Monthly Archives: May 2023

Sen. Lindsey Graham on Thursday said Big Tech companies will kill his legislation intending to protect kids online and he is working on a fallback plan.

The South Carolina Republican said his frustration with the Senates inaction has driven him to team with Sen. Elizabeth Warren, Massachusetts Democrat, on an alternative proposal to empower regulators to go after large technology companies.

Mr. Grahams EARN IT Act has more than 20 Democratic and Republican co-sponsors and advanced via a voice vote through the Senate Judiciary Committee on Thursday. The authors have said their bill would strike a blow against Big Tech by stripping the companies immunity from legal liability for child sexual abuse material posted by people using the companies platforms.

The committee advanced a previous version of the legislation last year that never became law. Mr. Graham said the 2023 bill is doomed to a similar demise because of Big Tech companies influence over Congress.

Theyre the largest companies in the world; theyre making hundreds of billions of dollars, and part of their business model is destroying peoples lives and theyre going to beat us, Mr. Graham said at the meeting before the vote. Were going to pass the EARN IT Act today, but itll go nowhere.

The EARN IT Acts co-sponsors urged Mr. Graham not to sound so fatalistic. Sen. Richard Blumenthal, Connecticut Democrat, said he hasnt given up hope and implored the Republican to consider that a journey of a thousand miles begins with a single step.

Mr. Graham did not appear persuaded. He said consumers are getting completely screwed and he wanted to create new powers for government regulators to crack down on tech companies.

Giving more power to the government to shape tech companies operations is something that has concerned several of Mr. Grahams colleagues about the EARN IT Act.

After the bills failure last year, lawmakers rewrote the legislations duty of care that directs companies to prevent and mitigate their tech platforms from enabling mental health disorders in children.

State attorneys general and the Federal Trade Commission are tasked with enforcing the law, and both Democrats and Republicans fretted about how the law would be applied.

Sen. Cory Booker, New Jersey Democrat, said the bill needed to be refined more before receiving final consideration on the Senate floor.

I have a real concern in this bill about issues of cybersecurity and how we might empower the government to do things to target disadvantaged groups for more harassment and discrimination, groups that we know are ultimately vulnerable, Mr. Booker said.

Sen. Ron Wyden, Oregon Democrat, similarly said Wednesday that he feared Republican state government officials would use the legislation to wage a culture war against children.

Democrats are not the only ones raising concerns about online child safety legislation. Sen. Mike Lee, Utah Republican, said lawmakers must be careful that the legislation would not accidentally destroy encryption that is used for things such as securing governmental secrets and making online payments safe.

The EARN IT Act has also drawn the ire of liberal and conservative advocacy groups. The American Civil Liberties Union and Americans for Prosperity urged lawmakers on Wednesday to oppose the legislation over fears that it would chill free speech on the internet and stifle innovation.

Originally posted here:

Lindsey Graham says Big Tech will kill online child safety bill, teases plan with Elizabeth Warren - Washington Times

As dry and bureaucratic as EU legislation may seem, it can also be groundbreaking and, dare we say it, radical. The bloc has taken a global lead in tackling regulation in areas such as green taxonomy and the much-anticipated AI Act. European lawmakers are also at the forefront in trying to curb the seemingly ever-growing dominance of Big Tech.

The Digital Markets Act (DMA) is the EUs tool to attempt to open the digital app marketplace up for smaller competitors. It sets criteria to identify the gatekeepers of the market and make them comply with a certain list of dos and donts.

Among other things, the DMA will promote interoperability, forcing companies like Google, Apple, and Meta to let users link rival apps to their services. This means that Apple will need to release the tightly controlled (and heavily commissioned) grip it exerts through its app store.

In the words of Cdric O, Frances then-digital economy minister, upon the signing of the act last year, Dont break them up, break them open.

Theoretically, it also means that users of different messaging apps will be able to contact each other from, say, WhatsApp to Telegram, but it is unclear how this would actually be implemented. It will also forbid the gatekeeper companies from doing things such as track their users outside core platforms for targeted marketing without consent.

While it entered into force on 1 November 2022, the DMA technically began applying yesterday, 2 May 2023. This means that potential gatekeeper tech companies now have until 3 July to notify their core platform services to the European Commission.

The Commission will then have 45 working days (until 6 September) to decide whether or not they pass the gatekeeper threshold. If the Commission concludes that the company in question does indeed meet the designated criteria, the gatekeeper will then have six months (until 6 March 2024) to comply with the requirements set out in the DMA.

In the case of non-compliance, the Commission can impose fines of up to 10% of the companys total worldwide annual turnover. In the event of repeated infringements this can increase to 20% plus periodic penalty payments of up to 5% of the companys total worldwide daily turnover.

So who are the gatekeepers? According to the DMA, they are platforms in the digital markets that have a significant impact on the internal market, serve as an important gateway for business users to reach their end users, and which enjoy, or will foreseeably enjoy, an entrenched and durable position.

As with all legal texts, the criteria go into significant detail. Simplified, they entail that companies will be considered gatekeepers if they have a market capitalisation of more than 75 billion, and 45 million monthly active users in the EU.

There are 10 platform services listed in the DMA. These are:

A company may be listed as a gatekeeper for more than one service.

Together with the Digital Services Act (DSA), the DMA forms one of the central columns of the EUs digital strategies. They are both part of a regulatory program known as A Europe Fit For the Digital Age.

Adopted three years ago, it is part of the Commissions ambition to make this Europes Digital Decade in which it will strengthen its digital sovereignty and set standards, rather than following those of others with a clear focus on data, technology, and infrastructure.

See more here:

'Break them open' new EU rules coming for Big Tech - TNW

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?

Original post:

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

In recent years, major players like Microsoft, Amazon and Google have increased their involvement in open source projects, providing both financial and technical support. More consistent contributions from big techwhether in the form of people or resourcesis exactly what the open source community needs. However, underdeveloped collaboration guidelines can lead to friction between large corporations and open source developers, which ultimately harms both parties. Friction jeopardizes tech companies ability to rely on open source for operations while leaving the open source community without the support it needs. To make their relationship more sustainable, both parties need to cultivate a greater level of trust, develop clear guidelines for collaboration, and prioritize community.

For years, major tech companies have used open source solutions in their tech stacks. But many open source developerswho receive little to no money for their workhave voiced concerns about companies that take more from the open source community than they give.

In many ways, big tech has answered the call. For example, Amazon recently passed IBM as the fifth-largest contributor to open source projects. Companies like IBM and Amazon have a vested interest in supporting these projectsif open source projects are understaffed and underfunded, the quality of the solutions suffers.

But many tech companies are grappling with an unstable financial environment, which makes hefty donations more difficult to justify. As a result, support from big tech often involves donations of their developers time. However, this is also challenging as tech companies like Twitter and Google continue to lay off the developers who were keeping many open source projects afloat.

Yet, even before recent layoffs, collaborations between big tech and open source teams were strained. Theres a natural power imbalance between a corporation like Amazon and the open source community, which includes members who contribute to these projects in their free time, sometimes for little or no pay. Big tech developers must juggle the interests of the open source team theyre collaborating with and their own employerwith little guidance on how to do so.

A lack of transparency and communication from big tech also puts open source developers in a tricky situation. Many developers need financial and personnel support but may not want to relinquish control of their solutions to an outside corporation.

To alleviate this tension, big tech needs to establish clear, mutually beneficial guidelines for open source collaboration that prioritizes sustainability.

Past tensions between big tech and the open source community can affect collaboration if left unaddressed. For example, Microsoft has become one of the biggest contributors to the Linux kernel, but many open source teams still remember former Microsoft CEO Steve Ballmer calling Linux a cancerin 2001.

To overcome this tension, big tech companies need to clarify their intentions from the beginning of a project. They should disclose their reasons for selecting the project, the developers who will work on that project and how their contributions will look. Open source maintainers also have a role to play here. They must properly vet these companies and inquire about their prior open source experience and strategies before welcoming them into the fold.

One way to reduce the risk of power imbalances or other tension is by collaborating through a project like the Linux kernel. Google, IBM and many other corporations contribute toward Linux kernel, and this distribution of contributors creates a much more balanced playing field. Rather than one company assuming operational control, multiple companies play a small part in keeping the Linux kernel up and running.

While these guardrails certainly help, big tech companies also need to formalize their open source contribution processes. At Aiven, weve done this through our open source program office (OSPO), which helps us manage our relationships with the open source communities we rely on. OSPOs ensure organizations remain compliant with open source licensing and provide a foundation to expand their involvement with the community over time.

When developing an OSPO, tech companies should be intentional about how they measure success. The most obvious metrics relate to the work developers dofor example, the number of features delivered, the number of fixes and the number of projects they contributed to. But OSPOs should also measure how developers contribute to the community itself, not just the projects within it. For example, do developers review work from other developers in the community? Do they attend conferences, write blog posts and share knowledge with other developers?

Big tech leaders must place as much emphasis on community-building as they do the number of contributions developers make. If they dont evaluate developers based on their engagement with the community, the developer is less likely to focus their efforts there, injecting toxicity into the communities theyre trying to support.

The challenge of reducing the stress and burnout of open source developers cant be solved solely through financial means. No amount of money will reduce the amount of work it takes to maintain an open source project.

To make collaborations between open source teams and big tech sustainable, both sides need to prioritize supporting the community above all else and develop guidelines that support this mission. More sustainable collaborations will ensure that the open source community gets the support it needs while big tech continues to reap the rewards of the communitys innovations.

Read more here:

Open Source Communities Need More Than Funding From Big Tech - DevOps.com

This is an audio transcript of the Behind the Money podcast episode: Night School, Class 3 Big Tech vs the insurgents

[MUSIC PLAYING]

Peter Spiegel Welcome to Behind the Money Night School. Im Peter Spiegel. Im the US managing editor of the Financial Times. BTM Night School is a special series made in collaboration with Blinkist that will serve as a guide to the US economy in 2023. For tonights lesson...

John Thornhill I think AI is different. It does disrupt peoples jobs. I dont think it ever tends to replace jobs outright. What it does do is change the nature of those jobs.

Peter SpiegelFrom the rise of ChatGPT to lay-offs at companies like Meta and Amazon, tech has dominated the headlines in 2023. Here to help us make sense of it all is the Financial Times innovation editor John Thornhill.

John, looking at the US economy, 2023 has been a year where weve seen the economy slow, and that is nowhere more apparent than in big tech, where firms like Amazon, Google and Microsoft have all announced some of the biggest lay-offs of any American companies. Why are they being hit so hard?

John Thornhill I think several things are going on at the moment. And youre right. I mean, so far this year, the latest tally, I think about 100,000 jobs have gone from the big tech companies, which is a lot of jobs. Several things, I think. One, last year, I think during the whole Covid pandemic, all of the big tech companies overinvested. They thought the future was gonna arrive quicker than it in fact did. And everyone was going online. They were using Zoom; they were using Google Meet. Everyone is working remotely. So there was a big demand for tech products. And so I think part of the story is were just coming off the peak. The Nasdaq index of kind of tech stocks is down 16 per cent over the past year, although its gone up 12 per cent this year. And I think that really, its just a recalibration when you look at a lot of the hiring figures or the investment levels or the VC funding, 2023 compared to 21, its really still showing an upward tick. Its just that this blowout year of 2022 has now been rolled back.

Peter SpiegelSo these names that we were just talking about that dominate in many ways our daily life Microsofts, the Googles, the Amazons if were coming off the peak, are these lay-offs and the downturn sign that these companies are sort of losing the position in the US economy, that theyre gonna be diminished in the US economy going forward? Or is this a classic case of sort of retrenchment where theyre basically just sort of cutting costs to maintain their leadership position going forward?

John Thornhill Im definitely in the retrenchment school. If you look at the underlying trend lines on ecommerce or the shift to digital advertising or just the uptick of adoption of all these tech products, youre seeing the underlying trend is still moving very sharply northwards. Youre seeing a whole load of new start-ups being formed, partly as a result of the kind of tech lay-offs as well, that there are a lot of kind of surplus tech workers who are now thinking about what theyre gonna do. So theres been a big surge in kind of new business formation weve seen since the Covid pandemic. And I think just generally theres a whole secular trend towards increased use of technology. Five billion people in the world have a smartphone. Increasing amount of commerce is going online, about 20 per cent in the US now. And so I think the secular trend will eventually can outweigh the cyclical downturn.

Peter Spiegel All right. So lets talk about that because theres this trend towards increased use. I think when we talk about technology in general, we tend to focus on these big companies because, as I said, they tend to dominate our lives. But as you pointed out, new companies being started, a secular trend towards more use of technology in our daily lives, so although these big tech groups in Silicon Valley play an important role, its not the only way technology is impacting the US economy. But what are some of these trends that we should be watching, you know, to see whats going to influence our lives and whats going to influence the broader economy?

John ThornhillWell, I think part of the story is that youre gonna see a battle between the big incumbents the Microsofts, the Googles, the Amazons and so on that youve been talking about and the insurgents, if I call them, the next generation of those companies that are emerging. And I think its gonna be fascinating to see how this battle plays out. On the one hand, its been easier and cheaper to launch a company than ever before. You have, everyone can operate in the cloud, which means that the cost has been reduced, the cost of software has plummeted, and finance is more readily available than ever before. So I think we have seen this really interesting trend of new business formation post-the Covid pandemic and how these businesses grow and adopt the new technologies that are coming along. Are they gonna shake the market grip that the big companies have, or are we gonna see a lot more disruption from below?

Peter Spiegel OK, so disruption by insurgents takes us very quickly to what I mentioned at the top, ChatGPT. Now OpenAI, which is sort of the inventor or the developer of it, has gotten some backing from Microsoft, but it clearly has become a disrupter, as you say. And its also convinced a lot of people that AI has finally arrived, and it become a...have a real impact on the real economy. Whats your view? I mean, is AI now ready for prime time? Will it play a role as a disrupter, or should we not believe the hype?

John Thornhill Well, these technologies have been developing over several years. I mean, Google really, the first people who came up with the transformer technology, and GPT stands for Generative Pre-trained Transformers. So they were the people who first came up with the technology, and then its been spread and other people have adopted it. As youre saying, OpenAI, which is this fascinating, kind of San Francisco-based research company, has really kind of pioneered the use of what are called large language models or the ChatGPT that came out. And I think theyve had a huge impact. So I think what...the difference is that a lot of the big companies and Google and Microsoft in particular had been developing these generative models. But when we saw the launch of ChatGPT in November last year, they really went mainstream. Millions of people started playing with them. About a hundred million people started using them within two months of launch, which is an astonishingly rapid take-up of a new technology. And I think we all had that kind of wow moment where you prompt a question in ChatGPT and you get this extraordinarily plausible instantaneous text coming out of the machine. And I think it is an amazing thing. But I think people are only just beginning to work out how its gonna have an impact.

Peter Spiegel Let me play the cynic or the sceptic here, because it was not so long ago that we had another, quote unquote, disruptive technology in something called the blockchain. And the most vivid thing we saw about this blockchain was in cryptocurrencies. And yet in the last few months, weve seen a complete collapse of the most prominent part of the crypto exchange called FTX. And that has seemed to raise all sorts of new questions about cryptocurrencies in general, but also whether blockchain is actually as disruptive as we maybe once thought. Take me through your thoughts on blockchain, and why perhaps AI as a disruptive technology is more worth paying attention to or not versus the hype that was around blockchain?

John ThornhillWell, Gartner, the data company, came up with this quite useful model called the hype cycle, which is rather nice (Peter chuckles). And so they plot where each technology is on this chart that they produced according to how much hype there is around a particular technology. So at the moment, AI is very close to the top of the peak of inflated expectations, as they call it. People are getting so excited about it. Metaverse and blockchain have gone over the top of that peak, and theyre now in what the Gartner would call the slough of despond. (Peter laughs) And then after a few months after people have stopped talking about it, then you get the slow adoption. And thats really when I think a lot of these technologies go mainstream. So I think that youre seeing exactly that with blockchain, there is massive overhyping of it. We saw the whole collapse of the FTX crypto empire. People have almost shaken their heads and thrown up their hands in despair and thought, this is never gonna come to anything. But I think people will start thinking, what are the real uses of this? How can we adopt it? And I think we might begin to see some really interesting uses over the next five, 10 years.

Peter SpiegelAnd when you say find ways to use it, do you mean cryptocurrencies specifically or more broadly, the blockchain technologies and how something that is, you know, visible and transparent to the world and cannot be hacked at is something that other industries could use potentially?

John ThornhillI think its the underlying blockchain technology that people are beginning to think, is this a different way of handling data and making transfers in a way that is more decentralised, is not controlled by one central authority and so on? So I think a lot of the models that weve seen emerge so far have failed, but there is still, I think, possibilities that they could get adopted in the future.

Peter Spiegel Lets go back to AI and to a certain extent to ChatGPT, but AI more generally, because if you combine AI with robotics, you have a debate about whether basically increased automation and machine learning through robotics is good or bad for the US economy. So on the upside, theres the obvious economic argument that automation increases productivity and productivity is key to any country increasing its collective wealth. So therefore, on paper at least, this is a good thing for the US economy. But many of us have seen that there are, automation frankly takes jobs away from a lot of blue-collar Americans, which means there are even fewer well-paying jobs for the average American. So in your view, because you are a columnist, is automation and robotics, you know, a plus or a minus for the US economy?

John Thornhill I would say its definitely a plus. I think this debate has been going on for several centuries and in fact, ever since the Industrial Revolution, that its very easy to see which jobs are destroyed by new technologies and very hard to predict which jobs are gonna be created. I think AI is different. Its an incredibly powerful whats called a general purpose technology that infuses the whole economy at large. I think it will have an incredible impact on productivity in a whole load of different areas. And one of the ones Im most interested in is healthcare at the moment. But as you say, it does disrupt peoples jobs. So I dont think it ever tends to replace jobs outright. What it does do is change the nature of those jobs. In healthcare, for example, a lot of speculation out there that it will change the role of a doctor a lot more than it will change the role of a nurse, for example. In the past, when manufacturing was automated, it definitely hit the blue-collar jobs. It was that kind of automation of muscle. What AI is doing is automating the brain. And so I think thats gonna affect a lot more white-collar jobs going forward...

Peter Spiegel Hopefully not journalists...

John Thornhill Well, maybe some journalists (laughs), but not columnists, I think.

Peter SpiegelBefore I let you go, I want to change topic slightly from the hard science and the disruptive nature of technology to sort of the policy side of things, because one of the biggest stories in technology, I would argue, is that its become in many ways the big battleground in geopolitical conflict, particularly between China and the US. So almost on every sector in technology microprocessors, quantum computing, renewables, green technologies, 5G you have the US and China at loggerheads, sanctions, bans, all these kinds of things. Just to throw this out there, who do you think is winning the global tech war? Because there is a lot of nervousness in Washington that China has taken a quantum leap ahead of the west on many of these technologies. Is that paranoia? Is that actually happening? What would be your view in terms of where China and the US stand right now in advanced technologies?

John ThornhillIf I can put it in a slightly different way, I think both sides are winning, which means also both sides are losing. In some areas like 5G telecoms infrastructure that you were talking about, no doubt China has won that war. I think in open areas that are still now very competitive, in particular, three I would pick out. One is chips that you mentioned. At the moment, 90 per cent of the worlds leading chips are manufactured in Taiwan, which a lot of people in Washington worry is an incredible kind of geostrategic hotspot. What happens if Taiwan came off market? Thats obviously an enormous kind of strategic challenge for America, which is, explains why theres been this massive investment in kind of chip production in the US. AI, I think, is one of the other areas when you look at the papers that are now coming up. China has put an enormous effort into increasing its capability in that area. I think for the moment, as far as anyone can tell, America still has the significant edge in terms of research. But I think China has probably got the edge in terms of the application of a lot of these AI models, certainly kind of ecommerce and online world and digital payments and so on. So I think thats an even contest in a way. And then I think the real joker is quantum, and weve been spending quite a lot of time at the FT trying to investigate quantum computing. In truth, nobody knows who is ahead in this field.

The idea is that if one side or the other did develop a fully functioning quantum computer, they would be able to crack open the other sides encryption methods, the so-called Q-Day, which would have an enormous strategic impact if one of those two sides got ahead of the other. But the truth is that we have no idea really who is where at the cutting edge of this technology. So thats definitely an open race.

[MUSIC PLAYING]

Peter Spiegel OK, John, Im gonna ask you, if our listeners were to just walk away and say, here are the three things I need to take away from John Thornhills discussion, what are the three most important things do you think right now?

John ThornhillWell, first, I think the macro trend towards tech is still very strong. We had this blip in 22. Weve had the retrenchment in 23. But I think we still are gonna see a very strong uptake of technology, particularly in ecommerce, a whole load of software services and in generative AI. Number two would be the impact of generative AI. I think people are still trying to figure this out. Huge numbers of start-ups being created and getting funded right now, who are trying to work out how they can apply AI. Ninety per cent of the start-ups are gonna go bust, but the 10 per cent of them are gonna transform the workplace, I believe. And I think in many areas theyre gonna augment human creativity. Theyre gonna threaten a number of jobs, particularly kind of white-collar jobs. Theyre going to change the nature of work. But I think they will also augment human creativity and lead to a lot of increased productivity. And the third one is really how this all fits into the context of the US-China tech war. I think people have kind of pulled back from calling it the new cold war, but theres certainly very heightened rivalry between the two powers, most particularly in chips, where America is kind of really squeezing China. And China is putting huge effort into trying to develop state-of-the-art computer chips. But were also seeing it in the areas of kind of AI quantum computing and also synthetic biology.

Peter SpiegelOK, Im gonna be very unfair and push you even further. If theres one thing that our listeners should take away about technology and the US economy, what do you think that one thing is?

John ThornhillIts all about the humans, rather perversely. I would argue that technology is a subject that everyone gets obsessed by and they look at the kind of capabilities of the technology and what it could do. But technology is only useful when its applied, and thats all about how people use it. And so I think humans very much are in the driving seat still. Were trying to figure out how we use this technology. We can use it for wonderful, productive ends. We can also use it for very harmful purposes as well. Dont forget the humans.

[MUSIC PLAYING]

Peter SpiegelThanks again for listening. Im Peter Spiegel. You can find more of Johns reporting on FT.com. This episode was done in collaboration with Blinkist. If you want to find out more about conversations and topics like this, check out the Blinkist app. This episode was produced by Zach St. Louis. Topher Forhecz is our executive producer. Sound design by Breen Turner and Sam Giovinco. Cheryl Brumley is our global head of audio. Thanks for listening. Class dismissed.

[SCHOOL BELL RINGING]

See the original post:

Night School, Class 3: Big Tech vs the insurgents - Financial Times

Michael Klimes Illustration by Dan Murrell

We love the cover images created each month by our art editor, Leon Parks, for the print magazine. But this time Leon has excelled himself. The dark wolf with demonic eyes, staring at the reader, is so arresting.

After you have dragged your own eyes away from those of the wolf, there are the little details to savour, such as the person with a bow whom the wolf seems to be hunting; or is it the other way around? Also, what about all that orange mist perhaps smoke between the two protagonists?

One thing these firms are very good at is providing innovative, efficient products and services

The cover image is so good you might not have felt like turning the page to discover what was in the rest of the magazine. If you did, and are reading my words here, I thank you.

The prose in the cover story, by chief reporter Lois Vallely, is equal to Leons artistic vision.

Their combined work makes editing become a joy, and Lois has produced a fine piece on whether Big Tech is a threat to advisers. Its a skilfully told story whose ultimate direction is hard to determine.

On one hand, there are the clunky platform behemoths that go back some years.

Advisers know their names and histories well. They cost tremendous amounts of money and generated huge expectations, but fell short of the mark.

Using AI should enable advisers to focus on what is most important in the long run: serving clients with a human touch

On the other hand, there is what comes under the label of Big Tech: Amazon, Apple, Facebook and Google. These giants are not associated with financial advice but they could make inroads to the sector due to their financial firepower, datasets and tech nous.

Lois mentions the fact the Financial Conduct Authority believes Big Tech firms could bring benefits to consumers of retail financial services by competing with incumbent providers. One thing these firms are very good at is providing innovative, efficient products and services.

Conversely, there are risks they could get a stranglehold on financial services in the same way they have in other sectors. The Big Tech giants have been criticised by both consumer advocates and politicians for exploiting their market dominance.

Big Tech could make inroads to the sector due to their financial firepower, datasets and tech nous

The best scenario, which Lois outlines, is that something like artificial intelligence (AI) comes in to complement what advisers do. This should enable them to focus on what is most important in the long run: serving clients with a human touch.

We will be covering the same theme of Big Tech and financial advice at MMI Leeds on Thursday 11 May, with Dr Liza Lovdahl Gormsen, a senior adviser to the FCA on the subject. She is our closing speaker and will give us the regulators view.

In other news, I managed to do some writing for the magazine, having conducted MM Meets with M&G Wealth managing director David Montgomery. Enjoy!

Michael Klimes is acting editor. Contact him at: michael.klimes@moneymarketing.co.uk

This article featured in the May 2023 edition of MM.

If you would like to subscribe to the monthly magazine, please click here.

Go here to see the original:

MM View: The Big Tech monster is coming for you - but only if you let it - Money Marketing

By Nick Matich

Google founder Larry Pages first patent U.S. Patent Number 6,285,999 describes the search algorithm that later became one of the most powerful tools in human history. Mr. Page and his colleagues turned that patent, which was licensed from Stanford, into a trillion dollar company and revolutionized the internet in the process.

But now, having reached the commanding heights of the economy, Google and other technology giants with some help from their allies in Washington are trying to weaken patent protections and thus prevent a new generation of startups from climbing the ladder.

First, starting in 2014 with Alice Corp v. CLS Bank International, a series of Supreme Court decisions made it much harder to patent the kind of algorithmic innovations that made Google what it is today. In the years after the Alice decision, for example, denials of AI-related patents on grounds of ineligibility quadrupled. Indeed, under current law, Mr. Pages first patent would almost certainly be invalid.

Lower courts have extended the Supreme Courts precedent to new areas, ruling that even innovations in electric car chargers and garage door openers are actually unpatentable abstract ideas. Bad law that once affected only tech startups, now impacts potentially any industry.

A bipartisan reform proposal in the Senate crafted by Thom Tillis, R-NC, the Patent Eligibility Restoration Act, would clear up the murkiness the Supreme Court created. But Big Tech interests are dead-set against it. The less thats patentable, the more Big Tech can lift the work of others without paying.

Second, around 2010, Big Tech lobbied Congress to pass the America Invents Act, which lawmakers wrote with the intention of streamlining patent litigation. Most notably, the law set up an administrative body that could review the validity of already-issued patents, to confirm whether they were genuinely novel, useful, and nonobvious. One of the architects of that legislation, Rep. Darrell Issa, R-CA, just became the new chair of the House subcommittee on intellectual property.

Unfortunately, Big Tech almost immediately abused the law, by infringing on smaller rivals patents and then repeatedly filing challenges against those patents. In fact, there are now companies whose entire business is challenging patents on behalf of Big Tech. These professional patent challengers keep their clients anonymous, enabling them to mount repeated attacks on their rivals patents.

Third, even if a patent survives Big Techs attacks, it has become virtually impossible to stop their infringement. Traditionally, courts would order an infringer to simply stop using the technology as a matter of course. The patent owner could decide whether to compete based on its idea or accept payment from infringers.

In recent years, however, courts have moved towards awarding a reasonable royalty but allowing infringement to continue. Now, after years of infringement and millions in litigation costs, the most a patent owner can usually collect is what the infringer should have paid before using the technology.

The result of all of these changes to our patent system is that it is almost impossible for startups to use patents to challenge the Big Tech incumbents as they might have in the past. With their other market advantages, Big Tech companies can crush new competition and make our economy less dynamic in the long run.

Thats why Congress needs to empower small innovators by restoring the balanced patent system that built Americas tech industry.

Nick Matich, a patent litigator in private practice, served as acting General Counsel at the U.S. Patent and Trademark Office.

See the article here:

Big Tech has eviscerated America's patent system The Gilmer Mirror - Gilmer Mirror

Is Britain really closed for business? That, were told, is the view of US Big Tech as expressed by Activision Blizzard the company whose most famous product is the violent videogame Call of Duty in response to the blocking by the UK Competition and Markets Authority (CMA) of Activisions proposed $70 billion merger with Microsoft, which would have given the latter a dominant position in the emergent field of cloud-based gaming. You dont need to know exactly what that means to be worried that the worlds digital giants take a dim view of the UK as a marketplace and investment destination. But are they right?

Some pundits have used Activisions scorn as a prompt to recite the UKs obvious faults. Our corporate taxes are too high, we no longer offer EU access, our tech skills are woeful, our stock exchange offers a poor platform for high-growth companies and Tory ministers are not as keen as they should be to cut red tape. All true.

But in the case of Microsoft-Activision, lets note that the US Federal Trade Commission has also challenged the deal, that Activision boss Bobby Kotick stands to collect 300 million if it goes through, and most importantly, that Big Tech is always a seeker of monopoly power witness Amazons habitual crushing of competitors which regulators oppose in the interest of consumers and challengers. Competition is for losers (the slogan of the veteran US tech investor Peter Thiel) sums up the long-term strategy of Microsoft and its ilk. The fact that the CMA has teeth and is prepared to use them is a counter-indication that the UK is open, but for fair business rather than corporate bullies.

The takeover by JP Morgan Chase of First Republic, the collapsed Californian bank, may or may not mean, as Morgan boss Jamie Dimon declared, that this part of the crisis is over and the banking system is very stable. What it does signal is that JPMorgan Chase itself, having absorbed $173 billion of First Republics lendings, is now, even more than before, too big to fail. And rumours of other troubled banks around the world despite Dimons confident tone are likely to lead to another round of safety-first mergers akin to Credit-Suisse-UBS. So the next part of the crisis, if and when, will involve bigger banks needing taxpayer bailouts rather than smaller ones that might easily be taken over by their elder brethren. Frying pans and fires come to mind.

Ive observed before that my own City cohort, who started work in the mid-1970s, were a limp lot compared with the generation a decade or so ahead of us, who were pioneers of eurobond issuance, contested take-overs and international consortium banking. Battle-hardened by the early 1970s boom and bust, I wrote, they turned out tougher and more resilient than we were. Now theyre old and some, sadly, are dead, we can begin to place them in bankings pantheon.

Sir John Craven was a big figure because he brokered so many mergers between the banks themselves. My old boss Lord Camoys, saluted here recently, deserves credit for his bold vision of BZW. Among those still with us, Sir David Scholey of Warburgs was a prince before the fall of his firm and Sir Martin Jacomb was the thinking mans City grandee in a multiplicity of roles.

But without fear of contradiction, Id say the most admired for professionalism, leadership, loyalty, global gladhanding and multi-decade stamina was the German-born Sir Win Bischoff, who died last month aged 81. Successively chairman of Schroders, Citigroup in New York during the 2008 crisis, Lloyds Banking Group in London in the aftermath of that crisis, and finally JPMorgan Securities, Bischoff bestrode the financial world.

And everyone liked him. Long ago we headlined a Spectator profile of him (by Judi Bevan) The last of the Citys frequent flyers. There must be younger candidates for that title by now, but few who also deserve this simple accolade offered by one of Bischoffs peers: Hes a traditional relationship banker who puts the interests of the client first.

Are you an early retiree with a penchant for travel but thinking of re-entering the workforce? How about becoming a train driver for Transpennine Express (TPE)? They certainly need you: the northern regional rail franchisee, owned by FirstGroup, currently cancels one train in five for lack of driver availability.

And the terms are attractive, not to say fantastic. Salary around 60,000 a year, almost twice as much as most teachers and nurses, plus lashings of overtime if you want it but no pressure, since the drivers union, Aslef, cancelled a rest day working agreement with TPE. Youll get a leisurely 18 months training to learn the routes and no risk of repetitive strain because you cant be asked to drive the same route twice in a day. Holidays? Take them at 48 hours notice and put your feet up whenever you feel peaky: TPE drivers take the equivalent of 30 sick days per year compared with a national average of 5.7.

For further details, best to contact Aslef lead officer Andy Hourigan rather than TPE, whose current contract expires on 28 May. The government says all options are on the table for the future of the franchise while voxpopped travellers and northern mayors overwhelmingly support Hourigans call for the axe to fall on TPE, whose management wins no praise or sympathy.

But could any private-sector operator run a decent service with a drivers union so determined to derail it in pursuit of the declared political aim of a publicly owned railway from which privateers are excluded? If TPEs routes end up renationalised, the victor will be union militancy, not the suffering passenger.

More:

We need regulators with teeth to fight Big Tech monopolism - The Spectator Australia

IAMAI member companies are also contemplating whether to seek a revamp of the lobby group's functioning and force out tech giants from the association in its forthcoming elections, say sources

A splinter group of around 30-40 startups and domestic companies who are Internet and Mobile Association of India (IAMAI) members are considering whether to join other tech lobby groups, including a prominent rival tech association that is involved in legal action against Big Tech firms, according to people close to the developments.

This comes days after a controversy erupted about IAMAI's alleged leanings to tech giantslike Google and Meta.

"There's a WhatsApp group of around 394 participants who are largely Indian founders and includes both IAMAI members and non-members. The mood has been really hot there with several founders ranting about the issue," said the founder of a unicorn.

"They are saying either we should compel IAMAI to restructure their workings and kick out the Big Tech firms, or join the other prominent rival of the lobby. A third but not too probable option is to form a new group," he added.

Earlier this week, in a bid to assuage the concerns of domestic tech companies, IAMAI said that it was carrying out its mandate by following a process and "work without fear or favour".

On the specific issue of a separate competition law for the digital arena, which triggered the controversy, IAMAI President Subho Ray told members in an e-mail earlier this week that an overwhelming majority of the groups constituents were opposed to the idea of such legislation.

"The genesis of the recent social media and media buzz is the issue of the government setting up a committee to purportedly bring in a separate Competition Law for digital companies. One of the key features of the proposed new competition law is likely to be ex-ante regulations. This means even before you have become large or dominant, your company would be subject to the new provisions," IAMAI President Subho Ray wrote in the mail.

Sources had earlier said that IAMAIs views on the matter may be submitted this week to the Committee on Digital Competition Law (CDCL). However, now, that is unlikely and the process may be delayed further in light of the current controversy.

Moneycontrol has sent queries to IAMAI on the matter and this article will be updated when we receive their responses.

The CDCL earlier had a May 6 deadline for industry bodies to submit their report. However reports state that the deadline has been extended, and a CDCL meeting is scheduled for May 10 to deliberate on the matter further.

Meanwhile, Monday (May 1) was the last day for IAMAI members to submit their views regarding the matter, the group had said in a recent email to its 500 plus members.

A source briefed on the matter said that IAMAI can make changes in its recommendation based on the dissenting views that it may have received from domestic companies. However, that seems unlikely since IAMAI's president Shubho Ray has already said that the last version of its suggestions on the matter, which argued against a separate competition law, reflected the opinion of the majority of IAMAI members.

However, the dissenting views can be captured in a 'dissent note' as part of the larger industry consultation document, and be submitted to the government, sources said.

Another person close to the developments said that IAMAI might be planning to do separate calls with its members and non-member domestic companies on the issue, in order to discuss their concerns about the groups independence.

The issue here is very simple. All of us would like anything that hurts big tech companies. Perhaps, one way to revamp the working of the lobby group would be to ensure that the big tech firms dont get any of the top positions in the upcoming elections of IAMAI, said the founder of the Indian unicorn quoted earlier.

Deepsekhar Choudhury Deepsekhar covers tech and startups at Moneycontrol. Tweets at @deepsekharc

Aihik Sur covers tech policy, drones, space tech among other beats at Moneycontrol

Read the original:

IAMAI showdown: Start-ups explore other lobby groups to fight Big Tech dominance - Moneycontrol

Advantage, big tech. Snaps first-quarter report today, showing a 7% drop in revenue, was a markedly worse performance than what its much bigger rival Meta Platforms reported on Wednesday night. (For those whove already forgotten, Metas ad revenue rose 4% in the quarter.) More noticeable was the difference in the second-quarter revenue outlook: Snap projected a 6% drop, while Meta projected growth of as much as 11%. Investors have made their choice, selling Snap stock down close to 20% in after-hours trading and wiping out all its gains for the year. Meta, on the other hand, is up 98% so far this year.

And this isnt just about Meta versus Snap. Alphabets Google is sailing through the ad downturn reasonably well, all things considered. While it reported a fractional dip in first-quarter ad revenue earlier this week, its search ad number rose slightly. What suffered were ad sales it handles for other companies websites, as well as on YouTube. And on the video front, YouTubes 2.6% decline was better than the 6.1% drop reported by Comcasts NBCUniversal today for its domestic ad revenue. Meanwhile Amazon tonight reported a 21% increase in advertising, slightly better than last quarters growth rate and a lot better than for other big ad-selling firms. (Details on Amazons overall quarter are here, Snap is here and Comcast here.)

See the original post:

Snap and Amazon Q1 Shows Big Tech's Advertising Advantage - The Information