OpenAI lands the plane, a judge nixes a deepfake law, and a Jack Nicholson imposter makes a star turn

AI Funding Explodes, Legal Battles Brew, and Jack Nicholson Gets Deepfaked Date: October 4, 2024 Sources: StrictlyVC Newsletter, October 3, 2024 Key Themes: AI Investment Frenzy: Massive funding rounds continue to pour into AI startups, reflecting the sector's explosive growth and fierce competition. Legal and Ethical Concerns: New laws attempting to regulate AI, particularly deepfakes, face legal challenges, while accusations of extortion and anti-competitive practices highlight the growing pains of the industry. The OpenAI Saga: OpenAI secures a record-breaking valuation, but its dominance sparks concerns over market control and employee retention. Most Important Ideas/Facts: AI Funding: OpenAI raises a staggering $6.6 billion at a $157 billion valuation, nearly doubling its value since March. Thrive Capital leads the round with a $1.25 billion investment and retains the right to invest up to $1 billion more through 2025. Poolside, an AI coding automation startup, secures $500 million in Series B funding at a $3 billion valuation. Crescendo, an AI customer service platform, raises $50 million at a $500 million valuation. Other notable AI fundings include Dexory ($80 million), Triveni Bio ($115 million), and Resolve AI ($35 million). Legal & Ethical Issues: A federal judge blocks a California law aimed at curbing election deepfakes, ruling it unconstitutional. The law was prompted by Elon Musk's reposting of a deepfake video featuring Vice President Kamala Harris. "The state can’t force people to take down election deepfakes," ruled the judge. (TechCrunch) WP Engine sues Automattic and WordPress founder Matt Mullenweg, alleging extortion and abuse of power related to WordPress's open-source nature. WP Engine claims Mullenweg is "obfuscating the true facts" about his control over WordPress. OpenAI Developments: OpenAI reportedly restricts investors in its latest round from investing in competitors like Anthropic and xAI, Elon Musk's AI venture. The company's CFO informs employees they will soon be able to sell some equity at the new valuation, potentially triggering a wave of departures. Elon Musk chooses San Francisco for xAI's headquarters, despite relocating other ventures to Texas, suggesting California's enduring appeal for AI talent. Other Notable Events: CRV returns $275 million to investors in its late-stage fund, citing inflated valuations for growth-stage companies. Omada Health, a diabetes startup, confidentially files for an IPO. Quotes: "Matt Mullenweg’s conduct over the last ten days has exposed significant conflicts of interest and governance issues that, if left unchecked, threaten to destroy that trust." - WP Engine (StrictlyVC) Analysis: This newsletter paints a picture of an AI industry experiencing explosive growth and attracting massive investments, but also grappling with legal challenges, ethical concerns, and potential market consolidation. OpenAI's dominance is attracting attention, particularly its efforts to maintain control over the burgeoning AI landscape. Meanwhile, the legal battle between WP Engine and Automattic highlights the tensions between open-source principles and commercial interests in the tech world. As AI becomes increasingly powerful and pervasive, these issues will only become more critical in the months and years to come.