I thought we liked free markets

Welcome to Cautious Optimism, a newsletter on tech, business, and power.

Hello from chilly New Orleans, where parade season is just about to start. Off topic, but once you have kids you no longer take vacations. Instead, you take your cranky children to places where they refuse to sleep. Lesson learned! — Alex

• 📈 Trending Up: Nazi salutes … Senate-House disconnect … shade … Apple’s principles … exec payouts at Meta … Substack <> Video …

• 📉 Trending Down: Red Bull F1’s sponsor list … intelligence … Cisco … Consumer Sentiment … Community Notes …

  • Amazon is getting out of the Zoom game. Not a huge shock here, but indicative of the new climate for remote work, I’d reckon. Amazon is all about RTO, and other companies are pushing along similar lines. Zoom only grew a few percentage points in Q3 2024 (its most recently reported quarter), so perhaps there just wasn’t enough juice to warrant the corporate squeeze?

Business, bent

The Journal reports that X is putting the screws to reticent advertisers, making lightly-veiled threats that they should “spend more on Elon Musk’s social-media platform, or else.” The gist is that advertisers are worried about more lawsuits from X concerning not doing business with the social network, and that their deals might get hit with political interference if they don’t give X their money:

Interpublic leaders interpreted the communications from X as reminders that the recently announced $13 billion deal to merge Interpublic with rival Omnicom Group could be torpedoed, or at least slowed down, by the Trump administration, given Musk’s powerful role in the federal government, some of the people said.

As someone old enough to recall the GOP decrying government meddling in business — “you don't just pick the winners and losers, you pick the losers” — the above is quite the turnabout.

But given how X’s owner has worked to hamstring a market competitor to his AI business (OpenAI and xAI, respectively), perhaps we should not be surprised. Still, a business work where how much one business dude likes you or not being the effective government line is a miserable way to run a country and its economy.

• Business leaders: Spine, please!

Block, chipped

Via Esther Jiao

It’s supposed to be fintech’s year. After the business niche went from hero to zero during the end of ZIRP, financial technology companies have found their feet in recent months. Private-market dealmaking seemed to be picking up, consumer neobank Chime filed privately to list, as did stablecoin provider Circle — the winds, the thinking went, were changing.

And then Block — née Square — reported earnings this week. The big numbers:

• Revenue of $6.0 billion (+4.5%), under a street-anticipated $6.3 billion.

• Earnings per share: $0.71 (adjusted), under a street-anticipated $0.87.

Not only did Block sharply miss Q4 expectations, but it’s Q1 2025 guidance is hardly scorching. The news was not all bad. Block’s gross profit grew 18% in 2024, though that figure slowed to +14% in Q4. Block’s profitability also expanded last year, with adjusted EBITDA growing 69% to $3.03 billion. Similarly, in 2024 the company’s adjusted free cash flow totaled $2.07 billion, “compared to $515 million [one] year ago.”

Block’s shares are off around 15% this morning after its Q4 miss and less-than-barn-busting guidance. Is Block’s tough earnings report and selloff enough to scuttle the fintech vibes? Probably not, but it could be enough to scoot some offerings back a few months. The IPO market thus far in 2025 has already proved modest — any further headwinds are unwelcome if you, like myself, want more S-1 filings.

• C’mon Jack, we want Chime and Circle to get going!

Crypto, freed

Coinbase is having quite a day. Its CEO Brian Armstrong writes on Twitter that his company has won its fight with the SEC:

After years of litigation, millions of your taxpayer dollars spent, and irreparable harm done to the country, we reached an agreement with SEC staff to dismiss their litigation against Coinbase. Once approved by the Commission (which we're told to expect next week) this would be a full dismissal, with $0 in fines paid and zero changes to our business.

The post goes on — including the required hand-wave at the current President — but the gist as is that the debate concerning whether or not a good portion of crypto assets were securities has come down on the side of no. From a simple reading of Howey, I do not understand the new position of the SEC. But no matter, here we are.

Cross the Coinbase win with the President issuing several highly controlled and you have the recipe for a wide legal avenue for crypto companies to play in. Toss in the end of the CFPB, and we’re about to entire wild times with limited consumer recourse for scams and scant rules — if any — concerning what sorts of investments can be sold to everyday investors.

• I am old enough now to watch my inner libertarian view towards gambling run into my real-world observations about the impact that sports wagers have on regular folks; I am sure you can see the analogy.

• It appears that free market, free trade perspectives are a dying breed

AI, everywhere

Closing off the week, how about a deluge of material AI news?

• Microsoft debuts Magma, a multimodal model that could help advance AI usage in real-world robotics.

• Figure debuts Helix, a homegrown AI model for robots that allows them to interact with the physical world sans extra coding.

• DeepSeek plans to open source “ repos, sharing [its] small but sincere progress with full transparency” — this is a big win for open-source AI and the folks who think closed-sourced efforts from companies like OpenAI and Anthropic are going about the future in the wrong way.

• Alibaba said that its “first and foremost goal is to pursue AGI.” Naturally a pledge is just that, but to see a company with as large a resource base as Alibaba point its nose directly at AGI speaks volumes to the scale of global competition thereof. And that China and the United States are not done tussling over who will finish building advanced general machine intelligence first.

• Genspark raised $100 million for its competing search offering to what Google still proffers, and what Perplexity and other AI search companies are building.

• Fluidstack, a neocloud, is in the market for a huge chunk of capital, predicated not only on its industry — and implicit demand for AI inference and similar — but also its potential work on France’s upcoming datacenter projects.