of the world of money, and that means stocks. Shares are mixed today in Asia. They are mostly lower in Europe, but are coming off of nearly two-year highs, so I'm not that concerned. And they're down in pre-market trading here in the US. And the leading story is a negative analyst called "Dinging the Value of Apple." On the earnings front, nothing. How about that? What a great way to start the year. But if the earnings calendar is bereft of any useful information, well, crypto is going to be filling up that headline space for us because, well, Bitcoin is up 6.5% in the last week to 45.5,000 USD. Ethereum's token is up 6.9% in the last

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  seven days to 2.4,000 dollars. And everywhere you look, there is more black ink. Solana up 8.6% in the last 24 hours. Binance's token is up 10% in the last week. It's quite a lot of good news. And crypto trading volume was far better in the final quarter of 2023 than in the second and third quarters of the year. So crypto was starting off on a better footing than I actually expected it to. However, do recall that in 2023, we also saw strong trading volumes at the start of the year compared to the middle. So we should not count our NFT chickens before they hatch. Elsewhere in crypto land, all eyes are on the potential approval of Bitcoin spot ETFs,

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  which some crypto folks think could unlock new demand for digital tokens, while other folks argue that any gains coming from that are already priced in.

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  Next up, it's my favorite part of the show, what I call "big news that matters." And there was no news that was bigger or mattered more than the recent New York Times versus OpenAI lawsuit that dropped a couple of days ago. So let me catch you up and then tell you what's going on. In late December, the New York Times sued OpenAI and Microsoft alleging copyright infringements, including "wide-scale copying." Now, this is not the first lawsuit we have seen of this type, but others have come from creators and not a group with the Times' large resource base. How big is that resource base? Well, the New York Times Company is worth about $8 billion today and is up about 1% in pre-market trading in case you were curious.

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  Now, this is not just a case of copyright infringement. The Times has a larger claim than that, and I quote, "Defendant's unlawful use of the Times' work to create artificial intelligence products that compete with it threatens the Times' ability to provide that service." Essentially, you stole our stuff and you are now using it to undercut us. It's a big claim. New York Times also says that OpenAI took millions of its articles. So this is not a small bit of, hey, give that back. A lot of claims, so what is the evidence? Well, New York Times writes in its suit that, "Powered by LLMs containing copies of Times' content, defendant's gen-AI tools can generate the output that recites Times' content verbatim,

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  closely summarizes it, and mimics its expressive style as demonstrated by scores of examples." I believe in legal speak, thus I got the receipts. A couple of things to consider. First, OpenAI is worth a bajillion dollars and is backed by a company whose value is measured in the trillions, not even the billions. Number two, Microsoft will want to protect its massive investment in OpenAI. And three, it is using OpenAI products in large enterprise software deals. So there is a lot of money on the line here. And I guess the question is, what portion of that money is owed to others? If the New York Times wins or even just gets a fat check,

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  everyone who got yanked into the OpenAI datasets is also going to want one. This has big implications, potentially, for other LLMs that were trained on non-licensed data. Now, tech folks are often annoyed here. Why can't we just use that stuff? How is this different than search? Well, the answer to the first question is copyright law, something that tech companies use to their own advantage all the time. And then the answer to the second is that this is not indexing, in which a company goes out there, scans the whole web, takes it in, and then exchanges a snippet for search traffic. No, no, this is collection, consumption, and then later. Regurgitation without credit or compensation. In short, the search agreement was value going to both parties.

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  Can you really argue that that is the case here? Other questions that are stuck in my head include what impact will this time suit have on open source AI models that might not have a generous and wealthy financial backer? What other tech companies could get hit with similar suits? Next, I have a couple of ideas. I'm sure you do too. And then amazingly enough, is it the case that the written word has never been worth more than it is right now? That's ironic.

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  Next up, news about my favorite private company, AKA XFKA Twitter, also known as the place where Elon Musk can shitpost and call it work. Well, TechCrunch reports that mutual fund company Fidelity has marked down its investment in X Holdings, the parent company of X, owned by Musk, by 71.5% from its original valuation. Now, for historical context, Fidelity spent just over $19 million to acquire a stake in X back in October of 2022. By October of 2023, it had marked that down by 65%. And now with its November disclosure, which was made public in December, that has been increased to a 71.5% reduction.

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  So if we're curious, that percentage decline from the original $44 billion price tag works out to about $12.5 billion in value, which I do believe is less than the total debt that Musk took out to buy the company originally. It's apparently very hard to make money in social media if your name is not Meta.

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  Looking for a bright spot to contrast the layoff coverage that we saw and endured so much of back in 2023? Well, TechCrunch's Tim Deschamps has an idea of where we should look for better tidings. He writes, "Climate tech is one sector that has been hiring. In 2024, it looks like it will be continuing the trend. Clean energy jobs have grown 10% in the last two years, outpacing the economy as a whole." And he thinks we're going to see more of that this year and maybe also next year. Now, I think this means one of two things. First of all, one, VCs are showering climate tech startups with new cash, or potentially, revenue growth at those startups is looking tidy, or both.

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  And to close out, The Times has an interesting look at how growth in defense tech investment is driving more former American military officials into the ranks of venture capital firms. That means, my friends, we have a new revolving door to track. It all feels very signed of The Times, but I can't help but imagine how funny it must be to be a former American military general on your first day at a venture capital firm. You open the door, and there's a bunch of people wearing athleisure and pajamas. Who's in charge? How do you find out? There's no ranks. Oh, my gosh, that must be amazing culture shock.

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  And that is our show for this fine Tuesday morning. Of course, Equity will be back on Wednesday and back on Friday. If you want even more from the show, we are Equity Pod over on X and Threads. And if you want more from me, I am Alex over on X as well. We have two sister shows, Chain Reaction, all about the world of crypto, and Found, digging deep into founders' stories. We'll talk to you soon. Hugs. Welcome to the new year.

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  Equity is hosted by myself, editor in chief of TechCrunch Plus, Alex Wilhelm, and TechCrunch senior reporter, Mary Ann Azvedo. We are produced by Teresa Locan Solo, with editing by Kel. Bryce Durbin is our illustrator. And a big thank you to the audience development team, and Henry Pickavet, who manages TechCrunch Audio Products. Thank you so much for listening, and we'll talk to you next time.