SPI Management Newsletter 07.07.23
Twitter Accuses Meta of Trade Secret Theft Over Threads App
Twitter has fired off allegations against Meta, accusing the social media giant of illegally appropriating its trade secrets during the creation of its latest messaging platform, Threads. The newly launched Threads app is a direct competitor to Twitter, owned by billionaire Elon Musk.
The popularity of Threads skyrocketed immediately upon its release, boasting more than 30 million sign-ups within the first 24 hours. This puts the app on a trajectory that could surpass the record of OpenAI's chatbot, ChatGPT, currently holding the title for the most rapidly downloaded consumer app at its launch.
Twitter's allegations against Meta came in a formal letter from Alex Spiro, Twitter's legal representative, addressed to Meta's CEO, Mark Zuckerberg. The document stated that Meta had employed a significant number of ex-Twitter staff members, who were privy to confidential information about Twitter's platform. It's alleged that these employees retained crucial documents and electronic devices from Twitter, using this knowledge to aid in the development of Threads, thus infringing both state and federal laws.
In response to the unfolding news, Musk took to Twitter with a succinct response, "Competition is fine, cheating is not." Meanwhile, Meta's Communications Director, Andy Stone, dismissed the allegations, stating that no one from the Threads engineering team had previously been employed at Twitter.
Threads operates as a "text-based conversation app," where users can publish posts with a limit of 500 characters, as well as share links, photos, and videos. The platform is closely tied to Instagram, allowing users to carry over their usernames and existing networks. Despite the accusations from Twitter, Mark Zuckerberg celebrated the successful launch of Threads, labeling it as a "friendly" alternative to Twitter.
This controversy comes amidst several substantial changes at Twitter under Musk's leadership.
Some users and advertisers have expressed discontent over his decision to scale back moderation and introduce disruptive changes to the platform's policies with minimal warning. Additionally, Musk has implemented drastic cost-cutting measures at Twitter, including a workforce reduction of about 80%. As both Meta and Twitter refrain from providing further comments, the event underscores the competitive dynamics and rising tension within the social media industry.
US Job Market Surges in June, Exceeding Expectations
The US job market continued its robust growth in June as private sector companies added a substantial 497,000 jobs, according to payroll processing firm ADP's Thursday report. The figure is a sharp increase from the downwardly revised 267,000 jobs added in May, and significantly outpaces the Dow Jones' predicted increase of 220,000. This increase marks the largest monthly growth since July 2022.
Leisure and hospitality industries led the job creation with 232,000 new roles, followed by the construction sector with 97,000, and trade, transportation, and utilities contributing 90,000. Despite this optimistic picture, certain sectors experienced job losses, with manufacturing losing 42,000 positions, information dropping by 30,000, and financial activities declining by 16,000.
On a more granular level, smaller companies with fewer than 50 employees were largely responsible for the job growth, contributing 299,000 positions. In contrast, large firms with more than 500 workers saw a reduction of 8,000 jobs. Mid-size companies accounted for the creation of 183,000 jobs.
Annual pay grew at a rate of 6.4%, a slowdown but still indicative of potential inflationary pressures. Nela Richardson, chief economist at ADP, stated that while consumer-facing service industries had a strong June leading to higher than expected job creation, wage growth in these industries continues to slow.
This unexpected surge in job creation comes in the context of multiple Federal Reserve interest rate increases, intended to temper a jobs market where there are almost two open positions for every available worker. These ADP figures, released a day before the Department of Labor's closely-watched nonfarm payrolls report, could suggest an even stronger jobs growth figure for Friday's report.
Adapted from WSJ, FT, NYT, Reuters, CNBC