Tech Brew Ride Home - Wed. 07/12 – Microsoft Wins Big In The FTC Case

Episode Date: July 12, 2023

A big win for Microsoft leads critics of FTC chair Lina Khan to come out of the woodwork. Anthropic has released its Claude 2 chatbot. Say hello to the Nothing Phone (2). And while the market caps of the big players might have been boosted by AI, might the need for on premises AI lead to a unique opening for the likes of Dell and Hewlett Packard Enterprise? Links: Microsoft-Activision deal moves closer as judge denies FTC injunction request (CNBC) Microsoft and UK regulators agree to pause their Activision battle to negotiate (The Verge) FTC would face tough appeal of Microsoft-Activision order, experts say (Reuters) F.T.C.’s Court Loss Raises Fresh Questions About Its Chair’s Strategy (NYTimes) AI Startup Anthropic Releases a New Version of Its ChatGPT Rival, Claude (Bloomberg) Why SUSE is forking Red Hat Enterprise Linux (TechCrunch) Bigger, Brighter, More Expensive: Nothing Reveals the Phone (2) (Gizmodo) The AI Boom Is Here. The Cloud May Not Be Ready. (WSJ) 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 Beam Ride Home for Wednesday, July 12th, 2023. I'm Brian McCullough today. A big win for Microsoft leads critics of FTC Charolina Khan to come out of the woodwork. Anthropic has released its Claude 2 chatbot. Say hello to the nothing phone too. And while the market caps of the big players might have been boosted by AI, might the need for on-premises AI lead to a unique opening for the likes of Dell and Hewlett Packard? Here's what you miss today in the world of tech. Big win for Microsoft yesterday. A U.S. court denied the FTC's preliminary injunction bid to stop Microsoft's Activision deal, as the FTC, quote, has not shown it is likely to succeed in showing harm.

Quoting CNBC, this court's responsibility in this case is narrow. It is to decide if notwithstanding these current circumstances, the merger should be halted, perhaps even terminated, pending resolution of the FTC administrative action. Judge Jacqueline Scott Corley, wrote in her decision published Tuesday. For the reasons explained, the court finds the FTC has not shown a likelihood it will prevail on its claim. This particular vertical merger in the specific industry may substantially lessen competition. To the contrary, the record evidence points to more consumer access to call of duty and other Activision content. The motion for a preliminary injunction is therefore denied, end quote. The decision comes after five days of court hearings to assess whether

Microsoft would be able to complete the $68.7 billion Activision Blizzard acquisition it announced in 2022. The judge was deciding whether to grant the FTC's request for an emergency injunction to prevent the deal from closing. The FTC argued Microsoft has shown an interest in making some games exclusive to prevent them from appearing on Sony's PlayStation or Nintendo Switch, and that it might do so if the deal were to close. But Microsoft said the company would want to make Activision's titles more widely available

rather than less, partly to grow from people subscribing to its GamePass library of games. Activision CEOs Katik and Microsoft CEO Nadella both testified, as did executives from Alphabet, NVIDIA, and Sony, end quote. Well, okay, but the deal is still in trouble in the UK, right? Maybe there were initial signs that Microsoft and the UK CMA might agree to stay the litigation to negotiate a restructured Activision Blizzard deal, but later this morning, there there was some question as to whether or not the UK would have to reopen the antitrust case entirely, quoting the Verge. The UK regulator moved to block Microsoft's proposed acquisition in April, and Microsoft was due to appeal that decision with a hearing to start on July 28th.

Microsoft has now agreed with the CMA to pause its appeal process to look at how the transaction could be modified to address the CMA's cloud gaming concerns. The CMA confirmed the decision in a statement to the verge, noting that the regulator is, quote, ready to consider any proposals for Microsoft to restructure the transaction in a way that would address the concerns set out in our final report, end quote. The Competition Appeal Tribunal will need to approve or deny this request, but it's more than likely that it will be approved to allow both parties to negotiate further, end quote. So, kind of hopeful signs for Microsoft there, but will the U.S. just take this as an L, or will the FTC appeal? Experts are telling Reuters that the FTC faces hurdles to appeal the Activision ruling, as the facts tend to work in Microsoft's favor. A lot of the power of the opinion on appeal comes down to an analysis of the factual record,

said antitrust scholar Daniel Crane of the University of Michigan Law School. Corley found there was no record contradicting Microsoft's vow that it would not make Call of Duty exclusive to the company's Xbox platform. The FTC may have difficulty on appeal establishing the fact without which the case, as they framed it, goes away, Crane said. Appeals courts generally defer to U.S. judges on factual records, said antitrust lawyer Luke Haskamp. The facts in the case, quote, seem to all break in Microsoft in Activision's way, he said. In her 53-page order, Judge Corley said it was not enough for the FTC to argue that a

merger might lessen competition, the FTC must show the merger will probably substantially lessen competition, end quote. Several legal scholars questioned that standard saying that U.S. antitrust law required the FTC to prove the proposed deal may harm competition, not that it will. University of Baltimore Law School Professor Robert Landy said, quote, Will, probably is not the same as May, and the judge got the standard wrong, end quote. But others are saying that FTC Chair Lena Kahn's take it to the court's strategy is flawed ahead of a House Judiciary Committee hearing to, quote, examine mismanagement of the FTC, quote, quoting the New York Times. I completely disagree with this approach. Anthony Sabino, a professor of business and law at St. John's University, said,

of Ms. Khan's methods. She's trying to change a centuries' worth of antitrust law overnight, and that's not necessarily wise, end quote. Adam Kovetchich, the chief executive of Chamber of Progress, a tech trade group, said the defeats made the FTC appear less credible, quote, all these court losses are making their threats look more like a paper tiger, he said. Others wondered if Ms. Khan was wasting the FTC's resources on can't-win cases. They've crossed the line to being reckless with the cases they are bringing, said Ashley, Ashley, Baker, a director of public policy for the Committee for Justice, a conservative think tank. The tide of criticism puts Ms. Khan in the hot seat as she prepares for further potential actions

against the tech giants. The FTC has filed antitrust suits against Meta and could bring a case against Amazon, which it has been investigating over claims of illegal monopolization. Now Ms. Khan will first have to defend herself. On Thursday, she is expected to be grilled at a House Judiciary Committee hearing on oversight of the FTC with the Republican-led panel's website saying it wants to, quote, examine mismanagement of the FTC and its disregard for ethics and congressional oversight under Chair Lena Khan, end quote. Anthropic has released AI chatbot Claude 2, available now in the U.S. and the UK via clod.a. And an API for businesses. Reminder that Anthropic has raised more than a billion dollars, including

$450 million just this past May, quoting Bloomberg. Like its predecessor, Claude 2 is built atop a large length. model and can be used for written tasks like summarizing, searching, answering questions, and coding. Both models can currently take in large chunks of text. A user can ask it to summarize a book, for instance, though Claude 2 can generate longer responses than its predecessor. Responses can reach up to about 3,000 words, according to data provided by the company. Claude 2 will also offer more accurate responses on some topics such as coding and grade school-level math, the company said. Anthropics goal has been for Claude to be less susceptible

than other chatbots to manipulation. The company aims to control the generation of harmful or offensive results in response to prompts, issues that have dogged rival chatbot such as OpenAI's chat GPT. The startup said that its test indicated Claude II was better than existing models at generating what Anthropic calls harmless responses to harmful prompts. Anthropic president and co-founder Daniela Ammodai said that the newer model is meant to, quote, feel sort of subjectively a little bit better than the older version, she added, and we also know that it's still not perfect, it has limitations, end quote. Anthropic, based in San Francisco, was founded in 2021 by a handful of former OpenAI staffers, including Amo Dai and her brother, Dario Ammodai, end quote.

Linux distribution company Seuss plans to create a hard fork of Red Hat Enterprise Linux, investing as much as $10 million into this project over the coming years, quoting TechCrunch. one major open source company forking another major open source company's project is equivalent to going nuclear. But there's a reason Seuss is doing this now and that it will likely be championed by many in the open source community. It's a complicated story. To understand what's happening here, we need to go back a few years, end quote. And actually, I'm not going to quote from it. I'm just offering this here as a stub because to say this is a long, complicated story is putting it mildly.

It's a bit too in the weeds for me to summarize here. But I do recognize this is a big deal for a certain segment of developer out there. So if you want the full rundown of how this is happening, the whole story, as it were, link in the show notes. Nothing plans to launch the phone two for around $600 in the U.S., Europe, and the UK on July 17th. The device has a Snapdragon 8 plus Gen 1 processor and those famous rear glyph lights. Quoting Gizmodo, Nothing phone, too, has finally struggled out of the muck into the light of day. It's got a beefier processor, a better camera, more of nothing's signature blinking lights, and it costs more than $100 more than its first iteration. The phone, too, victim of a protracted guerrilla marketing campaign by CEO Carl Pye, will cost $599 to start and should be available for locals at the company's London shop and New York pop-up kiosk on July 13th. The phone is going to be publicly available after that in the U.S., UK and Europe,

July 17th. Confirming early reports, the new phone two finally has a processor and camera that can measure up to other phones in the same price point. It's sporting the Snapdragon 8 plus Gen 1 chip, the same as last year's 1 plus 10 Pro and Samsung's Galaxy S-22, before the S-23 went over to the gen 2. The Gen 1 chip is powerful, but the phone 2 won't be quite as beefy as other company's recent flagships as far as processing power goes. The new phone also has an extended 4,700 milliamp hour battery capable of wireless or fast charging. The company claims it can reach 0 to 50% in 20 minutes, though we'll need full test to see if it lasts longer than last year's iteration. The front camera has been upgraded to a 32 megapixel sensor from the phone 1's 16 megapixel.

The rear dual sensor array now includes the Sony IMX 890-50 megapixel camera. According to nothing, the phone 2 can process camera data up to 4,000 times more than the phone 1. The company also claim the device has enhanced focus and 4K, 60 frames per second video recording capability. Though the latest nothing flagship device retains the 6.7-inch dimensions with an OLED mainscreen, the famed backplate and its glyph lights have seen some changes. While the device is still clear plastic on its rear, the LED strips have been segmented into several lighting zones. Like the phone one, the lights can track how much charge you have left. In addition, though, the phone 2's lights can act as a volume checker and timer.

Users can also set up the phone to notify them about new messages from select contacts or apps. Along with these notifications to the glyphs, users can also use a special glyph composer app to create their own glyph ringtone with select beeps and boops that correspond to different lights. The feature sits alongside the so-called nothing OS2 and Android-based system featuring homemade, home, and lock screens alongside custom widgets. Nothing promises its new operating system should be twice as fast as the phone one. The phone one started at about $475 in places like Europe and cost $300 when it finally saw a U.S. release. Gizmodo's biggest complaints with the phone one was that it was a rather middling mid-market device that was full of unnecessary features,

while lacking slightly in power and sensors compared to mass market giants like Google or Samsung, end quote. Finally today, remember the whole angle of on-premises computing for AI stuff? Like, you can't let your employees use chat GPT because you don't want your company's secrets. getting out. But it turns out there might actually be another angle to all of this. And, according to the journal, Dell, Qualcomm, and other on-premises hardware providers might be sensing an opportunity. Quote, much of the infrastructure of the cloud wasn't built for running such large and complex systems. Cloud sold itself as a convenient replacement for on-premises servers that could easily scale up and down capacity with a pay-as-you-go pricing model.

Much of today's cloud footprint consists of servers designed to run multiple workloads at the same time that leverage general-purpose CPU chips. A minority of it, according to analysts, runs on chips optimized for AI, such as GPUs and servers designed to function in collaborative clusters to support bigger workloads, including large AI models. GPUs are better for AI since they can handle many computations at once, whereas CPUs handle fewer computations simultaneously. Other hardware providers have an opportunity to make a play here, said Lee. Sustar, principal analysts at Tech Research and Advisory firm Forrester, covering public cloud computing for the enterprise. Dell Technologies expects that high cloud costs linked to heavy use, including training models, could push some companies to consider on-premises deployments. The computer maker has a server designed just for that use. The existing economic models of primarily the public cloud environment weren't really optimized for the kind of demand and activity level that we're going to see as people move into these AI systems. Dell's global chief technology officer John Ross said, on-premises, companies could

save on costs like networking and data storage, Ross said. Cloud providers said they have several offerings available at different costs and that in the long term, on-premises deployments could end up costing more because enterprises would have to make huge investments when they want to upgrade hardware. Qualcomm said that in some cases it might be cheaper and faster for companies to run models on individual devices, though, taking some pressure off the cloud. The company is currently working to equip devices with the ability to run larger and larger models. And Hewlett-Packard Enterprise is rolling out its own public cloud service, powered by a supercomputer that will be available at enterprises looking to train generative AI models in the second

half of 2023. Like some of the newer cloud infrastructure, it has the advantage of being purposely built for large-scale AI use cases, says Justin Hotard, executive vice president and general manager of high-performance computing AI and labs at HPE. Hardware providers agree that it is still early. days and that the solution could ultimately be hybrid with some computing happening on the cloud and some on individual devices, for example, end quote. A friend of mine went to see Liam Gallagher at Central Park Summer Stage, and apparently Liam bantered this, quote, this next song is from

the 90s when everything was cool, then the U.S. invented the internet, and everything went to hell, and quote, which, you know, show me the lie. Talk to you tomorrow.