Tech Brew Ride Home - Thu. 02/01 – A Tech Regulation Tipping Point?

Episode Date: February 1, 2024

Why I think yesterday’s Congressional hearings might actually be a tipping point for tech regulation. What would a Kids Online Safety Act actually mean? More proof of YouTube’s dominance. Celsius and FTX customers are about to get some money back. And Google’s new text to image AI processor. Sponsors: Kolide.com/ride Links: Microsoft, X throw their weight behind KOSA, the controversial kids online safety bill (TechCrunch) Americans’ Social Media Use (Pew Research Center) Celsius to Distribute $3B Crypto to Creditors as Firm Emerges From Bankruptcy (CoinDesk) Google launches an AI-powered image generator (TechCrunch) 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 TechMeme right home for Thursday, February 1st, 2024. I'm Brian McCullough today. Why, I think yesterday's congressional hearings might actually be a tipping point for tech regulation. What would a Kids Online Safety Act actually mean? More proof of YouTube's dominance. Celsius and FTX customers are about to get some money back and Google's new text-to-AI image processor. Here's what you missed today in the world of tech. As I said yesterday, this show basically has existed during the entire era of the great Let's Hall tech. executives before Congress, like that scene in the usual suspects and try to either embarrass them or embarrass ourselves by our congressional lack of knowledge of anything tech, series of tubes

style. Yesterday's Senate committee hearings had their share of embarrassing moments like this attempted gotcha by Senator Tom Cotton on the TikTok CEO. You said today, as you often say, that you live in Singapore. Of what nation are you a citizen? Singapore. Are you a citizen of any other nation? No, Senator. Have you ever applied for Chinese citizenship? Senator, I served my nation in Singapore. No, I did not. Do you have a Singapore in passport? Yes, and I served my military for two and a half years in Singapore.

Do you have any other passport from any other nations? No, Senator. Your wife is an American citizen, your children are American citizens. That's correct. Have you ever applied for American citizenship? No, not yet. Okay. Have you ever been a member of the Chinese Communist Party? Senator, I'm Singaporean. No.

Have you ever been associated or affiliated with the Chinese Communist Party? No, Senator. Again, I'm Singaporean. But you might also have heard about this moment when Senator Josh Howley's questions caused a visibly shaken, Mark Zuckerberg, to turn to face those in the audience, saying no one should have to go through the things that your families have suffered, and this is why we invested so much. Who did you fire? I said you mischaracterized it. 37% of teenage girls between 13 and 15 were exposed to unwanted nudity in a week on Instagram.

You knew about it. Who did you fire? Senator, this is why we're building all the different tools. Senator, I don't think that that's... Who did you fire? I'm not going to answer that. Because you didn't fire anybody, right? You didn't take any significant action.

It's appropriate to talk about, like, individual and HR decisions. Do you know who's sitting behind you? You've got families from across the nation whose children are either severely harmed or gone, and you don't think it's appropriate to talk about steps that you took, the fact that you didn't fire a single person. Let me ask you this. Let me ask you this. Have you compensated any of the victims? Sorry?

Have you compensated any of the victims? These girls, have you compensated them? I don't believe so. Why not? That empower parents. So you didn't take any action. You didn't take any action. you didn't fire anybody, you haven't compensated a single victim.

Let me ask you this. Let me ask you this. There's families of victims here today. Have you apologized to the victims? Would you like to do so now? They're here. You're on national television. Would you like now to apologize to the victims who have been harmed by your product?

Show them the pictures. Would you like to apologize for what you've done to these good people? I'm sorry. through the things that your families have suffered. And this is why we invest in so much and are going to continue doing these free-eathing efforts to make sure that no one has to go through the types of things that your families have had to suffer. That was a genuinely moving moment emotionally.

I'm offering these two contrasting clips to make this point. On some level, these congressional ritualistic shaming sessions have always operated on the level of U-tech platforms, you have most of the power in society these days. We know that, but we're the government. We want to remind you that on some level, we still have more power than you do. Now, I'd say that that is actually a genuinely debatable point, and that says a lot about where society is at at the moment. But this has always been a dominance play to a certain degree. Governments around the world kind of just want to take a pound of flesh to show that they can. And I think with this child's safety issue,

they finally found a truly bipartisan wedge to get that pound of flesh. I'm saying that yesterday's hearings represented maybe a tipping point in the power struggle. I'd say the odds are very high that we will see some sort of serious legislation in the U.S. around online child safety, see it actually get passed in Congress sometime in the next year or two. There is a big election coming up this year, after all. But what would that look like? I told you yesterday about the Kids Online Safety Act. Microsoft and X say they support the proposed legislation. Meta, Discord, and TikTok have demurred. Here's the lay of the land from TechCrunch.

Quote, Mark Zuckerberg similarly agreed with the basic spirit of the bill while declining to endorse it. Discord's Jason Citron said his company supported, quote, parts of the proposal but declined to say yes, stating that Discord would prefer to support a national privacy standard. In spite of some revisions, the bill's many critics have warned that COSA would dangerously sanitize the internet, empower censorship, and isolate young LGBTQ people in the process. Security, privacy, and free press advocates have also called attention to the bill's potential threat to encryption. The bill was revised last year in response to some criticisms, but many concerns persist. While X and Snap are likely hoping that their COSA support will either generally endear them to regulators or have a much worse impact

on rival companies, Microsoft probably has its sites set on a different issue entirely. Unlike its peers testifying on Capitol Hill, Microsoft doesn't own a traditional social media network steered by algorithms. Discord is also a notable exception here. For Microsoft, AI is the name of the game, and throwing support behind a bill that will change the rules for social media companies might buy it some regulatory goodwill where it counts, end quote. I spoke at length about YouTube yesterday, and we've been talking just now about major tech and especially social media platforms and the power they wield in society right now. But here's the thing. I know meta's various apps have something like 3 billion users or something crazy like that, but as I've been saying,

I'm coming around to the idea that YouTube is maybe the most powerful platform in all of social media, but maybe all of media full stop. I've read you stories about how with the kids, they're on the TikTok, they're on the Insta, the snap. But the one thing that has like 90% share of kids is YouTube. And if you look at share of time spent, well, it turns out that this holds for adults as well. According to Pew Research, among U.S. adults,

83% use YouTube. far and away the social media or just media platform, most adults say they use. Facebook is still kicking then with 68% usage share, 47% of adults use Instagram, and then in a range of 27 to 35% of adults come Snapchat, WhatsApp, LinkedIn, TikTok, and Pinterest. 22% of adults use X, and Reddit, and Be Real comes in at 3%. Some other nuggets from this research, quote, One platform TikTok stands out for growth of its user base. A third of U.S. adults 33% say they use the video-based platform up 12 percentage points from 2021.

The other sites asked about had more modest or no growth over the past couple of years. For instance, while YouTube and Facebook dominate the social media landscape, the shares of adults who use those platforms has remained stable since 2021. Adults under 30 are far more likely than their older counterparts to use many of the online platforms. these findings are consistent with previous center data. Age gaps are especially large for Instagram, Snapchat, and TikTok, platforms that are used by majorities of adults under 30. For example, 78% of 18 to 29-year-olds say they use Instagram far higher than the share among those 65 and older, which is only 15%. 65% of U.S. adults under 30 report using Snapchat compared with just 4% of

the oldest age cohort. 62% of 18-to-29-year-olds say they use TikTok, much higher than the share among adults aged 65 years and older at 10%. Americans aged 30 to 49 and 50 to 64 fall somewhere in between for all three platforms. YouTube and Facebook are the only two platforms that majorities of all age groups use, end quote. Celsius has emerged from bankruptcy with plans to distribute more than $3 billion to its creditors, who will also get a stake in the company's new Ionic Digital Mining Operators, You might recall Celsius as one of the big crypto blowups that led to the era of big crypto blowups, quoting Coin Desk. About 98% of Celsius network's creditors signed off on the plan after 18 months in bankruptcy court.

Ionic is expected to become a publicly traded company once it clears approvals. When we were appointed in June 2022, everyone assumed Celsius would disappear completely like the other crypto lenders that were filing bankruptcy around the same time, said David Bars and Alan Carr, of the special board committee that steered the bankruptcy in a statement. They said they managed to secure the platform's cryptocurrency, negotiate a deal with creditors, reorganize the part of the company that could continue and settled cases with the U.S. Department of Justice, Securities and Exchange Commission, and Commodity Futures Trading Commission. In a separate filing, the firm said PayPal and Coinbase will distribute the cryptocurrencies. Celsius will make no distributions through the debtors'

mobile or web applications, which will be shut down on or around February 28th. Crypto Lender Seltes' bankruptcy process also saw it make a $4.7 billion settlement with U.S. authorities over fraud allegations. Former CEO Alex Mischinsky, who had resigned in September 2022, was arrested on fraud charges for allegedly manipulating the price of the lender's sell token, an allegation he has denied, end quote. Also, some news about the biggest crypto blowup of them all. An FTX lawyer says the defunct crypto exchange expects to fully repay its customers and has abandoned efforts to restart the platform due to a lack of buyers. All of the money back. That would be quite something. Quoting CoinDesk again. However, the full recovery

of customer assets is, unfortunately for those waiting for their money, based on the point of FTX's actual bankruptcy when the markets were already in turmoil. That date was preliminarily approved by U.S. bankruptcy judge John Dorsey, and that's a point of contention for some claimants. Bitcoin's price has rebounded to more than $43,000 as of publication time, up 110% from its price of roughly $20,500 at around the time of FTX's collapse in early November. Many of those claims are premised on currencies which declined dramatically in value in that tumultuous period leading up to the petition date, FTC creditor, committee lawyer Chris Hansen said Wednesday during the hearing, the repayment process under consideration in the U.S.

Bankruptcy Court would require claimants to submit proof they held or subsequently lost assets on FTCX, which will be vetted by restructuring advisors, said FTCS lawyer Andrew Dietrich. The defunct exchange has shifted its focus to making its former clients whole as it abandons its plans to relaunch its platform due to a lack of buyers, according to the court proceedings. Today's efforts in court were aimed at pushing the case forward by allowing several camps of creditors to clinch approvals from individual investors to approve this latest approach to getting their money back. Roughly 15 million people lost a combined $30,000. a $35 billion worth of various cryptocurrencies in the wake of FTX's implosion, as of last fall,

according to data from bankruptcy claims exchange X claim. FTC's native token FTT surged more than 11% just after the news of the company's plans, but it quickly fell sharply and is down about 15% for the day on Wednesday, end quote. More of these, I could tell you about more of these every single day. Google has launched TextFX, an AI image generator underpinned by Imagine 2 with, quote, expressive chips or keyword suggestions. Google will also bring Imagine 2 to Bard, quoting TechCrunch. Underpinned by Imagine 2, a GenAI image model developed by Google's DeepMind team, TextFX offers a prompt-based UI to create and edit images. That's no different than tools like OpenAI's Dolly 3, Mid Journey, Meta's Imagine with MetaI and Microsoft Designer.

But TextFX's unique twist is expressive chips, basically a list of keyword suggestions that let users experiment with, quote, adjacent dimensions of their creations and ideas. Quote, design for experimentation and creativity, image FX lets you create images with a simple text prompt, then easily modify them with a new take on prompting using expressive chips. Google writes in a blog post, but what of the potential for abuse, especially in light of recent events. Google claims that it's taken steps to ensure that TextFX can't be used in ways that it wasn't intended, for example, by adding technical safeguards to limit problematic outputs like violent, offensive, and sexually explicit content. TextFX also has a prompt-level filter

for named people, presumably public figures, although Google wasn't especially clear on that point in its press materials. We invested in the safety of training data from the outset, Google said, consistent with our AI principles, we also conducted extensive adversarial testing and red-teaming to identify and mitigate potential harmful and problematic content, end quote. As an additional safety measure, Google's tagging images produced using ImageFX with synth ID, a digital watermark that's allegedly robust against image edits and crops. Synth ID watermarks are imperceptible to the human eye, but detectable for identification. Google continues in the blog post with added insights in about this image. know if an image may have been generated with Google's AI tools when you come across it in Google

search or Chrome, end quote. You can find ImageFX in Google's AI Test Kitchen app right now, as for that news of bringing Imagine 2 to other Google services. Imagine 2, which is already part of Google Ads's text to image features and duet AI in workspace as part of Google's GenAI Suite for enhanced productivity, has been incorporated into Google's search generative experience, or SGE, initially introduced in Google Image Search last October to provide image generation tools. SGEE now employs Imagine 2 for creating images. When users input a desired image prompt into SGEE, it generates and presents for image results within its interactive conversational interface, sort of like Mid Journey does.

In Vertex AI, you can get Imagine 2 via a Google Cloud API. You can also access Imagine 2 through Bard, quote. With Imagine 2, Bard understands simple or complex problems. so that you can generate a range of high-quality images Google explains. Just type in a description, like create an image of a dog writing a surfboard, and Bard will generate custom, wide-ranging visuals to help you bring your idea to life, end quote. Still no word, by the way, on what Google used to train Imagine 2. Nothing for you today. Talk to tomorrow.