Tech Brew Ride Home - Mon. 03/06 – AI And The Golden Age Of Scamming

Episode Date: March 6, 2023

As Microsoft begins to integrate AI into its core enterprise and productivity products, are we ready for the scamming that AI is going to be able to produce? Details on forthcoming new iMacs. A checkin on Twitter. And why does Meta seem hellbent on ignoring what most people use VR for in the first place? Sponsors: ZocDoc.com/techmeme RelationshipHero.com/techmeme Links: Microsoft’s Latest AI Assistant Is Meant for Marketers, Customer Reps and Work Apps (Bloomberg) They thought loved ones were calling for help. It was an AI scam. (WashingtonPost) OpenAI Rival Stable Diffusion Maker Seeks to Raise Funds at $4 Billion Valuation (Bloomberg) Multicoin Capital’s Hedge Fund Lost 91.4% Last Year, Investor Letter Reveals (CoinDesk) Apple Readies Its Next Range of Macs, Including — Finally — a New iMac (Bloomberg) Musk Delayed Paying Twitter’s Amazon Cloud Bill, Sparking Ad Threat (The Information) Twitter’s Revenue, Adjusted Earnings Fell About 40% in Month of December (WSJ) I don’t think Meta knows it’s a game company (The Verge) 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 Monday, March 6, 23. I'm Brian McCullough today. As Microsoft begins to integrate AI into its core enterprise and productivity products, are we ready for the scamming that AI is going to be able to produce? Details on forthcoming new IMAX, a check-in

with Twitter, and why does meta seem hell-bent on ignoring what most people use VR for in the first place? Here's what you miss today in the world of tech. Microsoft has announced Dynamics 365 co-pilot, built using OpenAI's technology, helping draft contextual chat and email answers and more rolling out in preview, quoting Bloomberg. Microsoft, having brought artificial intelligence to its battle with Google over search, is now turning to the latest AI technology to catch up with rivals in the corporate applications market, such as Oracle, Salesforce, and SAP. The software giant is introducing an AI assistant called Dynamics 365 copilot for applications that handle tasks such as sales, marketing, and customer service. Based on technology from OpenAI, the software can

draft contextual chat and email answers to customer service queries. It can help marketers come up with customer categories to target and write product listings for e-commerce. The new capabilities are being released in preview form on Monday and are being tested by hundreds of early customers. For example, Italian Apertief maker Campari is trying out the marketing tools to concoct targeted campaigns for events around the Nogroni cocktail. Microsoft also said its next set of AI announcements planned for March 16th will relate to workplace productivity, a term the software maker usually uses to mean office software, end quote. Yeah, but there's also this. Scammers are using voice cloning AI to impersonate distressed loved ones,

sometimes spoofing specific phone numbers to further the ruse, and victims are falling for it because, well, I just don't think we're ready for this jelly, quoting the Washington Post. The man calling Ruth Card sounded just like her grandson Brandon, so when he said he was in jail with no wallet or cell phone and needed cash for bail, Card scrambled to do whatever she could to help. It was definitely this feeling of fear, she said, that we've got to help him right now, end quote. Card 73 and her husband Greg Grace, 75, dashed to their bank in Regina Saskatchewan, and withdrew $3,000 Canadian dollars, the daily maximum. They hurried to a second branch for more money, but a bank manager pulled them into his office. Another patron had gotten a similar call and learned

the eerily accurate voice had been faked. Card recalled the banker saying, the man on the phone probably wasn't their grandson. That's when they realized they'd been duped. We were sucked in, a card said in an interview with the Washington Post, We were convinced that we were talking to Brandon, end quote. As impersonation scams in the U.S. rise, cards ordeal is indicative of a troubling trend. Technology is making it easier and cheaper for bad actors to mimic voices, convincing people often the elderly that their loved ones are in distress. In 2022, imposter scams were the second most popular racket in America,

with over 36,000 reports of people being swindled by those pretending to be friends and family, according to data from the Federal Trade Commission. Over 5,100 of those incidents happened over the phone, accounting for over $11 million in losses, FTC officials said. Advancements in artificial intelligence have added a terrifying new layer, allowing bad actors to replicate a voice with just an audio sample of a few sentences. Powered by AI, a slew of cheap online tools can translate an audio file into a replica of a voice, allowing a swindler to make it speak whatever they type. Experts say federal regulators, law enforcement, and the courts are ill.

equipped to rein in the burgeoning scam. Most victims have few leads to identify the perpetrator, and it's difficult for the police to trace calls and funds from scammers operating across the world. And there's little legal precedent for courts to hold the companies that make these tools accountable for their use. It's terrifying, said Hanny Farid, a professor of digital forensics at the University of California at Berkeley. It's sort of the perfect storm, with all of the ingredients you need to create chaos, end quote. Although imposter scams come in many forms, they essentially work the same way. A scammer impersonates someone trustworthy, a child, lover, or friend, and convinces the victim to send the money because they're in distress. But artificially generated

voice technology is making the ruse more convincing. The victims report reacting with visceral horror when hearing loved ones in danger. Two years ago, even a year ago, you needed a lot of audio to clone a person's voice, Farid said. Now, if you have a Facebook page or if you've recorded a TikTok and your voice is in there for 30 seconds, people can close. your voice, end quote. Yeah, remember what I said about my experience. Two years ago, when I was trying out decrypt, I had to read a whole script for two hours. Now I just upload episodes of this show. Quoting Paul Kedroski, like I keep saying with current generation AI, fraud has found scalable product market fit, and every piece of voice or text data of yours is a potential training set.

This will get much worse, end quote. Something, something, something, two-factor authenticity. but for the person facetiming you? Sources say that stable diffusion creator, Stability AI, is seeking to raise more money at around a $4 billion valuation mere months after raising a $101 million seed at around a $1 billion valuation. This was back just in October. If you thought that was a headline from spring of 2021, say you'd be right. That's how excited VCs are for this AI stuff right now.

Quoting Bloomberg. That it's going back to market so soon amid a tech downturn at a much richer valuation underscores how artificial intelligence in recent months has become the hottest topic in Silicon Valley with the potential to upend entertainment, finance, and even education. The way stable diffusion works is that people type in a description of an image, say, an astronaut riding a horse, and the program spits out a realistic or surrealistic picture. The company says it stands apart from competitors because its open source software is available to the public.

Its practical uses include designing video. games to advertisements, end quote. But one of the biggest reasons why the excitement around AI is nigh is due to a simple fact. Where else are you going to go? The old hotnesses have cooled down for sure. For example, CoinDesk has seen an investor letter from Multi-Coin Capitals hedge fund saying that they lost 91.4% in 2022. In November, it said around 10% of its assets were still stuck on FTCs, and it had exposure to FTT, SOL, and SRM. Multi-coin is pretty much the original biggest successful crypto hedge fund, so this is notable. Quote, the letter attributed last year's decline to a turbulent year for cryptocurrencies,

as well as direct and indirect impact from the collapse of crypto exchange FTX. While the fund successfully dodged the catastrophic implosions of Luna and Three Arrow's Capital earlier in the year, we didn't avoid the explosive revelations about FTCS nor the subsequent contagion. that spread across the market, said the letter. After a remarkable year in 2021, our performance in 2022 was the worst since inception, end quote. Multi-coin capital headed by managing partner Kyle Samani launched its hedge fund strategy in October 2017, which invests in liquid tokens. The firm also operates three venture capital funds and has invested in the now bankrupt exchange FTX. Despite the massive drawdown,

Multicoin's hedge fund remains up 1,376% net of fees from its inception through 2022. As the broader crypto market rebounded from last year's lows, Multicoin reported that the fund gained 100.9% in January 2023, bringing the fund's inception to January returns to 2,86%. Mark German Monday, he says that Apple's new 24-inch IMac is in engineering validation, testing, set to launch in the second half of 2023 at the earliest, likely with the M3 chip, and in the old IMAX colors, quoting Bloomberg. The next IMAQ will continue to come in the same 24-inch screen size as the current model, which was announced in April 2021. The versions being tested

also come in the same colors as the current IMAQ, a palette that includes blue, silver, pink, and orange. The new IMAX will, of course, be more powerful with a new M-Series chip to replace the M1. There will also be some behind-the-scenes changes. The computer will see some of its internal components relocated and redesigned, and the manufacturing process for attaching the IMAX stand is different. While development of the new IMAX, code-named J-433 and J-434, has reached a late stage, it's not expected to go into mass production for at least three months. That means it won't chip until the second half of the year at the earliest. So this is a great development for anyone disappointed that Apple's all-in-one desktop hasn't been updated in nearly two years.

Aside from the iMac, Apple is scheduled to launch about three new Macs between late spring and summer, I'm told. Those three models are likely to be the first 15-inch MacBook Air, the first Mac Pro with homegrown Apple chips, and an update to the 13-inch MacBook Air. The big remaining question is which processors these new Macs will run on. We already know the Mac Pro will include the M2 Ultra, which will provide up to 24 CPU cores, 76 graphics cores, and the ability to top out the machine with at least 192 gigabytes of memory. We also know that Apple has developed the next iMac on the same timeline as the M3 chip, so I'd expect it to be one of the company's first M3-based machines, end quote.

How about a Twitter check-in? Sources say that last month, Amazon threatened to withhold payments for advertising it runs on Twitter because the social network had been refusing to pay its AWS bills for months, quoting the information. The ad threat may have had an impact. A couple weeks ago, Twitter paid AWS $10 million for cloud services it used, but that's a drop in the bucket compared to what Twitter owes AWS AWS based on a long-term contract that company struck, said a person familiar with the situation. Nonetheless, CEO Elon Musk is likely to resist paying what it owes under the broader AWS contract. Twitter argues it hasn't used as much of AWS's service as its contract requires it to pay for, said the person.

Twitter's shortfall on what it is supposed to have spent on AWS services under a five-and-a-half-year contract signed in 2020 is now at least $70 million, and Amazon has resisted renegotiating the contract, the person said. Twitter's overall cost-cutting strategy has led to lawsuits from some firms whose bills haven't been paid, such as landlords. But with bigger companies, it's not so easy. Twitter has paid its Google Cloud bills, for instance. Twitter has a contract to spend $1 billion over five years on Google Cloud, according to the information's cloud database. But Google is an even bigger advertiser on Twitter than Amazon, and also pays to license Twitter data, allowing tweets to show up in Google search results, according to a person familiar with the matter. That close relationship helped convince Musk and Davis that antagonizing Google by not paying the cloud bill wasn't worth the risk,

the person said. And while they have tried to renegotiate Twitter's Google contract as well, as they did with Amazon, Google has refused to play ball, according to a former Twitter employee, end quote. Meanwhile, sources also say that in an update to investors, Twitter reported a 40% year-over-year decline in both revenue and adjusted earnings for December 2022, as advertisers fled the company. This is the journal, quote. As a public company in December 2021, Twitter didn't publicly release monthly financials. For the fourth quarter that ended December 31st, 2021, Twitter reported $1.57 billion in revenue with net income of $182 million. Mr. Musk has said that he expects Twitter to break even in 2023, quote, Twitter still has challenges, but is now trending

to break even if we keep at it, he said in a tweet in February. Banks, including Morgan Stanley, Barclays, and Bank of America that lent Mr. Musk the $13 billion he used to help buy Twitter, haven't been able to sell that debt to third-party investors, a common practice when banks help finance major buyouts. The run-up in the so-called hung debt parked on bank balance sheets has tied up some of their firepower to back other large M&A deals, one factor in the current drought for deals. More than 70 of Twitter's top 100 advertisers from before Mr. Musk's takeover weren't spending on the platform as of the week ended February 25th, according to analysis from research firm

Pathmatics, which is part of censor tower, end quote. Finally today, Alex Krantz in The Verge makes an excellent point that has also occurred to me, Let's not forget that the Meta Quest is good. Like, the state of VR is so, so superior to even five years ago, and Meta deserves a lot of the credit for that. Didn't we just talk about Meta saying they've sold 20 million headsets? Meta is good at making VR hardware, so why does it seem hell-bent on ignoring its core gamer audience?

It's not clear that the company realizes that games are what is currently driving its VR business. Or maybe it simply doesn't want that to be the case. Quoting the Verge on that 20 million headset number, that seems like a small number, but the Nintendo GameCube only sold 21 million consoles in its entire lifespan, and the Xbox Series X and S are estimated to have sold approximately 20 million consoles thus far. So if you look at the Quest 2, which most people use for playing games as a game console, it's done remarkably well, and I think we do need to look at it as a gaming console. Meta might have big ambitions for VR headsets and their place in the Metaverse,

But the reality is that the top software on the Quest 2 are all games. VR early adopters in the consumer space buy headsets to play games. Devices like the Oculus Rift, HTC V, and the PSVR, which sold around 5 million headsets by 2020, were adopted by consumers to play video games, not dick around in a barely built Metaverse. And the push for the Quest 2 to be a Metaverse device hasn't especially resonated with consumers. Rabkin told staff that, quote, sadly, the newer cohorts that are coming in, the people who bought this last Christmas, they're just not as into it as the early adopters. Those early adopters were eager to play games, and that's what they saw when they slipped the headset on.

New users are seeing ads for stuff like Horizon Worlds, which again is such a hot mess. Even the people who make it don't want to play it. Steam and Sony are both very aware that killer AAA game experiences are necessary for a VR platform. That's why we've got excellent titles like Half Life Alex and Horizon Call of the Mountain. They're invested in the software as much as the hardware. Meta isn't. It's bought up a lot of studios, including Beat Sabres, and then done things like announcing the launch of two-year-old games at Meta Connect

or shuttering the servers for one of the earliest multiplayer hits on the platform. If the goal is to build the audience of mixed reality, then a more expensive console focused on less proven experiences, than gaming is unlikely to do it, especially when you consider that its current big, expensive mixed reality headset is doing so poorly, it's dropping its price only five months after launch. By the way, we didn't cover that, but the price of the high-end Quest headset is now only $1,000. I don't know if that's affordable,

but anyway, quoting again, a fourth headset is expected in 2024 that will ideally, quote, pack the biggest punch we can at the most attractive price point in the VR consumer market, Rapkin said, but in 2023, it sounds like we'll be stuck with a very pricey game console that wants to take us on a journey. Most people just aren't interested in, yet, end quote. Nothing for you today. Talk to you tomorrow.