Tech Brew Ride Home - Fri. 11/15 – Crypto Ascendant

Episode Date: November 15, 2024

Eighteen states are suing the SEC over crypto regulation. The FTC might be going after Microsoft, but is this well timed or terribly timed? ChatGPT on Windows just got more available. NASA has created an AI Copilot for… Earth. And, of course, the Weekend Longreads Suggestions. Sponsors: Acorns.com/ride Links: SEC, Gary Gensler Sued by 18 States Over Biden’s Crypto Crackdown (Decrypt) US regulators plan to investigate Microsoft’s cloud business (Financial Times) ChatGPT App for Windows Now Available to Everyone (PCMag) NASA’s AI Earth Copilot will take your questions about our planet (The Verge) Weekend Longreads Suggestions: Not even Spotify is safe from AI slop (The Verge) Klarna’s Seb Siemiatkowski — from burger flipping to billionaire club (Financial Times) Inside the Billion-Dollar Startup Bringing AI Into the Physical World (Wired) Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the Tech meme right home for Friday, November 15th, 2024. I'm Brian McCullough today. 18 states are suing the SEC over crypto regulation.

The FTC might be going after Microsoft, but is this well-timed or terribly timed? ChatGPT on Windows just got more available. NASA has created an AI co-pilot for Earth. And of course, the weekend long-rate suggestions. Here's what you miss today in the world of tech. We've been speculating since the election how various markets and regulatory environments might change for tech with the new administration. It's probably too soon to come to any firm conclusions about all that. But one area where I think we know there's a new wind blowing is in

crypto. Crypto is ascendant and crypto is ready to conquer any regulatory roadblocks they think they still might be facing. Today's case in point, 18 U.S. states led by Kentucky are suing the Securities and Exchange Commission and its commissioners, including Chairman Gary Gensler, over its crackdown on the crypto industry. Quoting DeCript. Filed Thursday, the suit from 18 states and their respective attorneys general, all Republicans, along with the Defi Education Fund, alleges that the regulator violated the U.S. Constitution in its approach to regulating digital assets. Without congressional authorization, the SEC has sought to unilaterally rest regulatory authority away from the states through an ongoing series of enforcement actions targeting the digital asset industry. The lawsuit filed in a

federal court in Kentucky argues. The SEC's sweeping assertion of regulatory jurisdiction is untenable, end quote. The suit further alleges that the SEC knowingly defied a standard procedure under Gensler's leadership when it came to crypto, and so the agency intentionally avoided releasing any new crypto rules as a means to avoid the alleged issues with its, quote, regulatory land grab. The 18 states party to today's lawsuit led by Kentucky have now asked a federal judge to grant declaratory and injunctive relief effectively to freeze the SEC's ability to sue crypto companies. Russell Coleman, Kentucky's Attorney General, framed the suit in starkly partisan terms. Instead of encouraging this vibrant new digital industry, the Biden-Harris administration is unlawfully cracking down on cryptocurrency.

He said in a statement, along with conservative AGs across the country, we're fighting to keep the federal government from reaching into Kentuckians' wallets, both physical and digital, end quote. While President-elect Trump has pledged to ardently support the digital assets industry and is almost certain to appoint a new SEC chair with strong pro-crypto views, the suit appears intended to not only send a message to the outgoing administration, but to prevent any future SEC chair from exercising their powers against the industry, as Gensler has. The 18 attorneys general have formally requested that the court instruct the SEC that it is barred from bringing future enforcement actions against digital asset platforms on the base. basis of treating, quote, secondary transactions in common digital assets uniformly as, quote, investment contracts, end quote. Now, given that, what do you think the odds are that this is followed through on? Sources are telling the Financial Times that the U.S. Federal Trade Commission

plans to investigate allegations that Microsoft is abusing its market power and productivity software to prevent customers from leaving Azure. Although I don't know, signals are, so far at least, that things that harm consumers are still in regulatory crosshairs. Quote, the FTC is examining allegations that Microsoft is abusing its market power in productivity software by imposing punitive licensing terms to prevent customers from moving their data from its Azure cloud service to competitors' platforms, according to people with direct knowledge of the matter. Tactics being examined include substantially increasing subscription fees for those that leave, charging steep exit fees, and allegedly making its Office 365 products incompatible,

with rival clouds, they added. The FTC is yet to formally request documents or other information from Microsoft as part of the inquiry. The people said, a move to challenge Microsoft's cloud business practices would mark the latest broadside against big tech by the FTC's chair, Lena Kahn, who has centered her tenure on aggressively curbing the monopolistic powers of the likes of meta and Amazon. Khan, who has become the public enemy for most of Wall Street's dealmaking community, is set to be replaced after President-elect Donald Trump enters the White House next year. While any successor to Khan may not adopt as tough a stance, potential contenders are expected to continue targeting big tech companies which have attracted bipartisan ire in Washington. The Republican Party has accused online platforms of allegedly censoring conservative voices.

The decision to launch a formal probe would come after the FTC sought feedback from industry participants and the public on cloud computing providers' business practices. The result in November last year revealed that most responses raised concerns around competition. the agency said at the time, including software licensing practices that curb the ability to use some software and other cloud providers' ecosystems. The FTC also highlighted fees charged on users transferring data out of certain cloud systems and minimum spend contracts, which offer discounts to companies in return for a set level of spending, end quote. Now, some of the speculation online is that Kahn is trying to kick this in motion in the last two months of this administration because she feels it actually might be palatable to the next administration to take up.

As Darro Obisandro said on Mastodon, quote, the FTC plans to investigate whether Microsoft is using its dominance in productivity apps to lock customers into Azure. This is like investigating if the sky is blue. Unfortunately for big tech, J.D. Vance is a big fan of LenaCon and has described her as, quote, doing a pretty good job. So the election is unlikely to be a respite from FTC investigations, end quote. AI has made the ChatGPT desktop app for Windows available to all users following an October release that had been limited to paying ChatGPT subscribers, quoting PC mag. Although ChatGPT has long been available on the web, the Windows-based app stands out by letting you open a companion

window on your PC. This allows you to easily use the AI chatbot alongside any other Windows programs, even if you don't have a paid account. It's a little window you can pull up by pressing alt space. OpenAI product developer Alex Mbrisios said in a briefing with journalists, it's really easy to start a new chat without breaking your flow, pick up where you left off, or ask follow-up questions, end quote. The app contains many of the same features found in the web-based chat chpti, including chat chept search and advanced mode. However, both functions are only available to those with chat gpt plus, which costs $20 per month. Still, when we tried the program today, the Windows chat gpte app gave us a preview of the advanced mode

for over 10 minutes. In addition, the Windows chat GPT app can take screenshots, giving users an easy way to feed images to the AI chatbot in addition to the normal upload photo function. Users can also customize a hotkey to trigger the companion window. For Apple users, OpenAI is also upgrading the chat GPT app for MacOS, which became widely available to all users in June. The big improvement is that OpenAI is giving the app the ability to read computer code from third-party apps. The feature is meant to address how many Mac users felt they were constantly copying and pasting text from third-party apps to ChatGBTGBT, and Breesio said, quote, for example, instead of copying and pasting code, you can pair ChatGPT with an IDE or terminal,

and then when you're asking questions, ChatGBT-BT can look at the content in the app to better answer your questions, he added, end quote. NASA is partnering with Microsoft to create Earth Copilot, an AI chatbot that can answer questions about the Earth, using NASA's geospatial information. Quoting the verge. To create the tool, NASA is integrating AI into its data repository, allowing Earth co-pilot to refer to this information when answering questions such as what was the impact of Hurricane Ian in Sanibel Island or how did the COVID-19 pandemic affect air quality in the U.S. NASA aims to democratize access to scientific data with the launch of Earth co-pilot as obtaining and understanding the information within NASA's database is

currently more difficult for people who aren't researchers or scientists. For many, finding and extracting insights requires navigating technical interfaces, understanding data formats, and mastering the intricacies of geospatial analysis, specialized skills that very few non-technical users possess. Tyler Bryson, Microsoft's corporate vice president of health and public sector industry, said in the announcement, AI could streamline this process reducing time to gain insights from Earth's data to a matter of seconds. Right now, Earth co-pilot is only available to NASA scientists and researchers who will assess the tools capabilities. They'll then explore its integration into NASA's visualization, exploration, and data analysis platform known as VEDA, which already offers access to some

of the agency's data, end quote. It's Friday, so you know what that means? It's time for the weekend long read suggestions. First up, The Verge. Takes a look at how fake AI albums targeting real artists are flooding Spotify to profit from royalty fraud, abusing a distribution process. and until now has been effectively based on the honor system. Quote, to understand how this works, you need a sense of the mechanics. Streaming platforms like Spotify don't work like your Facebook page. Mina and other artists aren't logging in and adding albums to their accounts directly. Instead, they go through a distributor that handles licensing metadata and royalty payments.

Distributors send songs and metadata in bulk to the streaming services. The metadata part is important. It includes things such as the song title and artist's name, but also other information. such as the songwriter, record label, and so on. This is crucial for artists and others to get paid. But this whole process effectively works on the honor system, and for something like the fake standards album, this is where the problems begin. A distributor takes you at your word that you are who you say you are. Spotify takes the distributor at their word, and boom, there's a fake album on a real artist's page. Most of the time when this happens, it's an honest mistake. In the recent

spate of fakes, though, it seems like artists are directly targeted. UMG alleges that artists such as Kendrick Lamar, you have to see the spelling to see that this is wrong, Ariana Gromdey, Justin Biber, and Lady Gaga are among those, believe, uploaded, suggesting a strategy of attempting to capture streams from users who had simply typoed. Another strategy is creating AI covers of popular songs and getting them onto popular playlist, so normal people will stream them. Another involves bots listening to songs. Earlier this year, a Danish man was sentenced to 18 months in prison for using bots to get about

$300,000 in royalties. Another man, Michael Smith, was arrested and charged with defrauding streaming services out of $10 million over the course of seven years. Smith used AI tools to create hundreds of thousands of songs under the names of fake artists such as Calm Baseball, Calm Connected, and Calm Knuckles. He then streamed the huge catalog using bots, billions of times, prosecutors allege that diverted money that should have gone to real musicians that real people were really listening to. In this case, Spotify paid only $60,000 to Smith, suggesting the company's protective measures work to limit payments. People upload massive amounts of albums that are intended to be streaming fraud, said Andrew Beatty, the CEO of Beatap, a company that aims to

prevent streaming fraud. Beatty estimates that $2 billion to $3 billion is stolen from artists through this kind of fraud every year, end quote. By now, pay later startup Klarna is going public. They filed for a IPO two days ago. Investors hope Klarna can achieve a $15 to $20 billion valuation. So the Financial Times has a profile of Klarna and its CEO Sebastian Semyatowski. Quote, Simiatowski or Seb has acquired celebrity status in the Swedish tech scene. He is frequently asked to appear in podcasts and television shows to talk about his journey and his family struggles, such as his father's alcohol addiction and suicide. He has been vocal about no longer drinking alcohol and spoken about his difficult upbringing in Uppsala, a medieval town 70 kilometers north of Stockholm.

His parents, two academics who fled communist Poland before his birth in 1981, fell on hard times. His father became a taxi driver and his mother retired early due to illness. We would go a full week at a time eating meal after meal of Swedish pancakes, which are essentially nothing more than flour and milk. Simeatowski was quoted as saying in a Sequoia Capital brochure, my parents couldn't afford anything else. To fund Klarna's global ambitions, the Swedish executive secured the backing of prominent Silicon Valley investors, including Sequoia Capital and Silver Lake, writing a wave of investor hype and cheap money. By 2021, a soft bank-led funding round had awarded at the Crown of Europe's most valuable

startup, its pay-later option ubiquitous at the online checkouts enjoying a pandemic-era boom. Little more than a year later, rapid interest rate rises put an abrupt end to the fintech frenzy, and instead, Clarnock came under pressure to prove its profit potential and to supply its investors with an exit, end quote. Finally, today, Wired takes a look at how the startup physical intelligence is trying to give robots a human-like understanding of the physical world by feeding data from robots doing tasks into its AI model. Quote, despite amazing AI advances in recent years, nobody has figured out how to make robots particularly clever or capable. The machines found, in factories or warehouses are essentially high-tech automaton's going through precisely choreographed

motions without a trace of wit or ingenuity. Physical intelligence believes it can give robots human-like understanding of the physical world and dexterity by feeding sensor and motion data from robots performing vast numbers of demonstrations into its master AI model. This is, for us, what it will take to solve physical intelligence. CEO Carl Hausman says to breathe intelligence into a robot just by connecting it to our model. In early 2022, Hausman and Icter, then at Google, together with Levine, Finn and others, showed that LLMs could also be a foundation for robot intelligence. Although LLMs cannot interact with the physical world, they contain plenty of information about

objects and scenes thanks to the vast scope of their training data. Though imperfect, like someone who understands the world purely by reading about it, that level of insight can be enough to give robots the ability to come up with simple plans of action. Houseman and company connected an LLM to a one-armed robot in a mock kitchen at Google's headquarters in Mountain View, California, giving it the power to solve open-ended problems. When the robot was told, I spilled my coke on the table, it would use the LLM to come up with a sensible plan of action that involved finding and retrieving the can, dropping it in the trash, then obtaining a sponge to clean up the mess, all without any conventional programming. The team later connected a vision language model trained on both text and images to the same robot, upgrading its ability to make sense of the same robot, upgrading its ability to make sense of the same. the world around it. In one experiment, they put photos of different celebrities nearby and then

asked the robot to give a soda can to Taylor Swift. Taylor did not appear in any of the robot's training data whatsoever, but vision language models know what she looks like, says Finn, her long brown hair framing a broad grin. LLMs might help robots communicate, recognize things, and come up with plans, but their most basic ability to take actions is stunted by a lack of intelligence about the physical world. Knowing how to grasp an oddly shaped object is trivial for humans only because of deep instinctive understanding of how three-dimensional things behave and how our hands and fingers work. The assembled roboticists recognize that the remarkable abilities of chat GPT might perhaps translate into something similarly impressive in a robot's physical skills if actions, rather than words,

could be captured on a vast scale and learned from. There was an energy in the air, Finn recalls of the event. There have been signs that this may indeed work. In 2023, Kwan Vong, another physical intelligence co-founder, corralled researchers at 21 different institutions to train 22 different robot arms on a range of tasks using the same single transformer model. The result was more than the sum of its parts. In most cases, the new model was better than the one the researchers had developed specifically for their robot. Finn says, just as humans use a lifetime of learning to go from fumbling objects in early childhood to playing piano a few years later, feeding robots vastly more training data might unlock extraordinary new skills. Such is the excitement

and expectation around the company's dream that investors are betting hundreds of millions that it will make the next earth-shaking breakthrough in the field of AI. Physical intelligence last week announced it had raised $400 million from investors that include OpenAI and Jeff Bezos at a valuation of over $2 billion, end quote. The weekend bonus episode this weekend is when I'm really proud of. There's tons of content out there about how to start a startup, how to hire, how to grow, how to find product market fit, how to raise around. But there's not a ton out there that addresses this question.

How do you know when it's time to kill your startup? How do you know when it's time to shut it down? And how do you job search and or raise for a new startup if you're fresh off of killing your previous one? We talk about all of that with someone who has recently experienced all of that. There are some amazing learnings in this episode. Look for it this weekend. Talk to you on Monday.