Tech Brew Ride Home - Tue. 05/16 – Open Source Vs. Centralized AI, Part I

Starting point is 00:00:04 Welcome to the Tech meme right home for Tuesday, May 16th, 2023. I'm Brian McCullough today. The EU actually approved the Microsoft Activision acquisition. So what now? The IRS might finally allow us to file our taxes online for free. The EU passes the first crypto regulatory regime, but questions are being asked about their forthcoming digital euro experiment. And an interesting raise allows us to take our first look at the open source versus centralized debate when it comes to AI. Here's what you missed today in the world of tech. EU regulators yesterday approved Microsoft's $69 billion Activision Blizzard acquisition, after Microsoft made concessions to keep rivals' access to call of duty and other franchises available, quoting the New York Times. Even so, the Blockbuster acquisition, which has become a test of weather regulators around the world, will approve a tech mega merger amid concerns about the industry's power, still faces an uphill climb. American and British regulators have each moved to stop the acquisition in recent months, arguing that the combination of the Xbox maker with the company behind the Call of Duty franchise would hinder competition. Microsoft is fighting both actions. The deal has revealed fractures among regulators

Starting point is 00:01:15 about how to crimp the power of the world's biggest technology companies. Opposition to the acquisition has centered in part on so-called cloud gaming, a relatively new technology that lets people stream games on phones, tablets, and other devices, potentially eliminating the need for hardware-like consoles. American and British regulators said Microsoft's purchase of Activision would undercut this still-developing sector of the gaming industry before it had a chance to bloom. The European Commission, the executive body for the 27 nation block, gave its approval after Microsoft agreed to guarantee for 10 years that gamers would be able to play Activision titles on cloud gaming services

Starting point is 00:01:50 being developed by other companies, such as Nvidia, end quote. Right, that's the thing. Not everybody agreed on the rationale the UK took when they blocked the deal with some going so far as to say that their math was off, that they fundamentally did not understand, the business model or the market. So what does this mean for the deal now? Let me tell you that nobody knows, especially maybe inside of Microsoft and Activision. Clearly, they could take this as a win, a huge argument for their cases and appeals. But again, in the end, if one of these three government bodies still insist on blocking the deal, then it still doesn't happen, right? That's kind of what nobody knows right now. From the man alive, just let us do this already file.

Starting point is 00:02:41 Sources are telling the Washington Post that the IRS quietly built a prototype system to allow Americans to file tax returns digitally and free of charge, with a potential pilot for this program slated to launch in January of 2024. Quote, it was developed by the IRS and the U.S. Digital Service, the White House's Technology Consulting Agency. Last year's Inflation Reduction Act, one of President Biden's chief legislative victories, included $15 million for the IRS to look into creating a direct filing program. The IRS currently refers people seeking no-cost filing options to a consortium of companies that provide free e-filing for taxpayers below a certain income level. Though 70% of taxpayers qualify for those products, known collectively as IRS-free file,

Starting point is 00:03:25 fewer than 3% of taxpayers use them according to a government accountability office report. IRS Commissioner Daniel Werfel had previously told lawmakers that the IRS would consult Congress after the think tank made its recommendation and had not yet determined whether to pursue its own software program. But if the IRS already has a prototype before the New America report has been released, quote, this suggests a predetermined outcome and flies in the face of previous commitments, Commissioner Werfel made to publicly consult Congress on a potential free file solution, and for the IRS not to act without explicit legal authority, said Senator Mike Crapo of Illinois, the top Republican on the Senate Finance Committee. A free filing system

Starting point is 00:04:04 offered directly by the federal government could upset a commercial tax prep market estimated by the research firm Ibis World to be worth $14.4 billion this year, end quote. At the risk of editorializing, perhaps more than I ever have on the show and maybe overstepping my editorializing bounds, yes, but, you know, F that industry. Microsoft's Phone Link app now lets iPhone owners use a Windows 11 PC to send and receive. messages via iMessage, although not in group chats. Quoting the Verge. The PhoneLink app update is now available in 85 countries and will work with an iPhone over Bluetooth for calls, messages, and notifications. Microsoft is able to send messages via iMessage on PhoneLink by intercepting

Starting point is 00:04:55 incoming calls over Bluetooth and sending them by taking advantage of how Apple forces you to send text messages to other iPhone users. It's a clever workaround that means you'll be able to send and receive messages freely while Phone Link is open, but you won't. be able to see a full chat history or participate in group iMessage conversations. The rest of PhoneLink is rather basic compared to the Android integration. You can make and receive calls, see phone call history, and even view and dismiss phone notifications. But you can't run phone apps on your PC like you can with Android devices, and there's

Starting point is 00:05:26 no photos integration here at all. The latest PhoneLink app update should be available automatically, but if you don't see the new iPhone option during setup, head over to the Microsoft Store app in Windows 11 to make sure you have the latest updates, end quote. I sort of have a high bar for hacking stories these days, lest I end up telling you about three different incidents every single episode, but this one seems pretty bad. Pharmacy services provider Farmerica says hackers breached its system

Starting point is 00:06:00 and stole the names, addresses, social security numbers, and health data of more than 5.8 million patients on March 12th. Social Security numbers and health records. That's pretty unusual and pretty bad. Quoting bleeping computer. Farmerica is a pharmacy services provider in 50 U.S. states operating 180 local and 70,000 backup pharmacies and serving 3,100 medical facilities nationwide. Although Farmerica does not mention the type of hacking incident, the money message ransomware gang claimed the attack on March 28th when they began publishing stolen data. along with Farmerica, the threat actors listed Bright Spring, a health service provider that merged with Farmerica in March 2019. Money Message claimed to have stolen 4.7 terabytes of data during their attack on Farmerica, stating that it consisted of at least 1.6 million unique records of personal information. On April 9th, the timer ran out, and the threat actors published what they claim is all of the stolen data on their extortion site.

Starting point is 00:07:01 Unfortunately, the files are still available for download at this time. To make matters even worse, a threat actor has already posted the entire data dump on a clear net hacking forum, breaking the file into 13 parts for easier downloading, end quote. Sources say Twitter has bought recruiting startup Lasky for tens of millions in cash and stock. It's the first acquisition deal of the Elon Musk era. Pitchbook says Lasky had raised $6 million. I actually have nothing more to say on this except to note that Elon has said repeatedly he wants to turn X. nay, Twitter, into a super app. So, you know, adding job search and recruiting tools,

Starting point is 00:07:45 part of putting that super app tool belt together. EU states have approved the markets in crypto assets or mica rules becoming the first major global jurisdiction with a crypto licensing regime set to take effect in 2024. Quoting Coin Desk, landmark new crypto rules were signed off on Tuesday by finance ministers of the European Union. The EU's Council, which represents 27 member states, unanimously approved the markets in crypto assets regulation known as Micah, making the block set to be the first major jurisdiction in the world with a crypto licensing regime. It also agreed new anti-money laundering measures on crypto fund transfers. I'm very pleased that today we are delivering on our promise to start regulating the crypto assets

Starting point is 00:08:33 sector. Recent events have confirmed the urgent need for imposing rules which will better protect Europeans who have invested in these assets and prevent the misuse of crypto industry for the purposes of money laundering and financing of terrorism, said a statement from Elizabeth Svenston, Minister for Finance of Sweden, who chaired the talks as Council Presidency. Agreement to the laws was largely expected after ambassadors gave a green light to both Micah and tax measures last week. Micah requires crypto firms such as wallet providers and exchanges to seek a license to operate across the block and stable coin issuers to hold suitable reserves. Its main features were politically agreed to in June, but it's

Starting point is 00:09:12 been subject to administrative holdups. Major provisions take effect just over a year after it's published in the Block's official journal, which is now likely in June or July. Later in the day, ministers also agreed on new measures to force crypto providers to disclose details of their customers' holdings to tax authorities, which will be shared within the block in a bid to avoid stashing funds in secret overseas wallets, end quote. And this is not unrelated. The European Central Bank is preparing to pilot a digital euro as soon as October. But as they do so, consumers, financiers, and politicians in Europe are questioning the project's aims and benefits. Quoting the F.T. This cocktail of suspicions and conspiracy theories about

Starting point is 00:09:55 the digital euro comes at a highly delicate moment for the ECB and Eurozone politicians. On the one hand, they are eager to step up preparations for a digital currency over the next few months, with the hope that it could be launched in as little as three years' time. Yet at the same time, they are also struggling to communicate convincing arguments for the project, which is only increasing the scope for conjecture about the plans. While China has the most advanced plans for a central bank digital currency among the larger economies, Europe is the furthest ahead among the main western central banks. Christine Lagarde has embraced the project since taking over as ECB president in 2019 from Mario Draghi, who barely mentioned the idea. The Frankfurt-based institution is expected to announce

Starting point is 00:10:36 in October that it will move into an implementation phase and start a pilot scheme. The Guard has said she expects it will be ready to make the final decision of whether to launch a digital euro in 2026 or 27. Supporters of the project say it would modernize European payments by giving people an electronic alternative to cash that is riskless and universally accepted. We need a risk-free asset and the only one that exists is central bank currency. Fabio Panetta, the ECB executive board member overseeing its digital euro work, told the financial times, always jealous of the dominant position of the dollar in the international financial system, Europe is eager to find new ways of promoting the euro's weight globally. It is also wary that China's digital currency will allow Beijing to expand its role. Like other central banks,

Starting point is 00:11:20 the ECB is also concerned that privately controlled digital currencies will gain traction in the financial system as consumers increasingly shun cash. However, there are mounting questions among consumers, financiers, and politicians over exactly what the project actually aims to achieve and whether the potential risks outweigh the benefits. These questions have only grown as the immediate threat from cryptocurrencies has faded along with the decline in the value of Bitcoin and other rival forms of money. The subtleties of central bank currencies are hard for policymakers to explain. Many people consider they are already in effect using digital money when they use their contactless payment card or mobile banking app rather than cash. Some European

Starting point is 00:11:59 policymakers fear that a failure to make a clear case for the digital euro will undermine the project before it is even born, that it will come to be seen as a solution that does not quite know what problem it is solving, end quote. Finally today, interesting AI raise, together, which aims to build open source large language models, and was part of Red Pajama, a project where six companies replicated meta's Lama dataset, has raised a $20 million seed round. I'm going to share a Ben Thompson post about this soon, but this allows us to take our first crack at getting to the part of where people think all of this AI stuff is going at the moment. Will AI be just a sustaining innovation for big tech? Or will open source models disrupt the major players' own

Starting point is 00:12:50 models, which are centralized by their very design and business model requirements? Quoting Venture Beat. Together says its goal is to establish open source as the default way to incorporate AI and to help create open models that outperform close models. To this end, the company has already collaborated with decentralized infrastructure providers, open source groups, and academic and corporate research labs. Together believes that it has assembled an impressive team of researchers, engineers, and AI practitioners. Together has released several generative AI projects, including GPTJT, OpenChat Kit, and Red Pajama, which have received support from hundreds of thousands of AI developers. The company stated that it will use the new $20 million seed funding

Starting point is 00:13:31 to expand the team, research, product, and infrastructure. Foundation models are a new general purpose technology broadly applicable to industries and applications. We believe an open source ecosystem for these models will truly unlock their potential and create vast value, said Jamie DeGare, founding SVP of Product at Together. Further, as enterprises define their generative AI strategies, they seek privacy, transparency, customization, and ease of deployment. Open source models pre-trained on open datasets enable organizations to fully inspect, understand, and customize models to their applications, end quote. The company said its priority is to lay the groundwork for open source AI by providing datasets, models, and research. The Red Pajama Project is a promising initial undertaking,

Starting point is 00:14:15 but represents only the start of the company's efforts. Together's second goal is to make computational resources for training, fine-tuning, and operating large models more accessible. It means to provide this with a groundbreaking AI-specific cloud platform built on a decentralized computing network. DeGare noted that closed models also present risks for liability. and challenges, as the customer has no visibility into how the model works or what it was trained on. That's why together makes datasets and models fully open source to counteract this trend and enable more accessible computing infrastructure for training or using large models. With closed models, researchers cannot access the training data.

Starting point is 00:14:51 They are not able to download the models and customize them, and they cannot learn from the training process for future research, said DeGare. Open source, generative AI models and datasets enable the open community to do more advanced research and to build on these models, creating new ones that push innovation in new directions, end quote. According to DeGare, the company promotes open source AI advancements in two ways. First, it partners with open source groups and corporate research labs to release open research data sets and models. Second, the company is partnering with decentralized infrastructure providers to provide improved access to computing for training, fine-tuning, and running large models. He noted that networking is one of the key bottlenecks for training large foundation models.

Starting point is 00:15:30 Not only do you need a large number of powerful GPUs, but you also need those GPUs to be connected by incredibly fast networking, typically in a single physical location. Unfortunately, this type of data center is only available to a handful of organizations, he said. Our research enables a more than 200 times reduction in the network traffic during model training or fine-tuning. This means you can now leverage GPUs across multiple disparate networks to participate in the training or fine-tuning of large models without losing the quality of the model produced, end quote. Another thing I'm seeing a lot of when it comes to this AI stuff, you know how every website or every platform has search as a sort of basic table stakes function and has done so for decades now? What good are tweets if you can't search them? Everything from the New York Times to your corporate website needs to have at least a basic search function. Well, I'm seeing a lot of places starting to add chatbots to their sites to sort of serve as an augmented search platform.

Starting point is 00:16:32 friend of the show, Rafat Ali's site, for example, Skift, S-K-I-F-T. They're news vertical focusing on the travel industry. They've added just such a bot at ask.skift.com. So if you go there and you do a search for like, what are the best lie-flat seats offered by various airlines, you get a summary paragraph and links to some of the Skift articles most relevant to this query. Again, I expect this to become basic level table stakes that, every website will have to offer in terms of functionality, but take this a step further. As these bots get better, do they replace search or even catalogs and articles entirely?

Starting point is 00:17:11 Like, why have articles if you can just get the chatbot to summarize everything's gift has ever written about, say, the best travel destinations to take kids? You can ask the question and say, give me a summary in 100 words, in 1,000 words. Or take it another step and think of an e-commerce site. Without having to search the whole catalog, you could just say, show me the best heavy winter code in a $300 to $500 price range in black or navy blue in size XL. And maybe it's trained on your order history so it also knows your style preferences. You see what I mean. The web is going to change pretty fundamentally when this stuff begins to

Starting point is 00:17:47 take over in terms of a popular UI paradigm. Talk to you tomorrow.

Tech Brew Ride Home - Tue. 05/16 – Open Source Vs. Centralized AI, Part I

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