Tech Brew Ride Home - Wed. 09/27 – The Big Amazon Lawsuit

Starting point is 00:00:00 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 Wednesday, September 27th, 2020. I'm Brian McCullet today. The big FTC-led lawsuit against Amazon is live.

Starting point is 00:00:43 Is Johnny Ive working with OpenAI to create an AI hardware product? Open AI might soon be 3xing its private valuation. What the writers won from Hollywood and what it's actually like to ride in the only street legal level 3 autonomous car. Here's what you missed today in the world of tech. And so it begins. the Federal Trade Commission and 17 U.S. states have sued Amazon for allegedly using monopoly power to raise its prices, force sellers to pay fulfillment and ad fees, and harm its rivals. Quoting CNBC, the agency laid out a two-pronged strategy by which Amazon, quote, unlawfully maintains its monopoly power.

Starting point is 00:01:25 It pointed to so-called anti-discounting measures the company uses to punish sellers and deter other online retailers from offering lower, more competitive prices than Amazon. which translates to keeping prices higher for products across the internet, the FTC said. Amazon also, quote, effectively requires that sellers use its, quote, costly fulfillment services in order to obtain the vaunted prime badge for their products, the FTC said, which in turn makes it more expensive to do business on the platform. Sellers are paying one out of every $2 to Amazon, FTC chair Lena Kahn told reporters at a briefing Tuesday.

Starting point is 00:02:02 The FTC and states alleged that Amazon forces sellers to pay expensive fulfillment and advertising fees to market their goods on the site while facing no other choice, quote, but to rely on Amazon to stay in business. These tactics have degraded the shopping experience on Amazon by flooding search results with pay-to-play ads that steer shoppers toward more expensive and less relevant products, Con said. The upshot here is that Amazon is a monopolist and it's exploiting its monopolies in ways that leave shoppers and sellers paying more for worse service. Khan said at the briefing, in a competitive world, a monopoly hiking prices and degrading service would create an opening for rivals and potential rivals to come in, draw business, grow, and compete. But Amazon's unlawful monopolistic strategy has closed off that possibility and the public is paying directly as a result, end quote. David Zupolsky, Amazon's General Counsel and Senior and Senior Vice President of Global Public Policy, said in a statement that the FTC's complaint is,

Starting point is 00:02:57 quote, wrong on the facts and the law, end quote. The FTC didn't like, out potential remedies such as a breakup or divestitures in its announcement, saying it is primarily seeking to hold Amazon liable. In the complaint, the FTC and states called for the court to prevent Amazon from continuing the alleged unlawful behavior and order, quote, structural relief to the extent necessary to resolve the harm. Structural relief tends to refer to remedies like breakups and divestments that alter the business itself rather than simply order it to discontinue a certain behavior. Often in antitrust cases, a judge will rule on whether a company is liable for the alleged violations first. Only at that point will a separate proceeding to determine the proper

Starting point is 00:03:39 remedies occur should there be a finding of liability, end quote. Sources are telling the information that Johnny Ive and Sam Altman have been discussing building a new AI hardware device. And Masayoshi Son has apparently been involved in some aspects of the conversation as well. Quote, it is not clear what the device would be, or if they will decide to build it, but the two leaders who are friends have been discussing what new hardware for the age of AI could look like. It is also unclear whether any new device would be made by OpenAI itself or a new company. OpenAI has raised $11 billion to date from high-profile investors, including KOSLA Ventures and Microsoft. A popular consumer device could give

Starting point is 00:04:24 Open AI an edge to compete in the years-long battle ahead over how AI changes consumers' lives. But it also could be a big distraction. Many big tech companies have tried and failed to build hit hardware. Altman has ties to at least one consumer hardware startup, Humane. He is one of its largest investors. The company was founded by Imran Chaudry and software engineer Bethany Bonjourno, both former Apple employees. It plans to develop a screenless wearable device that can be directed using voice prompts and gestures while projecting information onto surfaces in front of it. In 2020, Altman co-led a $30 million series A round for Humane. and then participated in a $100 million series B in 2021 and a $100 million series C in 2023,

Starting point is 00:05:07 according to the company. On top of Altman's investments, Humane boasts that a, quote, collaboration with Open AI will integrate its technology into the humane device, end quote. SoftBank, meanwhile, has indicated it wants to catch up to the generative AI craze that swept Silicon Valley for the past year. Masyoshi Song crafted his $100 billion vision fund around the theory that artificial intelligence would underpin the next generation of technology. companies. But SoftBank has largely sat out the past year's rush into generative AI startups, bolstered by the proceeds from the recent IPO of Chip Designer Arm. SoftBank is expected to push aggressively into the current wave of AI startups, end quote. Probably not unrelated to that.

Starting point is 00:05:53 Sources have told the Wall Street Journal that Open AI is pitching investors on a possible share sale that would value the AI startup at between $80 and $90 billion, almost triple its level earlier this year. Quote, the startup, which is 49% owned by Microsoft, has told investors that it expects to reach $1 billion in revenue this year and generate many billions more in 2024, people familiar with the discussion said. The deal is expected to allow employees to sell their existing shares as opposed to the company issuing new ones to raise additional capital. Open AI representatives have begun pitching investors on the deal, the people said, though it is possible the terms could change. A valuation of $80 billion or more would make OpenAI one of the most highly valued.

Starting point is 00:06:34 global startups behind Elon Musk's SpaceX and TikTok owner BiteDance. The figure underscores the extent to which Open AI has been able to reshape the landscape of Silicon Valley and force even richer, more established tech giants to overhaul their product roadmaps and follow its lead. Open AI is aiming to sell a few hundred million dollars worth of existing shares to Silicon Valley investors. In the past, venture firms such as Sequoia Capital and Kosovo Ventures have purchased Open AI shares through tender offers, though the bulk of its external funding is from Microsoft. The transaction would immediately give Microsoft a huge paper profit. The tech giant invested billions of dollars in the startup in January to help finance the intensive

Starting point is 00:07:12 computing costs necessary to train its advanced AI models. At the time, OpenAI was valued at a bit under $30 billion, end quote. Ming Chi Kuo has a possible answer to those iPhone overheating reports. He says it is not due to the new chip inside those phones, which had not occurred to me, quoting from his own medium post. My survey indicates that the iPhone 15 Pro series overheating issues are unrelated to TSMC's advanced three nanometer node. The primary cause is more likely the compromises made in the thermal system design to achieve a lighter weight, such as the reduced heat dissipation area and the use of a titanium frame, which negatively impacts thermal efficiency. It's expected that Apple will address this through software updates,

Starting point is 00:08:05 but improvements may be limited unless Apple lowers processor performance. If Apple does not properly address this issue, it could negatively impact shipments over the product lifecycle of the iPhone 15 Pro series, end quote. Again, it looks like the WGA strike, at least that strike, is heading to a conclusion. And I find it interesting which details related to tech ended up getting in this deal. For example, the Verge says the WGA contract calls for streaming data transparency, as well as guarantees on AI usage, including preventing AI-generated material to be used as a source material. Quote, on the AI side of things, the WGA got essentially what it's been demanding from the start.

Starting point is 00:08:53 According to the summary of the contract, AI will not be able to write or rewrite literary material, and AI-generated material will not be able to be used as a source material. So, an exec won't be able to ask ChatGPT to come up with a story and ask writers to turn that into a script that the exec owns the rights to. The WGA also, quote, reserves the right to assert that exploitation of writer's material to train AI is prohibited by MBA or other law. This means that if the laws change or AI training reaches a point of contention for guild members, the WGA will be able to call that exploitation. This is likely related to proposed laws in California regulating the use of materials for AI training. But, quote, AI is the flashy thing. The data is the game changer.

Starting point is 00:09:36 Catherine Trendacosta, Director of Policy and Advocacy at the Electronic Frontier Foundation and a reporter covering the strike for Vice and Defector told me, and I tend to agree. As the LA Times noted earlier this week, streaming data has essentially been a black hole. This means no one working on projects in Hollywood knew how well those projects were doing, which created a problem because pay for projects is directly tied to performance. Now studios will have to provide the WGA with actual data, specifically the, quote, total number of hours streamed both domestically and internationally of self-produced high-budget streaming programs.

Starting point is 00:10:12 That means Netflix, Disney Plus, Amazon, and the other streamers won't be able to invent weird metrics or meaningless self-referential rankings to give to the WGA. The numbers the studios provide may be subject to NDAs, so the rest of us won't necessarily have access to those metrics yet. The WGA will still be able to release the data in aggregate, giving us much more nuanced and revealing looks at the business of streaming than anything we've had before. The streaming industry has thrived on data opacity, allowing an industry in the business of fiction to twist the story to how it sees fit with carefully crafted data.

Starting point is 00:10:46 Now there will be real actual hard data available to the WGA membership. And once the genie is out of the bottle, it will be a whole lot more difficult to smush it back in, end quote. Meanwhile, the journal says, the deal also lets studios train AI models on writers work, while writers would be compensated for work on scripts, even if AI tools are used. Quote, entertainment executives didn't want to relinquish the right to train their own AI tools based on TV and movie scripts, since their understanding is that AI tech platforms already are training their own models on such materials, people familiar with the matter said.

Starting point is 00:11:19 Entertainment companies are looking at the use of AI tools for everything from summarizing scripts to special effects to promotional marketing, the Wall Street Journal reported. Warner Brothers Discovery has held discussions with OpenAI about using chat GPT for tasks such as creating descriptions of shows on its max streaming service, and possibly down the road for summarizing scripts submitted to studio executives for review, the journal has reported. Hollywood studios are expected to retain the right to train artificial intelligence models based on writers' work under the terms of a tentative labor agreement between the two sides. People familiar with the situation said, the writers would also walk away with an important

Starting point is 00:11:51 win, a guarantee that they will receive credit and compensation for work they do on scripts, even if studios partially rely on AI tools, one of the people said. That provision had been in an earlier offer from the Alliance of Motion Picture and Television Producers, the group representing studios, streamers, and networks, end quote. Finally today, long-time listeners of the show know I don't feel like I need self-driving cars in my life in the fully self-driving sense. I just want to be able to read a book while I'm tooling down the highway. I'm happy to take over in other scenarios. Well, The Verge has gotten a hands-on with my dream. The Mercedes-Benz drive pilot, the first and only level three system,

Starting point is 00:12:35 approved for sale in the U.S. and the EU, available only on freeways mapped by Mercedes. Quote, offered on the electric EQS fastback and gas-powered S-class sedan, drive pilot will initially launch in California and Nevada later this fall, the first two states that have approved the system. At up to 40 miles per hour in traffic jam situations on highways, drive pilot provides hands-free eyes-off driving that allows the driver to look away from the road at something else like play games or watch a movie. That's a big leap up from hands-free level two systems, Tesla's autopilot and full self-driving included, which still require the driver to be in full

Starting point is 00:13:13 control, looking ahead and paying attention. Drive pilot can only be used when the operational design domain ODD is met, meaning the set of specific circumstances and criteria that are necessary for the system to work. There must be a vehicle in front of your car, reasonable road conditions with readable markings and lines and clear weather and light conditions. Drive pilot can't be used at night or in the rain, and the headlights and wipers must be set to auto for it to work. It's also only available on freeways that have been mapped by Mercedes with GPS positioning that is precise to the centimeter and even accounts for continental drift. Drive pilot can't be used in construction zones, and in addition to detecting vehicles and signs, the system gets data from local agency

Starting point is 00:13:54 so the car knows when a construction zone is ahead. More than 100,000 miles have been driven. driven and mapped in California using Drive Pilot by Mercedes engineers, and that number will continue to grow. Crucially, Mercedes takes full legal liability when Drive Pilot is activated, though it will depend on each individual case. That is a major step forward for autonomous tech, as level two systems still hold the driver responsible for anything that happens. As long as the user operates drive pilot as designed, Mercedes is the one responsible. The system has been available to customers for more than a year in Germany, and Mercedes says there have been zero accidents so far. Before getting into the cars to drive, Mercedes shows us an EQS on display. For Us is showing off, an important visual indicator that it is not yet legal. In the hopefully very near future, when Drive Pilot is active, the headlights, tail lights, and side mirrors will have turquoise marking lights so other drivers know the Level 3 system is in use.

Starting point is 00:14:47 Activating Drive Pilot is easy. The steering wheel has a pair of identical metal inserts at 10 and 2, each featuring a hard button with the system's logo and a slim light and a row of lights above. When Drive Pilot becomes available, the button shows a soft white light, and all you have to do is press it. The gauge cluster then displays a message of acknowledgement that you're turning the system on, which you have to accept by pressing the same button on the steering wheel stock used for other cluster adjustments. All of the steering wheel lights then turn turquoise, and Drive Pilot takes over. Unlike with regular adaptive cruise control or other Level 2 systems, the driver can't adjust the speed or follow distance when using Drive Pilot, so you really are leaving it to its own devices. In terms of actual Operation Drive Pilot at first, acts like any other hands-free Level 2 system does.

Starting point is 00:15:33 Because it only works in traffic jams at slow speeds, giving up total control doesn't feel unsettling or scary to me, as I already love using adaptive cruise control in situations like this. It does feel more precise and accurate in how the car stays in its lane and reacts to surrounding traffic, with fewer jerky movements and constant tiny adjustments. My first order of business is to open up the YouTube app and watch Kylie Minogue's latest music video on the EQS's 17.7-inch central display. The car has a 5G data connection for its infotainment, so high-quality streaming is easily

Starting point is 00:16:03 achieved. Mercedes also has the Zinc Entertainment Platform available, which features more than 30 different streaming services for movies and TV shows, including live programming. There are a number of built-in games like Sudoku, Tetris, Virtual Shuffleboard, and a tile-matching game featuring images of different Mercedes. Some of the games are multiplayer, and there's also a quiz game with a mix of automotive and general trivia questions, some of which are so tough that neither I nor the three Mercedes engineers writing with me pick the correct answers. You could also use a built-in web browser. The new E-class is the first Mercedes to feature an integrated TikTok app in the screen, something

Starting point is 00:16:37 that will be added via an over-the-air update to other M-BUX equipped cars, and Zoom will be available too. While Drive Pilot's breadth of capabilities may be fairly limited for now, it's just a taste of what will be possible in the future. Mercedes's goal is for drive pilot to be usable in an expanded range of conditions and at speeds of up to 80 miles per hour, and approval in more states and countries is in the works, end quote. Nothing for you today. Talk to you tomorrow.

Tech Brew Ride Home - Wed. 09/27 – The Big Amazon Lawsuit

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