1 big thing: ChatGPT sparks surge of AI detection tools

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2. Commerce Dept. report criticizes app stores

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3. PayPal to cut 2,000 employees

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1 big thing: In AI arms race, ethics may be the first casualty

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2. TikTok CEO to testify in D.C. as pressure mounts

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3. Quick takes: NLRB takes aim at Apple

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Join Axios' Eugene Scott and Alexi McCammond tomorrow at 8am ET for a News Shapers event featuring policymakers from both sides of the aisle offering an inside perspective on the agenda for the 118th Congress. Guests include Rep. Nanette Barragán (D-Calif.), Rep. James Clyburn (D-S.C.), Sen. Thom Tillis (R-N.C.), and Rep. Nancy Mace (R-S.C.). Register here to livestream the event.

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1 big thing: AI rockets ahead in vacuum of U.S. regulation

2. Israeli spyware firm makes a case in Washington

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3. Quick takes: Chip tech export limits spreading

The power went out last night right as the Chiefs-Bengals game went into the last minute tied. (Fortunately we were able to stream the ending on a phone.) Today's Login is 1,233 words, a 5-minute read.

📣 Situational awareness: TikTok CEO Shou Zi Chew will testify before the House Energy and Commerce Committee in March regarding TikTok’s privacy policies, its impact on children and its relationship with China’s government, Bloomberg reports.

1 big thing: Tech earnings show a powerful industry taking some licks

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2. Exclusive: YouTube contractors plan strike 

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3. Twitter will charge developers for API access

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Meta's good day

1 big thing: Meta's good day

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Microsoft's president calls for dialogue on AI

2. Microsoft's president calls for dialogue on AI

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3. OpenAI starts selling subscriptions to ChatGPT

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4. Senator urges TikTok removal from app stores

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Axios is hosting our second annual What's Next Summit on March 29 in Washington, D.C., spotlighting the innovations, trends and people that are breaking boundaries and shaping our world. Interested in attending? Request an invite here. 

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🐦 Situational awareness: Twitter will cut off free access to its API — used to build bots, create third-party apps, conduct research and more — on Feb. 9 and launch a paid version, according to TechCrunch.

National

Apple on Thursday reported quarterly revenue and per-share earnings that were short of what analysts had been projecting. 

The big picture: Apple's report comes as others in tech have warned of a weak market for PCs, smartphones and online advertising.

Apple's stock traded lower in after-hours trading after the report, changing hands recently at $144.53, down $6.29, or more than 4%.

Revenue: $117.2 billion (vs. FactSet expectations of $121.4 billion, via Marketwatch)

Per-share earnings: $1.88 (vs. FactSet expectations of $1.94)

iPhone revenue: $65.78 billion, down from $71.63 billion a year ago.

iPad revenue: $9.4 billion, up from $7.25 billion a year ago. 

Mac revenue: $7.74 billion, down from $10.85 billion a year ago.

Wearables and accessories revenue: $13.48 billion, down from $14.7 billion a year ago.

Services revenue: $20.77 billion, up from $19.52 billion.

What they're saying: On a conference call with analysts, CEO Tim Cook blamed the lower revenue on three factors: The impact of foreign exchange rates; a challenging economy; and COVID-19-related shutdowns at factories in China that limited production of the iPhone 14 Pro and iPhone 14 Pro Max.

"Production is now back where we want it to be," Cook said.

Apple's quarterly sales and earnings fell short of expectations

The report comes as others in tech have warned of weak demand.

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Apple

Apple on Thursday reported quarterly revenue and per-share earnings that were short of what analysts had been projecting. The big picture: Apple&#x27;s report comes as others in tech have warned of a weak market for PCs, smartphones and online advertising.

From the Valley to D.C., Big Tech players like Facebook, Google and Amazon are under more scrutiny than ever as new technology develops and privacy and antitrust concerns grow in lockstep with companies’ ambitions.

Technology

A group of YouTube contractors in Texas plans to strike later today in protest of rules requiring such workers — even those who have always worked remotely — to report to the office. The workers plan to walk out this morning, with a press conference set for noon, Axios has learned.

Why it matters: The move comes amid increased labor tensions at large tech companies, including Google, which owns YouTube. Some workers at Apple and Amazon have sought to unionize, as have some in the video game industry.

Details: All of the 43-person team of contractors for YouTube Music voted to strike, following an edict that they report to an office in Austin starting on Monday. 

The workers, who are technically employed by Cognizant, were notified of the Feb. 6 return to office date in November. That came after workers had filed the prior month for union recognition, leading some to conclude the move was being made in retaliation. The workers are also seeking to have Google and Cognizant recognized as joint employers.

The vast majority of the contractors were hired during the pandemic — and have always worked remotely. Nearly a quarter of them live somewhere other than Austin.

Workers say their pay, which starts at around $19 per hour, isn't enough to cover the costs of relocating to — and living in — Austin. Some also care for a child, spouse or parent, which complicates a shift to the office.

The other side: Cognizant says that the workers' contracts have always stated that the jobs were in-office jobs and that it communicated to workers since Dec. 2021 that it would provide 90 days notice when employees were expected back in the office.

"Cognizant respects the right of our associates to disagree with our policies, and to protest them lawfully," the company said in a statement to Axios. "However, it is disappointing that some of our associates have chosen to strike over a return to office policy that has been communicated to them repeatedly since December 2021."

Between the lines: Google workers and contractors have staged a series of actions this week to draw attention to pay and other conditions at the tech giant. 

In particular, workers have called attention to the so-called "shadow workforce" that includes temporary workers, vendors and contractors who receive lower pay and few of the benefits afforded full-time workers.

Separately, on Wednesday, a group of contractors who serve as "raters" evaluating search results held a protest at Google's Mountain View offices on Wednesday and delivered a petition demanding increased pay and other workplace changes. 

Some raters got a wage increase last year from $10 per hour to $14 per hour, but labor advocates say that's still below Google's general minimum of $15 per hour for its extended (non-employee) workforce. Some workers, such as raters, aren't covered by Google's extended workers policy, which guarantees a certain level of wages and benefits to many, but not all, of its contract workers.

Another rally outside Google's retail store in New York on Thursday featured current and laid-off Alphabet workers and was timed to coincide with the company's earnings report.

The big picture: Employees and contractors at Google formed the Alphabet Workers Union in 2021 to give workers a stronger voice, albeit without the full powers of a traditional union approved by the majority of workers.

As a minority union, the Alphabet Workers Union can't collectively bargain on behalf of workers or officially represent employees. 

That said, unlike traditional unions, it can represent contractors and temporary workers in addition to full-time employees.

The union helped organize the actions in Texas, Mountain View and New York.

What they're saying: "My goal is to keep my friends employed," said Katie Marschher, who has worked at Cognizant on YouTube Music for nearly two years. 

Like many on her team, Marschher said she works more than one job to make ends meet. Although she lives in Austin, one of her other jobs is helping bands on tour, which requires her to travel. That works well remotely but she would have to scale back if required to be in office.

"Our hope is we can actually have a dialogue where we are listened to," said Neil Gossell, who joined the YouTube/Cognizant team last year. He took the job specifically because it allowed him to work from home close to his spouse, who has post-traumatic stress disorder.

Editor's note: This article has been updated to clarify that the workers were told in November of the specific date they had to return to the office. The story has also been updated with additional information and comment from Cognizant.

Exclusive: YouTube contractors to strike over forced return to office

The move comes as labor tensions for big tech companies grow.

Google

A group of YouTube contractors in Texas plans to strike later today in protest of rules requiring such workers — even those who have always worked remotely — to report to the office. The workers plan to walk out this morning, with a press conference set for noon, Axios has learned.Why it matters: The move comes amid increased labor tensions at large tech companies, including Google, which owns YouTube. Some workers at Apple and Amazon have <a class="gtmContentClick" data-vars-link-text="sought to unionize" data-vars-click-url="https://www.axios.com/2022/12/12/tech-labor-movement-unions-2022" data-vars-content-id="501eef98-7c95-48ae-bebf-2cc75843d33d" data-vars-headline="Exclusive: YouTube contractors to strike over forced return to office" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2022/12/12/tech-labor-movement-unions-2022" target="_self">sought to unionize</a>, as have some in the video game industry.

Media Trends

Axios Media Trends

Meta investors got a double dose of good news on Wednesday. The Facebook parent company reported better-than-expected quarterly results and won a favorable ruling from the judge overseeing the FTC's move to block a virtual reality acquisition.

Why it matters: Meta's positive earnings come amid dour reports from many other flagship tech firms that are struggling in a softening economy.

Meta reported quarterly revenue of $32.16 billion, ahead of Wall Street estimates of approximately $31.5 billion. It also raised its authorized stock buyback by $40 billion and said to expect revenue of between $26 billion and $28.5 billion for the current quarter, which runs through the end of March.

Earlier in the day, a judge gave Meta the go-ahead to buy virtual reality fitness startup Within, rejecting the Federal Trade Commission's bid to block the acquisition. Per Bloomberg, U.S. District Judge Edward Davila made the ruling in sealed court documents, adding that Meta must wait a week before closing the deal to give the agency time to appeal his decision.

Shares of Meta surged more than 17% in after-hours trading Wednesday following the earnings report.

The big picture: Meta has been retrenching of late, announcing plans to lay off workers, cut some hardware projects and scale back its investments in real estate and data centers.

As part of Wednesday's earnings report, Meta said it took a restructuring charge of $4.2 billion in the fourth quarter.

Be smart: The company's optimistic forecast contrasts with the outlook from competitor Snap Inc., this week, which told investors that it expects revenue to decline 2%-10% in the current quarter.

Yes, but: Meta's Reality Labs unit — which is spearheading its metaverse projects — lost $4.27 billion last quarter, bringing its total losses for the year to $13.71 billion. The unit generated $2.15 billion in revenue last year, down slightly from $2.27 billion in 2021. 

Between the lines: The company has also managed to be less in the spotlight in recent months thanks to upheavals at Elon Musk's Twitter, as well as recent regulatory moves against Microsoft and Google.

What to watch: The FTC is set to start a separate trial to block the Within deal in its own administrative court on February 13, though it could opt not to move forward after the ruling in California.

Wall Street liked what it heard in the Facebook parent's latest earnings, and the company also won a round with the FTC.

Meta (company)

Artificial intelligence

Microsoft President Brad Smith said Thursday that the latest AI technologies require guardrails that can&#x27;t be established by tech companies alone.<ul><li>In a <a class="gtmContentClick" data-vars-link-text="blog post" data-vars-click-url="https://blogs.microsoft.com/on-the-issues/?p=65518" data-vars-content-id="a43eabfc-94b2-48f8-9d49-869df9922283" data-vars-headline="Microsoft&#x27;s president calls for dialogue on AI" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://blogs.microsoft.com/on-the-issues/?p=65518" target="_blank">blog post</a>, Smith called for greater dialogue with governments and other stakeholders, but stopped short of calling for specific regulation.</li></ul>

This week's earnings reports confirmed that Big Tech companies are taking a hit from a slowing economy — but also that they're still raking in tons of money.

The big picture: Tech companies have been on a decade-long growth jag, creating a generation of investors and workers who are now experiencing their first significant experience of a downturn, layoffs and retrenchment.

Apple on Thursday reported sales and earnings that fell below expectations. 

The iPhone maker was hit by the same macroeconomic pressures and strong dollar that crimped other tech companies' results.

But COVID-19-related disruptions of manufacturing in China also limited supplies of the iPhone 14 Pro and iPhone 14 Pro Max during the quarter.

Google parent Alphabet also reported financial results Thursday that disappointed investors, with lower online ad spending on YouTube cited as among the culprits. 

YouTube advertising was down more than 7% last quarter compared to the same quarter the previous year, causing Alphabet's overall revenue growth for the quarter to drop to just 1% year over year.

Amazon managed to beat overall revenue expectations. But investors were still spooked by lower-than-expected revenue from its AWS cloud computing unit.

The company warned that cloud growth will slow and companywide operating profits in the current quarter could be anywhere from zero to $4 billion. Analysts had expected operating profits near the high end of that range.

Microsoft last week reported its slowest quarterly sales growth in years, as the PC market has rapidly cooled off following a pandemic-fueled boom.

Facebook parent Meta offered the brightest spot among the tech giants, reporting both strong results as well as a positive outlook, despite the tougher economy and online ad slowdown. 

It also said expenses for the full year will be lower than it had previously anticipated.

Wall Street swooned, pushing Meta's stock up more than 23% Thursday. The stock has more than doubled since it hit a low three months ago.

Be smart: All of the companies said their results would have been better were it not for the effect of a strong dollar, which effectively makes it harder to sell products overseas. 

Between the lines: All these companies, with the exception of Apple, have announced layoffs as a response to the downturn. 

But the cuts still leave all the companies with more workers than they had before they went on a hiring binge during the pandemic.

What to watch: Most of these firms offered limited guidance, saying they expect economic weakness through the first half of the year, but leaving open the possibility of improvement in the second half of 2023.

Tech earnings reveal a powerful industry taking some licks

A new generation of tech workers and investors is seeing its first slowdown.

Big Tech

Column / Signal Boost

This week&#x27;s earnings reports confirmed that Big Tech companies are taking a hit from a slowing economy — but also that they&#x27;re still raking in tons of money.The big picture: Tech companies have been on a decade-long growth jag, creating a generation of investors and workers who are now experiencing their first significant experience of a downturn, layoffs and retrenchment.

Ina Fried

Stories

Exclusive: YouTube contractors to strike over forced return to office

Tech earnings reveal a powerful industry taking some licks

Apple's quarterly sales and earnings fell short of expectations

Microsoft's president calls for dialogue on AI

Meta's good day

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Axios Login: Sobering earnings season

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Axios Login: Detecting AI's hand

Axios Login: AI arms race

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