TRD Issue 63 - Briefing: xAI's Grok Goes Open Source, OpenAI Board Updates, Walmart's Fast Delivery, Instagram Outpaces TikTok

Hello Readers,

At the forefront, OpenAI's CEO Sam Altman makes a significant return to the board amidst internal conflicts that have yet to be fully disclosed, highlighting the tightrope walk between maintaining an organization's integrity and navigating the competitive landscape of artificial intelligence.

Meanwhile, Elon Musk has initiated legal action against OpenAI, the organization he co-founded, accusing it of betraying its non-profit ideals and favoring closed-source operations that benefit Microsoft. This legal move has stirred up the tech community, raising questions about the future direction of AI development and the ethical obligations of such powerful entities.

During the legal battle, Elon Musk announced that his AI company xAI's model Grok would soon be open source.

In the retail sector, Walmart steps up its game by introducing a same-day delivery service that promises orders placed by 6 am will be delivered by 7 am, directly challenging competitors like Amazon and Target. This initiative is set to redefine the expectations of speed in the retail industry, with Walmart+ members enjoying this perk at no additional cost while non-members are subject to a $10 fee.

As the TikTok ban debate heats up in the US, with bipartisan support for sanctions against the app due to security concerns, TikTok aggressively urges its users to contact lawmakers to fight the possible ban. Despite this, Instagram has seen an uptick in downloads, surpassing TikTok in acquiring new users, indicating a shift in social media preferences among the public.

Moreover, while TikTok Shop aims to entice users to shop within the app, not all Gen Z consumers are on board, with some expressing a desire to turn off the shopping feature altogether. This sentiment underscores the diverse preferences of younger consumers and the challenges platforms face in catering to their varied tastes.

This week's roundup underscores the dynamic interplay between innovation, competition, and consumer expectations in the tech and retail landscapes.

Until next time.

The Retail Direct

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AI

Elon Musk Says xAI Will Open Source Grok This Week

Why it is important

• Elon Musk's AI startup, xAI, plans to open source Grok, a ChatGPT rival, signaling a shift towards open AI technologies amid debates on AI's openness and proprietary models.

What happened

• Musk announced xAI would open source Grok, challenging OpenAI's closed-source approach and suing OpenAI for deviating from its open-source roots amidst broader discussions on AI openness.

Source: Tech Crunch

What Meta’s New AI Video Model Could Mean for Commerce

Why it is important

• Meta's AI video model aims to improve video and Feed recommendations, enhancing user engagement and benefiting advertisers.

What happened

• Meta developed a unified AI model for better video and user Feed recommendations, shifting from CPUs to GPUs and exploring large language models to transform its recommendation algorithm.

Source: PYMNTS

OpenAI Announces New Board Members, Reinstates CEO Sam Altman

Why it is important

• AI's development will be influenced more by wealthy individuals and markets than the scientists and engineers who are building it.
• The failed coup against Altman's leadership of OpenAI is possibly the last challenge to his belief that a nonprofit can benefit humanity by pursuing hyper-growth like a for-profit startup.

What happened

• OpenAI has announced that Sam Altman is returning to its board and has appointed three new members.
• The move aims to bring diverse perspectives to the company's governance amid criticism for lack of diversity and concerns about leadership dynamics.

Source: Tech Crunch

Indonesia to Launch AI Regulations by End-2024

Why it is important

• Governments worldwide are becoming more proactive in regulating AI, and Indonesia is following suit.

What happened

• Indonesia plans to introduce comprehensive AI regulations focusing on sanctions for AI misuse, paralleling global efforts for ethical AI governance and aligning with UNESCO's standards by the end of 2024.
• The announcement comes a month after ASEAN launched its AI governance framework to establish "common principles" and "best practices" for trustworthy AI solutions among its 10-member bloc.

Source: Tech in Asia

Retail

Walmart Opens New Front in Same-Day Delivery War

Why it is important

• Walmart's new delivery service signals intensifying competition in the same-day delivery market, emphasizing consumer demand for speed and convenience.
• The announcement comes two days after Target announced a new subscription program offering unlimited same-day deliveries to boost sales.

What happened

• Walmart launched Express On-Demand Early Morning Delivery for orders placed by 6 am to be delivered within an hour, challenging rivals like Amazon and Target in the same-day delivery space.
• Walmart will charge a $10 express fee for all orders and a base delivery fee for non-Walmart+ members.
• Walmart+ costs $98/year or $12.95/month. It offers free same-day delivery on orders of $35 or more, gas discount, and free Paramount Plus.

Source: Axios

Costco Misses Holiday-Quarter Revenue Expectations Despite Online Growth

Why it is important

• Costco's failure to meet holiday-quarter revenue expectations reflects the challenging retail environment and investor sensitivity.

What happened

• Costco fell short of Wall Street's Q4 revenue expectations despite increased e-commerce sales and higher net income YoY.
• Costco's EC sales grew 18.4% YoY, and its net income increased to $1.7B, up from $1.47B in the previous year.
• Traffic at Costco increased by 5.3% globally and 4.3% in the U.S., indicating increased shoppers and spending during the quarter.

Source: CNBC

Shein’s Fast Fashion Rivals May Find Stores Are Their Best Defence

Why it is important

• Through strategic upgrades and expansions, physical stores emerge as vital assets for fast fashion brands to combat online competitors like Shein by enhancing in-store experiences and efficiencies.

What happened

• Zara and H&M focused on fewer and larger stores to compete against online fast fashion and with better customer experience and sales efficiency, as demonstrated by Zara’s owner Inditex's revenue growth per square meter.

Source: FT

Social

Instagram Overtakes TikTok in App Downloads in Race for New Users

Why it is important

• Instagram has successfully kept existing users on its app by pushing into Reels.
• Meta has recently invested in AI to enhance its recommendation system and compete with TikTok's algorithm.

What happened

• Instagram overtook TikTok in global app downloads last year, primarily due to its short-form video feature Reels.
• Instagram’s MAU reached 1.47B, with a rise of 13M in 2023 Q4.
• TikTok’s active users reached 1.12bn, with a decline of 12M in 2023 Q4.

Source: FT

Gen Z Wants to ‘Turn Off’ TikTok Shop, as Beauty Brands Test the Waters

Why it is important

• The doubts of the younger generation towards TikTok Shop highlight a gap between how social media platforms make money and what users want, especially when it comes to buying things online.
• This gap poses a challenge for e-commerce in social media environments.

What happened

• Gen Z's disinterest in TikTok Shop was highlighted at the eTail West conference, revealing a preference for traditional online retailers over in-app shopping, influencing beauty brands' marketing strategies.

Source: Modern Retail

e-Commerce

Sea’s Upbeat Outlook on Shopee Drives Enthusiasm, But Can It Deliver?

Why it is important

• Sea had a profitable year for the first time, although it incurred losses in Q4.
• The firm’s positive outlook for Shopee highlights strategic moves in e-commerce amidst tough competition.

What happened

• Sea reported its first profitable year, with investors focused on Shopee's promising growth and market share retention strategy, despite challenges in Garena and SeaMoney and intense competition in e-commerce.

Source: Tech in Asia