Tech Brew Ride Home - Wed. 01/31 – Tech Execs Back Before Congress

Episode Date: January 31, 2024

The tech execs have been called before Congress once again. Universal Music Group pulls its songs from TikTok. Is 23andMe in danger of going out of business? Figure is an AI robotics company that Microsoft and OpenAI might be about to invest in. And say hello to the Chief AI Officer job title. Sponsors: Kolide.com/ride Links: Social media chiefs on defensive at US online child protection hearing (FT) TikTok CEO Pledges $2 Billion to Protect 170 Million US Users (Bloomberg) Child Safety Hearing (NYTimes) Universal Music Group Warns It Will Pull Songs From TikTok After Deal Expiration (Variety) 23andMe’s Fall From $6 Billion to Nearly $0 (WSJ) Humanoid Robot Startup Figure AI in Funding Talks With Microsoft, OpenAI (Bloomberg) Figure AI in talks with Microsoft and OpenAI for funding (ReadWrite) Figure-01: AI learns how to make coffee like a human (ReadWrite) Microsoft and OpenAI are in talks to inject $500 million into humanoid robotics startup Figure AI, report says (Business Insider) Hottest Job in Corporate America? The Executive in Charge of A.I. (NYTimes) 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 Wednesday, January 31st, 2021. 24, I'm Brian McCullough today. The tech execs have been called before Congress once again.

Universal Music Group pulls its songs from TikTok. Is 23 and me in danger of going out of business? Figure is an AI robotics company that Microsoft and Open AI might be about to invest in and say hello to the chief AI officer job title. Here's what you miss today in the world of tech. It's been a while since we've done this, but big tech's. CEOs including Mark Zuckerberg, Evan Spiegel, and the CEOs of X and TikTok are testifying before Congress today right now as I record this. Specifically, the U.S. Senate Committee that is

looking into child safety online. Ahead of the hearing, Zuckerberg called for requiring Apple and Google to verify the ages of users via app stores, quoting the Financial Times. Several proposed pieces of federal legislation are in train that target the Silicon Valley groups such as the controversial Kids Online Safety Act, which requires platforms to protect children from online harms. The Senate and the House have so far failed to find consensus on the precise measures that should be taken. Bills such as the Kids Online Safety Act have faced pushback from tech platforms and the trade groups that represent them. In pre-prepared testimony, Meda Zuckerberg called for lawmakers instead to mandate regulation requiring Apple and Google app stores to verify

the age of younger users. He reiterated the longstanding assertion that the platform has introduced, than 30 tools and features to protect children. We're also in favor of setting industry standards on age-appropriate content and limiting signals for advertising to teens to age and location, not behavior. Zuckerberg said, adding that the company was, quote, ready to work with any member of this committee who wants to discuss legislation in these areas, end quote. According to her opening testimony seen by the Financial Times, CEO Linda Yakorino, will insist that X, formerly known as Twitter, is, quote, not the platform of choice for teens and children, and, quote, does not have a line of business dedicated to children, end quote.

In prepared Senate testimony, TikTok CEO Show Chu says the company plans to spend more than $2 billion just in 2024 on trust and safety globally, and that TikTok has 40,000 people working on those efforts. Also, that TikTok now has 170 million monthly active users just in the U.S. quoting Bloomberg. Chew also plans to highlight a number of policies regarding teen users that he said, are unique to TikTok. For example, users under the age of 16 cannot send messages on the app, and their videos cannot be downloaded or recommended to people they aren't already connected to. Those aged 17 and younger have a preset screen limit of 60 minutes before a password is required

to continue watching, end quote. But the committee also released 90 pages of meta emails from 2021 showing that Zuckerberg rejected calls to bulk up resources for children's well-being and safety, quoting the Times. One incident revealed in the documents was a request by META, president of global affairs Nick Clegg in August 2021 for the 45 new staff members. It was rejected and he returned to Mr. Zuckerberg in November with a scaled down proposal for 32 new hires. It is unclear what Mr. Zuckerberg decided. Mr. Clegg wrote that the company was failing to meet goals to prevent bullying and harassment and other harmful activities on Instagram and Facebook and warned that global regulators could take action, end quote. Meta also claims to have 40,000 people working on safety and security across its various

apps and has spent more than $20 billion on such efforts since 2016. Guess what? You might not be able to give the perfect soundtrack to your next TikTok video. That's because Universal Music Group plans to cease licensing content to TikTok after their agreement expired today, January 31st, saying they failed to reach new licensing terms, quoting variety. Artists on Universal Music Group labels include Taylor Swift, Bad Bunny, Sting, The Weekend, Alicia Keys, Steve Lacey, Drake, Billy Elish, Kendrick Lamar, Rosalia, Harry Stiles, Arianna Grande, Justin Bieber, Adele, U2, Elton John, Brandy Carlisle, Coldplay, Pearl Jam, Bob Dylan, and Post Malone. Three years ago in February 2021, UMG, touted a global agreement with TikTok that it said, quote, delivers equitable compensation for recording artists and songwriters and significantly expands and enhances the company's existing relations. promoting the development of new innovative experiences, end quote. On Tuesday, UMG posted an open letter,

quote, to the artist and songwriter community with the headline, why we must call time out on TikTok. In the letter of the music company called TikTok, quote, an increasingly influential platform with powerful technology and a massive worldwide user base. UMG said that in its contract renewal discussions with TikTok, it has, quote, been pressuring them on three critical issues, appropriate compensation for our artists and songwriters protecting human artists from the harmful effects of AI and online safety for TikTok's users, end quote. With respect to the issue of artists and songwriter compensation, TikTok, quote, proposed paying our artists and songwriters at a rate that is a fraction of the rate that similarly situated major social platforms pay, according to UMG's letter, as an indication of, quote, how little TikTok compensates artists and songwriters, despite its massive and

growing user base, rapidly rising advertising revenue, and increasing reliance on music-based content, TikTok accounts for only about 1% of our total revenue. Ultimately, TikTok is, trying to build a music-based business without paying fair value for the music, UMG said in the letter, end quote. There were a bunch of tech earnings reported yesterday. I don't think anything major really came up. Microsoft revenue was up 18% year-over-year. Their intelligent cloud revenue was up 20%, Azure revenue up 30%, beating estimates. Alphabet reported revenue up 13% and net income up a whopping 52%. Their cloud revenue grew to $9.2 billion in the quarter. Apparently, Alphabet's digital subscription services, which include YouTube and Google One, are on a $15 billion annual

revenue run rate, which is up 5x in the last five years. YouTube ad revenue rose 15 and a half percent to $9.2 billion just in the quarter, even though ad sales fell by almost 8%, so they're selling less ads but getting better rates, I guess. A Wall Street analyst came out with a report that said, as a standalone business, YouTube would be valued at more than $40 billion, which is two times bigger than Disney's market cap and eight times bigger than the biggest record label in the world. And to put this in a different context, the analyst believes YouTube represents 22% of Google's entire market cap, or I guess

that should be Alphabet's entire market cap. Picking up on the conversation from this weekend's bonus episode, I increasingly think that as AI slowly kills the web, Google will increasingly discover how valuable YouTube is for them. As anyone with children will tell you, YouTube is the television of the future. Even more so than Netflix, between YouTube and TikTok, I think the argument can be made that Hollywood itself should be worried. The idea of watching a TV show or a movie is increasingly feeling like watching a quibby, something that doesn't make sense to a certain generation trained on different video watching habits. And so again, to bring it back to Google, they'll have YouTube, they'll own TV, they'll have their cloud business,

their AI business, who needs Google search? Rutro looks like we might need to open up a Deadpool file for 23 and Me. 23&Me's stock, which hit a $6 billion valuation after its 2021 IPO, has crashed 98%, and 23 and Me may run out of cash by 2025, according to some analysts, quoting the journal. Five years ago, 23 and Me was one of the hottest startups in the world. Millions of people were spitting into its test tubes to learn about their ancestors, history, Oprah had named its kit one of her favorite things. Lizzo dressed up as one for Halloween. Eddie Murphy name-checked the company on Saturday Night Live. Twenty-three and me went public in 2021, and its valuation briefly topped

$6 billion. Forbes anointed Ann Wojiski, 23 and Me's chief executive in Silicon Valley celebrity, as the, quote, newest self-made billionaire. Now Wajiske's self-made billions have vanished. 23 and Me's valuation has crashed 98% from its peak, and NASDAQ has threatened to delist its sub-1 stock. Wigiski reduced staff by a quarter last year through three rounds of layoffs and a subsidiary sale. The company has never made a profit and is burning cash so quickly it could run out by 2025. Wigiski has been searching for fresh capital, but with 23amese stock trading at just 74 cents, the company likely can't raise money by selling more shares. And the company's early stage drug programs are so expensive, she has sought investor partners for some of them,

so far unsuccessfully, and given up stakes in others. She could also plug the hole with her own cash. At the center of 23MEs DNA testing business are two fundamental challenges. Customers only need to take the test once and few test takers get life-altering health results. Wigiske's most ambitious bet is developing drugs using 23MMe's stockpile of more than 10 million DNA samples that test takers have agreed may be used for research. But getting new drugs to market is expensive and takes years. In a huge blow to its brand, 23&Me, also had a data breach this fall that exposed non-genetic information of 6.9 million customers, highlighting the same privacy concerns that Wigiski once blamed for slowing sales and exposing the company to a class

action lawsuit, which was filed last Friday. To create a recurring revenue stream from the test, Wigiski has pivoted to subscriptions as media companies launched Streaming Plus channels. Wojcicki rolled out 23 and Me Plus, offering personalized health reports, lifestyle advice, and unspecified new reports and features as discoveries are made for an initial 200, $129 with annual renewals of $69. When the company last disclosed the number of subscribers a year ago, it had $640,000, less than half the number it had projected it would have by then, end quote. Interesting raise time, and this is potentially a big one, but it's still potential.

A source is telling Bloomberg that figure AI, which is building a humanoid robot, is in talks to raise as much as $500 million in a round led by Microsoft and Open AI, at a $1.9 billion $1 pre-money valuation. What is Figure AI? Quote, figure is working on an AI-powered robot that looks and moves like a human. The company said it hopes its machine called Figure Zero One will be able to perform dangerous jobs that are unsuitable for humans and that its technology will help alleviate labor shortages. The AI robotics industry has been busy lately earlier this month. OpenAI-backed Norwegian AI Robotics Startup 1X Technologies AS raised $100 million. VanC. Hoover-based Sanctuary AI is developing a humanoid robot called Phoenix, and Elon Musk has previously

said Tesla is working on a robot called Optimus, end quote. Quoting read right. Figure AI's website states that it aims to amalgamate new AI technologies with robotics in order, quote, to develop general purpose humanoids that make a positive impact on humanity and create a better life for future generations. It believes that by creating humanoid robots, quote, unsafe and undesirable jobs can be eliminated, thus helping to plug unprecedented labor shortages. However, the California-based company said that its priority will be in industry such as manufacturing, shipping, and logistics, warehousing, and retail, quote, where labor shortages are the most severe. The AI-powered robot is set to look like a human called figure zero one, equipped with, quote, two legs, two arms,

hands, and a screen for a face. Brett Adcock, founder and CEO said it has managed to make coffee, like a human. Adcock added that his sole focus is, quote, building a figure with a 30-year view to positively impact the future of humanity. Earlier this month, of the company signed a deal with BMW to have its robot work in the car developers United States facilities, end quote. On that coffee-making robot, quoting from a different read-write piece, figure AI founder Brett Adcock has taken to X, formerly Twitter, to reveal that its robot figure Zero One has successfully learned how to make coffee. While that doesn't seem too impressive at the surface level, Adcock goes on to explain that the reason this is such a groundbreaking achievement is

that, quote, if you can get human data for an application, making coffee, folding laundry, warehouse work, etc. You can then train an AI system end to end on figure zero one. There is a patch to scale at every case, end quote. In the video, Adcock posted to X, it claimed it took 10 hours to train Figure Zero One on how to use a coffee machine to make a cup of coffee, including putting the coffee pod in and pressing the button to start brewing. It's prompted to do so simply by being asked, can you make me a cup of coffee? It then goes on to show how Figure Zero One also learn to correct its mistakes in the process, like placing the coffee pod into the machine incorrectly, end quote. And quoting Business Insider. Open AI has previously invested in another

humanoid robot startup called OneX Technologies per Bloomberg. It's raised $100 million to date, and the chat GPT maker led its $23.5 million Series A funding. Figure AI was founded in 2022 by CEO Brett Adcock, per an Axios report. He's built a team of top roboticists from Tesla and Boston Dynamics, the company behind the robot dogs. Robotics is poised to be the, quote, biggest thing in 2024, aside from LLMs, according to NVIDIA's senior AI scientist Jim Fan and the race to build the most advanced version seems to be heating up in a market expected to be worth $3 trillion.

by 2050, end quote. Finally, today, I have a hot new job title for you. The New York Times takes a look at how the AI boom has spurred law firms, hospitals, insurance companies, government agencies, and others to create chief AI officer roles to navigate the use of AI. Quote, the Equifax Credit Bureau, the manufacturer Ashley Furniture and law firms such as Evershed's Sutherland, have appointed AI executives over the past year. In December, the New York Times named an editorial director of AI initiatives and more than 400 federal departments and agencies looked for chief AI officers last year to comply with an executive order by President Biden that created safeguards for the technology. In total, 122 people with the title of chief or vice president of AI joined a forum last year on

Glassdoor, the company reviews site up from 19 in 2022, Glassdoor said. The AI executive jobs are appearing because organizations want to harness the transformative technology, said Randy Bean, the founder of the consulting firm New Vantage Partners, who advises companies on data and AI leadership. At the same time, he added, organizations want to say, yeah, we have a chief AI officer because that makes them look good, end quote. Other executive jobs have been formed in response to major technological and financial changes of the past. In the 1980s, advances in computing power led to a boom in chief information officers and chief technology officers who typically oversee how technology is used within a company or develop it.

After the 2008 financial crisis, chief data officers were appointed to comply with new regulations and to manage how companies use data. With AI executive roles, companies and organizations are looking for someone to help them navigate the technology's risks and potential and how it might change the way people work, end quote. So I haven't mentioned this in a while, but did you know you can get an ad-free version of this podcast? You can by going to tech.combe.com. It's a $5 per month subscription, and by my calculations, if you do listen to the show every day over the course of the month,

month. Without the ads, you're saving yourself 51 minutes of your time, almost a full hour each month. Plus, you have the satisfaction of supporting my hard work on the show directly. So give that a go if it sounds like it's worth your while to save some time. Tech.comcast.com. Talk to you tomorrow.