generative ai

facebook-rules-allowing-fake-biden-“pedophile”-video-deemed-“incoherent”

Facebook rules allowing fake Biden “pedophile” video deemed “incoherent”

Not to be misled —

Meta may revise AI policies that experts say overlook “more misleading” content.

Facebook rules allowing fake Biden “pedophile” video deemed “incoherent”

A fake video manipulated to falsely depict President Joe Biden inappropriately touching his granddaughter has revealed flaws in Facebook’s “deepfake” policies, Meta’s Oversight Board concluded Monday.

Last year when the Biden video went viral, Facebook repeatedly ruled that it did not violate policies on hate speech, manipulated media, or bullying and harassment. Since the Biden video is not AI-generated content and does not manipulate the president’s speech—making him appear to say things he’s never said—the video was deemed OK to remain on the platform. Meta also noted that the video was “unlikely to mislead” the “average viewer.”

“The video does not depict President Biden saying something he did not say, and the video is not the product of artificial intelligence or machine learning in a way that merges, combines, replaces, or superimposes content onto the video (the video was merely edited to remove certain portions),” Meta’s blog said.

The Oversight Board—an independent panel of experts—reviewed the case and ultimately upheld Meta’s decision despite being “skeptical” that current policies work to reduce harms.

“The board sees little sense in the choice to limit the Manipulated Media policy to cover only people saying things they did not say, while excluding content showing people doing things they did not do,” the board said, noting that Meta claimed this distinction was made because “videos involving speech were considered the most misleading and easiest to reliably detect.”

The board called upon Meta to revise its “incoherent” policies that it said appear to be more concerned with regulating how content is created, rather than with preventing harms. For example, the Biden video’s caption described the president as a “sick pedophile” and called out anyone who would vote for him as “mentally unwell,” which could affect “electoral processes” that Meta could choose to protect, the board suggested.

“Meta should reconsider this policy quickly, given the number of elections in 2024,” the Oversight Board said.

One problem, the Oversight Board suggested, is that in its rush to combat AI technologies that make generating deepfakes a fast, cheap, and easy business, Meta policies currently overlook less technical ways of manipulating content.

Instead of using AI, the Biden video relied on basic video-editing technology to edit out the president placing an “I Voted” sticker on his adult granddaughter’s chest. The crude edit looped a 7-second clip altered to make the president appear to be, as Meta described in its blog, “inappropriately touching a young woman’s chest and kissing her on the cheek.”

Meta making this distinction is confusing, the board said, partly because videos altered using non-AI technologies are not considered less misleading or less prevalent on Facebook.

The board recommended that Meta update policies to cover not just AI-generated videos, but other forms of manipulated media, including all forms of manipulated video and audio. Audio fakes currently not covered in the policy, the board warned, offer fewer cues to alert listeners to the inauthenticity of recordings and may even be considered “more misleading than video content.”

Notably, earlier this year, a fake Biden robocall attempted to mislead Democratic voters in New Hampshire by encouraging them not to vote. The Federal Communications Commission promptly responded by declaring AI-generated robocalls illegal, but the Federal Election Commission was not able to act as swiftly to regulate AI-generated misleading campaign ads easily spread on social media, AP reported. In a statement, Oversight Board Co-Chair Michael McConnell said that manipulated audio is “one of the most potent forms of electoral disinformation.”

To better combat known harms, the board suggested that Meta revise its Manipulated Media policy to “clearly specify the harms it is seeking to prevent.”

Rather than pushing Meta to remove more content, however, the board urged Meta to use “less restrictive” methods of coping with fake content, such as relying on fact-checkers applying labels noting that content is “significantly altered.” In public comments, some Facebook users agreed that labels would be most effective. Others urged Meta to “start cracking down” and remove all fake videos, with one suggesting that removing the Biden video should have been a “deeply easy call.” Another commenter suggested that the Biden video should be considered acceptable speech, as harmless as a funny meme.

While the board wants Meta to also expand its policies to cover all forms of manipulated audio and video, it cautioned that including manipulated photos in the policy could “significantly expand” the policy’s scope and make it harder to enforce.

“If Meta sought to label videos, audio, and photographs but only captured a small portion, this could create a false impression that non-labeled content is inherently trustworthy,” the board warned.

Meta should therefore stop short of adding manipulated images to the policy, the board said. Instead, Meta should conduct research into the effects of manipulated photos and then consider updates when the company is prepared to enforce a ban on manipulated photos at scale, the board recommended. In the meantime, Meta should move quickly to update policies ahead of a busy election year where experts and politicians globally are bracing for waves of misinformation online.

“The volume of misleading content is rising, and the quality of tools to create it is rapidly increasing,” McConnell said. “Platforms must keep pace with these changes, especially in light of global elections during which certain actors seek to mislead the public.”

Meta’s spokesperson told Ars that Meta is “reviewing the Oversight Board’s guidance and will respond publicly to their recommendations within 60 days.”

Facebook rules allowing fake Biden “pedophile” video deemed “incoherent” Read More »

cops-bogged-down-by-flood-of-fake-ai-child-sex-images,-report-says

Cops bogged down by flood of fake AI child sex images, report says

“Particularly heinous” —

Investigations tied to harmful AI sex images will grow “exponentially,” experts say.

Cops bogged down by flood of fake AI child sex images, report says

Law enforcement is continuing to warn that a “flood” of AI-generated fake child sex images is making it harder to investigate real crimes against abused children, The New York Times reported.

Last year, after researchers uncovered thousands of realistic but fake AI child sex images online, quickly every attorney general across the US called on Congress to set up a committee to squash the problem. But so far, Congress has moved slowly, while only a few states have specifically banned AI-generated non-consensual intimate imagery. Meanwhile, law enforcement continues to struggle with figuring out how to confront bad actors found to be creating and sharing images that, for now, largely exist in a legal gray zone.

“Creating sexually explicit images of children through the use of artificial intelligence is a particularly heinous form of online exploitation,” Steve Grocki, the chief of the Justice Department’s child exploitation and obscenity section, told The Times. Experts told The Washington Post in 2023 that risks of realistic but fake images spreading included normalizing child sexual exploitation, luring more children into harm’s way, and making it harder for law enforcement to find actual children being harmed.

In one example, the FBI announced earlier this year that an American Airlines flight attendant, Estes Carter Thompson III, was arrested “for allegedly surreptitiously recording or attempting to record a minor female passenger using a lavatory aboard an aircraft.” A search of Thompson’s iCloud revealed “four additional instances” where Thompson allegedly recorded other minors in the lavatory, as well as “over 50 images of a 9-year-old unaccompanied minor” sleeping in her seat. While police attempted to identify these victims, they also “further alleged that hundreds of images of AI-generated child pornography” were found on Thompson’s phone.

The troubling case seems to illustrate how AI-generated child sex images can be linked to real criminal activity while also showing how police investigations could be bogged down by attempts to distinguish photos of real victims from AI images that could depict real or fake children.

Robin Richards, the commander of the Los Angeles Police Department’s Internet Crimes Against Children task force, confirmed to the NYT that due to AI, “investigations are way more challenging.”

And because image generators and AI models that can be trained on photos of children are widely available, “using AI to alter photos” of children online “is becoming more common,” Michael Bourke—a former chief psychologist for the US Marshals Service who spent decades supporting investigations into sex offenses involving children—told the NYT. Richards said that cops don’t know what to do when they find these AI-generated materials.

Currently, there aren’t many cases involving AI-generated child sex abuse materials (CSAM), The NYT reported, but experts expect that number will “grow exponentially,” raising “novel and complex questions of whether existing federal and state laws are adequate to prosecute these crimes.”

Platforms struggle to monitor harmful AI images

At a Senate Judiciary Committee hearing today grilling Big Tech CEOs over child sexual exploitation (CSE) on their platforms, Linda Yaccarino—CEO of X (formerly Twitter)—warned in her opening statement that artificial intelligence is also making it harder for platforms to monitor CSE. Yaccarino suggested that industry collaboration is imperative to get ahead of the growing problem, as is providing more resources to law enforcement.

However, US law enforcement officials have indicated that platforms are also making it harder to police CSAM and CSE online. Platforms relying on AI to detect CSAM are generating “unviable reports” gumming up investigations managed by already underfunded law enforcement teams, The Guardian reported. And the NYT reported that other investigations are being thwarted by adding end-to-end encryption options to messaging services, which “drastically limit the number of crimes the authorities are able to track.”

The NYT report noted that in 2002, the Supreme Court struck down a law that had been on the books since 1996 preventing “virtual” or “computer-generated child pornography.” South Carolina’s attorney general, Alan Wilson, has said that AI technology available today may test that ruling, especially if minors continue to be harmed by fake AI child sex images spreading online. In the meantime, federal laws such as obscenity statutes may be used to prosecute cases, the NYT reported.

Congress has recently re-introduced some legislation to directly address AI-generated non-consensual intimate images after a wide range of images depicting fake AI porn of pop star Taylor Swift went viral this month. That includes the Disrupt Explicit Forged Images and Non-Consensual Edits Act, which creates a federal civil remedy for any victims of any age who are identifiable in AI images depicting them as nude or engaged in sexually explicit conduct or sexual scenarios.

There’s also the “Preventing Deepfakes of Intimate Images Act,” which seeks to “prohibit the non-consensual disclosure of digitally altered intimate images.” That was re-introduced this year after teen boys generated AI fake nude images of female classmates and spread them around a New Jersey high school last fall. Francesca Mani, one of the teen victims in New Jersey, was there to help announce the proposed law, which includes penalties of up to two years imprisonment for sharing harmful images.

“What happened to me and my classmates was not cool, and there’s no way I’m just going to shrug and let it slide,” Mani said. “I’m here, standing up and shouting for change, fighting for laws, so no one else has to feel as lost and powerless as I did on October 20th.”

Cops bogged down by flood of fake AI child sex images, report says Read More »

“alexa-is-in-trouble”:-paid-for-alexa-gives-inaccurate-answers-in-early-demos

“Alexa is in trouble”: Paid-for Alexa gives inaccurate answers in early demos

Amazon Echo Show 8 with Alexa

Enlarge / Amazon demoed future generative AI capabilties for Alexa in September.

“If this fails to get revenue, Alexa is in trouble.”

A quote from an anonymous Amazon employee in a Wednesday Business Insider report paints a dire picture. Amazon needs its upcoming subscription version of Alexa to drive revenue in ways that its voice assistant never has before.

Amazon declined Ars’ request for comment on the report. But the opening quote in this article could have been uttered by anyone following voice assistants for the past year-plus. All voice assistants have struggled to drive revenue since people tend to use voice assistants for basic queries, like checking the weather, rather than transactions.

Amazon announced plans to drive usage and interest in Alexa by releasing a generative AI version that it said would one day require a subscription.

This leads to the question: Would you pay to use Alexa? Amazon will be challenged to convince people to change how they use Alexa while suddenly paying a monthly rate to enable that unprecedented behavior.

Workers within Amazon seemingly see this obstacle. Insider, citing an anonymous Amazon employee, reported that “some were questioning the entire premise of charging for Alexa. For example, people who already pay for an existing Amazon service, such as Amazon Music, might not be willing to pay additional money to get access to the newer version of Alexa.”

“There is tension over whether people will pay for Alexa or not,” one of the anonymous Amazon workers reportedly said.

Subscription-based Alexa originally planned for June release

Amazon hasn’t publicly confirmed a release date for generative AI Alexa. But Insider’s report, citing “internal documents and people familiar with the matter,” said Amazon has been planning to release its subscription plan on June 30. However, plans for what Insider said will be called “Alexa Plus” and built on “Remarkable Alexa” technology could be delayed due to numerous development challenges.

According to the report, the Remarkable Alexa tech has been being demoed by 15,000 customers and currently succeeds in being conversational but is “deflecting answers, often giving unnecessarily long or inaccurate responses.”

In September, then-SVP of devices and services at Amazon David Limp demoed Alexa understanding more complex commands, including Alexa not requiring the “Hey Alexa” prompt and being able to understand multiple demands for multiple apps through a single spoken phrase.

Insider reported: “The new Alexa still didn’t meet the quality standards expected for Alexa Plus, these people added, noting the technical challenges and complexity of redesigning Alexa.”

“Legacy constraints”

According to the report, people working on the original Alexa insisted on using what they had already built for the standard voice assistant with the paid-for version, resulting in a bloated technology and “internal politics.”

However, the original Alexa is based on a natural language model with multiple parts doing multiple things, compared to the colossal large language model of generative AI Alexa.

Now, generative AI Alexa is reportedly moving to a new technological stack to avoid the “legacy constraints” of today’s Alexa but potentially delaying things.

“Alexa is in trouble”: Paid-for Alexa gives inaccurate answers in early demos Read More »

game-developer-survey:-50%-work-at-a-studio-already-using-generative-ai-tools

Game developer survey: 50% work at a studio already using generative AI tools

Do androids dream of Tetris? —

But 84% of devs are at least somewhat concerned about ethical use of those tools.

The future of game development?

Enlarge / The future of game development?

A new survey of thousands of game development professionals finds a near-majority saying generative AI tools are already in use at their workplace. But a significant minority of developers say their company has no interest in generative AI tools or has outright banned their use.

The Game Developers Conference’s 2024 State of the Industry report, released Thursday, aggregates the thoughts of over 3,000 industry professionals as of last October. While the annual survey (conducted in conjunction with research partner Omdia) has been running for 12 years, this is the first time respondents were asked directly about their use of generative AI tools such as ChatGPT, DALL-E, GitHub Copilot, and Adobe Generative Fill.

Forty-nine percent of the survey’s developer respondents said that generative AI tools are currently being used in their workplace. That near-majority includes 31 percent (of all respondents) that say they use those tools themselves and 18 percent that say their colleagues do.

A majority of game developers said their workplace was at least interested in using generative AI tools.

Enlarge / A majority of game developers said their workplace was at least interested in using generative AI tools.

The survey also found that different studio departments showed different levels of willingness to embrace AI tools. Forty-four percent of employees in business and finance said they were using AI tools, for instance, compared to just 16 percent in visual arts and 13 percent in “narrative/writing.”

Among the 38 percent of respondents who said their company didn’t use AI tools, 15 percent said their company was “interested” in pursuing them, while 23 percent said they had “no interest.” In a separate question, 12 percent of respondents said their company didn’t allow the use of AI tools at all, a number that went up to 21 percent for respondents working at the largest “AAA developers.” An additional 7 percent said the use of some specific AI tools was not allowed, while 30 percent said AI tool use was “optional” at their company.

Worries abound

The wide embrace of AI tools hasn’t seemed to lessen worries about their use among developers, though. A full 42 percent of respondents said they were “very concerned” about the ethics of using generative AI in game development, with an additional 42 percent being “somewhat concerned.” Only 12 percent said they were “not concerned at all” about those usage ethics.

Developer policies on AI use varied greatly, with a plurality saying their company had no official policy.

Enlarge / Developer policies on AI use varied greatly, with a plurality saying their company had no official policy.

Overall, respondents offered a split opinion on whether the use of AI tools would be overall positive (21 percent) or negative (18 percent) for the industry. Most respondents seemed split, with 57 percent saying the impact would be “mixed.”

Developers cited coding assistance, content creation efficiency, and the automation of repetitive tasks as the primary uses for AI tools, according to the report.

“I’d like to see AI tools that help with the current workflows and empower individual artists with their own work,” one anonymous respondent wrote. “What I don’t want to see is a conglomerate of artists being enveloped in an AI that just does 99% of the work a creative is supposed to do.”

Elsewhere in the report, the survey found that only 17 percent of developers were at least somewhat interested in using blockchain technology in their upcoming projects, down significantly from 27 percent in 2022. An overwhelming 77 percent of respondents said they had no interest in blockchain technology, similar to recent years.

The survey also found that 57 percent of respondents thought that workers in the game industry should unionize, up from 53 percent last year. Despite this, only 23 percent said they were either in a union or had discussed unionization at their workplace.

Game developer survey: 50% work at a studio already using generative AI tools Read More »

openai-must-defend-chatgpt-fabrications-after-failing-to-defeat-libel-suit

OpenAI must defend ChatGPT fabrications after failing to defeat libel suit

One false move —

ChatGPT users may soon learn whether false outputs will be allowed to ruin lives.

OpenAI must defend ChatGPT fabrications after failing to defeat libel suit

OpenAI may finally have to answer for ChatGPT’s “hallucinations” in court after a Georgia judge recently ruled against the tech company’s motion to dismiss a radio host’s defamation suit.

OpenAI had argued that ChatGPT’s output cannot be considered libel, partly because the chatbot output cannot be considered a “publication,” which is a key element of a defamation claim. In its motion to dismiss, OpenAI also argued that Georgia radio host Mark Walters could not prove that the company acted with actual malice or that anyone believed the allegedly libelous statements were true or that he was harmed by the alleged publication.

It’s too early to say whether Judge Tracie Cason found OpenAI’s arguments persuasive. In her order denying OpenAI’s motion to dismiss, which MediaPost shared here, Cason did not specify how she arrived at her decision, saying only that she had “carefully” considered arguments and applicable laws.

There may be some clues as to how Cason reached her decision in a court filing from John Monroe, attorney for Walters, when opposing the motion to dismiss last year.

Monroe had argued that OpenAI improperly moved to dismiss the lawsuit by arguing facts that have yet to be proven in court. If OpenAI intended the court to rule on those arguments, Monroe suggested that a motion for summary judgment would have been the proper step at this stage in the proceedings, not a motion to dismiss.

Had OpenAI gone that route, though, Walters would have had an opportunity to present additional evidence. To survive a motion to dismiss, all Walters had to do was show that his complaint was reasonably supported by facts, Monroe argued.

Failing to convince the court that Walters had no case, OpenAI’s legal theories regarding its liability for ChatGPT’s “hallucinations” will now likely face their first test in court.

“We are pleased the court denied the motion to dismiss so that the parties will have an opportunity to explore, and obtain a decision on, the merits of the case,” Monroe told Ars.

What’s the libel case against OpenAI?

Walters sued OpenAI after a journalist, Fred Riehl, warned him that in response to a query, ChatGPT had fabricated an entire lawsuit. Generating an entire complaint with an erroneous case number, ChatGPT falsely claimed that Walters had been accused of defrauding and embezzling funds from the Second Amendment Foundation.

Walters is the host of Armed America Radio and has a reputation as the “Loudest Voice in America Fighting For Gun Rights.” He claimed that OpenAI “recklessly” disregarded whether ChatGPT’s outputs were false, alleging that OpenAI knew that “ChatGPT’s hallucinations were pervasive and severe” and did not work to prevent allegedly libelous outputs. As Walters saw it, the false statements were serious enough to be potentially career-damaging, “tending to injure Walter’s reputation and exposing him to public hatred, contempt, or ridicule.”

Monroe argued that Walters had “adequately stated a claim” of libel, per se, as a private citizen, “for which relief may be granted under Georgia law” where “malice is inferred” in “all actions for defamation” but “may be rebutted” by OpenAI.

Pushing back, OpenAI argued that Walters was a public figure who must prove that OpenAI acted with “actual malice” when allowing ChatGPT to produce allegedly harmful outputs. But Monroe told the court that OpenAI “has not shown sufficient facts to establish that Walters is a general public figure.”

Whether or not Walters is a public figure could be another key question leading Cason to rule against OpenAI’s motion to dismiss.

Perhaps also frustrating the court, OpenAI introduced “a large amount of material” in its motion to dismiss that fell outside the scope of the complaint, Monroe argued. That included pointing to a disclaimer in ChatGPT’s terms of use that warns users that ChatGPT’s responses may not be accurate and should be verified before publishing. According to OpenAI, this disclaimer makes Riehl the “owner” of any libelous ChatGPT responses to his queries.

“A disclaimer does not make an otherwise libelous statement non-libelous,” Monroe argued. And even if the disclaimer made Riehl liable for publishing the ChatGPT output—an argument that may give some ChatGPT users pause before querying—”that responsibility does not have the effect of negating the responsibility of the original publisher of the material,” Monroe argued.

Additionally, OpenAI referenced a conversation between Walters and OpenAI, even though Monroe said that the complaint “does not allege that Walters ever had a chat” with OpenAI. And OpenAI also somewhat oddly argued that ChatGPT outputs could be considered “intra-corporate communications” rather than publications, suggesting that ChatGPT users could be considered private contractors when querying the chatbot.

With the lawsuit moving forward, curious chatbot users everywhere may finally get the answer to a question that has been unclear since ChatGPT quickly became the fastest-growing consumer application of all time after its launch in November 2022: Will ChatGPT’s hallucinations be allowed to ruin lives?

In the meantime, the FTC is seemingly still investigating potential harms caused by ChatGPT’s “false, misleading, or disparaging” generations.

An FTC spokesperson previously told Ars that the FTC does not generally comment on nonpublic investigations.

OpenAI did not immediately respond to Ars’ request to comment.

OpenAI must defend ChatGPT fabrications after failing to defeat libel suit Read More »

sharing-deepfake-porn-could-lead-to-lengthy-prison-time-under-proposed-law

Sharing deepfake porn could lead to lengthy prison time under proposed law

Fake nudes, real harms —

Teen “shouting for change” after fake nude images spread at NJ high school.

Sharing deepfake porn could lead to lengthy prison time under proposed law

The US seems to be getting serious about criminalizing deepfake pornography after teen boys at a New Jersey high school used AI image generators to create and share non-consensual fake nude images of female classmates last October.

On Tuesday, Rep. Joseph Morelle (D-NY) announced that he has re-introduced the “Preventing Deepfakes of Intimate Images Act,” which seeks to “prohibit the non-consensual disclosure of digitally altered intimate images.” Under the proposed law, anyone sharing deepfake pornography without an individual’s consent risks damages that could go as high as $150,000 and imprisonment of up to 10 years if sharing the images facilitates violence or impacts the proceedings of a government agency.

The hope is that steep penalties will deter companies and individuals from allowing the disturbing images to be spread. It creates a criminal offense for sharing deepfake pornography “with the intent to harass, annoy, threaten, alarm, or cause substantial harm to the finances or reputation of the depicted individual” or with “reckless disregard” or “actual knowledge” that images will harm the individual depicted. It also provides a path for victims to sue offenders in civil court.

Rep. Tom Kean (R-NJ), who co-sponsored the bill, said that “proper guardrails and transparency are essential for fostering a sense of responsibility among AI companies and individuals using AI.”

“Try to imagine the horror of receiving intimate images looking exactly like you—or your daughter, or your wife, or your sister—and you can’t prove it’s not,” Morelle said. “Deepfake pornography is sexual exploitation, it’s abusive, and I’m astounded it is not already a federal crime.”

Joining Morelle in pushing to criminalize deepfake pornography was Dorota and Francesca Mani, who have spent the past two months meeting with lawmakers, The Wall Street Journal reported. The mother and daughter experienced the horror Morelle described firsthand when the New Jersey high school confirmed that 14-year-old Francesca was among the students targeted last year.

“What happened to me and my classmates was not cool, and there’s no way I’m just going to shrug and let it slide,” Francesca said. “I’m here, standing up and shouting for change, fighting for laws, so no one else has to feel as lost and powerless as I did on October 20th.”

Morelle’s office told Ars that “advocacy from partners like the Mani family” is “critical to bringing attention to this issue” and getting the proposed law “to the floor for a vote.”

Morelle introduced the law in December 2022, but it failed to pass that year or in 2023. He’s re-introducing the law in 2024 after seemingly gaining more support during a House Oversight subcommittee hearing on “Advances in Deepfake Technology” last November.

At that hearing, many lawmakers warned of the dangers of AI-generated deepfakes, citing a study from the Dutch AI company Sensity, which found that 96 percent of deepfakes online are deepfake porn—the majority of which targets women.

But lawmakers also made clear that it’s currently hard to detect AI-generated images and distinguish them from real images.

According to a hearing transcript posted by the nonprofit news organization Tech Policy Press, David Doermann—currently interim chair of the University at Buffalo’s computer science and engineering department and former program manager at the Defense Advanced Research Projects Agency (DARPA)—told lawmakers that DARPA was already working on advanced deepfake detection tools but still had more work to do.

To support laws like Morelle’s, lawmakers have called for more funding for DARPA and the National Science Foundation to aid in ongoing efforts to create effective detection tools. At the same time, President Joe Biden—through a sweeping AI executive order—has pushed for solutions like watermarking deepfakes. Biden’s executive order also instructed the Department of Commerce to establish “standards and best practices for detecting AI-generated content and authenticating official content.”

Morelle is working to push his law through in 2024, warning that deepfake pornography is already affecting a “generation of young women like Francesca,” who are “ready to stand up against systemic oppression and stand in their power.”

Until the federal government figures out how to best prevent the sharing of AI-generated deepfakes, Francesca and her mom plan to keep pushing for change.

“Our voices are our secret weapon, and our words are like power-ups in Fortnite,” Francesca said. “My mom and I are advocating to create a world where being safe isn’t just a hope; it’s a reality for everyone.”

Sharing deepfake porn could lead to lengthy prison time under proposed law Read More »

regulators-aren’t-convinced-that-microsoft-and-openai-operate-independently

Regulators aren’t convinced that Microsoft and OpenAI operate independently

Under Microsoft’s thumb? —

EU is fielding comments on potential market harms of Microsoft’s investments.

Regulators aren’t convinced that Microsoft and OpenAI operate independently

European Union regulators are concerned that Microsoft may be covertly controlling OpenAI as its biggest investor.

On Tuesday, the European Commission (EC) announced that it is currently “checking whether Microsoft’s investment in OpenAI might be reviewable under the EU Merger Regulation.”

The EC’s executive vice president in charge of competition policy, Margrethe Vestager, said in the announcement that rapidly advancing AI technologies are “disruptive” and have “great potential,” but to protect EU markets, a forward-looking analysis scrutinizing antitrust risks has become necessary.

Hoping to thwart predictable anticompetitive risks, the EC has called for public comments. Regulators are particularly keen to hear from policy experts, academics, and industry and consumer organizations who can identify “potential competition issues” stemming from tech companies partnering to develop generative AI and virtual world/metaverse systems.

The EC worries that partnerships like Microsoft and OpenAI could “result in entrenched market positions and potential harmful competition behavior that is difficult to address afterwards.” That’s why Vestager said that these partnerships needed to be “closely” monitored now—”to ensure they do not unduly distort market dynamics.”

Microsoft has denied having control over OpenAI.

A Microsoft spokesperson told Ars that, rather than stifling competition, since 2019, the tech giant has “forged a partnership with OpenAI that has fostered more AI innovation and competition, while preserving independence for both companies.”

But ever since Sam Altman was bizarrely ousted by OpenAI’s board, then quickly reappointed as OpenAI’s CEO—joining Microsoft for the brief time in between—regulators have begun questioning whether recent governance changes mean that Microsoft’s got more control over OpenAI than the companies have publicly stated.

OpenAI did not immediately respond to Ars’ request to comment. Last year, OpenAI confirmed that “it remained independent and operates competitively,” CNBC reported.

Beyond the EU, the UK’s Competition and Markets Authority (CMA) and reportedly the US Federal Trade Commission have also launched investigations into Microsoft’s OpenAI investments. On January 3, the CMA ended its comments period, but it’s currently unclear whether significant competition issues were raised that could trigger a full-fledged CMA probe.

A CMA spokesperson declined Ars’ request to comment on the substance of comments received or to verify how many comments were received.

Antitrust legal experts told Reuters that authorities should act quickly to prevent “critical emerging technology” like generative AI from being “monopolized,” noting that before launching a probe, the CMA will need to find evidence showing that Microsoft’s influence over OpenAI materially changed after Altman’s reappointment.

The EC is also investigating partnerships beyond Microsoft and OpenAI, questioning whether agreements “between large digital market players and generative AI developers and providers” may impact EU market dynamics.

Microsoft observing OpenAI board meetings

In total, Microsoft has pumped $13 billion into OpenAI, CNBC reported, which has a somewhat opaque corporate structure. OpenAI’s parent company, Reuters reported in December, is a nonprofit, which is “a type of entity rarely subject to antitrust scrutiny.” But in 2019, as Microsoft started investing billions into the AI company, OpenAI also “set up a for-profit subsidiary, in which Microsoft owns a 49 percent stake,” an insider source told Reuters. On Tuesday, a nonprofit consumer rights group, the Public Citizen, called for California Attorney General Robert Bonta to “investigate whether OpenAI should retain its non-profit status.”

A Microsoft spokesperson told Reuters that the source’s information was inaccurate, reiterating that the terms of Microsoft’s agreement with OpenAI are confidential. Microsoft has maintained that while it is entitled to OpenAI’s profits, it does not own “any portion” of OpenAI.

After OpenAI’s drama with Altman ended with an overhaul of OpenAI’s board, Microsoft appeared to increase its involvement with OpenAI by receiving a non-voting observer role on the board. That’s what likely triggered lawmaker’s initial concerns that Microsoft “may be exerting control over OpenAI,” CNBC reported.

The EC’s announcement comes days after Microsoft confirmed that Dee Templeton would serve as the observer on OpenAI’s board, initially reported by Bloomberg.

Templeton has spent 25 years working for Microsoft and is currently vice president for technology and research partnerships and operations. According to Bloomberg, she has already attended OpenAI board meetings.

Microsoft’s spokesperson told Ars that adding a board observer was the only recent change in the company’s involvement in OpenAI. An OpenAI spokesperson told CNBC that Microsoft’s board observer has no “governing authority or control over OpenAI’s operations.”

By appointing Templeton as a board observer, Microsoft may simply be seeking to avoid any further surprises that could affect its investment in OpenAI, but the CMA has suggested that Microsoft’s involvement in the board may have created “a relevant merger situation” that could shake up competition in the UK if not appropriately regulated.

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