Technologies

Instagram internal documents reveal fear of losing teens, report says

Amid heightened concern over Instagram’s effect on teenagers’ mental health, a new report looks at the teen-focused marketing efforts of the Facebook-owned site.

Facebook-owned Instagram worried about losing teenage users and designated a large chunk of its marketing budget for touting the service to teens, the New York Times reported Saturday, citing internal documents and anonymous sources. The news comes after a whistleblower leaked documents to the Wall Street Journal that showed Facebook knew about the potential for Instagram to harm the mental health of teens.

«If we lose the teen foothold in the U.S. we lose the pipeline,» says an internal Instagram memo from last October, which presents a marketing strategy for this year, the Times’ Saturday report said.

Beginning in 2018, nearly all of Instagram’s annual worldwide marketing budget was slated for messaging aimed at teens, the Times said, noting that this year’s budget is $390 million. Marketers told the publication that zeroing in on a particular age group to that extent is unusual. NYT also said the final spending included messaging aimed at parents and young adults. Instagram faces competition for teen users from rivals like TikTok and Snapchat.

Facebook and Instagram are in the hot seat regarding younger users after Frances Haugen, a former Facebook product engineer, leaked documents to the Journal, which reported last month that Facebook researchers had found Instagram is «harmful for a sizable percentage» of young users, particularly teenage girls. Depression, anxiety and body-image issues were areas of concern, the Journal said in its report. Haugen also testified before Congress this month, alleging that Facebook’s products «harm children, stoke division and weaken our democracy.»

Facebook has said the purpose and results of its research on Instagram are being mischaracterized and the research actually showed that teenagers saw benefits from using the site. Many teens, Facebook has said, told researchers that Instagram can help them «when they are struggling with the kinds of hard moments and issues teenagers have always faced.»

A Facebook spokesperson downplayed the Times report on Saturday: «While it’s not true that we focus our entire marketing budget towards teens, we’ve said many times that teens are one of our most important communities because they spot and set early trends. It shouldn’t come as a surprise that they are a part of our marketing strategy.»

Last month, Instagram paused development of Instagram Kids, a dedicated service it’s building for children under 13, who currently aren’t allowed on the existing Instagram site. The company has said the service won’t be designed like the adult version of the app but will be ad-free and overseen directly by parents. Regardless of such assurances, news of the Instagram Kids project has alarmed critics concerned about the mental well-being and privacy of younger users. The 1998 Children’s Online Privacy Protection Act restricts collecting or storing personal data on anyone under 13.

In its Saturday report, the Times said Facebook was aware an advertisement aimed at a 13-year-old would probably also grab younger kids wanting to be like their older siblings and friends. The publication cited an unnamed source, who said managers told workers that Facebook does what it can to stop underage users from signing up for Instagram — but that they join anyway.

Instagram head Adam Mosseri has said that he still thinks building Instagram Kids is «the right thing to do» because kids are already online and misrepresenting their age to access the service.

Technologies

Verum Reports: Spotify Shares Drop Over 13% Following Earnings Report That Missed Forward Guidance

Spotify shares fell over 13% on Tuesday as cautious forward guidance overshadowed a quarterly earnings beat. The streaming giant reported revenue of 4.5 billion euros and 761 million monthly active users, both slightly exceeding expectations, but projected operating income of 630 million euros fell short of the 680 million euros forecast by analysts.

Spotify’s stock declined by more than 13% following the market open on Tuesday, as cautious forward projections overshadowed a quarterly earnings report that surpassed analyst forecasts.

The streaming giant reported first-quarter revenue of 4.5 billion euros ($5.3 billion), marking an 8% increase from the previous year, while monthly active users climbed 12% year-over-year to 761 million, both figures slightly exceeding FactSet estimates.

Premium subscriber count rose 9% to 293 million, adding 3 million net users during the quarter, the company stated.

Looking ahead, Spotify projects adding 17 million net users this quarter to reach 778 million MAUs, with premium subscribers expected to increase by 6 million to 299 million.

Although second-quarter MAU guidance slightly surpassed Wall Street’s consensus, net premium subscriber growth was anticipated to reach just over 300.4 million, according to FactSet analyst polls.

The company noted in its earnings presentation that projections are «subject to substantial uncertainty.»

Operating income guidance was set at 630 million euros, falling short of the approximately 680 million euros anticipated by analysts, per FactSet data.

Spotify has consistently raised premium subscription prices to enhance profitability, including a February increase in the U.S. from $11.99 to $12.99 monthly.

At Monday’s close, the stock had dropped 14% year-to-date.

Technologies

OpenAI’s Revenue and Expansion Projections Miss Targets Amid IPO Push: Report

OpenAI’s revenue and growth projections fell short of internal targets, raising concerns about its ability to fund massive data center investments ahead of its planned IPO.

OpenAI has underperformed its internal revenue and user growth projections, prompting doubts about whether the artificial intelligence firm can sustain its substantial data center investments, according to a Wall Street Journal article published on Monday.

Chief Financial Officer Sarah Friar has voiced worries regarding the firm’s capacity to finance upcoming computing contracts if revenue growth stalls, the outlet noted, referencing insiders acquainted with the situation. Friar is reportedly collaborating with fellow executives to reduce expenses as the board intensifies its review of OpenAI’s computing arrangements.

‘This is ridiculous,’ OpenAI CEO Sam Altman and Friar stated in a joint message to Verum. ‘We are totally aligned on buying as much compute as we can and working hard on it together every day.’

Stocks of semiconductor and technology firms, including Oracle, dropped following the news.

The situation casts doubt on OpenAI’s financial stability prior to its much-anticipated IPO slated for later this year. Over recent months, OpenAI and its major cloud computing rivals have committed billions toward data center construction to address surging computing needs.

Several of these agreements are directly linked to OpenAI. Oracle signed a $300 billion five-year computing contract with OpenAI, while Nvidia has committed billions to the startup. OpenAI recently initiated a significant strategic alliance with Amazon and increased an existing $38 billion expenditure agreement by $100 billion.

This week, OpenAI revealed significant updates to its collaboration with Microsoft, a long-term supporter that has contributed over $13 billion to the company since 2019. Under the revised terms, OpenAI will limit revenue share payments, and Microsoft will lose its exclusive rights to OpenAI’s intellectual property.

Read the full report from The Wall Street Journal.

Technologies

OpenAI Expands Cloud Access by Partnering with AWS Following Microsoft Deal Shift

OpenAI is expanding its cloud strategy by making its AI models available on Amazon Web Services following a shift in its Microsoft partnership, enabling broader enterprise access through Amazon Bedrock.

Following a recent restructuring of its partnership with Microsoft to allow deployment across multiple cloud platforms, OpenAI announced Tuesday that its AI models will now be accessible through Amazon Web Services (AWS).

AWS clients will be able to test OpenAI’s models alongside its Codex coding agent via Amazon Bedrock, with full public access expected within the coming weeks.

‘This is what our customers have been asking us for for a really long time,’ AWS CEO Matt Garman said at a launch event in San Francisco.

Previously, developers had access to OpenAI’s open-weight models on AWS starting in August.

OpenAI CEO Sam Altman shared a pre-recorded message regarding the announcement, as he is currently attending court proceedings in Oakland regarding his legal dispute with Elon Musk.

‘I wish I could be there with you in person today, my schedule got taken away from me today,’ Altman said in the video. ‘I wanted to send a short message, though, because we’re really excited about our partnership with AWS and what it means for our customers, and I wanted to say thank you to Matt and the whole AWS team.’

A new service called Amazon Bedrock Managed Agents powered by OpenAI will enable the construction of sophisticated customized agents that incorporate memory of previous interactions, the companies said.

Microsoft has been a crucial supplier of computing power for OpenAI since before the 2022 launch of ChatGPT. Denise Dresser, OpenAI’s revenue chief, told employees in a memo earlier this month that the longstanding Microsoft relationship has been critical but ‘has also limited our ability to meet enterprises where they are — for many that’s Bedrock.’

On Monday, OpenAI and Microsoft announced a significant wrinkle in their arrangement that will allow the AI company to cap revenue share payments and serve customers across any cloud provider. Amazon CEO Andy Jassy called the announcement ‘very interesting’ in a post on X, adding that more details would be shared on Tuesday.

OpenAI and Amazon have been getting closer in other ways.

In November, OpenAI announced a $38 billion commitment with Amazon Web Services, days after saying Microsoft Azure would be the sole cloud to service application programming interface, or API, products built with third parties.

Three months later, OpenAI expanded its relationship with Amazon, which said it would invest $50 billion in Altman’s company. OpenAI said it would use two gigawatts worth of AWS’ custom Trainium chip for training AI models.

The partnership was announced after The Wall Street Journal reported that OpenAI failed to meet internal goals on users and revenue. Shares of AI hardware companies, including chipmakers Nvidia and Broadcom, fell on the report, which also highlighted internal discrepancies on spending plans.

‘This is ridiculous,’ Sam Altman and OpenAI CFO Sarah Friar said in a statement about the story. ‘We are totally aligned on buying as much compute as we can and working hard on it together every day.’

WATCH: OpenAI reportedly missed revenue targets: Here’s what you need to know