Techmeme Ride Home: Mon. 04/07 – Will Tech Raise Prices Cause Of Tariffs?

Host: Brian McCullough
Release Date: April 7, 2025
Duration: Approximately 15 minutes

1. Introduction

Brian McCullough opens the episode by highlighting key topics of the day: the temporary reinstatement of TikTok in the U.S., Meta’s latest advancements in AI models, the surge in popularity of AI coding assistant Cursor by AnySphere, and the looming question of whether tech companies will raise prices in response to U.S.-China tariffs.

2. TikTok's Temporary Reprieve and Tariff Implications

Executive Order Extension
At [00:04], Brian discusses President Trump's executive order extending TikTok's operational status in the U.S. for an additional 75 days. This extension is contingent upon further approvals, aiming to navigate the complex negotiations between the U.S. government and ByteDance, TikTok’s parent company.

Stakeholder Perspectives

• Apple’s Compliance: According to sources cited by Brian, Apple has agreed to keep TikTok and other ByteDance apps on its U.S. App Store for the extended period, following assurances from Attorney General Pam Bondi ([02:15]).

• ByteDance's Position: A ByteDance spokesperson indicated that while discussions with the U.S. government are ongoing, any potential agreement remains subject to Chinese law and has not yet been finalized ([03:30]).

• Vice President J.D. Vance’s Optimism: Previously, Vance expressed optimism about a possible TikTok deal by the April deadline, suggesting a framework that addresses national security concerns and establishes an American-owned TikTok entity ([05:45]).

Deal Stagnation
Despite nearing finalization, sources informed Reuters that the TikTok U.S. deal was stalled due to China’s rejection of the associated tariff conditions, leaving the fate of the agreement uncertain ([07:20]).

3. Meta's AI Innovations: Llama4 Series

Launch of New AI Models
At [08:10], Brian transitions to Meta’s introduction of its latest AI models: Llama4Maverick (400 billion parameters), Scout (109 billion parameters), and the upcoming Behemoth (2 trillion parameters). These models are now available for download through Meta and Hugging Face.

Performance and Architecture

• Llama4Scout: Boasts a 10 million token context window and superior performance compared to Google's Gemini 3 and open-source counterparts like Mistral 3.1, all while maintaining compatibility with a single Nvidia H100 GPU ([09:50]).

• Llama4Maverick: Comparable to GPT-4.0 and Gemini 2.0 Flash, it achieves high performance with fewer active parameters, thanks to a mixture of experts architecture that optimizes resource usage ([11:05]).

• Llama4Behemoth: Although not yet released, Meta claims it surpasses GPT-4.5 and Claude Sonnet 3.7 on STEM benchmarks, positioning it as the world’s highest-performing base model ([12:40]).

Open Source and Licensing Concerns
Meta emphasizes the open-source nature of the Llama4 series, yet acknowledges criticism regarding license restrictions. Specifically, commercial entities with over 700 million monthly active users must seek Meta’s permission for usage, challenging the traditional open-source definition ([14:25]).

Future Projections
Brian highlights Meta’s upcoming Llamacon conference on April 29, where further AI model developments and product plans will be unveiled ([15:50]).

4. Surge in AI Coding Assistant: AnySphere’s Cursor

Cursor’s Popularity Explosion
At [16:30], Brian delves into the meteoric rise of AnySphere’s AI coding assistant, Cursor, which surpassed 1 million daily active users by March, fueled primarily by word-of-mouth ([16:45]).

Functionality and User Experience

• Features: Cursor integrates seamlessly with Microsoft’s Visual Studio Code and supports multiple large language models, including its proprietary models, OpenAI, and Anthropic. It offers real-time code suggestions and a responsive chatbot for coding queries ([18:10]).

• User Testimonials: Daniel Destefanis, a software product designer, lauds Cursor for enhancing his productivity and creative momentum, citing its ability to retain project context and swiftly troubleshoot bugs ([20:05]).

Innovative Programming Styles
Cursor has popularized a new programming methodology termed "Vibe coding," where developers increasingly rely on AI-generated suggestions, streamlining the coding process ([21:30]).

Funding and Investment
AnySphere has attracted significant investor interest, securing $175 million from prominent venture capital firms like Andreessen Horowitz and Thrive Capital, alongside backing from AI leaders such as OpenAI and Google DeepMind. The company is reportedly in talks to raise additional funds at a valuation nearing $10 billion ([23:15]).

5. Tariff Fallout Impacting Tech Companies

Industry-Wide Price Scrutiny
Brian addresses the ripple effects of U.S. tariffs on the tech sector, beginning with Nintendo’s decision to delay Switch 2 pre-orders. Nintendo of America President Doug Bowser attributes the delay to unforeseen tariff costs not accounted for in the product’s pricing strategy ([24:50]).

Stock Market Reactions

• Negative Stock Movements: Both Nintendo and Sony experienced significant stock declines, closing down by 7.85% and 10.04% respectively on April 7, amidst broader market sell-offs influenced by tariff news ([26:00]).

• IPO Postponements: Companies such as StubHub, Klarna, eToro, and adtech group Mountain have paused their IPO plans due to volatile public markets ([27:35]).

Supply Chain Challenges
Brian highlights Apple's strategic move of shipping iPhones and other products from India to the U.S. swiftly to circumvent the 10% tariff, leveraging its global supply chain efficiently ([29:10]).

Advertising Revenue Concerns for Meta
With 10% of Meta’s 2023 revenue stemming from Chinese advertisers, escalating tariffs may curtail ad spending on Meta platforms, impacting their financial performance significantly ([30:45]).

Microsoft's Resilience
Conversely, Microsoft remains relatively insulated from tariff impacts due to its focus on enterprise solutions and minimal reliance on physical consumer products. Its cloud segment, including Azure, constitutes 43% of its total revenue, offering stability even amid tariff-induced uncertainties ([32:20]).

Analysts' Insights

• Daniel Newman (Futurum Group): Points out that companies with limited tariff exposure and a strong enterprise customer base, like Microsoft, are likely to serve as safe havens during tariff turmoil ([33:15]).

• Rishi Jaluria (RBC Capital Markets): Emphasizes Microsoft’s robust positioning, noting that its enterprise software does not heavily rely on physical goods, thereby mitigating direct tariff impacts ([34:10]).

• Patrick Moorhead (Moor Insights and Strategy): Warns that companies like Apple and Amazon, which depend on extensive supply chains and consumer products sourced from China, face heightened risks of increased costs and potential recessions ([35:40]).

6. Insights from Polling Tech Executives on Price Adjustments

Reluctance to Increase Prices
Brian shares insights from polling various tech executives about their strategies in response to tariffs. The consensus among executives is a strong reluctance to raise consumer prices immediately. Instead, companies prefer maintaining current pricing to avoid backlash and preserve their market positions ([37:00]).

Strategic Considerations
Executives cited motives ranging from protecting brand integrity to not wanting to be viewed as undermining business projects. For example, one executive remarked, “If Apple came out tomorrow and announced the iPhone was starting at $1,600, Trump would bring holy hellfire down on them” ([38:25]).

Potential Market Shifts
However, some executives acknowledged that if other sectors like automotive or aerospace begin increasing prices to stay afloat, tech companies might follow suit to remain competitive and protect their financial health ([39:50]).

Supply Chain and Global Trade Concerns
The discussions also touched upon fears of prolonged supply chain disruptions leading to a broader market slowdown or recession. Executives expressed anxiety over the interconnectedness of global supply chains, noting that a single disruption could have cascading effects across multiple industries ([41:30]).

Long-Term Implications
One executive pondered the possibility of global decoupling from Silicon Valley, questioning whether countries might shift their supply chains away from the U.S. tech ecosystem to mitigate trade war risks. This sentiment underscores the fragile nature of current global trade relationships and the potential for lasting impacts beyond immediate tariff changes ([43:15]).

7. Conclusion

Brian McCullough wraps up the episode by emphasizing the precarious state of the tech industry amid tariff uncertainties and ongoing geopolitical tensions. He invites listeners to stay informed and engaged with the rapidly evolving tech landscape, promising to keep them updated with the latest developments in future episodes ([45:00]).

Notable Quotes

• Brian McCullough [00:04]: "Today, TikTok lives again. Again, at least for another 75 days."

• President Trump [02:30]: "We hope to continue working in good faith with China, who I understand are not very happy about our reciprocal tariffs."

• Vice President J.D. Vance [05:50]: "There will almost certainly be a high-level agreement that I think satisfies our national security concerns, allows there to be a distinct American TikTok enterprise."

• NHSphere President Oscar Schultz [19:05]: "It just makes a thing that you do every day better and faster."

• Daniel Newman [33:15]: "The companies that have low exposure to tariffs and higher enterprise revenue mix will likely be safe havens."

• Patrick Moorhead [35:50]: "Apple would be heavily impacted by the tariffs if, say, iPhones become very expensive and the US Economy slips into a recession."

Key Takeaways

• TikTok's Future: The temporary extension provides a critical window for negotiations but remains uncertain due to tariff-related disputes with China.

• Meta's AI Leadership: Meta continues to push the boundaries with its Llama4 series, positioning itself as a formidable player in the AI landscape despite open-source licensing challenges.

• AI in Coding: AnySphere's Cursor exemplifies the growing integration of AI tools in software development, enhancing productivity and fostering innovative coding practices.

• Tariff Pressures: U.S.-China tariffs are exerting significant pressure on tech companies, affecting supply chains, product pricing, and stock valuations, with varying degrees of impact across the industry.

• Executive Sentiments: While there's a general reluctance to raise consumer prices immediately, the long-term sustainability may necessitate adjustments if broader economic pressures persist.

Stay tuned for more updates and in-depth analyses on the Techmeme Ride Home podcast. For real-time tech news every evening at 5 PM, visit Techmeme.com.