Wiser! #124: BigTech Earnings | Gov Surveillance | AI Godfather | Friendly Pi | TechRegs | ChatGPT's 1st Scalp!

w/Wiser! #124 - 5th May 2023

Preamble

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What's In This Issue: It was the Big Tech earnings round last week and I start with my assessment of what the results told us. There's lots of AI stories (again), including:

• reports from The Netherlands and Spain about clandestine use of AI by government,
• the Godfather of AI warns of AI dangers,
• my favourite AI chatbot of the moment, the super friendly and empathetic Pi,
• how ChatGPT knee-capped an education software training app.

Outside of AI, this week I explain how UK regulators knee-capped the Microsoft-Activision $69 billion takeover, the Digital Markets Act came into force in the EU (well kinda, I'll explain), and Apple's new integrated AI coaching app, the first of many.

Plus, the latest updates from Consumer Brands adopting emerging technology to enhance consumer engagement. A dozens of headlines in a roundup of what else is going on in Tech.

It's a bumper edition. I've done all the hard work pulling it together, all you need to do is consume it.

ATB, Rick

P.s. Remember: Insight and Information Gives You Leverage!

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w/BigTech

1. What did the latest round of BigTech earnings tell us?

Meta, Microsoft, Alphabet, and Amazon all announced solid quarterly earnings this week as big tech continues to bounce back from 2022, a year in which the four companies shed nearly $3 trillion of market cap between them.

Meta has had a tough time since its name-change 18 months ago. However, the social media giant reminded everyone that its apps are still wildly popular, reporting over 3 billion daily active users for the first time across its family of Facebook, Messenger, WhatsApp and Instagram. Also well-received was the return to revenue growth after three consecutive quarters of decline. That paves the way for Zuckerberg to continue investing in his biggest bets: AI and the much-maligned metaverse.

Microsoft continues to march on. Revenue grew 7% year-over-year, and its Azure cloud-computing business held up better than expected, growing 27%. Elsewhere, the company’s partnership with OpenAI, the maker of ChatGPT, promises continuing innovations for the entire Microsoft suite. Those developments have contributed to a ~$480 billion increase in Microsoft's market cap since the beginning of 2023, equivalent to gaining the value of about 8 Ubers.

Google’s owner Alphabet posted more measured results as the firm continues to play catch-up since the rollout of AI-powered search from Microsoft. The company’s ad revenue fell, although not as sharply as expected, and lower costs helped the bottom line beat expectations.

Amazon nearly delivered a win. The company’s shares initially soared as much as 10% on the back of a better-than-expected quarter… but cautious comments about its all-important cloud division, where growth slowed to 16% from 37% last year, sparked fears for the future.

w/AI

2. Leaked documents reveal ethnic profiling by Netherlands' Ministry of Foreign Affairs; Spain's health algorithm under fire

Leaked documents obtained by Lighthouse Reports reveal that the Netherlands’ Ministry of Foreign Affairs has been secretly using an algorithm that ethnically profiles visa applicants, despite warnings from its own internal watchdog over discrimination. They found that the algorithm has profiled millions of short-stay visa applicants using variables such as nationality, gender, and age. Applicants deemed 'high risk' are automatically moved to an "intensive track," resulting in delays and rejections.

Meanwhile, over in my home country of Spain, Lighthouse Reports teamed up with El Confidencial to reveal that millions of people across the country have had their health evaluated by a secretive algorithm to see if they may be shirking work. Public records requests and interviews with dozens of sources paint a picture of an opaque and unfit-for-purpose system. Experts have described the system as an example of "malpractice," yet Spanish officials have continued to use it, potentially pushing people back to work who aren't ready. The system was purchased from software giant SAS for around one million pounds.

w/AI

3. The "godfather of AI"  warns against AI risks and dangers

Geoffrey Hinton, also known as the "Godfather of AI", is the latest industry expert to put his shoulder behind a ban/halt on the rapid pace of AI development. Hinton resigned from Google in April to speak openly about the potential risks of AI, according to The New York Times. Hinton, a prominent figure in the field of artificial intelligence, had been working part-time at Google in recent months. Decades ago, he advocated for the use of a "neural network" as a method for developing AI, at a time when few researchers were willing to embrace the idea. This framework later became the foundation for the current AI revolution.

"The idea that this stuff could actually get smarter than people - a few people believed that... Most people thought it was way off. And I thought it was way off. I thought it was 30 to 50 years or even longer away. Obviously, I no longer think that," Hinton said in a tweet on Monday.

Here's The Thing: Hinton joins a growing group of scientists and technologists who have been sounding the alarm about the potential harms of AI. Hinton is concerned that AI-generated images, videos, and text could lead to a wave of misinformation. He also worries that the race for AI supremacy among companies like Google and Microsoft could spiral out of control in the absence of regulation and put humans out of work in the long term.

w/AI

4. Pi, the kind and supportive AI chatbot

InflectionAI has just launched Pi, a ChatGPT-like competitor designed to be a kind and supportive companion assistant. Pi acts as a coach, confidante, creative partner, and sounding board. Pi can help people organise their schedules, prepare for meetings, and learn new skills. Pi can also talk to you when you're feeling down, lonely or disheartened. It is more than capable of having a conversation at a personal level.

Here’s The Thing: Inflection AI's Pi chatbot is more personal in its style of communication than other AIs, like ChatGPT and Bard. It can converse with empathy and understanding without forgetting its role as a respectful, helpful AI chatbot.It is just a machine, after all! It helps that the text based chatbot also has a voice (4 voices to be precise.) Which means that Pi talks back to you in a remarkably human like way. I have to say that of all the AI chatbot’s I’ve tried in the last few months, this is my favourite. Check out Pi here (it’s free too.)

w/AI

5. ChatGPT claims its first scalp!

When online education firm Chegg told investors last week that they believe OpenAI’s ChatGPT is “having an impact on our new customer growth rate,” I doubt they anticipated the impact of such a simple statement. After all, it’s a competitive market and there are always new players, right? Except that there hasn’t been any quite like ChatGPT.

Here’s The Thing: Students are turning to ChatGPT as a studying tool. Why use Chegg, or any other education software, when ChatGPT is easier to use and free? In after-hours trading following the statement, Chegg shares fell 38% from a market capitalisation of $2.1 billion.  In response Chegg said it was launching its own AI study aide powered by ChatGPT. If you can’t beat ‘em…

P.S.: Chegg is not the only software firm roiled by OpenAI’s software. The Information reported last week about 13 companies including Grammarly that now face the prospect of competing against a cheaper product, in other words, ChatGPT.

w/TechRegs

6. The EU’s Digital Markets Act comes into force, kinda!

The EU's technology industry regulations can be frustratingly slow to take effect, with new rules often taking years for the effects to be felt by consumers. The Digital Markets Act (DMA) is a case in point. While it technically began to apply earlier this week, the major legislative attempt to level the playing field for smaller players against the Big Tech companies was first proposed in December 2020. It was voted into law by the European Council and European Parliament in July 2022.

Here’s The Thing: Despite the fact that the DMA has technically started, it will be another 10 months until the "gatekeeper" companies, such as Google, Apple, and Meta, will actually have to comply with the rules. These 10 months, until March 2024, are going to be an interesting time for European tech observers and enthusiasts as they second guess how these global platforms are going to change to comply with European regulations (especially with the UK’s new Online Safety Bill due imminently.) On top of that, some parts of the DMA remain ambiguous, with much depending on how it is interpreted and implemented. Messaging interoperability is a prime example. In theory, apps like WhatsApp and Telegram would have to allow users to send messages between them to comply with the DMA. However, in practice, this is not entirely feasible, and it's questionable whether such changes would actually benefit users of these apps.

w/BigTech

7. UK Regulator Blocks Microsoft’s $69 Billion Bid to Acquire Activision

The UK antitrust regulator rejected Microsoft's $69 billion acquisition of Activision Blizzard, citing concerns about higher prices, fewer choices, and less innovation in the British gaming sector. Microsoft's president, Brad Smith, plans to appeal the decision, arguing that it is based on a "flawed understanding of this market." Activision will also work to reverse the ruling. If Microsoft fails to win the appeal, the acquisition could be in jeopardy. The US FTC has already sued to block the deal, and the EU's competition regulator is expected to release a decision in May. Microsoft already has a 60-70% share of the UK cloud gaming market, giving it an advantage in the industry.

Here’s The Thing: Cloud gaming, which the regulators cited as the center piece of their decision, is still a relatively small market. It only makes up less than 1% of global internet traffic! In other words, the reason doesn’t pass the sniff test too well! It's possible that there is pressure from other companies, such as Sony, who has been pushing regulators to block the deal. Next to come is the EU who are expected to make their ruling by May 22nd. The FTC has already taken action to block the deal, and the UK's decision is another serious blow to Microsoft's hopes of acquiring Activision Blizzard. However, investors liked it and responded by sending Microsoft's stock up 8% and Activision's stock down nearly 9%.

w/AI

8. Apple’s AI coaches are just the start of a rush of new AI products and features

Apple has introduced a new tool called Quartz that uses AI and emotion-tracking technology to provide personalised coaching programs for exercise, eating habits, and sleep. The tool is designed to keep users motivated and uses data from Apple Watch to create personalised programs. Apple allegedly are also exploring how the iPhone can use algorithms to determine your mood via speech, the words you’ve typed, and other data points on your devices next. They are aiming to unveil a new iPad app, emotion tracker, and AI coaching services at the annual Worldwide Developers Conference in six weeks.

Here’s The Thing:  In the coming months, Apple and other big tech giants are going to be integrating an unusually high number of AI-powered tools into their product set. The race is on and Microsoft have set the pace. But Apple is still the most valuable tech company world and it has a reputation to live up too. Expect to see a regular stream of AI-this and AI-that new features and products. I also expect this to be the point when Apple enters the Search market. Google have been caught off-guard and a post-Google world of Search is already taking shape.

w/BrandStrategy

What's happening in the Brand Strategy Collection?

Consumer brands are using emerging technologies, like AI, NFTs, virtual reality and blockchain, to win new marketshare and engage with their customers. Over the past 6 months, I've tracked, analysed and documented over 250 consumer brands, organisations and personalities with are enhancing their brand using emerging tech.

Access to the Brand Strategy Collection is limited to Premium members only. The latest updates include:

• Starbucks released its second collection of NFTs to beta users of its Web3 loyalty program.
• American Eagle introduced an augmented reality experience on Snapchat that allows users to try on 200 items from a curated collection through an American Eagle "shopping lens".
• Panera has partnered with Amazon to introduce an updated voice ordering capability using conversational AI.
• BP has extended its agreement with Aize, a digital twin software provider.
• Sports Illustrated launched an NFT ticketing platform built on the Polygon network.

w/Insights & Information

What else is going on in Tech?

Artificial Intelligence

• Samsung has decided to temporarily ban the use of generative AI tools, such as ChatGPT, on company-owned devices and internal networks following an accidental leak of sensitive data last month.
• ChatGPT has returned to Italy after addressing concerns raised by the Italian Data Protection Authority.
• Palantir, founded by billionaire Peter Thiel, is launching Palantir Artificial Intelligence Platform (AIP) to integrate AI into military decision-making.
• Sberbank, Russia's largest bank, has launched GigaChat, an AI chatbot that can answer questions, hold conversations, write program code, and generate images.
• Elon Musk has cut off OpenAI's access to Twitter data and is reportedly in talks with University of Toronto professor Jimmy Ba to create a new AI company called X.AI.
• A new study names the European continent at the epicentre of a new wave of AI chat apps.  
• Stanford students developed RizzGPT, smart glasses that listen in on your conversations and suggest the right things to say during first dates and job interviews. See it in action here, and what the monocle/glasses look like here.
• Researchers at the University of Texas have developed a GPT-based decoder that can translate thoughts into text using non-invasive fMRI scans.
• San Diego Health and Stanford Health Care are testing a tool that uses OpenAI's ChatGPT to read patient messages and draft responses from their doctors.

Web3

• The Biden administration is again pushing its proposal for a 30% tax on the electricity used by crypto mining firms with the so-called Digital Asset Mining Energy tax.
• Coinbase is launching its international crypto exchange amid an ongoing tussle with the US Securities and Exchange Commission. Coinbase will let traders engage in 5x leveraged trading to start.
• Bitcoin transactions on a daily basis are surging, thanks to Ordinals (NFTs on the Bitcoin blockchain).
• PayPal will roll out crypto transfers to users of its Venmo payments app.
• Former U.S. President Donald Trump dropped a second round of his digital trading cards.
• Sotheby’s has launched a new NFT marketplace.
• Blur, an NFT marketplace that has overtaken OpenSea as the most popular platform for trading digital artwork collectibles, is launching an NFT lending service for users to borrow cryptocurrency by posting NFTs as collateral.

BigTech

• Apple’s savings account, which the company launched last month, attracted almost $1 billion in deposits in the first four days.
• Apple and Google have announced a partnership to tackle unwanted tracking (stalking) through the likes of AirTags and Tile devices.
• Amazon has shut down its Halo health wearables group.
• Someone posted the entire ‘Super Mario Bros. Movie’ on Twitter and over nine million people watched it before it was taken down.
• Twitter has complied with hundreds of government orders for censorship or surveillance under the leadership of Elon Musk.

w/AboutWiser!

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