#222 – OpenAI’s social network, Google’s monopoly, and Temu & Shein slash US ad spend

by Shopifreaks | Apr 21, 2025 | Recent Newsletters

Hi Shopifreaks

This is one of my favorite editions of the year. AI social networks, antitrust cases, influencer lawsuits! What's not to love? Get ready for another jam-packed edition. Let's dive right in…

In this week's edition I cover:

OpenAI building a social network
Temu & Shein cutting ad spend
Google's second big antitrust loss
Meta's antitrust trial
Amazon's reaction to tariffs
TikTok's business review initiative
Revolve's $50M lawsuit
Chinese marketplaces still crushing it despite tariffs
The Silicon Six's tax avoidance
Etsy's push for consumers to shop local

All this and more in this week's 222nd Edition of Shopifreaks. Thanks for subscribing and sharing!

Stat of the Week

Google suspended 39.2M malicious advertisers in 2024 thanks to deploying more than 50 LLMs to help enforce its ad policies. That's over 3x more than the 12.7M accounts it suspended in 2023 for network abuse, improper use of personalization data, false medical claims, trademark infringement, and other violations.

While impressive, doesn't it make you think — damn, Google's been allowing a LOT of malicious advertisers on its network for the past 25 years! It's almost as if the company has been profiting for more than two decades at the expense of consumer safety and small businesses, who've had their ad costs driven up by these malicious actors competing against them in auctions. Almost, right?

1. OpenAI is building a social network

OpenAI is working on building its own Twitter-like social network, according to multiple sources of The Verge — a move that would amplify CEO Sam Altman's already-bitter rivalry with Elon Musk, who in February made an unsolicited offer to purchase OpenAI for $97.4B.

Here's what The Verge knows about the endeavor:

There's an internal prototype focused on ChatGPT's image generation that has a social feed.
Altman has been privately asking outsiders for feedback about the project.
It's unclear whether OpenAI plans to release the social network as a separate app or integrate it into ChatGPT, which became the most downloaded app globally last month.
A social app would give OpenAI its own unique, real-time data that X and Meta already have to help train their AI models.

The Verge notes that launching a social app would also put OpenAI on more of a collision course with Meta, which is planning to add a social feed to its coming standalone app for its AI assistant. When reports of Meta building a rival to the ChatGPT app surfaced a few months ago, Altman posted on X, “ok fine maybe we'll do a social app.”

Does the world need yet another Twitter clone?

There's already Bluesky, Threads, Mastodon, Nostr, and of course Substack, which has been actively moving in the X / TikTok direction in recent months. However even after years of development, none come close to OpenAI's reach.

As of March 2025, OpenAI’s ChatGPT app has been installed approximately 600M times globally across iOS and Android platforms, according to estimates from Sensor Tower. In March 2025 alone, ChatGPT achieved 46M new downloads, 13M from Apple App Store and 33M from Google Play, making it the most downloaded non-gaming app worldwide for that month.

These numbers trump the monthly active users on Threads (300M), Substack (35M), Bluesky (33M), and Mastodon (15M), but comes close to X's active user base, which is slightly above 600M according to recent estimates.

So do we need yet another social network? Likely not, but if anyone were to succeed in rivaling Meta, X, and TikTok, OpenAI would be the ones to do it. No other social network on the list above has technology that even comes close to OpenAI when it comes to AI-powered image and video generation tools or integration with real-time news articles.

If properly executed, an OpenAI social network could pose a real threat to Meta and X.

2. Temu & Shein slash digital ad spend in the US

Temu dramatically reduced and then eventually stopped spending on Google Shopping ads between April 9th and 12th, according to data from Tinuiti. The Chinese marketplace has also pulled back from buying ads on Facebook and Instagram as well.

In early April, Temu had over 60,000 active image, text, and video ads on Google, according to the company's ad transparency tool.
As of Wednesday, that number had fallen to just six ads globally.
Ad transparency data from Meta show that as of Tuesday, Temu had just four active ads on Facebook and Instagram in the US, but was continuing to spend in other countries. Meta represented 68% of its American media budget, down from 76% in 2024 and 2023, when Temu was estimated to have spent around $3B globally.
Temu showed a total of 22,000 active ads globally, including 2,800 running in Turkey and 1,100 in Canada.
Downloads of Temu's iPhone app have also fallen in the US over the past week, falling from one of the top 5 most popular free iPhone apps in the US to 67th place.

Shein is following a similar pattern, having cut its digital ad spend across all US platforms.

Shein's daily average US ad spend on Meta, TikTok, Google, and Pinterest fell a collective average of 19% during the first two weeks of April.
Downloads of Shein's app have also tanked, dropping from #12 most popular free apps down to 73rd place.

Neither company have publicly made statements explaining their decisions to decrease ad spend, but both have made it clear that they plan to change their strategies due to global trade disruptions.

Does their reduction in ad spend help other retailers?

Potentially. Digiday notes that “a noisy competitor for audience eyeballs and dollars has disappeared, leaving one less threat to worry about,” and that their “exits from the market could slow the rise of cost-per-thousand rates or even cause them to drop.”

For those of you who manage ad spend on Meta and Google — have you noticed a difference in your CPM or CPC since Temu and Shein backed off? Hit reply and let me know.

3. Google is a monopoly (again)

Google's dominance of the online advertising and ad tech markets violates US antitrust laws, a federal court ruled on Thursday, marking the second major antitrust loss for the company in the past year.

The federal government and 17 states sued Google, alleging its ad tech monopoly lets it charge higher prices and take a bigger portion of each sale. The lawsuit seeks to force Google to sell off parts of its ad network that place ads on third-party websites, a division that makes up about 12% of Alphabet’s total business.

The court decided that Google had a monopoly over two of the three parts of the online advertising market:

✅ The tools used by online publishers, like news sites, to host open ad space: Google is a monopoly

✅ The tools advertisers use to buy that ad space: Google is a monopoly

❌ The software that facilitates those transactions: Google is not a monopoly

Judge Leonie Brinkema of the U.S. District Court for the Eastern District of Virginia ruled in a 115-page opinion:

“Google has violated Section 2 of the Sherman Act by willfully acquiring and maintaining monopoly power in the open-web display publisher ad server market and the open-web display ad exchange market, and has unlawfully tied its publisher ad server (DFP) and ad exchange (AdX) in violation of Sections 1 and 2 of the Sherman Act.”

The decision precedes another hearing to determine what Google must do to restore competition in those markets, such as sell off parts of its business.

Lee-Anne Mulholland, Google's VP for regulatory affairs, said in a statement:

“We won half of this case and we will appeal the other half. The Court found that our advertiser tools and our acquisitions, such as DoubleClick, don't harm competition. We disagree with the Court's decision regarding our publisher tools. Publishers have many options and they choose Google because our ad tech tools are simple, affordable and effective.”

That's two big antitrust rulings for Google.

Another federal judge ruled in August that Google had a monopoly in online search and is now considering a request by the Justice Department to break up the company, with a three-week hearing on the matter scheduled to begin today.

The two rulings could potentially lead to Google being broken up in various ways.

In other hard times for Google this week:

Japan's Fair Trade Commission issued a cease-and-desist order against Google, accusing it of violating the nation's anti-monopoly law by compelling smartphone manufacturers to preinstall its apps on Android devices. This landmark decision marks the first time Japan has taken such action against a US Big Tech company.
Google is facing a £5B lawsuit in the UK that claims the company abused its position to restrict competing search engines from gaining market share, and in turn, leveraged its dominant position in the market to drive up ad prices.. The suit is being brought on behalf of all UK-based organizations that used Google's search advertising services from Jan 1, 2011 up until when the claim was filed.

Tough week for Google! Can't say they didn't have it coming though…

4. Meta may also be a monopoly

Last week Mark Zuckerberg took the stand in an antitrust trial brought by the FTC that could result in the breakup of Meta's social networking conglomerate. The case concerns whether the company's 2012 acquisition of Instagram for $1B and 2014 purchase of WhatsApp for $19B was anticompetitive and done to box out competitors.

The first complaint for injunctive relief claims that “Facebook's course of conduct has eliminated nascent rivals,” and that US social media users didn't have “the benefits of competition, including increased choice, quality, and innovation.”

Meta disagrees with the FTC's case and says that the company operates in a “dynamic and hypercompetitive space,” with platforms like YouTube and TikTok currently offering steep competition to its platforms.

Here are some highlights from the trial:

A 2012 e-mail was revealed where Zuckerberg suggested that Facebook could buy Instagram to “neutralize a potential competitor.”
Another message from Zuckerberg exhibited at trial suggested Facebook try to buy Snapchat for $6B and prepare for the aftermath. The message wrote, “We should probably prepare for a leak that we offered $6b… and all the negative [attention] that will come from that.”
Zuckerberg said during the trial that TikTok is a “highly urgent” concern since its rise in 2018 and that TikTok's popularity has significantly impacted Meta's growth.
Meta's board of directors considered offering ad-free Facebook subscriptions as far back as 2018 after the Cambridge Analytica data scandal broke in response to the backlash.
Google, Apple, and Snap weren't happy about Meta's poorly-redacted slides, which contained easy-to-remove redactions. Attorneys for Apple and Snap called the errors “egregious,” with Apple indicating that it may not be able to trust Meta with its internal information in the future.
The FTC considers the privacy-first social network MeWe to be a big competitor to Facebook, even though it only boasts 20M members.
In e-mails from 2022, Meta executives acknowledged that Facebook's cultural relevance was decreasing and mulled different visions for its future to boost success.
At one point, Zuckerberg considered ditching the Friends format and even suggested deleting everyone's Facebook friends and having them start again.

It is currently the FTC's responsibility to prove that Meta's acquisitions harmed consumers and the market, while Meta has to convince the court that the FTC's case is political. So far, Meta has accused the FTC of shifting its marketing definition to punish tech giants for their success.

In a blog post published last week, Meta accused the FTC of lobbing a “weak case” that “ignores reality” and insists that the FTC has “gerrymandered a fictitious market” to exclude Meta's actual rivals including TikTok, X, YouTube, and LinkedIn.

If the FTC proves its case, it could pursue a breakup of the company, requiring Meta to spin off WhatsApp and Instagram — the latter which would be a big hit to Meta's revenue, as Instagram brings in more than half of its US ad revenue.

In other bad news for Meta this week… A gym in South Carolina is suing the company for allegedly overcharging Facebook advertisers a collective $4B, starting in 2013 and continuing for at least four years. The class-action complaint claims that a flawed Facebook ad auction system overcharged advertisers due to a coding error that replaced the promised “second price” model with a “blended price” system, and that Facebook knowingly delayed fixing the issue to avoid destabilizing its ad platform and disclosing the problem to investors, despite internal estimates that the error cost advertisers $1B annually.

5. Amazon encourages sellers to list products in the EU amid tariffs

Amazon is reaching out to sellers for input on how Trump's tariffs are impacting their business to gather data as sellers rethink pricing and inventory. Amazon's questions ask the sellers about the effects of tariffs on their sourcing strategies, pricing models, and international shipping costs.

Vanessa Hung, the CEO of Online Seller Solutions, posted a screenshot of an e-mail on LinkedIn that one of her clients received from Amazon, which read:

“I wanted to open a discussion about the current U.S. tariff situation and how it's affecting our businesses on Amazon, particularly in terms of logistics. As of April 2025, we're dealing with the repercussions of various tariff policies, and I believe it's crucial for us that you share current experiences and strategies.”

Another e-mail from a global account manager at Amazon encouraged a seller to consider diversifying their sales channels by listing their products for sale on Amazon's European marketplaces, noting how the company's EU marketplaces have more than 180M average monthly active users (about 80% the size of the US) and a projected $900B e-commerce market by 2028 “with a strong demand for U.S. brands.”

The e-mail went on to advertise “potential launch incentives and fee credits to offset your upfront costs,” suggesting that Amazon may be preparing to adjust its international seller fee structures based on seller input.

It sounds like the EU is about to get flooded with new products for sale.

The handwriting is on the wall, and British retailers have taken notice and begun raising concerns over Chinese products being dumped into their market following President Trump's tariffs increase.

Currys CEO Alex Baldock said in an interview with FT that there are early signs of “stock being diverted into European markets in a straightforward dumping way” through Shein, Temu, Alibaba, TikTok Shop, and Amazon, which could artificially drive down the costs of consumer goods in the region at the expense of local retailers.

6. TikTok local business reviews

TikTok is testing a feature that surfaces reviews for select places within the comments tab of a video, eliminating the need for users to conduct a new search or open Google when they want to learn more about the business.

Users who have access to the new feature will see a new “Reviews” tab on the right after they click to view the video's comments.

TechCrunch shows an example of a video of Central Park in New York City, where the creator has tagged a restaurant location. In the comments section, users are able to see the star ratings of the restaurant, written reviews, and uploaded photos. They can also click on a reviewer's username to visit their TikTok profile and see the rest of their content.

An earlier integration of Google reviews, seen 5 months ago, offered the ability for users to leave a review right from within TikTok. The latest version no longer has the Google branding, which suggests that TikTok may be aiming to build out a review feature for local businesses on its own.

Google remains as the premier destination to discovery local businesses, but TikTok is gaining traction in the space. Even as far back as 2002, a Google executive noted that “almost 40% of young people, when they're looking for a place for lunch, they don't go to Google Maps or Search, they go to TikTok or Instagram.”

TikTok declined to comment on whether it plans to roll out its reviews tab more broadly.

7. Revolve hit with a $50M lawsuit over deceptive influencer practices

Revolve, a Los Angeles-based fashion retailer that curates apparel and accessories for millennial and Gen Z consumers, is facing a $50M lawsuit alleging that the brand's social media marketing tactics deceived at least one million consumers by operating an advertising scheme in which influencers disguised paid product endorsements as genuine recommendations in order to boost the company's sales.

The lawsuit claims that for many years, the company “used its position, payments, and free merchandise to entice influencers to endorse and promote its products while failing to disclose any material relationship with the brand.”

Lead plaintiff Ligia Negreanu said that if she had known the influencers' posts were sponsored, she would not have purchased products at the prices she paid, which were at times up to 40% higher than those of other retailers selling the same items.

Okay, I understand the lawsuit over lack of paid influencer disclosure (which is against the law), but how did that impact whether Negreanu decided on her own free will to purchase items at a higher cost on Revolve? She could've just enjoyed the video from the influencer, learned about a new product, and bought it elsewhere.

Apparently she was too ~~dumb~~ innocent to understand that influencers have incentive to create videos about products, but then suddenly developed such an acute understanding of the industry that she's able to spearhead a class-action lawsuit over the matter. Smells like a money grab to me.

That being said, companies have a responsibility to follow FTC guidelines when working with affiliates.

Kimberly DeCarrera of Springboard Legal wrote:

“The responsibility for proper disclosures isn’t just on the influencer. In fact, the brand has a very big part in the disclosures. Brands, like Revolve, should be educating their influencers, ambassadors, and affiliates, to ensure that they are aware of the disclosure requirements… While it is not required that they monitor 100% of the posts and catch every time that a disclosure isn’t made properly, every brand should have a habit of regularly reviewing and enforcing disclosure requirements.”

DeCarrera went on to note that In the lawsuit, the plaintiffs allege that Revolve not only abdicated this responsibility, they actively tried to avoid disclosure and create a marketing campaign that didn't comply with the law — being not just negligent, but intentionally deceptive to increase clicks and purchases.

8. Tariffs-led price hikes are coming, but Chinese marketplaces are still crushing it

Shein and Temu sent similarly worded letters to customers warning of incoming price increases on April 25th and encouraged them to shop now at today's rates.

The efforts of the two Chinese retailers may be working, at least in the short term, as Bloomberg reports that both Shein and Temu saw their sales rebound in March and April as US shoppers stockpiled products like makeup brushes and home appliances before tariff-led price increases went into effect. Shein recorded some of its best US sales growth in the past 12 months as revenue jumped 29% in March YoY and then accelerated further to 38% during the first 11 days of April. Meanwhile Temu saw growth of 46% and 60% over the same periods.

Alibaba's Taobao app and another popular Chinese marketplace app called DHgate have also been experiencing a surge in American shoppers in recent weeks. Both apps have reached Top 5 spots in Apple's US App Store, partly due to an influx of Chinese manufacturers promoting the apps in TikTok videos as a means to avoid tariff price increases (more on that below). In April, Taobao's estimated downloads hit 185,000, marking a 514% increase it saw during the same period last month, while DHgate saw installs surge 5.7x over the weekend.

Through all this tariffs uncertainty, consumers are actively looking for ways to bypass incoming tariffs, and Chinese manufacturers are hopping on the bandwagon. US TikTok users' For You pages are being flooded with videos from Chinese manufacturers urging Americans to bypass tariffs by purchasing goods directly from China, with some manufacturers claiming to sell the same Lululemon leggings that retail for $100 for just $5 because “the materials and the craftsmanship are basically the same because they all come from the same production line.”

Lululemon warns that it does not work with the manufacturers identified in the videos and that claiming to manufacture for big-name brands while actually selling knockoffs is a common scam.

9. Other e-commerce news of interest

TikTok launched a Video Exclusion List and Profile Feed Exclusion List to give brands more control over blocking specific videos and user profiles from appearing alongside their ads. Meanwhile X is like, “Damnit, why didn't we think of that?” The two new tools are available globally via the Brand Safety Hub in TikTok Ads Manager. Advertisers can manage their exclusion lists directly or partner with third-party verification firms to fine-tune their ad placements.

Google is testing displaying an animated playable video in its e-commerce shopping card block, which it began testing several months ago, according to screenshots posted by Sachin Patel and spotted by SEO Roundtable. In full screen, after clicking on the video, Google displays related products and topics that open new search queries when clicked.

The “Silicon Six” which comprise of Amazon, Meta, Alphabet, Netflix, Apple, and Microsoft have been accused of paying $278B less corporate income tax in the past decade compared with the statutory rate for US companies making the same profits, according to the Fair Tax Foundation, which claims that the companies have “hardwired” tax avoidance into their business models. The nonprofit's latest report claims that the six tech firms paid an average of 18.8% in combined national and federal corporation taxes, compared with an average of 29.7% in the US, and that the companies also inflated their stated tax payments by $82B over the same period by including contingencies for tax they did not expect to pay.

JD.com is one of the many Chinese companies looking to further stake its claim in the UK market. In 2022, the company introduced an offering in Europe under the Ochama brand, and now JD.com is actively recruiting category managers to help it enter the UK. Matthew Nobbs, Chief Merchandising Officer of JD.com, wrote on LinkedIn, “Getting ready to rumble in the UK for one of China's biggest success stories. With global annual turnover in excess of $157 billion last year – we are coming to the UK.”

Etsy is aiming to make it easier for shoppers to find and purchase items from domestic sellers in their country as a way to minimize the impact of tariff related price increases on imports. The company said it is surfacing new features like curated shopping pages and local seller spotlights. For sellers, the company is providing an online tariff handbook that provides information on how tariffs are collected.

eBay is partnering with Checkout.com to expand its global payment platform capabilities as a means to “enhance customer experience and drive operational efficiencies.” The deal is a significant win for Checkout.com, which is pursuing a full-year of profits for 2025. Net revenue at the company grew 40% in 2024, with the US seeing 80% growth after the firm onboarded 300 new merchant partners.

HP agreed to pay $4M to settle allegations that it misled customers with deceptive pricing on its website by displaying inflated original prices for computers and accessories and creating the illusion of significant discounts. The complaint alleged that the “strike-through” prices that HP displayed on its website were often not the actual regular or recent prices of the products. For example, an HP All-in-One computer was advertised as discounted from $999 to $899, even though the higher price was rarely, if ever, used in the months leading up to the sale. Meanwhile Best Buy and Amazon are reading this and thinking, “Crap!”

The House Committee on Energy and Commerce sent a letter to recently bankrupt 23andMe expressing concerns that its genetic data is “at risk of being comprised” now that its assets are up for sale. The congressmen said that there are reports that users have had trouble deleting their data from the company's site. The letter stated, “With the lack of a federal comprehensive data privacy and security law, we write to express our great concern about the safety of Americans’ most sensitive personal information. Regardless of whether the company changes ownership, we want to ensure that customer access and deletion requests are being honored by 23andMe.”

AI spambots used OpenAI's GPT-4o-mini model to flood over 80,000 small business websites with spam comments. The spambot gave ChatGPT a prompt to help it generate custom marketing messages that it could post in comments across the web to push SEO services, personalized for each site and written differently enough to evade detection. OpenAI has since disabled the API key used by the bot and made the statement, “We take misuse seriously and are continually improving our systems to detect abuse.”

LinkedIn cofounder Reid Hoffman praised Shopify CEO Tobi Lütke's recent memo on AI (which I covered last week) as a model for how leaders should think about AI. Hoffman added that every leader should be using and integrating AI at work, as well as holding regular AI check-ins with their teams to help them do their job better and help the whole company run more smoothly. Although some might argue that these types of meetings are ultimately asking employees to train the company on how to replace their jobs with AI.

TikTok is restructuring a division of its global e-commerce team, which recently laid off US staff, to give more power to leaders from China and Singapore, according to a leaked memo seen by Business Insider. The changes affect its global governance and experience team and will shape the development of new markets such as Latin America with global leaders, not local managers, overseeing tasks like moderation and partner management. The move arrives as TikTok is expanding into Brazil.

ebay sellers are unexpectedly finding that their listings are selling for less than their asking price, a result of a “feature” called “Send Offers” that was turned on by default without notifying sellers. Although there's still confusion on what exactly happened, with no clarification from eBay, many sellers reported the Send Offer feature being enabled without their consent and having to go through each listing one by one to turn it off.

Klarna partnered up with Fiserv's Clover, a California-based cloud-based POS system built for SMBs, to enable payments and BNPL lending at more than 100,000 merchants. The deal is the latest of several agreements Klarna has signed in recent months, which have reportedly boosted Klarna's addressable merchant market in the US past 1M, as it prepares for its now-delayed public listing in New York. Other recent partnerships include Walmart, which made Klarna's BNPL loans available through OnePay, as well as Adyen, Apple, Staples, Worldpay, and RiteAid.

TikTok is testing a new feature called Footnotes that allow users to add relevant information to content on its platform, beginning with the US for short form videos. The feature is similar to Meta and X's Community Notes features that let users add context to posts with missing or wrong information. US users who have been on TikTok for more than 6 months, are older than 18, and have no recent history of violating the platform's Community Guidelines, can apply to be a Footnotes contributor.

Hong Kong's post office is no longer shipping small parcels to the US following Trump's plans to end customs exceptions on small-value parcels. A government statement said Hongkong Post would not collect tariffs on behalf of Washington and suspended accepting non-airmail parcels containing goods destined for the US on Wednesday, since items shipped by sea take more time than airmail parcels, which it will continue to accept until April 27th. The government wrote, “For sending items to the US, the public in Hong Kong should be prepared to pay exorbitant and unreasonable fees due to the U.S.’s unreasonable and bullying acts.”

Meta argued in its ongoing copyright case that there's no market in paying authors to use their copyrighted works because “for there to be a market, there must be something of value to exchange, but none of [the authors'] works has economic value, individually, as training data.” Well, that argument feels a bit mute given that Meta stole 7.5M books — thus giving them collective economic value! If they don't want to pay for each book individually, they can pay for the collective amount they stole, and lawyers can divvy up the payout to authors. Other communications recently disclosed in the lawsuit show that Meta employees stripped the copyright pages from the downloaded books.

LVMH, the parent company of Sephora, says that sales are slowing down in the US because Amazon is “very aggressive” in lowering prices “and we try to avoid this technique.” The company reported revenue of $23.1B for Q1 2025, down 3% YoY, and noted that sales were notably weak in the US, even though the brand is performing well globally. CFO Cecile Cabanis said that while US demand for jewelry, leather, and fashion “remained well oriented and accelerated modestly” compared to the back half of 2024, “Sephora on the other hand faced very challenging comps after going double-digit last year and this explained the sequential deceleration of the US market at group level.”

PayPal is giving away up to $10M as part of its “Great PayPal Checkout” sweepstakes, where every day for 100 days, 1,000 winners will have their purchases of up to $100 covered simply by paying with PayPal Checkout. Every eligible checkout is a chance to win between now and July 18th, and customers can win up to five times. However given that it's a sweepstakes, which legally can't require consideration to enter, anyone can enter without purchase by SENDING A PHYSICAL LETTER IN THE MAIL! 😂 Stamps cost $0.68 now PayPal! Y'all couldn't figure out a way for people to enter without purchase online? Or did you not actually want them to?

HelloFresh, a German-based global meal-kit provider that delivers pre-portioned ingredients and recipes to customers to cook at home, added 70 all-electric Rivian vans to its fleet, marking one of the company's biggest EV sales since ending its exclusive deal with Amazon in Nov 2023. The 70 vehicles represent one quarter of HelloFresh's fleet, which has already helped the company save an estimated 20,000 gallons of gasoline, according to its announcement. Rivian has been spotted performing trials with various companies in the past year and a half, however, HelloFresh is the first to publicly declare itself a customer and incorporate the vans into a fleet.

🏆 This week's most ridiculous story… An AI startup called Anysphere went viral after its customer support AI software, Cursor, went rogue, triggering a wave of customer cancellations. Last week Cursors users reported that customers had started getting mysteriously logged out when switching between devices, so they contacted customer support, only to be told in an e-mailed response from “Sam” that the logouts were “expected behavior” under a new login policy. Except there was no new policy, and no human was behind the support e-mail. The AI software entirely made-up the explanation! The news spread quickly in the developer community, leading to a wave of cancellations, while many users complained about the lack of transparency.

😱 In other AI creepiness this week… Some ChatGPT users have noticed that the chatbot has begun occasionally referring to them by name as it reasons through problems, which wasn't the default behavior previously. It actually happened to me yesterday, and it definitely threw me off! Suddenly I'm troubleshooting a Shopify liquid code issue and ChatGPT says, “Thanks Paul, I'll review the code.” I didn't realize we were on a first name basis. “Mr. Drecksler” feels more appropriate.

10. Seed rounds, IPOs, & acquisitions

Hammerspace, a startup that built a system to help AI and other organizations tap into data troves with minimal heavy lifting, raised $100M in a “strategic venture round” led by Altimeter Capital and ARK Invest, at a $500M valuation, bringing its total amount raised to $156M. The company currently boasts big name customers including Meta and the Department of Defense and claims that much of its growth so far has been through word of mouth, however it plans to use the funds to expand its client base with proactive sales and marketing.

Banked, a UK fintech that enables real-time payments directly from consumers' bank accounts, acquired VibePay, a fellow UK fintech that connects people, brands, sellers, and banks with real-time messaging and instant payments. The company says that the acquisition will help it address a gap in the market by rewarding debit users who have been overlooked by traditional credit card programs with access to personalized rewards, cashback, and exclusive offers with every Pay by Bank transaction within the VibePay app. This is the second acquisition Banked has made in the last 12 months after acquiring Australian Pay by Bank provider, Waave, in October 2024.

Stitch, a South African fintech company that provides open banking APIs and payment infrastructure, raised $55M in a Series B round led by QED Investors, bringing its total amount raised to $107M within four years of operation. The company plans to use the funds to expand its in-person payment offerings, improve its online payment suite, and facilitate its entry into card acquiring. Earlier this year, Stitch acquired ExiPay, a startup that offers in-person payment solutions for retail businesses to enable it to integrate online and in-person payments into one platform, making it easier for businesses to track payments across different channels.

Lyft, the US ride-hailing firm, is acquiring FreeNow, a European mobility platform that offers taxis, private hire vehicles, carsharing, e-scooters, and e-bikes through a single app, for €175M, marking the company's first European acquisition. The deal is expected to close later this year, and once combined, the two companies will serve over 50M annual users. Founded in 2009 as myTaxi, FreeNow has been jointly owned by BMW and Mercedes-Benz since 2019.

TheNextLevel, a Manchester-based mobile commerce platform that can turn any Shopify store into a mobile app, raised £500k from GC Angels as part of a £500k pre-seed round led by DSW Ventures. The funding will support its growth strategy across the UK and US as it expands its customer base and advances the development of its AI-driven mobile platform.

Worldeye Technologies, a US-based company that develops AI software tools to assist e-commerce sellers with marketplace optimization and analytics, acquired Datahawk, a French platform that provides e-commerce analytics solutions that enable brands and agencies to optimize their performance on marketplaces, for an undisclosed amount. The acquisition creates synergies with its other established marketplaces optimization tools, such as Viral Launch, and is the first step in Worldeye's expansion strategy, with additional acquisitions planned in the coming months.

Lowe's acquired Artisan Design Group, a Dallas-based provider of design, distribution, and installment services that focuses on flooring, cabinets, and countertops, for $1.325B. The acquisition enables Lowe's to expand its Pro business in the $50B interior finishes market, and comes nearly a year after Home Depot acquired SRS Distribution, a distributor of building products that serves professional contractors, for $18.25B.

Infinite Reality, a Norwalk-based company specializing in immersive 3D experiences, AI, and spatial computing to enhance digital media and e-commerce, acquired Touchcast, a US-based tech company that specializes in developing AI-powered immersive digital experiences for virtual events, e-commerce, and training, for $500M in a combination of cash and stock. Last month I reported that Infinite Reality acquired Napster for $207M. Integrating the two platforms will enable subscribers to easily generate immersive social listening spaces and leverage AI agents for music playlisting, community management, and music trivia.

YOOBIC, a tech company that provides an AI-powered frontline employee experience platform, acquired SimpliField, a mobile-first platform designed to enhance retail operations, internal communications, and performance analytics, for an undisclosed amount. The combined entity is set to offer an advanced frontline experience designed to meet the requirements of today's retail environment, particularly addressing the growing needs of high-end goods, cosmetics, supermarkets, and quick-service restaurants, and consumer products.