Tech Brew Ride Home - Mon. 08/05 – OpenAI Can Detect AI Text But Isn’t Sure It Wants To

Episode Date: August 5, 2024

Why is OpenAI sitting on technology that could detect AI cheating? Why is Bitcoin so correlated to the stock market? Why is Elon restarting his lawsuit against OpenAI? Why are the Chinese launching a Starlink competitor? And are the go-go days for music streaming over? Sponsors: Dell.com/deals HelloMood.com code RIDE Links: There’s a Tool to Catch Students Cheating With ChatGPT. OpenAI Hasn’t Released It. (WSJ) Bitcoin tumbles below $50,000 for the first time since February (CNBC) Elon Musk Revives Lawsuit Against OpenAI and Sam Altman (NYTimes) China launches first satellites of constellation to rival Starlink, newspaper reports (Reuters) AI Chip Startup Groq Gets $2.8 Billion Valuation in New Funding Round (Bloomberg) Is the Music Industry Slowdown a Crisis or a Blip? (Bloomberg) 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 from Monday, August 5th, 2024. I'm Brian McCullough today. Why is OpenAI sitting on technology that could detect AI cheating? Why is Bitcoin so correlated to the stock market? Why is Elon restarting his lawsuit

against OpenAI? Why are the Chinese launching a Starlink competitor? And are the go-go days for music streaming over? Here's what you miss today in the world of tech. You know what would probably be useful? Some sort of watermarking system or some other method to detect text written by AI. It would be even better if that method had a, I don't know, 99.9% reliability rate in terms of detecting AI text. And you know who apparently has exactly this? OpenAI. So why haven't we seen it? Quoting the journal. The project has been mired in internal debate at OpenAI for roughly two years and has been ready to be released for about a year, according to people familiar with the matter and internal documents viewed by the Wall Street

Journal. It's just a matter of pressing a button, one of the people said. In trying to decide what to do, Open AI employees have wavered between the startup's stated commitment to transparency and their desire to attract and retain users. One survey the company conducted of loyal chat GPT users found nearly a third would be turned off by the anti-cheating technology. In OpenAI spokeswoman said the company is concerned the tool could disproportionately affect groups such as non-native English speakers. The text watermarking method we're developing is technically promising, but has important risks we're weighing while we research alternatives, she said. We believe the deliberate approach we've taken is necessary, given the complexities involved, and its likely impact on the broader

ecosystem beyond open AI, end quote. Employees who support the tools release, including those who helped develop it, have said internally those arguments pale compared with the good such technology could do. A recent survey by the Center for Democracy and Technology, a technology policy nonprofit, found 59% of middle and high school teachers were sure some students had used AI to help with schoolwork, up 17 points from the prior school year. OpenAI, Chief Executive Sam Altman and Chief Technology Officer Mira Murati have been involved in discussions about the anti-cheating tool. Altman has encouraged the project, but hasn't pushed for it to be released, some people familiar with the matter said. ChatGPT is powered by an AI system that

predicts what word or word fragment known as a token should come next in a sense. sentence. The anti-cheating tool, under discussion at OpenAI, would slightly change how the tokens are selected. Those changes would leave a pattern called a watermark. The watermarks would be unnoticeable to the human eye, but could be found with OpenAI's detection technology. The detector provides a score of how likely the entire document or a portion of it was written by ChatGBT.T. The watermarks are 99.9% effective when enough new text is created by Chatchibt, according to the internal documents. It is more likely that the sum, evaporates tomorrow, then this term paper wasn't watermarked, said John Thickston, a Stanford researcher

who is part of a team that has developed a similar watermarking method for AI text. Still, staffers have raised concerns the watermarks could be erased through simple techniques like having Google translate the text into another language and then back, or having chat GPT add emojis to the text and then manually deleting them, an open AI employee familiar with the matter said. There is broad agreement within the company that determining who can use this detector would be a challenge. If too few people have it, the tool wouldn't be useful. If too many get access, bad actors might decipher the company's watermarking technique. Open AI employees have discussed providing the detector directly to educators or to outside companies that help schools

identify AI written papers and plagiarized work. Google has developed a watermarking tool that can detect text generated by its Gemini AI called Synth ID. It is in beta testing and isn't widely available. Open AI has a tool to determine whether an image was created using its text to image generator Dolly 3 that was released for testing this past spring. The company has given priority to audio and visual watermarking over text because the harms are more significant, particularly in a busy election year in the U.S., the employee familiar with the matter said, end quote. The global stock markets are down this morning, which is, of course, a bit beyond my ken, and who knows, by the time you hear this, maybe everything will be back in the green.

But I did want to note to note again that Bitcoin is now basically a proxy for the overall stock market at this point, especially the more aggressive parts of the market. At the time of this writing, Bitcoin has gone below $51,000 a coin, its lowest level since February, and down 18% just since August 3rd. Ether is down 15% or so, quoting CNBC. Until last Wednesday, everybody was thinking that inflation was going down gradually and the economy was relatively strong, so the Fed would start cutting rates with successful soft landing of the economy. Yuya Hesigawa, Crypto Market Analyst at Japanese Bitcoin Exchange BitBank said. However, July's U.S. manufacturing PMI and Jobs Report came in way weaker than the market expected,

and now investors are worrying about the possibility of recession and dumping risk assets, end quote. On top of economic and geopolitical concerns, crypto investors have been contending with sell pressure from Mount Gox distributions and decreasing odds of a second Donald Trump presidency in the U.S. polls on polymarket in Ethereum-based prediction market platform show the gap between Trump and Kamala Harris has narrowed significantly since President Joe Biden dropped out of the race on July 21st. Bitcoin is still holding on to a year-to-date gain of 20%, end quote. Elon Musk has revived his OpenAI lawsuit filing a complaint in California, alleging that OpenAI Sam Altman and Greg Brockman breached Open AI's founding contract, quoting the Times.

Mr. Musk withdrew his original suit seven weeks ago without an explanation one day before a judge was set to rule on whether it should be dismissed. After joining with Mr. Musk to create OpenAI in 2015 and pledging to carefully develop artificial intelligence for the benefit of humanity, the suit claims, Mr. Altman and Mr. Brockman, abandoned this mission by entering a multi-billion dollar partnership with Microsoft. Mr. Musk was, quote, betrayed by Mr. Altman and his accomplices, the suit said. The perfidy and deceit is of Shakespearean proportions, end quote. OpenAI did not immediately respond to a request for comment. In a blog post responding to Mr. Musk's first suit against OpenAI, Mr. Altman and others at the company said that they intended to ask that its claims be dismissed

and that the company aimed to serve the public good by building artificial general intelligence or AGI, a machine that can do anything the human brain can do. The mission of OpenAI is to ensure AGI benefits all of humanity, which means both building safe and beneficial AGI and helping create broadly distributed benefits, they said. When Mr. Musk founded OpenAI with Mr. Altman, Mr. Brockman, and several young AI researchers, he envisioned the research lab as a necessary counterweight to AI work being done by Google. He believed that Google and its co-founder Larry Page were not sufficiently concerned with AI's dangers.

Mr. Musk parted ways with OpenAI in 2018 after a power struggle, withdrawing his financial support. forced to find other sources of funding, Mr. Altman transformed OpenAI into a for-profit company and eventually raised $13 billion from Microsoft, end quote. Also, I'll take this opportunity to quickly make note of the fact that Elon also said Neurrelink has implanted its device in a second trial patient who had a spinal cord injury, and 400 of the implants, 1,024 electrodes are working. Somewhat Elon-related news, according to Chinese state media, a state-owned company launched its first batch of internet satellites to rival Starlink, part of plans for more than 15,000 low-Earth orbit satellites, quoting Reuters. The competition to occupy Earth's lower orbits also has military implications with the potential to affect the balance of power between warring countries. The launch led by Shanghai Spacecom satellite technology, or SSST, took place at Taiyan Satellite Launch Center, one of China's main satellite and missile launch centers, located in northern provinces of the country. Chinese Securities Journal reported, the launch is part of SSST's Thousand Sales Constellation Plan, also known as the G-60 Starlink Plan, which began last year and aims to deploy more than 15,000 low-Earth orbit satellites. LEO satellites usually operate at altitudes of 300 kilometers to 2,000 kilometers from the Earth's surface

and have the advantage of being cheaper and providing more efficient transmission than satellites at higher orbits. Starlink operated by billionaire Elon Musk has tens of thousands of users in the United States so far and plans to add tens of thousands more satellites to its system, the largest of its kind. Chinese researchers in the People's Liberation Army have over the past two years studied the deployment of Starlink in the war in Ukraine and repeatedly warned about the risks it poses to China should the company find itself in a military conflict with the United States. In January, an op-ed published in a PLA mouthpiece described the deployment of Starlink as a, quote, serious threat to the security of space assets of various countries. SSST's Thousand-Sales constellation is one of three 10,000-star constellation plans China is hoping will allow it to close the gap with SpaceX.

SSST's plan is to launch 108 satellites this year, 648 satellites by the end of 2020. 25, provide a global network coverage by 2027, and get to 15,000 satellites deployed before 2030, end quote. Even this is an Elon adjacent story, because, you know, he has a startup with a similar name, though different spelling. AI chip startup GROC raised a $640 million series D led by BlackRock at a $2.8 billion valuation up from $1 billion after raising $300 million in 2021. and the startup is adding an Intel executive as COO. Quoting Bloomberg. The startup designs semi-conductors and software to optimize the performance of AI tasks

aiming to help alleviate the huge bottleneck of demand for AI computing power. It was valued at $2.8 billion in the deal, which was led by BlackRock funds and included backing from the investment arms of Cisco Systems and Samsung Electronics. The Series D round almost triples the Mountain View, California-based company's valuation from $1 billion in a funding round in 2020. GROC is entering the market for new semiconductors that run AI software competing against incumbents such as Intel, advanced microdevices, and leader invidia. This funding accelerates our vision of delivering instant AI inference compute to the world, chief executive officer Jonathan Ross said in a statement. Former Intel executive Stuart Pan is joining Grock to serve as its chief operating officer, the company said, end quote. Finally today, interesting newsletter from Lucas Shaw this weekend in Bloomberg.

Lucas asserts that music streaming has exited its high-growth era, as big streaming services are picking up fewer new subscribers, causing revenue shortfalls for music labels. Quote, shares of the most powerful music company in the world tanked on July 25th after its executives were honest about their revenue shortfall. Subscription revenue saw a deceleration in growth. Universal Music Chief Financial Officer Boyd Muir told analysts a day earlier, large partners who have been less successful in driving global adoption have seen a slowdown in new subscriber additions. Translation, streaming is slowing down. Apple and Amazon in particular aren't signing up a lot of new customers. This really isn't news. The industry has known streaming was slowing down for at least a year, but saying it out loud still spooked Wall Street. Investors fretted that the music streaming

boom is over and tried to sell their stock at the top of the market. It was reminiscent of 2015 when Walt Disney's CEO Bob Iger acknowledged his cable networks were suffering from cord-cutting. Wall Street already knew streaming was stealing customers from cable, but most executives had played down the risk. When Iger said, as much on an earnings call, it spooked investors and Disney shares tanked. Disney also dragged other companies down with it. The good news for the music industry is it isn't staring at cord-cutting 2.0. Streaming, the record industry's most lucrative business, isn't shrinking.

It's still growing, thanks largely to Spotify, YouTube, and local players. The bad news for record labels is that their business is no longer growing as quickly. Streaming has exited a high-growth era and settled into a slower growth era. Music companies are limited in their power to address the streaming slowdown on their side. So while labels believe this is just a temporary setback, they have cut staff and reorganized to juice their numbers in the short term. Every music company is exploring ways to make money outside of streaming. They see how much money artists are making from tours, merchandise, and special edition vinyl, and they want some. But they don't have as much control over artist businesses beyond the music.

Labels don't get a substantial piece of touring sales and merchandise is a low-margin business. Movies and plays are nice one-off projects, but they primarily exist to boost listenership of catalog. Warner Music is developing a superfan app. That's a tall mountain to climb. The most obvious solution is that labels need a new way to exploit what they do own, the songs, in concert with existing partners. They are good at this. Streaming services, social media network, fitness companies and video game publishers are paying them billions of dollars for access to their catalogs. Mir's boss, Lucian Grange, has already pushed streaming platforms to crack down on fraud and raise prices. Grange can't force these companies to act, however. Amazon, Apple, YouTube, and

Spotify will raise prices at their own pace. Spotify in particular has demonstrated pricing power. New pricing plans will generate additional revenue, though, potentially in ways that are not as lucrative for all musicians. A major label could, in theory, yank its music from a major streaming service to force the issue, but is any label ready to forego billions of dollars in revenue? Universal already tried going to war with TikTok, a company it makes very little money from, and lost. Yet for all the historical animosity between tech companies and record labels, the interests of major streaming services and major music companies are at least partially aligned. Services like Spotify and Amazon Music want to increase their customer base and the amount of

money they make per user. If they succeed, it will benefit record labels. We very much see it as a symbiotic partnership analysts at JPMorgan Chase and Company wrote this past week. Whether these companies will succeed in accelerating growth is less clear. Spotify is developing a premium tier, but the Swedish company and record labels haven't agreed on the best features. Some want Spotify to sell limited edition vinyl or early access to tickets. Others want fans to pay more for early releases of new music. Apple and Amazon are more focused on other initiatives than innovating in music streaming,

while Serious XM Holdings is having a tough time right now. Having identified the problem, everyone just needs to agree on a solution, end quote. Ah man, I got a wicked summer cold all of the sudden. Not COVID. Tested multiple times for that, no, just a run-of-the-mill summer cold, which really sucks. It's weird to have sweat dripping off your face at the same time. Your nose is dripping. Annoying.

Talk to you tomorrow.