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Welcome to Issue 19 of The Quest Digest, where we break down Silicon Valley news for you every week, in 3 minutes.
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Twitter tries to sue Elon
Twitter has sued Elon Musk in a Delaware court over refusing to follow through in the merger agreement.
The company’s board states they are “committed” to closing the deal at the terms the two parties previously agreed upon. In the lawsuit, Twitter highlights the contradiction between Musk’s claims to reduce Twitter’s spam and his subsequent surprise at the platform’s bot problem.
Since then, Elon has responded with joking tweets and is trying push the lawsuit back from the proposed trial in September to February, 2023.
Our Take
Twitter is aiming to sue on the counts that Musk has (1) refused to honor his obligations, (2) trashed the company and internal culture, (3) and destroyed stockholder value. They seek to expedite the process in starting the trial in September.
On other hands, Musk’s legal team has pushed back claiming the case will required “forensic review”. The team believes the review of Twitter’s bot count is fundamental to determining how much Twitter is worth.
The actual timeline of the trial will be announced on July 19, but there are reasonable claims to be made on both side.
Gen Zs are quitting Google
TikTok is seeming to be threatening core Google services such as Search and Maps. Google Senior Vice President Prabhakar Raghavan has referenced that younger users are turning to apps like Instagram and TikTok instead of Google Search or Maps for discovery purposes.
The Google exec notes that “in studies [of U.S users aged 18 to 24], 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.”
Our Take
Younger audiences are now interested in more “visually rich forms” or search and discovery.
Instead of scrolling through text-written reviews of restaurants and places to go, they want to see places based off photos, what friends and influencers recommend and be immersed in something before trying it out – making TikTok and Instagram a more preferable starting point.
While Google is experimenting with incorporating AR to help users position themselves in their environment, expectations on how search should work is changing for younger people and Google’s search moat may be under threat.
Stripe takes a hit with a 28% cut in its valuation
Stripe has seen a 28% cut in the value of it’s shares from $40 to now $29. The valuation cut comes from a 409A price change, determined by an independent party. The news comes after fintech giant Klarna saw its valuation cut by a whopping 85% to $6.7 billion from its last round.
Our Take
Companies are supposed to conduct a 409A every 12 months when material events (e.g. market instability) may lower it’s valuation. Earlier in the year we saw a similar 409A price changing with Instarcart reducing it’s valuation by 38.5%.
In light of this news, it’s clear fintech has taken a huge hit in these market conditions, and it’s likely Stripe isn’t going to the last startup to report an internal valuation cut in the immediate future.
🔥 Press Worthy
Unity is merging with ironSource in a $4.4B M&A deal
Netflix loses almost 1 million subscribers in Q2
Celsius files for bankruptcy
The New Yor Times is turning Wordle into a board game
NFT marketplace OpenSea lays off 20% of staff
Nintendo acquires animation studio Dynamo Pictures and renames it to Nintendo Pictures
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The Quest Digest is written by Hannah Ahn and edited by Brent Liang, two dropouts who hate long tech newsletters. You can sign up to our next issue below.
Even with Snap's sad drop after hours, I do think mobile search is looking up, good point Hannah.