Technologies

Instagram CEO testifies before Congress for the first time: 5 takeaways

US lawmakers expressed their distrust in the company even as the executive tried to assure them the company was committed to keeping young users safe.

Near the end of a more than two-hour congressional hearing, Sen. Marsha Blackburn gave Instagram CEO Adam Mosseri a chance to speak directly to parents whose children have been harmed by the platform.

«We’re not talking to people that have ever had any kind of response from Instagram and you have broken these children’s lives and you have broken these parents’ hearts,» Blackburn, a Tennessee Republican, told Mosseri on Wednesday.

«To any parent who’s lost a child or even had a child hurt themselves, I can’t begin to imagine what that would be like for one of my three boys. As the head of Instagram, it’s my responsibility to do all I can to keep people safe. I’ve been committed to that for years. I’m going to continue to do so,» Mosseri responded.

US lawmakers weren’t satisfied with Mosseri’s reply. The executive was testifying during a Senate hearing, titled «Protecting Kids Online: Instagram and Reforms for Young Users,» that focused on what Instagram, which is owned by Meta, knows about the impact of its service on young people. Mosseri’s testimony comes at an uncomfortable moment for Instagram and Facebook, which rebranded itself as Meta. Frances Haugen, a former Facebook product manager turned whistleblower, leaked a trove of internal research to Congress and the US Securities and Exchange Commission before leaving the company in May.

Lawmakers still don’t trust Instagram to self-regulate

Lawmakers kicked off the hearing by expressing their frustration that not much has changed to safeguard children online. In September, Antigone Davis, who runs Facebook’s global safety operations, appeared before the same subcommittee. The Senate panel also held a hearing in October about online child safety with executives from Snapchat, TikTok and Google-owned YouTube.

Sen. Richard Blumenthal, a Connecticut Democrat, said his office created a fake Instagram account on a Monday for a teenager and the user was still shown recommendations for eating disorder content. The example was one of several anecdotes lawmakers brought up to illustrate how enforcement of Instagram’s rules falls short.

«The resounding bipartisan message from this committee is legislation is coming. We can’t rely on trust anymore. We can’t rely on self policing. It’s what parents and our children are demanding,» he said.

Ahead of the hearing, Instagram also announced new tools, including a feature that reminds people to take a break from the platform, to demonstrate that the company is serious about the mental health of its users.

Blumenthal said the new safety tools Instagram released «fall way short of what we need» — and should have been released earlier.

Instagram pushes for the creation of an industry body

Mosseri told US lawmakers that keeping young people safe online is «not just about one company.» One idea he pushed during the hearing is the creation of an industry body to determine best practices for protecting young people online such as how to verify a user’s age and to build parental controls.

Citing a survey from Forrester, Mosseri also noted it appears that more teens are using short-form video app TikTok and Google-owned YouTube more than Instagram.

Companies like Instagram «should have to adhere to these standards» to earn protections under Section 230, a federal law that shields online platforms from liability for user-generated content, he said.

Sen. Ed Markey, a Massachusetts Democrat, and other lawmakers didn’t appear to support that idea.

«Your idea of regulation is an industry group creating standards that your company follows. That’s self regulation, that status quo and that just won’t cut it,» Markey said.

Instagram Kids isn’t permanently off the table

In September, Instagram said it was pausing the development of a version of the photo-sharing app for children under 13-years-old known as Instagram Kids. Instagram says the project is meant to give parents more control over the social media usage of kids between the ages of 10 to 12 years old who may already be on the app.

But the project raised concerns from child advocacy groups who say kids aren’t developmentally equipped to deal with the social comparison and mental health risks that come with being on Instagram.

During the hearing, Blumenthal asked if Mosseri would commit to permanently pause Instagram Kids. Mosseri said what he could commit to is that no child between the ages of 10 to 12 if the company ever managed to build Instagram Kids would have access to the «without their explicit parental consent.»

Teen accounts created on the web don’t default to private

Instagram said in July that users under the age of 16, or 18 in some countries, will have their accounts set to private by default.

Blackburn, though, pointed out her staff created a fake Instagram account for a 15-year-old girl but it defaulted as public not private.

«While Instagram is touting all these safety measures, they aren’t even making sure the safety measures are in effect,» she said.

Mosseri said accounts for teenagers created on a mobile device do default to private but that’s not the case when accounts are created on the web.

«We will correct that quickly,» he said.

Instagram could bring back the chronological feed next year

Mosseri said during the hearing he thinks users should have more control over their experience on Instagram, including the ability to view their feed chronologically. The company got rid of the chronological feed in 2016 and shows posts that users are more likely to be interested in based on activity such as what users «liked.»

Instagram is working on a way to pick the people users want to see at the top of their feed and a chronological version of Instagram.

«I wish I had a specific month to tell you right now, but right now we’re targeting the first quarter of next year,» Mosseri said.

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