Regulation Onslaught on Big Tech 🐘

Update 2023-03-03

Hello! In today's update, you find the following:

• Europe Cracks Down on Big Tech with Onslaught of New Regulations with the Digital Markets Act

• Microsoft Improves Bing Chatbot with Three Personality Modes

• EU Clears Microsoft's Acquisition of Activision Blizzard After Competitive Licensing Offers

• EU Preparing to Hit Google with Antitrust Charges

• Apple to Launch Mixed Reality Headset with Continuity Features in Late 2023

• Brave Search Launches New AI-Powered "Summarizer" Feature for Desktop and Mobile

• AI Could Generate $15.7 Trillion in Global Economic Impact by 2030

• Apple Refuses Update for AI App Unless Developer Sets 17+ Age Restriction

• Microsoft Introduces LLM-Augmenter to Reduce Misinformation from Large Language Models

• Figure, a Robotics Company from Archer Co-Founder, Emerges from Stealth with Humanoid Robot

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Big Tech and Startups

Europe Cracks Down on Big Tech with Onslaught of New Regulations with the Digital Markets Act

European regulators on Thursday unveiled plans to rein in Big Tech's anti-competitive practices and fundamentally alter how US tech giants do business. These new rules, the Digital Markets Act, target tech companies like Apple, Amazon, Meta, and Google. The DMA can potentially affect Europe and global regulation of Big Tech practices. Examples of implications of the DMA:

• Requiring Apple to open iMessage for interoperability with other messaging apps.

• Google is prohibited from "combining personal data for targeted advertising" without explicit consent.

• Amazon must stop giving a leg up to its own offerings.

The Digital Markets Act needs one final vote from the European Parliament and Council, but their approval is all but assured. Fines of up to 10% of global turnover can be issued for first-time offenses; repeated infringements can be twice that.

📝 Cloudly quick take: The effects of the DMA would be massive on "Big tech" it aligns with the trend of trying and taking down these companies' dominance. However, we worry that these new rules will have an even larger effect on startups and smaller companies that need to follow them, kinda like how the GDPR has played out. The companies that have the resources to handle the ever-increasing compliance need are "Big tech," while the small ones suffer.

Microsoft Improves Bing Chatbot with Three Personality Modes

Microsoft has enabled users to change the Bing chatbot's personality with three creative, balanced, and precise options.

• The default is the balanced mode, aiming to balance accuracy and creativity.

• This update addresses previous wild AI responses from Bing and unresponsive issues.

• Microsoft also integrated the chatbot into Windows 11 taskbar and expanded access to mobile users.

EU Clears Microsoft's Acquisition of Activision Blizzard After Competitive Licensing Offers

Microsoft's acquisition of Activision Blizzard reportedly cleared a major regulatory hurdle with the EU, as licensing offers to competitors appeased concerns about competition in PC, console, and cloud gaming.

• The company has agreed to keep Call of Duty on competing platforms for at least ten years if the purchase is finalized.

• Microsoft is also committed to granting equal long-term access to Call of Duty across various platforms.

• The deal was announced in January 2022 to help the company compete against Tencent and Sony while developing its metaverse platform.

• US Federal Trade Commission and UK regulators still need to approve the deal before it can be finalized. The deadline is in June; otherwise, up to $3 billion may have to be paid in a breakup fee.

📝 Cloudly quick take: Microsoft's latest moves to show their long-term intent for the Activision game content seems to please regulators in the EU. It is up for debate whether it will be the same in the US and the UK.

As earlier commented by us. The acquisition will not lead to a worse deal for the consumer, and we view regulators' moves as a continuous trend of blocking M&A by "big tech."

EU Preparing to Hit Google with Antitrust Charges

The European Union is preparing to hit Google with a statement of objections in antitrust charges related to its online display advertising technology.

• These charges, which could lead to fines as high as 10% of annual revenue for Google, are based on evidence collected from the EU, the U.K., France, and Portugal.

• The European Publishers Council, including the New York Times, Guardian, and Axel Springer, have filed complaints.

• These fresh charges follow over €8 billion in EU fines over the past decade, including a record €4.34 billion penalty for the Android mobile operating system in 2021 and a €220 million fine from France in 2021.

📝 Cloudly quick take: Similarly to the EU, the US DOJ filed a lawsuit against the company with similar claims. We believe the focus on Google's display advertising business is misguided. In our view, Google dominates the display advertising business because they have built a far superior product to competitors. As a result, advertisers using the ad network pay less than competitors and get a far more extensive reach. It's hard to see how that scenario is terrible for the consumer. Businesses chose to use Google Adwords, which allowed Google to leverage its power. Advertisers have no duty to do business with Google, but their convenience has kept Google in power.

Google has a distinct and extreme monopoly in Search, so if the regulatory body focuses on something, it should be on that.

Apple to Launch Mixed Reality Headset with Continuity Features in Late 2023

Apple's upcoming mixed reality headset will bring new Continuity features to switch between different devices and virtual workspaces seamlessly.

• Continuity is how Apple describes all the ways its devices communicate interchangeably, such as Handoff, AirPlay to Mac, Sidecar, Universal Control, and Continuity Camera.

• In the patent application "Multi-Device Continuity for use with Extended Reality (XR) Systems," Apple outlines scenarios where a headset wearer can look at an iPhone display and have a virtual replica of it overlaid on their view of the environment, transfer music playback from an iPhone to a nearby HomePod via a gesture; and draw a virtual overlay of iPhone content into an extended reality space from their desktop Mac.

• The headset will run xrOS instead of iOS, feature no wearable control device, and arrive in late 2023 at the earliest.

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AI

Brave Search Launches New AI-Powered "Summarizer" Feature for Desktop and Mobile

Brave Search launched a new “Summarizer” feature powered by different LLMs to provide a synopsis of a search query.

• The feature is available on both desktop and mobile and provides source attribution for transparency.

• Brave warns users not to trust everything produced by AI-powered search results.

• The Summarizer is reliant on its own LLMs, featuring a question-answering model, classifier, and rewrite model.

• Brave Search is competing with other AI-powered search engines in the space, emphasizing the importance of minimal errors in order to gain an advantage.

AI Could Generate $15.7 Trillion in Global Economic Impact by 2030

Bank of America strategists believe AI is about to have its "iPhone moment".

• AI allows for the democratization of data, has unprecedented mass adoption potential, is developing rapidly, and has many commercial uses.

• BofA predicts the global economic impact of the technology could reach $15.7 trillion by 2030, and the AI market could reach $900 billion by 2026.

• ChatGPT reached 1 million users and 1 billion visits in just 5 days, signifying its potential and exponential growth.

• UBS forecasts that the AI hardware and services market will reach $90 billion by 2025.

Apple Refuses Update for AI App Unless Developer Sets 17+ Age Restriction

Apple has refused an update to the email app BlueMail that adds generative AI features based on ChatGPT unless the developer sets a 17+ age restriction.

• The App Store review team expressed concerns about inappropriate content for children, requiring content filtering as part of the update.

• Blix Inc. claims other apps with similar capabilities do not have such age restrictions and is disputing Apple's decision via the Review Board appeal process.

• Microsoft uses a 17+ age restriction on its version of Bing that includes Chat GPT functionality, while Google Play Store does not, suggesting Apple is demanding stricter requirements regarding AI apps.

• Apple is staying out of the race to develop generative AI tools, and their recent employee summit focused on aspects like healthcare, privacy, and computer vision instead.

Microsoft Introduces LLM-Augmenter to Reduce Misinformation from Large Language Models

Microsoft is introducing LLM-Augmenter, a framework designed to decrease misinformation created by large language models such as ChatGPT and Bard.

• The framework consists of plug-and-play modules that store conversation history, select the next action to take, execute commands from outside sources, and determine whether responses match desired outcomes of conversations.

• Tests show that people view LLM-Augmenter’s generated responses as more human and useful than native ChatGPT responses.

• Microsoft plans to improve the accuracy of language models by including more human feedback in their training process.

Figure, a Robotics Company from Archer Co-Founder, Emerges from Stealth with Humanoid Robot

Figure, a new robotics company founded by Archer co-founder Brett Adcock, has emerged from stealth and presented the first images of its humanoid robot.

• The project has reignited the conversation around the form factor and efficacy of robots.

• Figure employs 40 people with experience from companies like Boston Dynamics, Tesla, Apple SPG, and Cruise.

• The alpha build of the robot was completed in December 2020 and is currently being tested in Sunnyvale offices.

• The robot is designed to undertake manual labor tasks such as warehouse/fulfillment/logistics, manufacturing, and retail.

• Long-term direction involves developing horizontal hardware that can be used for various applications.