Daily Edition · Page 12

THE DAILY INDEX

Technology, AI, software, security, crypto and business

HEADLINES & TRENDS

TLDR Founders

CALIFORNIA IS TAXING SAAS AND AI TOOLS AND IS ABOUT TO MAKE YOUR SOFTWARE 8-10% MORE EXPENSIVE. HERE'S WHAT SB 122 DOES TO BUYERS AND VENDORS

California signed SB 122 on June 29, which will apply sales tax to SaaS and AI tools starting on January 1. The rate is 7.25% at the state level plus local district taxes, so the total lands between 7.25% and 10.75% depending on where the buyer sits. Sacramento projects about $2B a year. Remote sellers cross into collection duty at $500,000 in California sales. Every California customer's invoice grows by up to 10.75% that day, and the vendor collects it, so pricing pages, billing systems, and renewal conversations all change before year-end.

GOOGLE AI MODE SHOWS THE SAME PRODUCTS 21.6% MORE EXPENSIVE THAN TRADITIONAL SEARCH

A small e-commerce analytics company compared over 2 million product listings across more than 100,000 search result pages and AI Mode answers over 23 days in August, covering the US and UK. Products that appeared in both surfaces were 21.6% more expensive in AI Mode, with a median price of $149 against $100 in traditional search. Only 1.28% of products in traditional results also showed up in AI Mode for the same query, so a rank in traditional search says almost nothing about whether a product is in the answer box. The main seller differed on 49.6% of matched products.

THE INCUMBENTS ARE COMING

AI will make systems of record more important as customers will soon be able to pipe the system's data into an AI agent and skip the AI-native app. An incumbent system of record working with a general agent will be enough to get the work done. The incumbents have an incentive to control and charge for access to their data, and also to push their own agents forward. The vertical AI-native company has to perform a specific cross-system job better than an incumbent's purpose-built agent or a general-purpose agent that can reconstruct it from the underlying tools.

PROJECT HYDRAFUSION

Project HydraFusion delivers frontier intelligence through runtime orchestration. It can create a full execution plan, choose from models across multiple providers to draft, critique, and revise, or cascade to more powerful models to complete tasks. Developers just select HydraFusion like any other model, and it chooses a workflow that balances performance, cost, and latency for each task. HydraFusion is now available to users on all GitHub Copilot plans as a research preview.

CHINESE BUSINESSES ARE GIVING AWAY AI TOKENS WITH COFFEE, CREDIT CARDS, AND DUMPLINGS

Tokens are getting so cheap in China that businesses give them away as loyalty rewards. Daily token use there reached 500 trillion this year, up from 100 billion in early 2024. Chinese models cost 60% to 90% less than American ones. China Telecom sells 10 million tokens a month for about $1.40. A Beijing dumpling restaurant hands out more than 100 compute vouchers a day, and a Shanghai bank bundles up to 3 billion Qwen tokens with a credit card, in the slot where airline miles used to go.

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