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Last year, Instagram launched teen Accounts, which default all teens into automatic protections for who can contact them and the content they can see. And we'll continue adding new safeguards for teens to help give parents peace of mind. Explore Teen Accounts, automatic protections, and all of our ongoing work@instagram.com Teenaccounts. OpenAI declares code red in a memo to employees as its lead in the AI race narrows Plus, Democrats hope a tight special election in Tennessee today can flip a consistently Republican district in their favor.
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The election is seen as a gauge of the political climate before the 2026 midterms, and it's also seen as a referendum on Trump's second term as the president faces slumping poll numbers, particularly in his handling of the economy.
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And what will Disney look like without Bob Iger? We've got the inside scoop on the top contenders jockeying to succeed him. It's Tuesday, December 2nd. I'm Caitlin McCabe for the Wall Street Journal, and here is the AM edition of what's news, the top headlines and business stories moving your world. The AI arms race is continuing to accelerate, with OpenAI chief executive Sam Altman launching the latest salvo overnight. In an internal memo late yesterday, he told employees that the company was declaring a code red effort to improve the quality of ChatGPT. It's the clearest indication yet of the pressure OpenAI is facing from competitors as its lead in the industry narrows. Journal reporter Berbergin covers the AI race and says that Altman has grown particularly concerned about Google, which released a new version of its Gemini AI model last month. Berber this seems like a pretty urgent declaration from OpenAI. Have we seen the company issue something like this before?
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This is the first time we've seen OpenAI so forcefully sound the warning call around ChatGPT. Ever since ChatGPT was first launched back in November 2022, the company has basically seen breakneck growth on the product. But I think for the first time now, OpenAI feels a lot of pressure, mainly from Google, which has seen users flock to its new Gemini app. They have a new image generator called nanobanana, which has really put Gemini on the map. And last month they launched a very powerful AI model that actually beat OpenAI's models on several industry benchmarks. So Google is also integrating Gemini into their search products into various other business lines that they have. And OpenAI is also facing competition from Anthropic, which is its startup rival. Anthropic is gaining a lot of ground amongst business customers. They're probably the tool of choice now for selling AI to big companies and coders as well. So, Yeah, I think OpenAI is definitely facing pretty intense competition from all aspects of its business right now.
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What does this Code red actually mean in practice?
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So the company has three different color designations for the severity of a particular business problem they face, red being the most severe one. So it's a pretty big warning alarm that Altman has raised. By elevating it to Code Red, Altman is delaying the launch of other products that he's advertised heavily in recent months. He's asking employees to move, temporarily reassign to work on improving the ChatGPT experience. And the internal memo that we saw really laid out in stark terms areas that OpenAI feels like they need to do better on. They want to improve the speed and the reliability of ChatGPT. They want to make ChatGPT feel more personal. They want image generation features inside ChatGPT to be better. And he mentions Google explicitly in the memo. So I think we have a really good sense from our reporting of just how concerned Altman is and where he thinks OpenAI needs to go in terms of improving ChatGPT in order to stay ahead in the AI race.
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Berber, there have been a lot of concerns around AI valuations recently. How do you think this Code Red will be interpreted by investors?
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I think investors are going to be nervous. So many public tech companies, Microsoft, Oracle, Nvidia, a lot of the gains in those stocks have been based off of these massive computing deals that OpenAI has signed. In order for OpenAI to make good on those computing deals, they need to be able to continue growing revenue at exponential rates. By their own projections, they say they need to get $200 billion in revenue by 2030 in order to turn a profit. They're on track to make around $13 billion this year. We can expect Google to be much more aggressive in how it rolls out its AI products and to continue mounting a big challenge to OpenAI. So there is this really big question of whether OpenAI can respond. And in five years this could be just a minor hiccup or could potentially be the beginning of a much tougher road ahead for the company.
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That's the Journal's AI reporter, Berber Jin. Thanks, Berber.
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Of course. My pleasure.
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Bitcoin is making a bit of a comeback this morning after tumbling more than 6% yesterday in its biggest one day drop since March. That puts the cryptocurrency slightly above $85,000, a long way off its all time intraday high of more than 1,126,000. The recent crypto route coincides with a broader investor retreat from riskier assets. But as Journal Markets reporter Vicky Ge Huang explains, the ferocity of the bitcoin sell off has stoked worries that another crypto winter, as it's known, could be underway.
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This downturn differs from previous crypto sell offs in the sense that in previous major downturns such as 2022, those solves were mostly driven by the bursting of retail bubble or the collapse of major crypto companies like the exchange ftx, whereas in today the downturn appears to be linked to institutional flows and traditional macroeconomic factors. So a lot of analysts believe that this crash is less like the onset of a traditional crypto winter, where crypto asset prices can fall as much as 80%. They believe that this is sort of more subdued price actions wherein because bitcoin had run off so much so fast this year that it's due to correct.
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According to Vicky, yesterday's sell off was also fueled by comments from Strategy's Michael Saylor. He said the bitcoin accumulation company might sell some of its stash and related securities, sparking worries that Strategy could flood the market with bitcoin and push prices even lower. Coming up, all eyes are on Tennessee as voters head to the polls in an unusually tight special election. Plus, Netflix sweetens its bid for Warner Brothers discovery. Those stories and more after the break. 300 sensors over a million data points per second. How does F1 update their fans with every stat in real time, AWS is how, from fastest laps to strategy calls, AWS puts fans in the pit. It's not just racing, it's data driven innovation at 200 miles per hour. AWS is how leading businesses power next level innovation. We go now to Tennessee, where a closely watched special election is underway. The contest between Democrat Afton Bain and Republican Matt Van Epps for a spot in the House has gotten national attention as polls have tightened. Yesterday, President Trump held a rally for Van Epps urging Republicans to vote in the traditionally red district. Democrats, on the other hand, are framing the race as a referendum on Trump's performance, especially on the economy. The Journal's Anvi Bhutani says the stakes are high for both parties.
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The election is seen as a gauge of the political climate before the 2026 midterms, and it's also seen as a referendum on Trump's second term. Democrats, meanwhile, see this as a chance to potentially flip another House seat. If Democrats did flip this congressional seat, this would tighten Republicans lead in the House. The election has garnered a lot of national attention with Kamala Harris and AOC helping canvas for the Democrats and and Trump, as well as the sitting governor in Tennessee helping with rallies on the Republican side. Both parties very much view this as a national proxy fight and see it as an attempt to gain voters ahead of the 2026 midterms.
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The election comes as a recent Gallup poll has found Trump's approval rating fell to 36%, the lowest of his second term in that survey. Meanwhile, the White House has launched a new official website to identify what it calls false and misleading media coverage. It marks the latest in a series of unorthodox steps by the Trump administration against news outlets. This site has headers like Media Offender of the Week and Offender hall of Shame, and lists nearly two dozen publications, including the Wall Street Journal, and uses terms such as lie and left wing lunacy to describe some stories. White House press secretary Caroline Levitt said the site is a reaction to fake news and fulfills a promise to, quote, hold the media accountable. But press rights advocates argue the approach is dangerous and could have a chilling effect on journalism. Netflix has sweetened its offer for Warner Brothers Discovery in a second round of bids as it tries to outdo rival Paramount. We've learned that the streamer has made a primarily cash based offer for the entertainment and streaming assets of Warner Discovery and is working to secure tens of billions in financing to fund the purchase. NBCUniversal parent Comcast has also submitted a second bid for the entertainment and streaming assets, while Paramount made an improved offer for all of Warner Brothers, including cable networks like CNN and tnt. The terms of Paramount and Comcast new offers couldn't be learned. And as Disney's succession planning enters its final stages, the company is hoping to write a happy ending in its latest attempt to pick a replacement for CE Bob Iger. Past attempts have been less than magical. Iger has delayed his retirement date a handful of times and helped to push out a number of top executives in line to succeed him. Disney's board of directors is expected to announce its choice early next year, with Journal Entertainment reporter Ben Fritz saying there are two leading candidates.
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Josh d' Amaro oversees Disney's Experiences division, which includes theme parks and consumer products, cruise ships and video games. And so he oversees the biggest business at Disney right now. And that's particularly true because television, which used to be Disney's most important and profitable business, has really been declining and streaming, while growing, is not nearly as profitable as TV used to be. He's very charismatic, which is very important for any top executive at Disney because it's such a public facing company. And his strongest rival, people who work at the company say, is Dana Walden, who's a veteran television executive. She oversees TV and she co heads streaming for Disney Now. And for people who think that the TV shows and movies Disney produces are the most important part of the business because they fuel everything else, including the theme parks and toys, they would say that Dana Walden is the best candidate to succeed Bob Iger as CEO.
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Iger's contract expires next December, with whomever is chosen to replace him expected to work alongside him for some time to learn the ropes. And that's it for what's news for this Tuesday morning. Today's show is produced by Hattie Moyer and Daniel Bach. Our supervising producer is Sandra Kilhoff. And I'm Caitlin McCabe for the Wall Street Journal. We'll be back tonight with a new show. Until then, thanks for listening. Time is your most important asset, and AI is transforming the speed of business. Your innovation and how you protect it depends on the technology you choose to trust. 70% of the Fortune 100 trust CrowdStrikes leading AI native cybersecurity platform built to secure their business and the AI fueling their innovation. AI is changing the world. We're securing it crowdstrike. We stop breaches.