Daily Archives: May 6, 2023

Artificial intelligence has a lot of potentially huge upsides, but it is also big and scary because it could get out of control and possibly end all human life, according to some scientists. And so naturally the tech companies that stand to make bank off the menace are aping one of the original big and scary industries: Big Tobacco.

Thats the thrust of a recent study flagged for me by Dr. Max Tegmark after our fascinating and terrifying Lever Timediscussion about his dire AI warnings that have been making headlines across the planet.

Tegmark likens the situation to the plot of Dont Look Up, in which experts tout the benefits of the incoming comet rather than sounding the alarm about its dangers. The 2021 paper he sent me offers some answers about why: It shows how Big Techs has infiltrated the academic institutions studying and often promoting AI with little regard for the potentially catastrophic downsides.

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Big Tech Is Big Tobacco - The Lever

Sen. Lindsey Graham on Thursday threatened to repeal the section of federal law that gives social media companies broad protection from lawsuits over the content they publish if these companies thwart efforts to make them liable for sexual content aimed at children.

The Senate Judiciary Committee approved the bipartisan EARN IT Act, which is cosponsored by Graham, R-S.C., and Sen. Richard Blumenthal, D-Conn. Their bill would create exceptions to Section 230 of the Communications Decency Act to make companies liable for content that both sides agree is inappropriate for children.

But a frustrated Graham remarked in the meeting that the likelihood of the bill advancing any further was small, and implied that Big Techs lobby on Capitol Hill is strong enough to keep the measure off the Senate floor. He said that if his preliminary efforts fail to curb Section 230, hell move to kill the entire section and said Democrats would support him.

"If this doesnt work, I'm going to offer legislation to repeal Section 230, two years from whatever date the bill is enacted, and let the trial lawyers fix this problem," Graham warned.

CONSERVATIVES WORRY GOP WILL GO SOFT ON BIG TECH AFTER JIM JORDANS SURPRISE COMMITTEE DECISION

FILE - Sen. Lindsey Graham, R-S.C., speaks with reporters about aid to Ukraine, on Capitol Hill. ((AP Photo/Alex Brandon, File))

"To the social media companies: I'm glad to work with you, I want to work with you, but you're eventually going to lose. And if I were you, I'd sit down with a bunch of us and try to figure a way to regulate your business so you can thrive and survive and protect the consumers, because if you don't, we're gonna unleash the courtrooms of America against your business model," he added.

The EARN IT Act, which Graham originally introduced in 2019, would allow victims of online sexual abuse to sue the companies that distributed the content on their sites. Right now, no such litigation mechanism for victims exists.

While the bill has bipartisan support in the committee, Senate Majority Leader Chuck Schumer, D-N.Y., has yet to bring it to a floor vote. Neither did then-Majority Leader Mitch McConnell, R-Ky., in 2019.

SENATE DEMOCRATS PROPOSE SECTION 230 REFORM BILL TO HOLD BIG TECH ACCOUNTABLE FOR CONTENT

Sen. Lindsey Graham, R-S.C. (AP Photo/J. Scott Applewhite, File)

However, the chairman of the Judiciary Committee, Sen. Dick Durbin, D-Ill., said he agrees with Graham's plan.

"It's time for the social media companies to face the reality," Durbin said. "We can have these hearings after hearings after hearings. We can hear all the victims and all the surviving parents tell these terrible stories. We can imagine them among our own children and grandchildren."

"And then if we step back and say this is just too big and complicated, and we're against too big a situation here, we can't change it. Shame on us," Durbin added.

In a statement to Fox News Digital, Graham said that the "political and economic power of social media companies is overwhelming. I have little hope that common-sense proposals like this will ever become law because of the lobbying power these companies have at their disposal."

JUSTICES 'COMPLETELY CONFUSED' DURING ARGUMENTS IN SECTION 230 CASE AGAINST GOOGLE THAT COULD RESHAPE INTERNET

Sen. Lindsey Graham, R-S.C., speaks with reporters about aid to Ukraine, on Capitol Hill, Wednesday, March 10, 2022, in Washington. ((AP Photo/Alex Brandon))

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"They go back three times, the company blows them off. The child kills themselves, and they can't sue because Section 230," Graham stated.

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Graham fires warning shot at Big Tech: Were going to unleash the courtrooms of America on you - Fox News

How to identify, remedy, and prevent anticompetitive behavior by Big Tech companies was the theme of the day-long February 24 conference, Antitrust and 21st Century Bigness: Dealing with Tech Platforms in a Globalized World." Antitrust scholars, practitioners, and regulators from the United States and Europe discussed technology mergers and monopolization, the reach of current competition law, and potential regulatory and legislative changes to address anticompetitive conduct by technology firms.

Morning keynote speaker Doha Mekki, principal deputy assistant attorney general in the antitrust division of the US Department of Justice, Antitrust Division, engaged in a conversation with Walter J. Derenberg Professor of Trade Regulation Emerita Eleanor Fox 68.

I think theres a false tension between the kind of competition that benefits consumers and the kind of competition that benefits workers, Mekki said. Looking back to the legislative history of the Sherman Act itself, Senator Sherman says that we should be concerned about monopoly power because it commands the price of labor without fear of strikes, for in its field it allows no competitors said Mekki. ...And so a recognition that labor can be impacted by the industrial relations of firms, I think shouldnt be radical at this point.

Joseph Stiglitz, University Professor at Columbia University, delivered the closing keynote of the day, arguing that a changing economy necessitates stronger competition regulation. The legal framework that we had at the end of the 19th century and beginning of the 20th century are not adequate to the changes in the structure of our global economy, and in particular to the challenges posed by tech, Stiglitiz said. This is the era of information, he added, and it really does change economics, and it changes antitrust. The idea that information might be imperfect totally changed all of our views about economics. Adam Smiths invisible hand was shown to be wrong.

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Post on May 5, 2023

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Experts weigh the current cost of anticompetitive behavior in Big ... - NYU Law

An OpenAI logo on a smartphone with a Chat GPT logo in the background. (Photo Illustration by Avishek Das/SOPA Images/LightRocket via Getty Images)

As the technology industry races to create tools harnessing generative artificial intelligence, the technology that powers AI chatbots like ChatGPT, Big Tech companies also rushed to K Street to weigh in on potential regulation of the novel technologies.

In the first three months of 2023, 123 companies, universities and trade associations lobbied the federal government on issues relating to artificial intelligence, an OpenSecrets analysis of federal lobbying disclosures found. They collectively spent roughly $94 million lobbying on AI and other issues from January through March 2023, though it is not possible to determine how much went to lobby issues specifically related to AI.

The number of entities lobbying on issues related to AI boomed in recent years, from single digits a decade ago to 30 in 2017 to 158 last year, an OpenSecrets analysis found.

Big Tech companies Amazon, Microsoft, Oracle, Googles parent company Alphabet Inc., IBM and Meta were among those that reported lobbying on AI issues. Silicon Valley giants Alphabet, Meta and Microsoft laid off thousands of employees in recent months to, in part, focus on their in-house AI projects, though teams focused on ethical AI development were among those laid off.

Microsoft announced earlier this year that they were planning to invest $10 billion into ChatGPTs creator, OpenAI, in an effort to integrate OpenAIs technology into their Bing search engine, Azure cloud service and GitHub coding tools, among other uses. Microsoft, which invested in OpenAI in 2019 and in 2021, spent $2.4 million on lobbying according to quarterly reports, including on issues related to AI and facial recognition.

In an effort to keep up with rivals Microsoft and OpenAI, Google recently rolled out its own artificially intelligent chatbot dubbed Bard. The chatbot was released in March despite Google describing it as an early experiment, and a Google employee who tested the tool dubbed Bard a pathological liar, Bloomberg reported. Alphabet Inc. spent $3.4 million in lobbying from January through March this year, including on issues relating to AI principles, generative AI, research and development on AI, machine learning and quantum information science.

Top executives of Alphabet Inc., Microsoft, OpenAI and AI startup Anthropic will meet with Vice President Kamala Harris and other top administrators today to discuss AI related concerns, including misinformation, bias and privacy, Reuters reported.

ChatGPT attracted U.S. legislators attention after becoming the fastest growing consumer application in history just two months after it launched, reaching 100 million monthly users in January. In April, President Joe Biden said that whether AI is dangerous remains to be seen, but it was the companies responsibility to make sure their products were safe.

Meta was among the tech giants that shifted priorities to catch up with generative AI after an underwhelming metaverse initiative two years ago. The social network conglomerate which owns Facebook, Instagram and WhatsApp has laid out plans to integrate AI powered tools such as image generation and artificially intelligent chat across its platforms. Meta spent $4.6 million in lobbying expenses in the first quarter of the year, including for continued conversations on Artificial Intelligence, among other issues such as cybersecurity, election integrity and misinformation policies.

Software giant Oracle spent $3.1 million to lobby on AI and machine learning policy, research and development, among other issues related to defense, the supply chain and workforce. The Texas-based company has become one of the industry frontrunners in the race to catch up with ChatGPT, providing cloud computing for AI startups.

In April, Amazon announced that it will also be joining the generative AI race by making two new AI language models available through Amazon Web Services, the companys cloud platform. The company spent roughly $5 million to lobby Congress in the years first three months on issues including AI and cloud security.

The auto company General Motors, which announced plans to integrate ChatGPT into its vehicles as driver assistants in March, lobbied on issues related to AI, electrification and autonomous vehicles, among other things. Their total spending on lobbying for the first quarter of 2023 was $5.5 million.

The U.S. Chamber of Commerce, the largest lobbying group in the country representing business interests, spent $19 million on lobbying in the years initial quarter. Its lobbying efforts included, but were not limited to, establishing task forces on AI and financial technology in the House Committee on Financial Services, implementing the National Artificial Intelligence Act, drafting automated vehicle bills, and related to other national AI related bills and executive orders as well as relating to international AI policy and the European Unions Artificial Intelligence Act.

Lobbyists for insurance companies Zurich Insurance Group and State Farm Insurance also reported lobbying to further AI discussions this year. State Farm specifically lobbied for Congressional efforts to better understand commercial use of artificial intelligence and its impact on consumers.

Higher educational institutions such as Carnegie Mellon University lobbied to support the Army AI Integration Center and research related to Distributed AI applications for defense, among other issues, according to disclosures. At least ten other universities including Case Western Reserve, Vanderbilt, Harvard and Stanford also spent on lobbying around AI research related issues.

But as tech giants and other groups go all in on AI systems, some industry insiders fear that the technology is scaling up too fast, before it is properly understood and can be controlled.

In late March, over a thousand tech leaders, professors and researchers working in artificial intelligence signed an open letter warning that AI technologies pose profound risks to society and humanity. The letter urged AI labs to pause the development of their most advanced technologies so they can be better understood. The letter was published just two weeks after the San Francisco start-up OpenAI unveiled GPT-4, the latest version of their chatbot ChatGPT.

Powerful AI systems should be developed only once we are confident that their effects will be positive and their risks will be manageable, the letter by the Future of Life Institute, a nonprofit organization, read. The Future of Life Institute spent $50,000 in the first quarter of 2023 to lobby for provisions and funding that would ensure trustworthy artificial intelligence development. The nonprofit is backed by Elon Musk, who was one of OpenAIs co-founders and previously invested in the company before a fallout with its other founders. Musk has since been working to launch his own AI start-up, X.AI, to take on OpenAI.

The tech ethics group Center for Artificial Intelligence and Digital Policy called on the U.S. Federal Trade Commission to open an investigation into OpenAI and stop it from releasing new ChatGPT models in March before guidelines were established, dubbing GPT-4 biased, deceptive, and a risk to privacy and public safety. The group also urged AI regulations including laws to ensure algorithmic transparency.

Geoffrey Hinton, who pioneered the neural technology that became the foundation for todays AI systems and recently quit his over-a-decade-long job at Google to warn about the risks of the technology he created, said in a New York Times interview that he feared the AI race between tech companies will keep escalating without some sort of regulation.

The disruptive technology can flood the internet with fake imagery and text in the short run, and can later replace human workers, Hinton warned. IBM, which spent $1.5 million to lobby issues related, but not limited to, emerging technologies including blockchain, cloud computing, 5G, AI and facial recognition in the years first quarter, made headlines on Monday for pausing their hiring to replace 7,800 workers with AI in coming years.

Down the road, Hinton fears, AI can slip outside our control and potentially threaten humanity by learning and executing malicious behavior that its creators didnt expect.

I dont think they should scale this up more until they have understood whether they can control it, Hinton told New York Times.

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Big Tech lobbying on AI regulation as industry races to harness ... - Center for Responsive Politics

By Jon Swartz

Sen. Ed Markey's latest attempt at COPPA 2.0 bill would raise the age limit for privacy protections to 16 from 13 and ban ads targeted at children

Amid an escalating bipartisan outcry about the need to protect kids' safety online, punctuated by President Joe Biden's State of the Union address, a sequel to one of the last major pieces of tech legislation was reintroduced in the Senate on Wednesday.

Sen. Ed Markey's Children and Teens' Only Privacy and Protection Act, or COPPA 2.0, is long-gestating legislation that updates his 1998 COPPA law. It raises the age limit for privacy protections to 16 from 13, bans targeted ads aimed at children and introduces a first-of-its-kind "digital marketing bill of rights for minors."

"Big Tech is knowingly fueling a mental-health crisis in this country by exploiting kids and teens just so they can make an extra buck," Markey, a Massachusetts Democrat who has spent more than a decade trying to pass updates to the law, said in a statement. "Congress must pass COPPA 2.0 to put immediate safeguards in place that prevent Big Tech from tracking, traumatizing and targeting young people every second, every minute and every hour of the day."

Reports of child exploitation online soared at Alphabet Inc.'s (GOOGL)(GOOGL) Google, Meta Platforms Inc.'s (META) Instagram, and other social media firms over the last year, according to a report from the National Center for Missing and Exploited Children on Tuesday. The U.S. child safety agency was inundated with more than 32 million reports last year, about 2.7 million more than in 2021.

The original COPPA, which was last revised by the Federal Trade Commission in 2013, is one of the few federal privacy laws in the U.S. and one enforced by the FTC. In December, the agency levied a $275 million fine against "Fortnite" creator Epic Games Inc. for violating COPPA. Alphabet Inc.'s (GOOGL)(GOOGL) YouTube was hit with a similar fine in 2019.

In-depth: U.S. laws protecting kids online languish behind Europe

Attempts by Markey to update the 1998 law have sputtered for years, as has nearly every piece of tech regulation, including some recent highly touted bills to rein in Big Tech's powers. But there is growing support across the political spectrum to create comprehensive guardrails to protect young people online amid toxic social-media platforms, a national mental-health crisis and a jump in teen suicides over the past decade.

Congress has held a succession of hearings in recent years in which they berated Big Tech executives from Meta Platforms Inc. (META), Snap Inc. (SNAP), Twitter Inc. and, most recently, TikTok. In all that time, though, they have failed to pass meaningful legislation putting guardrails on social-media companies, which Biden pushed for earlier this year.

Opinion: Instead of banning TikTok, Congress should do its actual job

'We must finally hold social-media companies accountable for the experiment they are running on our children for profit," Biden said during his State of the Union speech in February "And it's time to pass bipartisan legislation to stop Big Tech from collecting personal data on kids and teenagers online, ban targeted advertising to children and impose stricter limits on the personal data these companies collect on all of us."

With Biden raising kids' safety online to an "A-1 issue," as one Markey staffer put it, the senator is more optimistic that COPPA 2.0 will make its way through the Democratic-controlled Senate. A vote on the bill could come this summer, though its fate may be more precarious in a deeply divided House.

Still, there is momentum on the issue, along with several stabs at bipartisan legislation. On Tuesday, Sens. Richard Blumenthal, a Connecticut Democrat, and Marsha Blackburn, a Tennessee Republican, introduced the Kids Online Safety Act, comprehensive bipartisan legislation to protect children online and hold Big Tech accountable.

That bill, which shares some of the same goals as Markey's bill, could be paired in a joint piece of legislation with COPPA 2.0, according to a member of Markey's staff.

"For kids, the pressure to engage with social media in order to have a social life far outweighs their privacy concerns," Marco Belin, CEO of kids search engine Seekado, said in an email message. "With the inclusion of AI into many social media platforms, protecting individual privacy will become increasingly important and harder to achieve."

-Jon Swartz

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

05-06-23 1309ET

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'Big Tech is knowingly fueling a mental-health crisis in this country ... - Morningstar

Ernst & Young has a tech growth problem the size of Silicon Valley, and the firms failure to spin off its consulting business has eliminated what it envisioned as a way out.

Like all accounting firms, it is barred from forming lucrative consulting partnerships with its audit clients, but the restriction is especially onerous for EY, with its audit roster of tech heavyweights like Amazon, Alphabet, and Salesforce. Its inability to team up with such companies to build and sell tech solutions hamstrings its consulting practice, forcing it to leave millions of dollars on the table for in-demand services crucial to todays corporations.

EYs leaders had sought to split up the firm so its $19.7 billion consulting and strategy practices could pursue such partnerships, freeing those businesses from rules intended to ensure that auditors provide unvarnished views of their clients financial health. The collapse of the ambitious plan puts EY back where it started: Its restricted from promoting or jointly selling services offered by audit clients.

It really makes it impossible to enter into any kind of partnership or joint marketing, joint-service-provision type of an arrangement when youre auditing that company, Cathy Allen, who runs the ethics compliance firm Audit Conduct, said of US conflict-of-interest rules.

Those conflicts and restrictions will remain as the firm confronts its future with audit, tax and consulting tethered together.

EY didnt respond to requests for comment for this article.

EY leaders, however, have said that they still want to restructure at some point, committing to their argument that the practices would be stronger apart.

This was a way to disrupt our industry, Carmine Di Sibio, the firms global chairman, said about the firms restructuring in remarks to a Milken Institute event Monday. Its on pause, its really on pause for a while, but its something that well continue to look at over the next couple years.

In some ways EY is a victim of its own success. Its buildup of software and tech clientele over the years means its potential for conflicts of interest is bigger than for the other Big Four firms, said Doug Carmichael, former chief auditor of the Public Company Accounting Oversight Board and an accounting professor at Baruch College.

PwC, also known as PriceWaterhouseCoopers, KPMG and Deloitte are the other Big Four firms.

EY has acknowledged the restrictions under which its working.

The firm audits nine of the 10 biggest tech companies, DiSibio told CNBC in January while discussing the firms plans to carve out its consulting arm and much of its tax practice into a unit known provisionally as Newco.

Theyre also the companies we could have alliances with going forward on the Newco side, he said. So thats been an inhibitor in terms of our growth in consulting.

In addition to Amazon, Alphabet and Salesforce, EYs audit clients include Intuit, HP, Workday and Apple. It also audits small, nascent technology companies and has served as auditor to eight tech IPOs since 2018, according to PitchBook data.

EYs technology and digital transformation work contributed to a 25% spike in revenue for its global consulting practice last year. Tech consulting is among the most heavily promoted consulting services offered by the Big Four, and such work is much more profitable than auditing, said Elizabeth Cowle, assistant professor of accounting at Colorado State University.

Alphabet last year paid EY $41 million for auditing and related services, she noted.

If youre making $41 million off the audit, she said, how much could you be making off consulting?

Longstanding US securities rules prohibit accounting firms from entering into certain business relationships with their audit clients if they were to share whats known as a mutual interest. That means that profit sharing, jointly developing products or even advocating for a clients work is out of bounds.

Firms have learned the hard way to steer clear of arrangements that could threaten their independence from audit clients.

The Securities and Exchange Commission suspended EY in 2004 from accepting new public-company audit clients for six months over auditor-independence issues that dated back to the 1990s. EY had audited the software firm PeopleSoft at the same time the firms consulting arm profited from recommending PeopleSoft software to customers.

More recently, Marcum LLP, a top-15 US accounting firm, paid $525,000 in penalties and other sanctions in 2019 for promoting audit clients as good investment opportunities at conferences the firm hosted.

Although big partnerships with audit clients are off limits, firms may be able to help consulting clients adopt mainstream software or cloud platformsroutine implementation work considered a core consulting serviceeven if those platforms and apps are run by audit clients.

But accounting firms have to be careful how they market those services to avoid violating the independence rules, Allen said, referring to Securities and Exchange Commission regulations. Its a very tricky area to navigate.

Consultants, for example, cant tell a client to use a specific application or tool if it happens to be one provided by an audit client, but they could offer a menu of options which includes products of its audit clients, Carmichael said.

Sorting through those gray areas with regulators and audit committees takes time, however. Clients may be unwilling to wait to clear any possible conflicts and may choose instead a competitor who can start right away on the project.

Even there, EY could run into problems. Many major tech companies, including Netflix, Airbnb, and Pinterest, say Amazon Web Services is critical to running their businessand EY is Amazons auditor. Depending on the circumstances, that alone could be enough to preclude EY from pitching work to those companies, industry observers say.

The rules arent always very clear about this, said Fiona Czerniawska, CEO of Source Global Research, which tracks the professional-services industry.

EYs leaders contended that separating auditing from consulting would have better enabled EYs consulting operations to compete with consulting companies like Accenture, McKinsey, and Alvarez & Marsal that dont have to vet potential clients for audit conflicts.

They dont have to worry about calling us and us telling them, We cant serve you here because we have an audit conflict, Paul Aversano, managing director at Alvarez & Marsal and a former EY partner, said of advisory clients. They know when they call us, were largely going to be able to serve them.

Still, accounting firms, including their consulting arms, benefit from the stable revenue audits deliver, especially for decades-long client relationships. Sri Ramamoorti, an associate professor at the University of Dayton, compared that steady stream of revenue to a perpetual annuity.

And that stability obviously is very good in business, Ramamoorti said.

A split might resolve concerns about keeping auditors independent. But it would also deprive them of the market knowledge and technical skills that their consulting colleagues provide them under the current setup, in areas from cybersecurity to valuations to automation.

Theres no perfect solution here, Czerniawska said.

The future of auditing and consulting is going to be about technology, she said. Is there going to be an audit in the way we know it in 20 years time?

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EY's Abandoned Split Exposes Obstacles to Big Tech Consulting - Bloomberg Tax