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Good morning readers. Toys “R” Us demonstrated the potential of AI in film by premiering a short promo film created almost entirely with OpenAI’s new text-to-video tool at the 2024 Cannes Lions Festival in France. Does this mean Sora’s debut is just around the corner? We certainly hope so.

When you get a minute, check out the company’s short promo film here.

Let’s jump into today’s storylines.

In today’s digest:

• Volkswagen invests $5 billion into EV startup Rivian

• Headline Hustle: CDK thinks it’ll take months before they’re back online, China’s space program returns with rock’s from far side of the moon, Nvidia wipes out $500 billion in market cap in three trading days

• AI startups are facing the music with latest lawsuit

• Pulse Points: What’s Trending

AUTO

Volkswagen bets big on Rivian with a $5 billion investment

You’d need a Tesla Cybertruck’s payload capacity to haul in the cash Volkswagen is throwing at Rivian. The German automotive giant plans to inject up to $5 billion into the electric vehicle startup, beginning with a hefty $1 billion down payment.

By the numbers

This initial investment, arriving as a convertible note, can be transformed into Rivian shares come December 1st. Following this, Volkswagen plans to pour in an additional $4 billion by 2026, with $1 billion each in 2025 and 2026, and a hefty $2 billion tied to a joint venture aimed at creating cutting-edge electrical architecture and software technology.

Following the announcement, shares of Rivian surged more than 50% in after-hours trading on Tuesday, setting the stage for their investor event. Despite facing pressure from Wall Street due to its substantial cash burn and losses, the company’s stock had taken a beating, closing at $11.96—a 49% drop this year.

A partnership built for the future

Rivian’s CEO, RJ Scaringe, expressed optimism during an investor call, highlighting that the capital infusion will support the production ramp-up of its new R2 SUVs in Illinois and the midsize EV platform in Georgia by 2026.

• The partnership will see Volkswagen utilizing Rivian’s electrical architecture and software stack for its vehicles from the second half of the decade.

• However, the joint venture excludes battery technologies and vehicle propulsion platforms.

The deal is expected to close in the fourth quarter, with both companies each appointing co-CEOs for balanced leadership: Rivian providing technical direction and Volkswagen a chief operating officer.

Big picture: With $7.86 billion in cash and equivalents by the end of March and more than $9 billion in total liquidity, Rivian aims to turn this partnership into a springboard for profitability, even as it reported a first-quarter loss of $1.45 billion.

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IN THE KNOW

Headline Hustle

💻️ CDK says “it’ll take months” before it’s back online. CDK Global, the retail software provider behind a massive auto dealer outage, announced that its systems likely won't be back online before June 30. The cybersecurity incident has affected nearly 15,000 car dealerships across North America, leaving them struggling to provide services and resorting to pen-and-paper solutions. CDK aims to restore systems soon but expects delays until June 30. Dealers face financial impacts, missed rebates, and manual registration processes, causing long wait times and operational disruptions. Other software providers are also on high alert following the incident.

🇨🇳 China takes an important first step in space race against the U.S.. The U.S. and China are in a new space race, vying for dominance on the moon’s strategic south pole. On Tuesday, China made a significant leap by landing a spacecraft in Inner Mongolia with the first-ever rock samples from the moon's far side. This marks China's fourth successful moon landing since 2013, highlighting its ambitions to put astronauts on the moon by 2030 and build a lunar base by 2035. Both nations aim to establish permanent bases on the lunar south pole, raising concerns of potential territorial disputes. The U.S. is also progressing with its Artemis program, despite facing delays and challenges.

📉 Nvidia wipes out over half a trillion in market cap over three trading days. Global semiconductor stocks experienced volatility on Tuesday after Nvidia’s shares slumped, losing over $500 billion in market capitalization over three days. European and Asian chip stocks fell early but some rebounded as Nvidia rose 5.5% by mid-morning. STMicroelectronics dropped over 1.4%, while ASML ended up 0.18%. In Asia, MediaTek fell 1.8%, Samsung slipped 0.3%, but TSMC and SK Hynix rose. Nvidia, which recently topped $3.4 trillion in market cap, is set to ship its next-generation AI chips, potentially spurring further growth.

AI

AI startups hit sour note with major record labels

If music lawsuits were a chart-topping hit, this one would be playing on repeat. A group of major record labels is suing AI startups Suno and Uncharted Labs (makers of Udio), claiming they wrongfully used popular artists’ work to train their systems without consent.

The Recording Industry Association of America (RIAA), representing heavyweights like Sony Music, UMG Recordings, and Warner Records, filed the suits against these AI companies for using unlicensed sound recordings. The lawsuits claim that Udio and Suno have essentially stolen the entire history of recorded music to train their AI models, which don’t generate new music so much as remix and regurgitate the patterns from their training data.

The response

In response, Udio, the brain behind the viral “BBL Drizzy” song during the Kendrick Lamar and Drake spat, said their AI’s algorithms are designed to produce “completely new outputs.” The companies argue that their use of copyrighted music falls under fair use—a notoriously complex and murky legal doctrine.

But the issue has sparked widespread concern among artists.

• In April, over 200 musicians, including Billie Eilish, The Jonas Brothers, and Katy Perry, signed an open letter demanding AI developers cease using AI to infringe upon artists’ rights.

• Without proper oversight, these tools could cause irreparable harm to artists and the industry, ultimately diluting the quality of new music available to consumers.

As the trial progresses…it’s likely that Udio and Suno will have to reveal their training data and methods, exposing the extent of their reliance on copyrighted material. The music groups are demanding damages of up to $150,000 every time they infringe on a song’s copyright, potentially equaling billions of dollars.

SNIPPETS

Pulse Points

• Dr Disrespect finally shares why he was banned from Twitch, his first direct acknowledgment of the incident.

• Google is introducing the Gemini AI side panel to Gmail, helping users write emails and summarize threads. This nifty tool is also being added to Docs, Sheets, Slides, and Drive.

• The European Union has charged Microsoft with antitrust violations for bundling its Teams collaboration tool with Office 365 and Microsoft 365.

• Perkins Restaurant and Bakery, a 66-year-old diner chain, is undergoing a major makeover with a new logo and name, a redesign of nearly 300 locations, and a revamped menu focused on value and refreshed ingredients to attract new customers.

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