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In this screengrab, CEO of Snap Inc. Evan Spiegel takes the stage at the virtual Snap Partner Summit 2021 on May 20, 2021 in Los Angeles.

Snap Partner Summit 2021 – Snap Inc | Getty Images

The online ad market is bouncing back. But the spoils are not being evenly shared.

After Meta blew away Wall Street estimates last week in its fourth-quarter earnings report, pushing the stock to a record, smaller rival Snap came up short on Tuesday, sending investors rushing for the exits.

Meta’s ad business, which includes Facebook and Instagram, grew 24% from a year earlier, lifting the company to its fastest rate of expansion since mid-2021. Snap reported an increase of just 5% year-over-year, its sixth straight quarter of single-digit growth or a decline in sales. That’s slower than advertising growth at Google, Amazon and Microsoft in addition to Meta.

Based on investors’ reactions, Snap is headed for one of its worst days on the market since its debut seven years ago. The stock dropped 33% in extended trading to $11.75. Its two biggest one-day declines were a 43% drop in May 2022 and a 39% plunge two months later.

Meta, by contrast, soared 20% on Friday after the company reported a tripling in profit, beat estimates on the top and bottom lines, issued an optimistic forecast and announced that it’s paying a dividend for the first time.

“We’re seeing the bigger companies get bigger and smaller companies are slower to rebound,” said Jasmine Enberg, principal analyst at Insider Intelligence. “Snap is one of those” in the latter camp, she said.

For the first quarter, Snap projected revenue of $1.095 billion to $1.135 billion, which would equal growth of between about 11% and 15%. The middle of the range — $1.115 billion — was just below analysts’ average estimate of $1.117 billion.

Broadly, the digital ad market is recovering from a brutal 2022, when soaring inflation and rising interest rates led brands to reel in spending. Now ad platforms are seeing improvements from a more stable economy along with upcoming events like the 2024 Olympics in Paris and the the presidential election later this year.

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As Enberg noted, “the rebound has been uneven” and has benefited Meta and other giant tech companies like Alphabet and Amazon, which all reported advertising growth in the double digits for the fourth quarter.

On Snap’s earnings call on Tuesday, CEO Evan Spiegel faced questions from analysts about why the company is lagging behind competitors.

Rich Greenfield of LightShed Partners asked Spiegel if Snap’s smaller size compared to Meta represents “a fundamental long-term issue.” Spiegel responded by saying that Snap is “certainly one of the largest Internet services,” and while some platforms are bigger, “I think there’s enormous opportunity for us to continue to grow our business.”

Barclays analyst Ross Sandler asked Spiegel, “Why aren’t we seeing more progress and getting that growth rate up to the levels of the broader digital ad industry?”

‘Wish we were moving faster’

UKRAINE – 2023/03/11: In this photo illustration, Temu, LLC logo seen on a smartphone and on a pc screen. (Photo Illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images)

Sopa Images | Lightrocket | Getty Images

Meta is seeing the benefits, sparked by a surge in spending from Chinese retailers, which are trying to reach the company’s billions of users spread across the globe. Meta has 2.11 billion daily active users, compared with 414 million for Snap.

Spiegel echoed commentary from prior quarters and said Snap is “investing heavily” into machine learning and AI technologies to enhance its online ad platform.

Enberg told CNBC that, based on feedback she’s heard from advertisers, Meta is further ahead in its development. And the company’s size provides an inherent advantage.

“Meta’s platforms are much bigger than Snapchat, meaning that they have more data and users to work with as they’re rebuilding it,” Enberg said. “Snap has clearly made progress, and we saw some of that in its earnings, both this quarter and last quarter, but it seems to be taking a longer time for the company.”

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Snap has recently tried to distance itself from the broader social media universe and has pitched itself as more of a messaging company, Enberg said. The company disclosed sales in its Snapchat+ subscription service for the first time and said it had an annualized revenue run rate of $249 million in 2023. The service now has 7 million subscribers, up from 5 million in the previous quarter. Snap debuted the product in 2022 for $3.99 a month.

But revenue from subscriptions is currently minimal. Advertising is still what matters, and “the reality is that it’s competing for the same social dollars,” Enberg said.

“I think the confidence level from investors in Snap is concerning going forward,” she said.

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Robinhood CEO downplays OpenAI concerns on tokenized stock structure

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Robinhood CEO downplays OpenAI concerns on tokenized stock structure

Robinhood CEO defends OpenAI stock token offering

Robinhood CEO Vlad Tenev says it’s not “entirely relevant” that the trading platform’s so-called tokenized shares of OpenAI and SpaceX aren’t technically equity in the companies.

It comes after OpenAI raised concerns about the product, which is designed to give users in the European Union exposure to various U.S. stocks — including private companies, which are less liquid than publicly listed firms.

OpenAI last week warned that Robinhood’s stock tokens do not represent equity in the company and said in a post on X that, “any transfer of OpenAI equity requires our approval — we did not approve any transfer.”

Robinhood says its OpenAI stock tokens are “enabled by Robinhood’s ownership stake in a special purpose vehicle.”

“It is true that these are not technically equity,” Tenev, who co-founded Robinhood in 2013 with fellow entrepreneur Baiju Bhatt, told CNBC’s “Squawk Box Europe” Tuesday, echoing his initial response to OpenAI’s concerns.

Tenev said that OpenAI’s complex company structure enables institutional investors to gain exposure to the company through “various instruments, like equity upon the event of a conversion to a for-profit at a later date.”

OpenAI was initially founded as a non-profit organization. However, it has since evolved to include a for-profit entity, which is owned by the non-profit.

“In and of itself, I don’t think it’s entirely relevant that it’s not technically an equity instrument,” he said. “What’s important is that retail customers have an opportunity to get exposure to this asset” — even if it’s a private company — due to the disruptive nature of AI, he added.

Read more CNBC tech news

On Monday, the Bank of Lithuania, which is Robinhood’s lead authority in the European Union, told CNBC it was “awaiting clarifications” regarding the structure of the company’s stock tokens following OpenAI’s statement last week.

“Only after receiving and evaluating this information will we be able to assess the legality and compliance of these specific instruments,” Bank of Lithuania spokesman Giedrius Šniukas told CNBC. “The information for investors must be provided in clear, fair, and non-misleading language.”

Tenev said in response to the Lithuanian regulator’s comments that Robinhood is “happy to continue to answer questions from our regulators.”

“Since this is a new thing, regulators are going to want to look at it, and we’ve built this program in a way that we believe will withstand scrutiny — and we expect to be scrutinized as a large, innovative player in this space,” he told CNBC.

Watch CNBC's full interview with Robinhood CEO Vlad Tenev

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Southeast Asia needn’t take sides in US-China tech rivalry. It can learn from both, experts say

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Southeast Asia needn't take sides in US-China tech rivalry. It can learn from both, experts say

A woman holds a cell phone featuring the DeepSeek logo, with the Nvidia logo displayed in the background.

Nurphoto | Nurphoto | Getty Images

As China and the U.S. compete in artificial intelligence, Southeast Asia should draw from the best of both countries while building its own technologies, panelists said at CNBC’s East Tech West 2025 conference on June 27 in Bangkok, Thailand.

Julian Gorman, head of Asia-Pacific at mobile network trade organization GSMA, said it would be a negative development if Southeast Asia was forced to choose between either superpower. 

“Southeast Asia is very dependent on both economies, both China and America. I think it’s pretty hard to consider that they would go one way or the other,” Gorman said. 

“It’s very important that we continue to focus on not fragmenting the technology, standardizing it, and working so that technology transcends geopolitics and ultimately is used for good,” he added. 

The spread of U.S. and Chinese AI companies into new global markets has been a big trend this year as both Beijing and Washington seek more global influence in advanced technologies. 

U.S. and China offerings

According to George Chen, managing director and co-chair of digital practice for The Asia Group, Southeast Asia had initially been leaning towards AI models from the U.S., such as those from Google and Microsoft. 

However, the emergence of China’s DeepSeek has propelled the popularity of the company’s models in Southeast Asia due to its low cost and open-source licensing, which can be used to build on and adapt models to regional priorities. 

Open-source generally refers to software in which the source code is made freely available, allowing anyone to view, modify and redistribute it. Large language model players in China have been leaning into this business model since DeepSeek’s debut. 

Previous panels at East Tech West have flagged open-source models as an important tool for regions outside of China and the U.S. to build their own sovereign AI capabilities.

Meanwhile, on the hardware side, the U.S. remains a leader in AI processors through chip giant Nvidia. While the U.S. has restricted China’s access to these chips, they remain on the market for Southeast Asia – which Chen suggested the region continue to take advantage of. 

However, Chen noted that there is a possibility that the AI landscape could change dramatically in a decade, with China being able to provide more affordable alternatives to Nvidia. 

“Don’t take a side easily and too quickly. Think about how to maximize your economic potential,” he suggested. 

GSMA’s Gorman pointed out that facing this “balancing act” between the superpowers is not new for Southeast Asia. For example, the region’s mobility industry heavily relies on Chinese tech manufacturing and hardware, as well as the U.S. in other areas such as telecommunications.

Southeast Asia’s edge

Leader in AI regulation? 

According to GSMA’s Gorman, Southeast Asia can serve as a neutral ground between China and the U.S., where the two sides can come together and engage in high-level dialogues on how to apply AI responsibly.  

Southeast Asia can also play a proactive role in AI regulation itself, he said, citing recent examples of regulatory leadership from the region, such as Singapore’s Shared Responsibility Framework for tackling international scams and fraud. 

So far, there have been few global regulations on AI. While the EU has adopted a policy, the U.S. and ASEAN countries have yet to follow suit. 

Chen added that the region will need to band together and adopt common frameworks to gain a more prominent seat at the table of global AI development and regulation. 

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Tech founders call on Sequoia Capital to denounce VC Shaun Maguire’s Mamdani comments

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Tech founders call on Sequoia Capital to denounce VC Shaun Maguire's Mamdani comments

Almost 600 people have signed an open letter to leaders at venture firm Sequoia Capital after one of its partners, Shaun Maguire, posted what the group described as a “deliberate, inflammatory attack” against the Muslim Democratic mayoral candidate in New York City.

Maguire, a vocal supporter of President Donald Trump, posted on X over the weekend that Zohran Mamdani, who won the Democratic primary last month, “comes from a culture that lies about everything” and is out to advance “his Islamist agenda.”

The post had 5.3 million views as of Monday afternoon. Maguire, whose investments include Elon Musk’s SpaceX and X as well as artificial intelligence startup Safe Superintelligence, also published a video on X explaining the remark.

Those signing the letter are asking Sequoia to condemn Maguire’s comments and apologize to Mamdani and Muslim founders. They also want the firm to authorize an independent investigation of Maguire’s behavior in the past two years and post “a zero-tolerance policy on hate speech and religious bigotry.”

They are asking the firm for a public response by July 14, or “we will proceed with broader public disclosure, media outreach and mobilizing our networks to ensure accountability,” the letter says.

Sequoia declined to comment. Maguire didn’t respond to a request for comment, but wrote in a post about the letter on Wednesday that, “You can try everything you want to silence me, but it will just embolden me.”

Among the signees are Mudassir Sheikha, CEO of ride-hailing service Careem, and Amr Awadallah, CEO of AI startup Vectara. Also on the list is Abubakar Abid, who works in machine learning Hugging Face, which is backed by Sequoia, and Ahmed Sabbah, CEO of Telda, a financial technology startup that Sequoia first invested in four years ago.

At least three founders of startups that have gone through startup accelerator program Y Combinator added their names to the letter.

Sequoia as a firm is no stranger to politics. Doug Leone, who led the firm until 2022 and remains a partner, is a longtime Republican donor, who supported Trump in the 2024 election. Following Trump’s victory in November, Leone posted on X, “To all Trump voters:  you no longer have to hide in the shadows…..you’re the majority!!”

By contrast, Leone’s predecessor, Mike Moritz, is a Democratic megadonor, who criticized Trump and, in August, slammed his colleagues in the tech industry for lining up behind the Republican nominee. In a Financial Times opinion piece, Moritz wrote Trump’s tech supporters were “making a big mistake.”

“I doubt whether any of them would want him as part of an investment syndicate that they organised,” wrote Moritz, who stepped down from Sequoia in 2023, over a decade after giving up a management role at the firm. “Why then do they dismiss his recent criminal conviction as nothing more than a politically inspired witch-hunt over a simple book-keeping error?”

Neither Leone nor Moritz returned messages seeking comment.

Roelof Botha, Sequoia’s current lead partner, has taken a more neutral stance. Botha said at an event last July that Sequoia as a partnership doesn’t “take a political point of view,” adding that he’s “not a registered member of either party.” Boelof said he’s “proud of the fact that we’ve enabled many of our partners to express their respected individual views along the way, and given them that freedom.”

Maguire has long been open with his political views. He said on X last year that he had “just donated $300k to President Trump.”

Mamdani, a self-described democratic socialist, has gained the ire of many people in tech and in the business community more broadly since defeating former New York Gov. Andrew Cuomo in the June primary.

— CNBC’s Ari Levy contributed to this report.

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