Tech Brew Ride Home - Wed. 11/08 – The First AI Election

Episode Date: November 8, 2023

Big tech platforms are preparing for the first big election of the AI era. Why even Microsoft is so desperate to get its hands on AI chips. Some incredibly bearish signs from crypto. But could we actually see a crypto IPO happen soon? Don’t sleep on Amazon’s healthcare ambitions. And never underestimate the power of timing nostalgia correctly. Links: Meta to Require Campaigns to Disclose AI-Altered Political Ads (WSJ) Microsoft Is Offering to Help US Politicians Crack Down on Deepfakes (Bloomberg) Bing Chat so hungry for GPUs, Microsoft will rent them from Oracle (The Register) Coatue Cuts Value of OpenSea Stake by 90% as Fund’s Returns Sag (The Information) Stablecoin Issuer Circle Internet Considering 2024 IPO (Bloomberg) Amazon links One Medical primary care to Prime memberships (Washington Post) Fortnite just had its biggest day ever, 6 years in (Polygon) 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 Membrate Home for Wednesday, November 8, 23. I'm Brian McCullough today. Big tech platforms are preparing for the first big election of the AI era. Why even Microsoft is so desperate to get its hands on AI chips, some incredibly bearish signs from crypto, but could we actually see a crypto IPO happen soon? Don't sleep on Amazon's healthcare ambitions and never underestimate the power of timing nostalgia correctly. Here's what you miss today in the world of tech. It was Election Day here in the United States yesterday, not the biggest elections as these things go, but the event probably did tend to remind folks that we have a bigger election one year from now.

And, well, look, what happens now that we're in this new AI paradigm with elections? This is not just me sticking to the narrative of the show or trying to force connections to that narrative. There are two big headlines this morning about tech platforms at. least starting to think about AI and elections. For example, meta says it will require advertisers to disclose running political ads with media altered by AI or other software starting in early 2024 ahead of next year's presidential election. Quoting the journal. The Facebook parent company said the new policy will go into effect at the start of the new year. Political advertisers will have to disclose when an ad contains an image, video, or audio that was digitally created or

altered significantly. Meta provided examples of scenarios where political advertisers would need to make this type of disclosure, including ads that depict a real person saying or doing something they didn't say or do. Another example includes the digital creation of a realistic looking event or person that didn't occur or doesn't exist. The new policy is being announced nearly a year after OpenAIs public release of ChatGPT in November 2022. ChatGPT is a large language model chatbot that ushered in a new era of so-called generative AI technology that allows users to easily create images, essays, or videos with simple word prompts. This type of technology is already being used to create numerous pieces of content for social media services. The U.S. primary elections that will begin in

January may be the first big test for how content produced with generative AI will affect U.S. elections. The company said advertisers won't need to disclose digitally created or altered content that is immaterial, but Meta noted that advertisers that it determines didn't make disclosures as required by its policy will have their ads rejected. Advertisers that repeatedly fail to make necessary disclosures may also face penalties, Meta said. In addition to political ads, the new policy will apply to ads related to social issues. Meta also recently noted it will not allow advertisers to use the company's own generative AI ads creation tools to make political ads, end quote. Meanwhile, Microsoft plans to offer a new free tool to help

U.S. politicians fight deep fakes by authenticating their videos and photos. Quoting Bloomberg. Using cryptography, the service would create a permanent record of an image or video allowing anyone on the web to see whether it has been digitally altered or generated using artificial intelligence over time. Initially, Microsoft plans offer the tool for free to political candidates and then may eventually extend it to more groups after the 2024 U.S. elections, a person familiar with the situation said, asking not to be identified because the information isn't public. Microsoft's offer comes as concerns mount over AI-generated images and videos and their potential to supercharge misinformation as U.S. citizens prepare to vote for a new president in November 2024. Several political deepfakes have already emerged. Ron DeSantis was chastised in June for publishing fake images on the social media platform X of Donald Trump cozing up to Dr. Anthony Fauci, an attempt to mock his Republican Party Challenger.

In April, the Republican National Committee circulated a fake video depicting an apocalyptic U.S. under President Joe Biden's reign. Just weeks before the Biden video was released, a manipulated clip went viral of Senator Elizabeth Warren saying Republicans should be banned from voting. Microsoft also posted a new threat intelligence report that doubled down on its previous concerns about foreign actors attempting to influence campaigns. It's likely that China, Iran, and Russia will try to meddle with U.S. politics in the next year, the company said in the report, end quote. I continue to be amazed to what degree the current AI moment is also being constrained by a simple lack of resources. Microsoft and Oracle have signed a multi-year deal to, quote, support the explosive growth of AI services, meaning Microsoft can access Oracle's Nvidia A-100's and H-100 GPUs. In other words, this is Microsoft, again, one of the biggest tech platforms in the world, and

remember, the primary investor in OpenAI itself, going hat in hand to an ostensible tech rival simply because they themselves can't get their hands on enough chips to do AI stuff. Quoting the Register, the partnership essentially boils down to Microsoft needs more compute resources to keep up with the alleged explosive growth of its AI services, and Oracle just happens to have tens of thousands of Nvidia A-100s and H-100s available for rent. Far be it from us to suggest the Larry Ellison founded database giant doesn't have enough cloud customers to consume its stocks of Silicon. The two cloud providers' latest collaboration takes advantage of the Oracle Interconnect for Microsoft Azure, which allows services running in Azure to interact with resources in Oracle

Cloud infrastructure or OCI. The two SuperCorp's have previously used the service to allow customers to connect workloads running in Azure back to OCI databases. In this case, Microsoft is using the system alongside its Azure Kubernetes service to orchestrate Oracle's GPU nodes to keep up with what's said to be demand for Bing's AI features. Microsoft hasn't said just how many of Oracle's GPU nodes it needs for its AI services and apps and won't say. A spokesperson told us, quote, those aren't details we are sharing as part of this announcement. We've also asked Oracle 2 for more information and we'll let you know if we hear anything back, end quote. Not exactly bullish news from the crypto sector, according to a document seen by the information, CO2, cut the valuation of its

$120 million stake in NFT Marketplace OpenC to $13 million as of Q2 of this year, implying a valuation of $1.4 billion or less down from a $13.3 billion valuation in January of 2022. Quote, the previously unreported markdown shows how venture investors are reassessing the value of their investments made at the height of the crypto boom following a severe deterioration in the market. At the start of last year, OpenC sported a 13.3 billion. dollar valuation from a funding round co-led by CO2 and Paradigm. Co2 also slashed the valuation of its stake in crypto payment startup moon pay by 90%. Collapsing startup valuations are contributing to lacklustre returns for venture investors.

As of September, the multiple on invested capital for CO2's $7.7 billion growth fund raised in 2021, which backed OpenC and Moonpay, equalled 0.8 times, meaning the total paper value of the fund's investments is worth less than the initial money put in, according to a person with direct knowledge of the matter. For venture funds raised in 2021, the median internal rate of return is negative, meaning most of these funds have lost money so far, according to Cambridge Associates' data as of March. Paradigm, a specialist in crypto, had generated a negative 5% net internal rate of return as of May, a spokesperson for Paradigm declined to comment on the value of its open-sea stake. Most crypto startups have faltered

in the past 18 months as the end of near-zero interest rates quashed demand for digital assets. OpenC last week laid off 50% of its staff after volume on its marketplace plunged 99% since the start of 2022. Co2 and CryptoVC firm Paradigm co-led a $30 million Series C investment in OpenC in January 2022 amid high demand for trendy blockchain-based digital collectibles like the board Ape Yacht Club collection. The transaction value on the New York startup at $13.3 billion are nearly nine times higher than its prior round led by Andrew and Horowitz less than a year earlier. But OpenC's business, which had generated revenue by taking a two and a half percent cut of each transaction, began to founder once crypto prices declined and NFTs

fell from favor. In July 2022, OpenC made the first of at least three rounds of layoffs over the last year. By December 2020, Tiger Global Management, another OpenC backer had slashed the value of a $126.8 million investment it made in the startup by 76%. The information previously reported, earlier this year, OpenC temporarily eliminated its fees on most trades following the launch of a no-fee competitor blur crushing trading revenue. A spokesperson for OpenC didn't comment, end quote. This is the inverse of that, because meanwhile, sources say U.S.D.C. Stablecoin issuer Circle is considering an IPO early in 2024. Circle was valued at $9 billion when the company tried to go public via a SPAC back in 2020. Quoting Bloomberg. The company is talking to advisors as it prepares for a potential initial public offering, said the people who asked not to be identified discussing confidential information.

Deliberations are ongoing and there's no certainty that Circle will decide to proceed with a listing, the people said. While it's not clear how much Circle would seek to be valued at in an IPO, it was valued at $9 billion when it tried to go public in a blank check deal in 2022. Circle issues one of the world's largest stable coins, which are crypto tokens pegged to an asset like the dollar, that are mostly used by traders to move digital assets between exchanges. Earlier this year, Circle revealed it had $3.3 billion in exposure to the collapsed Silicon Valley bank triggering a brief depeg of USD coin. It plans to share financial reports on an ongoing basis and has hired Deloitte as an auditor, Bloomberg News reported in August, end quote.

Speaking of Greenshoots, I mean, how wild would it be if a crypto company were the one to kick open the door to tech IPO's return? I want to highlight something real quick because for all the other stuff happening right now, like the AI madness, I don't think we should ignore Amazon's continued push into health care because it could ultimately be a bigger deal than a lot of people think. Amazon has cut the price of an annual one medical membership from $199 to $99 for prime users, part of its plans to significantly expand its health care footprint, quoting the Washington Post. Amazon has gradually been integrating one medical, giving it top billing on its homepage and offering smaller temporary sales to Prime members,

but tying a permanent health discount to Prime is a big step toward Amazon's ambitious health goals. Because One Medical has brick-and-mortar clinics in only 19 major cities across the United States, thousands of Prime members would only be able to access One Medical's services virtually. One Medical's telehealth business has been picking up steadily. A one medical employee who spoke to the Washington Post on condition of anonymity to protect their job, said. Increasing virtual appointments helps maximize productivity of in-person One Medical Clinics, the person said, and the company has multiple job openings for virtual clinical roles. The new Prime One Medical Membership Benefit covers unlimited access to 24-7 on-demand

virtual care, including video chats with licensed providers within minutes, the company said in the blog post, virtual care is available nationally and members don't incur any additional costs for on-demand virtual care services. It's all covered by the members. and quote. Amazon operates another telehealth offering called Amazon Clinic. Clinic uses third-party health providers rather than directly employed primary care providers as One Medical does and aims to serve patients looking to resolve the most common and easily treatable conditions like acne, pink eye, and dandruff. According to Amazon's announcement, One Medical offers a similar service called Treat Me Now, but with one crucial difference. Amazon Clinic doesn't accept health insurance

while One Medical does. Amazon is known for its willingness to experiment until it finds a model that fits. The company has tried and walked away from at least two other costly healthcare gambits. Most recently, Haven, a corporate health care focused collaboration with J.P. Morgan and Berkshire Hathaway, and Amazon Care, a mobile in-home primary care service that was shut down last year. The health care services that have emerged from that trial and error process are one medical, Amazon Clinic, and Amazon Pharmacy, which grew out of the company's 2018 acquisition of Pillpack. While these services have so far grown, slowly, marrying one medical and prime is a sign that Amazon is ready to open the health care

floodgates to its more than 100 million prime members, some of whom already received discounts on prescriptions through Amazon Pharmacies' RX pass, end quote. Finally today, real quick, I want to end with a grab bag of gaming headlines. You might have heard that after the recent success of the Super Mario Brothers movie, more than a billion dollars in global box office, Nintendo is planning a live action Zelda movie. Not much here in terms of news to share about that other than to make the point that Dair Obasanjo made online, quote, Nintendo is working on a live-action legend of Zelda movie after the success of Super Mario Brothers, and it's going to be produced by Avi Arad, who's produced every Spider-Man

movie from the Ramey trilogy to the Home Trilogy to the Spider-Verse movies. Move over, MCU. There's a new IP king in town, end quote. Meanwhile, the socials are going wild with news that after what a decade? Rockstar is planning to officially announce the much-anticipated Grand Theft Auto 6, which again, not a surprise. We've known it's coming. There have been leaked renderings of the graphics, but think about it. An entire generation has come of age playing Grand Theft Auto 5. It's sold 185 million copies. Whenever a new GTA is released, it's going to be one of the biggest media releases of all time easily. And meanwhile, quoting Polygon. A little over six years after it launched, Battle Royale sensation

Fortnite just broke its all-time one-day player record by going back in time. The launch of Fortnite OG, a special season which brings back the game's original Chapter 1 map, drew an incredible 44.7 million players on Saturday, November 4th, who between them racked up 102 million hours of play. That's according to a post on X, formerly Twitter, from the official a Fortnite account, end quote. One way to never go broke in this life is to bet on nostalgia and get your timing right. Think about it. There are freshmen in college right now who probably played this map this weekend because

it brought them back to falling in love with Fortnite for the first time when they were back in middle school. I got my start in podcasting because at the time, a decade ago, tech still felt so new in people's lives that most people didn't think of the internet as history. I was just ever so slightly ahead of that game. Stick around long enough, and what you lived through personally becomes history. And if you time it right, people will want to relive their own personal histories as well. Something, something.

If they were remaking the show The Wonder Years today, they'd be making it about the year 2003. Talk to you tomorrow.