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Sora Sinks
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OpenAI is abandoning Sora to do the big refocus they’ve been signaling. Meta is starting to rack up the losses in court. Is China going to block the Manus acquisition by Meta from going through? They’re not even letting the founders leave the country. And interesting raises from vertical AI startups.
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Welcome to the Tech Brew Ride home for Wednesday, March 25, 2026. I'm Brian McCullough. Today OpenAI is abandoning Sora to do the big refocus they've been signaling. Meta is starting to rack up the losses in court. Is China going to block the Manus acquisition by Meta from going through? They've not even let the founders leave the country. And interesting raises from vertical AI startups. Here's what you missed today in the world of tech. OpenAI announced it is discontinuing products that use its Sora models, including the consumer app Sora, a Sora version for developers and a video feature inside of ChatGPT, quoting the Journal, the move is one of a number of steps OpenAI is taking to refocus on business and coding functions ahead of a potential initial public offering as soon as the fourth quarter of this year. CEO Sam Altman announced the changes to staff on Tuesday, writing that the company would wind down products that use its video models in addition to the consumer app, OpenAI is also discontinuing a version of Sora for developers and won't support video functionality inside ChatGPT either. OpenAI is in the middle of a strategy shift to redirect the company's computing resources and top talent toward a so called productivity tool that can be used by both enterprises and individual users. Last week, OpenAI announced that it was combining its ChatGPT desktop app, coding tool, codecs and browser into one super app. The company expects the consolidated product to align its employees around a single vision. OpenAI launched Sora last September, aiming to expand its dominance among consumers by creating a TikTok style social feed that allowed users to share AI generated content with one another. Shortly after the launch, Sam Altman encouraged users to find different ways to splice him into famous or iconic scenes from popular culture. At the time, some OpenAI employees were surprised by the amount of computing resources the company poured into the project, given the lack of clear evidence of demand for such a product. But Altman wanted the company to think ambitiously about its product roadmap and unveiled plans for a new AI hardware device that the company plans to launch in the coming years. The Sora discontinuation is a rebuke to OpenAI's previous strategy, which involved an array of product launches that created a complicated organizational structure and competing priorities. OpenAI launched Sora without guardrails to protect certain content from being used without the consent of copyright holders, touching off a brief copyright battle. Eventually, the company added controls so content owners could block the use of their likenesses or intellectual property. In December, Disney said it would invest $1 billion in OpenAI. As part of the deal, OpenAI was set to license more than 200 characters from Disney, allowing users to create and share AI generated videos with beloved Disney characters. The three year agreement allowed people to wield a lightsaber like Luke Skywalker or insert themselves into Toy Story. Disney's investment into OpenAI isn't proceeding. As the nascent AI field advances rapidly, we expect OpenAI's decision to exit the video generation business and to shift its priorities elsewhere, a Disney spokeswoman said. Yes, that licensing agreement with Disney is ending, so no more thoughts of making Moana videos for you, your kids. Also, this is quoting Reuters. On Monday evening, Walt Disney teams were working together on a project linked to Sora, OpenAI's AI video tool. But just 30 minutes after that meeting, the Disney team was blindsided with word that OpenAI was dropping the tool altogether, a person familiar with the matter said. It was a big rug pull, according to the person who requested anonymity to discuss the matter. The transaction between the companies has actually never closed to other people familiar with the matter said. And no money ever changed hands. OpenAI executives have been debating Sora's fate for some time. Running the AI video app required significant computational resources, a fourth person with knowledge of the matter said, and left other teams with less firepower. Even so, some OpenAI staffers on the Sora team were surprised when they were informed of the changes Tuesday morning, one of the people and another source said. The announcement was made just a day after OpenAI published a blog post about Soros safety standards. A spokesperson for Disney said that the media giant respects OpenAI's decision to exit the video generation business and to shift its priorities elsewhere. The two sides are discussing if there is another way they can partner or invest with one another. One of the people familiar with the matter said. But back to that memo from Sam Altman announcing all of this. He also said OpenAI's next model is finished pre training and is moving on to safety and research and security for scaling. And if you're curious about some of the basic rationale behind pulling back from Sora, quoting Alex Heath's newsletter, while the outside world speculates about motivations, the reality is that OpenAI is making trade offs in how it allocates compute across research, product launches and inference. Video generation is extraordinarily GPU intensive and every chip powering Sora Eclipse was one not powering what OpenAI is focusing on right now. Codex and its enterprise products. OpenAI employees are under tremendous pressure to catch up with Anthropic on coding around productizing it in a way that successful to non engineers like Claude Cowork has done. The broader picture is OpenAI's new super app strategy, ChatGPT. Codex and the Atlas browser are being merged into a single desktop application to better compete with what Anthropic is cooking and enable agents at scale. It's hard to see how Sora fits into that strategy, especially when OpenAI has already hit many brick walls and pursuing potential content deals for it. Simply put, the GPUs are better used elsewhere. Sam Altman also laid out a reorg today. He's moving safety under Mark Chen's Research Org and security under Greg Brockman's Scaling Org, freeing himself up to focus more on fundraising and building data centers. Fiji Simo is now the CEO of AGI deployment or essentially everything else. Altman said OpenAI has finished pre training its next model, codenamed Spud, which he expects to produce a quote, very strong model in a few weeks that the team believes can really accelerate the economy, end quote. These are starting to come thick and fast. A New Mexico jury has found Meta violated that state's Unfair Practices act by not safeguarding its apps from child predators. Meta must pay $375 million in civil damages Quoting CNBC the civil trial, which began with opening arguments in Santa Fe last month, centered on allegations that Meta violated state consumer protection laws and misled residents about the safety of apps like Facebook and Instagram. New Mexico Attorney General Raul Torres sued meta in 2023 following an undercover operation involving the creation of a fake social media profile of a 13 year old girl that he previously told CNBC, quote, was simply inundated with images and targeted solicitations from child abusers. Deliberations began Monday and jurors were tasked with ruling in favor or against the defendant. Meta jury members found that Meta willfully violated the state's Unfair Practices act and decided the company should pay $375 million in damages based on the number of violations. Linda Singer, an attorney representing New Mexico, urged jury members during closing statements to impose a civil penalty against Meta that could top $2 billion. We respectfully disagree with the verdict and will appeal, a Meta spokesperson said. We work hard to keep people safe on our platforms and are clear about the challenges of identifying and removing bad actors or harmful content. We will continue to defend ourselves vigorously and we remain confident in our record of protecting teens online. Meta denied the State of New Mexico's allegations and previously said it is focused on demonstrating our long standing commitment to supporting young people. The jury's verdict is a historic victory for every child and family who has paid the price for Meta's choice to put profits over kids safety, torres said in his statement. Meta executives knew their products harmed children, disregarded warnings from their own employees and lied to the public about what they knew. Today, the jury joined families, educators and child safety experts in saying enough is enough. When the New Mexico trial's second phase, conducted without a jury, commences on May 4, a judge will determine whether Meta created a public nuisance and should fund public programs intended to address the alleged harms. The state's lawyers are also urging Meta to implement changes to its apps and operations, including enacting effective age verification, removing predators from the platform and protecting minors from encrypted communications that shield bad actors. During the trial, New Mexico prosecutors revealed legal filings detailing internal messages from Meta employees discussing how CEO Mark Zuckerberg's 2019 announcement to make Facebook messenger end to end. Encrypted by default would impact the ability to disclose to law enforcement some seven and a half million child sexual abuse material reports, end quote.
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come home to Disney. Let's go get ready for a new case.
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last name the Snake Dream Team New
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Habitats Zootopia has a secret reptile population
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you can watch the record breaking phenomenon at home. Zootopia 2 now available on Disney. Rated PG and right now you can get Disney and hulu for just $4.99 a month for three months with a special limited time offer ends March 24. After three months, Plan Auto renews at $12.99 a month. Terms apply.
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for you the Supreme Court of the United States has ruled unanimously that Cox could not be held liable for the piracy of thousands of songs online. Quoting the Times, music labels and publishers sued cox Communications in 2018, saying the company had failed to cut off the Internet connections of subscribers who had been repeatedly flagged for illegally downloading and distributing copyrighted music. At issue for the justices was whether providers like Cox could be held legally responsible and required to pay steep damages a billion dollars or more in Cox's case, if they knew that customers were pirating music but did not take sufficient steps to terminate their Internet access. In its opinion released on Wednesday, the court said a company was not liable for, quote, merely providing a service to the general public with knowledge that it will be used by some to infringe copyrights. Writing for the court, Justice Clarence Thomas said a provider like Cox was liable only if it intended that the provided service be used for infringement and if it, for instance, actively encourages infringement. Justice Sonia Sotomayor, joined by Justice Kentaji Brown Jackson, wrote separately to say that she agreed with the outcome, but for different reasons. Courts have long held that people can be liable for providing an another person or entity with the tools to commit copyright infringement. Two decades ago. For instance, the Supreme Court unanimously ruled that the file sharing company Grokster could be held responsible for the violations of its users. But in a pair of more recent cases in 2023 unrelated to copyright law, the justices declined to hold technology platforms liable for problematic content posted by their users, but did not ultimately resolve the question of whether platforms are ever responsible for such content. In the Cox case, free speech advocates urged the Supreme Court to side with the Internet provider, warning of a chilling effect on free expression if Internet companies could be on the hook for hefty penalties for the actions of their users. The advocates argued that such a ruling could result in speech related lawsuits against other kinds of intermediaries, including bookstores and social media platforms. End quote. But back to Meta News for a second because they are probably a bit concerned about this. The FT has sources saying that China has barred Manus co founders Zhao Hong and Ji Yiqiao from leaving that country as it reviews whether Meta's $2 billion acquisition of Manus violates its internal rules. Manus chief executive Zhao Hong and chief scientist Ji Yiqiao were summoned to a meeting in Beijing with the National Development and Reform Commission this month, according to people with knowledge of the matter. They said Zhao and Ji were questioned on potential violations of foreign direct investment rules related to its onshore Chinese entities. After the meeting, the Singapore based executives were told they were not allowed to leave China because of a regulatory review while they remain free to travel within the country, two of the people said. No formal investigation has been opened and no charges have been brought. Manus is actively seeking law firms and consultancies to help resolve the matter, said a person with knowledge of the move. Manus was founded in China, but last year relocated its headquarters and core team to Singapore. Meta acquired it for $2 billion at the end of last year. The deal is under regulatory review by China's Ministry of Commerce for its potential violation of export controls, the FT reported in January. Further scrutiny of the transaction highlights growing concern about what Chinese leaders have described as selling young crops to foreign buyers in strategic areas such as AI. There are also concerns that by moving out of China, Manus bypassed domestic regulation in ways that would encourage other groups to follow Manus. Alleged FDI violations are related to Chinese reporting rules after its ownership changed, said the people with knowledge of the case. While such violations, if confirmed, are unlikely to lead to serious penalties under Chinese law, regulators appear to be seeking ways to intervene over the deal. An extreme outcome would be to unwind the transaction, one of the people said, because the deal has been completed and Meta has started integrating Manus AI agent software into its platform. Such a settlement would be, quote, messy, the person said. End quote. Finally today, interesting raise from a company we've all likely encountered on Zoom calls AI note taking startup Granola has raised $125 million, led by Index Ventures at a $1.5 billion valuation and plans for Claude integrations and agentic AI features in the next year. Quoting Bloomberg, Granola's product transcribes conversations and uses AI to turn rough draft meeting notes into complete summaries. Chief Executive Officer Chris Pedregal said that many of its corporate customers, which include companies like Cursor and Gusto, have adopted the technology after individual employees started using it. Something similar happened at Index, Reimer said multiple people at the firm were using the technology by the time he considered investing. Alongside the funding, the startup is launching new features for its app, including integrations with AI coding tools like anthropic Claude code, as well as team workspaces where employees can pull their notes. Granola's next act, Pedregal said, will be to introduce agentic AI features to allow users to perform tasks using the information they've gathered in the startup's note files. While the CEO declined to share specifics about the plans, he said he expects the integrations within the next year. The company's agentic AI ambitions were paramount in Index's decision to invest in Granola, Reimer said. Some industry watchers believe that AI note taking, already a competitive space, is on its way to becoming a commodity. Pedregal doesn't disagree. It's part of why he envisions much more for Granola's future. I would never have entered this space if what I wanted to do was just to generate meeting notes. It was a commoditized, oversaturated space before we started Granola, let alone now, he said. We're just at the beginning of how we're going to collaborate with AI to do work while we're on the interesting raise tip. Legal AI company Harvey raised $200 million, led by GIC and Sequoia, at an $11 billion valuation, up from an $8 billion valuation back in December, and reported more than 100,000 users at more than 1300 organizations. Something, something vertical. Shout out to my kids for making me watch it. The Chris Pine Dungeons and Dragons movie from a few years ago is really a great and fun movie. Highly recommended. I think I might have recommended that a couple years ago, but they made me rewatch it last night and it's still great. Talk to you tomorrow. Quick Interruption Here's a helpful tip.
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