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Investors appear to be over the metaverse with funding at roughly a quarter of what it was from a year ago, according to Pitchbook data.

Why it matters: Generative AI has in many ways replaced metaverse as the new investment darling, Tim writes.

Per Alphasense, 63 earnings call transcripts have mentioned "metaverse" in the first quarter of 2023, about 27% of the mentions from a year ago, when 234 transcripts mentioned "metaverse."

The big picture: Through March 16 of last year, companies that played in the metaverse or web3 space had raised nearly $2 billion in funding. So far this year, metaverse and web3 companies have raised $586.7 million.

When you look at fundraising for generative AI companies, however, they are eerily inverse: Through March 16, 2022, that space saw $612.8 million in funding. This year, it's up to $2.3 billion.

What we're watching: Meta and its chief executive Mark Zuckerberg have been one of the biggest promoters of the metaverse, even changing the company's name in 2021 to reflect that commitment.

But the metaverse has largely been a digital money pit. The company's Reality Labs division reported losses of $13.7 billion and $10.2 billion in 2022 and 2021, respectively.

Meta lost more than 70% of its value last year, making it one of the worst performers in the S&P 500.

In announcing layoffs earlier this week, Zuckerberg said the company will put AI at the forefront and appeared to push the metaverse to the backburner.

"Our single largest investment is in advancing AI and building it into every one of our products. We have the infrastructure to do this at unprecedented scale and I think the experiences it enables will be amazing. Our leading work building the metaverse and shaping the next generation of computing platforms also remains central to defining the future of social connection."

1 big thing: Metaverse is so 2022

The Biden administration has warned TikTok that it faces a ban in the U.S. if its Chinese parent company, ByteDance, does not sell its stake in the U.S. version of the app, Sara Fischer and Ashley Gold report.

Why it's the BFD: TikTok has become one of the most popular mobile apps in the country, amassing over 100 million U.S. users. Banning it would have an immediate impact on millions of everyday Americans, and would mark a significant escalation of tensions between China and the U.S.

💭 Kerry's thought bubble: When TikTok launched in August 2018, creators told me they were excited about a truly global app that helped "bridge the gap" between China and the U.S. But as the app gained popularity, national security concerns bubbled up.

It's been confusing how a TikTok deal would work exactly. The most valuable aspect is the algorithm, which the company had reportedly refused to give up when sale talks were going on in 2020.

Details: The Committee on Foreign Investment in the United States (CFIUS), a regulatory arm that reviews foreign investments in the U.S., told TikTok that the government planned to ban the app in the U.S. if its owners didn't sell it, according to a TikTok source familiar with the situation.

Their outreach included a broad outline of what a proposal for TikTok to remain in the U.S. would look like to satisfy the government's national security concerns.

Yes, but: It isn't clear to TikTok what CFIUS means by having its owners divest their stake, given that a large percentage of ByteDance's shares are owned by global investment firms, the TikTok source noted, adding that CFIUS did not provide details or a written order.

The source said the company wants to resolve these questions and will continue to invest in data security efforts, like Project Texas, a series of steps TikTok is taking alongside U.S. software giant Oracle to separate its U.S. operations' backend functions and code from its Chinese arm.

✅ Sign up for Axios Pro: Tech Policy written by Ashley and Maria Curi. A sneak peek published yesterday, and the official launch is March 27.

2. The BFD: Clock ticks on TikTok 

Illustration of an anvil swaying back and forth above the tiktok app icon

3. Tweet of the day

Tweet from Diddy saying BET should be black-owned

• Prescient AI, a Miami, Fla.-based marketing attribution platform, raised $4.5m in seed funding led by Blumberg Capital. https://axios.link/3lmHKEL

• Frontier Towers, backed by KKR, is in advanced talks to buy a portfolio of over 1,000 telecom towers from Philippines-based PLDT for more than $200m, per Bloomberg. https://axios.link/3JGXxHV

• Lionsgate, Fremantle and Legendary (with Apollo Global Management) are potential suitors to acquire a majority stake in eOne from Hasbro. https://axios.link/3lhqnFg

• Microsoft signed a 10-year deal with cloud gaming provider Ubitus to stream Xbox PC Games and Activision Blizzard titles after its pending acquisition closes, Xbox CEO Phil Spencer said. https://axios.link/42gRFfy

• Idris Elba's Green Door Pictures partnered with Mo Abudu's EbonyLife Media on developing a slate of African TV and film projects. https://axios.link/3ZTKbO2

• 101 Studios partnered with Spin to develop and produce film, TV and podcasts projects based on the music magazine's library and IP. https://axios.link/3yFI2tx

4. Deal flow

• AGBO, Joe Russo and Anthony Russo's production company, named Riot Games' Ryan Verniere as SVP of story. https://axios.link/3TkDPoq

• MPC, the British VFX company, hired DNEG's Ludovic Iochem and The Mill's Sal Umerji as heads of studio for Montreal and London. https://axios.link/42ic8Rh

• Michael Waldron, the creator, writer and executive producer of "Loki," launched film and TV production company Anomaly Pictures with Adam Fasullo. https://axios.link/429faaq

• Fox News named a new senior editorial leadership team, including Tom Lowell as SVP and managing editor for Fox News Channel and Fox Business Network, Kim Rosenberg as EVP of news programming overseeing daytime news shows and Doug Rohrbeck and Jessica Loker overseeing political coverage. https://axios.link/3Ltsu3z

• Twitch CEO Emmett Shear announced his departure. https://axios.link/3yPL0vj

5. Movin' on up (or out)

👀 HYBE turns focus to U.S. market after withdrawing bid for SM Entertainment (Deadline)

"HYBE founder and chairman Bang Si-hyuk said the company will announce a 'substantial number of acquisitions and investments within this year as part of our efforts to widen our presence in the U.S.,'" Liz Shackleton writes.

🏀 NBA wants billions more in sports deals: media and tech firms are resistant (The Information)

"Amazon, for instance, is interested in the NBA rights, say people who have spoken with the tech giant's representatives, but it has no intention of overpaying for a high-priced NBA rights package, according to people familiar with its thinking," Sahil Patel writes.

🤷‍♂️ "Iger is stuck": Disney chief debates future of Hulu and ESPN (FT)

"Towards the end of 2021, Disney executives met Michael Rubin, chair of sports company Fanatics, to discuss options for ESPN, including a potential investment or sale, according to three people familiar with the matter," Anna Nicolaou and Christopher Grimes report.

🎮 Vince McMahon included in new WWE game (Axios)

"WWE chairman Vince McMahon is a playable character in the latest WWE 2K23 video game, despite controversies that have largely kept him out of the public eye," Herb Scribner writes.

🚀 Tech antitrust's uphill climb (Axios Pro Tech Policy)

"A rare bipartisan moment of agreement that Big Tech companies are too big and powerful may be overshadowed by partisan differences over what should be done about them," Ashley writes. Axios Pro Tech Policy launches March 27.

6. Channel surfing

📆 Situational awareness: Join Axios Business Editor Dan Primack and Senior Deals Editor George Moriarty this Friday at 1pm ET for a subscriber-exclusive conversation on the state of the SVB fallout and what happens next. Register.

@tim_bays: March Madness. I've barely watched any college basketball this season, but the tourney still gets me. 

@kerrymflynn: Taylor Swift. I'll be in Arizona this weekend to see the kickoff of The Eras Tour. 

✏️ Thanks to George Moriarty for editing and Katie Lewis for copy editing this newsletter.

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March 16, 2023

1 big thing: Metaverse is so 2022