Policy

musk’s-x-demands-money-from-laid-off-employees,-claims-they-were-overpaid

Musk’s X demands money from laid-off employees, claims they were overpaid

elon musk x corp, Policy / /

Math is hard —

Laid-off Aussies reportedly got up to $70K extra from currency-conversion error.

–

An app icon and logo for Elon Musk's X service.

Getty Images | Kirill Kudryavtsev

Elon Musk’s X Corp. is reportedly demanding money from at least six Australians who were laid off, saying the company accidentally overpaid them. The Sydney Morning Herald reported today that “X is threatening to take some former Australian employees to court, demanding they return entitlements it claims were overpaid to them after it bungled the currency conversion from US to Australian dollars on the payments.”

Emails sent this year by X’s Asia Pacific human resources department to the laid-off employees said there was “a significant overpayment in error in January 2023.” The alleged overpayments ranged from $1,500 to $70,000 for each employee.

So far, none of the former employees have repaid the money, The Sydney Morning Herald was told. One Australian dollar is currently worth $0.67 in US currency.

“The company said the overpayment was related to ‘deferred cash compensation,’ in the form of employee shares issued to the staff when they joined Twitter,” the article said. “These shares were valued at $US54.20 ($82) each, the price at which Musk bought Twitter in 2022, and the total number of shares acquired by an employee was based on the length of their tenure at the company.”

X reportedly made the currency conversion errors “when employees were paid their entitlements once they were made redundant… According to one account, X paid out the share entitlements at a conversion rate 2.5 times the value of the shares.”

X asked the laid-off employees for repayment “at your earliest convenience” and said the company reserved the right to seek the return of the money plus interest in court, the report said.

In US, ex-workers still fighting for severance

Employment law specialist Hayden Stephens was paraphrased in the report as saying that the ex-X workers may be forced to return the money, but they should first “ask X to clearly explain how the error occurred and ask for supporting documentary evidence.” He said that if there was a genuine mistake, “there is usually an obligation to repay that money” under Australian employment law.

X has not responded to a request for comment from Ars today.

X overpaying laid-off employees is the opposite of what allegedly happened to many former US-based workers. X was served with lawsuits and arbitration claims from about 2,000 ex-employees who were fighting to receive severance. Settlement talks in multiple severance cases ended without deals, court filings state.

X is also facing a lawsuit from four former Twitter executives who say they were cheated out of more than $128 million in severance when Musk fired them immediately after buying the firm. The lawsuit was filed by former Twitter CEO Parag Agrawal, former CFO Ned Segal, former Chief Legal Officer Vijaya Gadde, and former General Counsel Sean Edgett. The plaintiffs proposed a trial date in November 2025.

Musk also refused to pay a variety of Twitter vendors after taking over, leading to a deluge of lawsuits seeking compensation.

Musk’s X demands money from laid-off employees, claims they were overpaid Read More »

adobe-to-update-vague-ai-terms-after-users-threaten-to-cancel-subscriptions

Adobe to update vague AI terms after users threaten to cancel subscriptions

adobe, Adobe Firefly, AI training, firefly ai, generative ai, Illustrator, InDesign, Photoshop, Policy / /
Adobe to update vague AI terms after users threaten to cancel subscriptions

Adobe has promised to update its terms of service to make it “abundantly clear” that the company will “never” train generative AI on creators’ content after days of customer backlash, with some saying they would cancel Adobe subscriptions over its vague terms.

Users got upset last week when an Adobe pop-up informed them of updates to terms of use that seemed to give Adobe broad permissions to access user content, take ownership of that content, or train AI on that content. The pop-up forced users to agree to these terms to access Adobe apps, disrupting access to creatives’ projects unless they immediately accepted them.

For any users unwilling to accept, canceling annual plans could trigger fees amounting to 50 percent of their remaining subscription cost. Adobe justifies collecting these fees because a “yearly subscription comes with a significant discount.”

On X (formerly Twitter), YouTuber Sasha Yanshin wrote that he canceled his Adobe license “after many years as a customer,” arguing that “no creator in their right mind can accept” Adobe’s terms that seemed to seize a “worldwide royalty-free license to reproduce, display, distribute” or “do whatever they want with any content” produced using their software.

“This is beyond insane,” Yanshin wrote on X. “You pay a huge monthly subscription, and they want to own your content and your entire business as well. Going to have to learn some new tools.”

Adobe’s design leader Scott Belsky replied, telling Yanshin that Adobe had clarified the update in a blog post and noting that Adobe’s terms for licensing content are typical for every cloud content company. But he acknowledged that those terms were written about 11 years ago and that the language could be plainer, writing that “modern terms of service in the current climate of customer concerns should evolve to address modern day concerns directly.”

Yanshin has so far not been encouraged by any of Adobe’s attempts to clarify its terms, writing that he gives “precisely zero f*cks about Adobe’s clarifications or blog posts.”

“You forced people to sign new Terms,” Yanshin told Belsky on X. “Legally, they are the only thing that matters.”

Another user in the thread using an anonymous X account also pushed back, writing, “Point to where it says in the terms that you won’t use our content for LLM or AI training? And state unequivocally that you do not have the right to use our work beyond storing it. That would go a long way.”

“Stay tuned,” Belsky wrote on X. “Unfortunately, it takes a process to update a TOS,” but “we are working on incorporating these clarifications.”

Belsky co-authored the blog this week announcing that Adobe’s terms would be updated by June 18 after a week of fielding feedback from users.

“We’ve never trained generative AI on customer content, taken ownership of a customer’s work, or allowed access to customer content beyond legal requirements,” Adobe’s blog said. “Nor were we considering any of those practices as part of the recent Terms of Use update. That said, we agree that evolving our Terms of Use to reflect our commitments to our community is the right thing to do.”

Adobe to update vague AI terms after users threaten to cancel subscriptions Read More »

ai-trained-on-photos-from-kids’-entire-childhood-without-their-consent

AI trained on photos from kids’ entire childhood without their consent

AI, ai dataset, ai deepfakes, Artificial Intelligence, children's online privacy, generative ai, LAION, LAION-5b, online child safety, openai, Policy / /
AI trained on photos from kids’ entire childhood without their consent

Photos of Brazilian kids—sometimes spanning their entire childhood—have been used without their consent to power AI tools, including popular image generators like Stable Diffusion, Human Rights Watch (HRW) warned on Monday.

This act poses urgent privacy risks to kids and seems to increase risks of non-consensual AI-generated images bearing their likenesses, HRW’s report said.

An HRW researcher, Hye Jung Han, helped expose the problem. She analyzed “less than 0.0001 percent” of LAION-5B, a dataset built from Common Crawl snapshots of the public web. The dataset does not contain the actual photos but includes image-text pairs derived from 5.85 billion images and captions posted online since 2008.

Among those images linked in the dataset, Han found 170 photos of children from at least 10 Brazilian states. These were mostly family photos uploaded to personal and parenting blogs most Internet surfers wouldn’t easily stumble upon, “as well as stills from YouTube videos with small view counts, seemingly uploaded to be shared with family and friends,” Wired reported.

LAION, the German nonprofit that created the dataset, has worked with HRW to remove the links to the children’s images in the dataset.

That may not completely resolve the problem, though. HRW’s report warned that the removed links are “likely to be a significant undercount of the total amount of children’s personal data that exists in LAION-5B.” Han told Wired that she fears that the dataset may still be referencing personal photos of kids “from all over the world.”

Removing the links also does not remove the images from the public web, where they can still be referenced and used in other AI datasets, particularly those relying on Common Crawl, LAION’s spokesperson, Nate Tyler, told Ars.

“This is a larger and very concerning issue, and as a nonprofit, volunteer organization, we will do our part to help,” Tyler told Ars.

Han told Ars that “Common Crawl should stop scraping children’s personal data, given the privacy risks involved and the potential for new forms of misuse.”

According to HRW’s analysis, many of the Brazilian children’s identities were “easily traceable,” due to children’s names and locations being included in image captions that were processed when building the LAION dataset.

And at a time when middle and high school-aged students are at greater risk of being targeted by bullies or bad actors turning “innocuous photos” into explicit imagery, it’s possible that AI tools may be better equipped to generate AI clones of kids whose images are referenced in AI datasets, HRW suggested.

“The photos reviewed span the entirety of childhood,” HRW’s report said. “They capture intimate moments of babies being born into the gloved hands of doctors, young children blowing out candles on their birthday cake or dancing in their underwear at home, students giving a presentation at school, and teenagers posing for photos at their high school’s carnival.”

There is less risk that the Brazilian kids’ photos are currently powering AI tools since “all publicly available versions of LAION-5B were taken down” in December, Tyler told Ars. That decision came out of an “abundance of caution” after a Stanford University report “found links in the dataset pointing to illegal content on the public web,” Tyler said, including 3,226 suspected instances of child sexual abuse material.

Han told Ars that “the version of the dataset that we examined pre-dates LAION’s temporary removal of its dataset in December 2023.” The dataset will not be available again until LAION determines that all flagged illegal content has been removed.

“LAION is currently working with the Internet Watch Foundation, the Canadian Centre for Child Protection, Stanford, and Human Rights Watch to remove all known references to illegal content from LAION-5B,” Tyler told Ars. “We are grateful for their support and hope to republish a revised LAION-5B soon.”

In Brazil, “at least 85 girls” have reported classmates harassing them by using AI tools to “create sexually explicit deepfakes of the girls based on photos taken from their social media profiles,” HRW reported. Once these explicit deepfakes are posted online, they can inflict “lasting harm,” HRW warned, potentially remaining online for their entire lives.

“Children should not have to live in fear that their photos might be stolen and weaponized against them,” Han said. “The government should urgently adopt policies to protect children’s data from AI-fueled misuse.”

Ars could not immediately reach Stable Diffusion maker Stability AI for comment.

AI trained on photos from kids’ entire childhood without their consent Read More »

isps-ask-fcc-for-tax-on-big-tech-to-fund-broadband-networks-and-discounts

ISPs ask FCC for tax on Big Tech to fund broadband networks and discounts

big tech, Policy, Universal Service Fund / /
Illustration of $100-dollar bills being sucked into a broadband network.

Internet service providers are again urging the Federal Communications Commission to impose new fees on Big Tech firms and use the money to subsidize broadband network deployment and affordability programs. If approved, the request would force Big Tech firms to pay into the FCC’s Universal Service Fund (USF), which in turn distributes money to broadband providers.

The request was made on June 6 by USTelecom, a lobby group for AT&T, Verizon, CenturyLink/Lumen, and smaller telcos. USTelecom has made similar arguments before, but its latest request to the FCC argues that the recent death of a broadband discount program should spur the FCC to start extracting money from Big Tech.

“Through focusing on the Big Tech companies who benefit most from broadband connectivity, the Commission will fairly allocate the burden of sustaining USF,” USTelecom wrote in the FCC filing last week.

The USF spends about $8 billion a year. Phone companies must pay a percentage of their revenue into the fund, and telcos generally pass those fees on to consumers with a “Universal Service” line item on telephone bills.

The money is directed back to the telco industry with programs like the Connect America Fund and Rural Digital Opportunity Fund, which subsidize network construction in unserved and underserved areas. The USF also funds Lifeline program discounts for people with low incomes.

USTelecom cites death of discount program

FCC Chairwoman Jessica Rosenworcel hasn’t stated any intention to expand USF contributions to Big Tech. Separately, she rejected calls to impose Universal Service fees on broadband, leaving phone service as the only source of USF revenue.

The USTelecom filing came in response to the FCC asking for input on its latest analysis of competition in the communications marketplace. USTelecom says the USF is relevant to the proceeding because “the Universal Service Fund is critical for maintaining a competitive marketplace and an expanded contributions base is necessary to sustain the fund.” No changes to the USF would be made in this proceeding, though USTelecom’s comments could be addressed in the FCC’s final report.

Some people have called for the USF to be expanded in order to revive the Affordable Connectivity Program (ACP), which provided $30 monthly discounts until Congress allowed funding to lapse. That program reduced the price of broadband for people with low incomes while providing more revenue to ISPs. USTelecom’s request for payments from Big Tech argues that the ACP’s lapse is a reason to impose fees on Big Tech.

“Expanding the contributions base to include Big Tech would not only sustain the current USF programs, but would also fund affordability efforts like the ACP long term,” USTelecom wrote. Payments from Big Tech could “enable a permanent Affordable Connectivity Program,” the group said.

In other news related to the Universal Service Fund, the US Supreme Court today rejected a challenge to the fund’s legality that was brought by the conservative Consumers’ Research group. The group challenged the FCC’s authority to raise revenue for the fund but previously lost at the appeals court level, and the Supreme Court declined a petition to take up the case.

ISPs ask FCC for tax on Big Tech to fund broadband networks and discounts Read More »

some-company-heads-hoped-return-to-office-mandates-would-make-people-quit,-survey-says

Some company heads hoped return-to-office mandates would make people quit, survey says

Policy, return-to-office, work from home / /

HR study —

1,504 workers, including 504 HR managers questioned.

–

Man and woman talking at an office water cooler

Enlarge / RTO mandates can boost workers’ professional networks, but in-office employees may also spend more time socializing than remote ones.

A new survey suggests that some US companies implemented return-to-office (RTO) policies in the hopes of getting workers to quit. And despite the belief that such policies could boost productivity compared to letting employees work from home, the survey from HR software provider BambooHR points to remote and in-office employees spending an equal amount of time working.

BambooHR surveyed 1,504 full-time US employees, including 504 human resources (HR) workers who are a manager or higher, from March 9 to March 22. According to the firm, the sample group used for its report “The New Surveillance Era: Visibility Beats Productivity for RTO & Remote” is equally split across genders and includes “a spread of age groups, race groups, and geographies.” Method Research, the research arm of technology PR and marketing firm Method, prepared the survey, and data collection firm Rep Data distributed it.

Trying to make people quit

Among those surveyed, 52 percent said they prefer working remotely compared to 39 percent who prefer working in an office.

A generation-based breakdown of respondents who prefer remote work. BambooHR's report didn't specify how many respondents it surveyed from each category.

Enlarge / A generation-based breakdown of respondents who prefer remote work. BambooHR’s report didn’t specify how many respondents it surveyed from each category.

Despite an apparently large interest in remote work, numerous companies made workers return to the office after COVID-19 pandemic restrictions were lifted. The report suggests that in at least some cases, this was done to get workers to quit:

Nearly two in five (37 percent) managers, directors, and executives believe their organization enacted layoffs in the last year because fewer employees than they expected quit during their RTO. And their beliefs are well-founded: One in four (25 percent) VP and C-suite executives and one in five (18 percent) HR pros admit they hoped for some voluntary turnover during an RTO.

It’s hard to get a firm understanding of the effectiveness of RTO policies, as 22 percent of HR professionals surveyed said that their company has no metrics for measuring a successful RTO. The report points to a “disconnect between stated goals for RTO and actually measuring the success of those goals.”

The report also found that 28 percent of remote workers fear they will be laid off before those working in the office. While BambooHR’s report doesn’t comment on this, some firms have discouraged employees from working remotely. Dell, for example, told remote workers that they can’t be promoted.

“By using RTO mandates as a workforce reduction tactic, companies are losing talent and morale among their employees,” BambooHR’s report says. The report notes that 45 percent of people surveyed whose companies have RTO policies said they lost valued workers. The finding is similar to that of a May study of Apple, Microsoft, and SpaceX that suggested that RTO mandates drove senior talent away.

In BambooHR’s survey, 28 percent said they would consider leaving their jobs if their employer enacted an RTO mandate.

Productivity

A frequently cited reason for in-office mandates is to drive teamwork, collaboration, and productivity. BambooHR’s data, however, doesn’t support the idea of RTO mandates driving productivity.

According to the report, regardless of whether they’re working in their home or in an office, employees work for 76 percent of a 9-to-5 shift. The report adds:

When it comes to who’s more productive overall, in-office workers spend around one hour more socializing than their remote counterparts, while remote workers spend that time on work-related tasks and responsibilities.

Despite this, 32 percent of managers said that one of the main goals of their firm implementing an in-office policy was to track employee working habits, with some companies tracking VPN usage and company badge swipes to ensure employees are coming into the office as expected.

RTO works for some

Although the majority of people surveyed prefer working from home, the survey also highlighted some perceived benefits of working in the office. For example, 48 percent of the people surveyed said “their work results have improved” since returning to the office, per the report. And 58 percent said they have a “stronger professional network” since going back, BambooHR reported.

Preferences for working from home or in an office can vary by various factors, like age. This points to the benefits of building RTO strategies around worker feedback and needs.

“The mental and emotional burdens workers face today are real, and the companies who seek employee feedback with the intent to listen and improve are the ones who will win employee loyalty and ultimately customer satisfaction,” Anita Grantham, head of HR at BambooHR, said in a statement.

Some company heads hoped return-to-office mandates would make people quit, survey says Read More »

google-avoids-jury-trial-by-sending-$2.3-million-check-to-us-government

Google avoids jury trial by sending $2.3 million check to US government

Google, google antitrust, Policy / /

Judge, no jury —

Google gets a bench trial after sending unexpected check to Justice Department.

–

At Google headquarters, the company's logo is seen on the glass exterior of a building.

Getty Images | Justin Sullivan

Google has achieved its goal of avoiding a jury trial in one antitrust case after sending a $2.3 million check to the US Department of Justice. Google will face a bench trial, a trial conducted by a judge without a jury, after a ruling today that the preemptive check is big enough to cover any damages that might have been awarded by a jury.

“I am satisfied that the cashier’s check satisfies any damages claim,” US District Judge Leonie Brinkema said after a hearing in the Eastern District of Virginia on Friday, according to Bloomberg. “A fair reading of the expert reports does not support” a higher amount, Brinkema said.

The check was reportedly for $2,289,751. “Because the damages are no longer part of the case, Brinkema ruled a jury is no longer needed and she will oversee the trial, set to begin in September,” according to Bloomberg.

The payment was unusual, but so was the US request for a jury trial because antitrust cases are typically heard by a judge without a jury. The US argued that a jury should rule on damages because US government agencies were overcharged for advertising.

The US opposed Google’s motion to strike the jury demand in a filing last week, arguing that “the check it delivered did not actually compensate the United States for the full extent of its claimed damages” and that “the unilateral offer of payment was improperly premised on Google’s insistence that such payment ‘not be construed’ as an admission of damages.”

The government’s damages expert calculated damages that were “much higher” than the amount cited by Google, the US filing said. In last week’s filing, the higher damages amount sought by the government was redacted.

Lawsuit targets Google advertising

The US and eight states sued Google in January 2023 in a lawsuit related to the company’s advertising technology business. There are now 17 states involved in the case.

Google’s objection to a jury trial said that similar antitrust cases have been tried by judges because of their technical and often abstract nature. “To secure this unusual posture, several weeks before filing the Complaint, on the eve of Christmas 2022, DOJ attorneys scrambled around looking for agencies on whose behalf they could seek damages,” Google said.

The US and states’ lawsuit claimed that Google “corrupted legitimate competition in the ad tech industry” in a plan to “neutralize or eliminate ad tech competitors, actual or potential, through a series of acquisitions” and “wield its dominance across digital advertising markets to force more publishers and advertisers to use its products while disrupting their ability to use competing products effectively.”

The US government lawsuit said that federal agencies bought over $100 million in advertising since 2019 and aimed to recover treble damages for Google’s alleged overcharges on those purchases. But the government narrowed its claims to the ad purchases of just eight agencies, lowering the potential damages amount.

Google sent the check in mid-May. While the amount wasn’t initially public, Google said it contained “every dollar the United States could conceivably hope to recover under the damages calculation of the United States’ own expert.” Google also said it “continues to dispute liability and welcomes a full resolution by this Court of all remaining claims in the Complaint.”

US: We want more

The US disagreed that $2.3 million was the maximum it could recover. “Under the law, Google must pay the United States the maximum amount it could possibly recover at trial, which Google has not done,” the US said. “And Google cannot condition acceptance of that payment on its assertion that the United States was not harmed in the first place. In doing so, Google attempts to seize the strategic upside of satisfying the United States’ damages claim (potentially allowing it to avoid judgment by a jury) while at the same time avoiding the strategic downside of the United States being free to argue the common-sense inference that Google’s payment, is, at minimum, an acknowledgment of the harm done to federal agency advertisers who used Google’s ad tech tools.”

In a filing on Wednesday, Google said the DOJ previously agreed that its claims amounted to less than $1 million before trebling and pre-judgment interest. The check sent by Google was for the exact amount after trebling and interest, the filing said. But the “DOJ now ignores this undisputed fact, offering up a brand new figure, previously uncalculated by any DOJ expert, unsupported by the record, and never disclosed,” Google told the court.

Siding with Google at today’s hearing, Brinkema “said the amount of Google’s check covered the highest possible amount the government had sought in its initial filings,” the Associated Press reported. “She likened receipt of the money, which was paid unconditionally to the government regardless of whether the tech giant prevailed in its arguments to strike a jury trial, as equivalent to ‘receiving a wheelbarrow of cash.'”

While the US lost its attempt to obtain more damages than Google offered, the lawsuit also seeks an order declaring that Google illegally monopolized the market. The complaint requests a breakup in which Google would have to divest “the Google Ad Manager suite, including both Google’s publisher ad server, DFP, and Google’s ad exchange, AdX.”

Google avoids jury trial by sending $2.3 million check to US government Read More »

tesla-chair-says-elon-musk-needs-$46-billion-pay-plan-to-stay-motivated

Tesla chair says Elon Musk needs $46 billion pay plan to stay motivated

elon musk pay plan, Policy, tesla elon musk / /
Elon Musk sitting down and speaking at a conference.

Enlarge / Elon Musk speaks onstage at SXSW on March 11, 2018, in Austin, Texas.

Getty Images | Diego Donamaria

Tesla Board Chairperson Robyn Denholm urged shareholders to re-approve CEO Elon Musk’s $46 billion pay package this week, saying the vote is “not about the money” while suggesting that Musk could leave Tesla or devote less time to the company if he isn’t properly compensated.

“This is obviously not about the money. We all know Elon is one of the wealthiest people on the planet, and he would remain so even if Tesla were to renege on the commitment we made in 2018,” Denholm wrote in a June 5 letter to shareholders.

Musk’s pay plan was nullified by a Delaware Court of Chancery ruling in January 2024 after a lawsuit filed by a shareholder. The ruling said that Denholm had a “lackadaisical approach to her oversight obligations” and “derived the vast majority of her wealth from her compensation as a Tesla director.” It also said most board members “were beholden to Musk or had compromising conflicts,” and that the proxy information given to shareholders before the 2018 vote was “materially deficient.”

Musk’s pay plan “is the largest potential compensation opportunity ever observed in public markets by multiple orders of magnitude—250 times larger than the contemporaneous median peer compensation plan and over 33 times larger than the plan’s closest comparison, which was Musk’s prior compensation plan,” the court ruling noted.

Tesla’s board subsequently asked shareholders to approve a transfer of Tesla’s state of incorporation from Delaware to Texas and to reinstate the pay plan, which was previously estimated to be worth $56 billion but was more recently valued at $46 billion. Votes can be submitted before Tesla’s annual meeting on June 13. A survey found that more than 80 percent of early votes were in favor of Musk’s pay package, despite some shareholders’ vocal opposition.

Lawsuit slams Musk’s “strong-arm, coercive tactics”

The pay plan and Texas move are also being challenged by a new shareholder lawsuit filed in the same Delaware court that nullified the 2018 pay package. Donald Ball, who owns 28,245 shares of Tesla stock, yesterday filed a lawsuit against Tesla, Musk, Denholm, and other board members.

The Ball lawsuit points to Musk’s January 2024 statement that he “would prefer to build products outside of Tesla” if he isn’t given 25 percent voting control. It also points to reports that “Musk has directed Nvidia to ship thousands of AI chips reserved for Tesla to X and xAI, delaying Tesla’s ability to build up its data center and AI infrastructure by several months.”

“Musk has engaged in strong-arm, coercive tactics to obtain stockholder approval for both the Redomestication Vote and the Ratification Vote,” the lawsuit said.

The lawsuit also alleges that the Tesla board has not “disclosed a complete or fair picture” to shareholders on the impact of re-approving Musk’s pay plan. The lawsuit said “there could be radical tax implications for Tesla that will potentially wipe out Tesla’s pre-tax profits for the last two years.”

Tesla chair says Elon Musk needs $46 billion pay plan to stay motivated Read More »

us-agencies-to-probe-ai-dominance-of-nvidia,-microsoft,-and-openai

US agencies to probe AI dominance of Nvidia, Microsoft, and OpenAI

microsoft, microsoft ai, NVIDIA, nvidia ai, openai, Policy / /

AI Antitrust —

DOJ to probe Nvidia while FTC takes lead in investigating Microsoft and OpenAI.

–

A large Nvidia logo at a conference hall

Enlarge / Nvidia logo at Impact 2024 event in Poznan, Poland on May 16, 2024.

Getty Images | NurPhoto

The US Justice Department and Federal Trade Commission reportedly plan investigations into whether Nvidia, Microsoft, and OpenAI are snuffing out competition in artificial intelligence technology.

The agencies struck a deal on how to divide up the investigations, The New York Times reported yesterday. Under this deal, the Justice Department will take the lead role in investigating Nvidia’s behavior while the FTC will take the lead in investigating Microsoft and OpenAI.

The agencies’ agreement “allows them to proceed with antitrust investigations into the dominant roles that Microsoft, OpenAI, and Nvidia play in the artificial intelligence industry, in the strongest sign of how regulatory scrutiny into the powerful technology has escalated,” the NYT wrote.

One potential area of investigation is Nvidia’s chip dominance, “including how the company’s software locks customers into using its chips, as well as how Nvidia distributes those chips to customers,” the report said. An Nvidia spokesperson declined to comment when contacted by Ars today.

High-end GPUs are “scarce,” antitrust chief says

Jonathan Kanter, the assistant attorney general in charge of the DOJ’s antitrust division, discussed the agency’s plans in an interview with the Financial Times this week. Kanter said the DOJ is examining “monopoly choke points and the competitive landscape” in AI.

The DOJ’s examination of the sector encompasses “everything from computing power and the data used to train large language models, to cloud service providers, engineering talent and access to essential hardware such as graphics processing unit chips,” the FT wrote.

Kanter said regulators are worried that AI is “at the high-water mark of competition, not the floor” and want to take action before smaller competitors are shut out of the market. The GPUs needed to train large language models are a “scarce resource,” he was quoted as saying.

“Sometimes the most meaningful intervention is when the intervention is in real time,” Kanter told the Financial Times. “The beauty of that is you can be less invasive.”

Microsoft deal scrutinized

The FTC is scrutinizing Microsoft over a March 2024 move in which it hired the CEO of artificial intelligence startup Inflection and most of the company’s staff and paid Inflection $650 million as part of a licensing deal to resell its technology. The FTC is investigating whether Microsoft structured the deal “to avoid a government antitrust review of the transaction,” The Wall Street Journal reported today.

“Companies are required to report acquisitions valued at more than $119 million to federal antitrust-enforcement agencies, which have the option to investigate a deal’s impact on competition,” the WSJ wrote. The FTC reportedly sent subpoenas to Microsoft and Inflection in an attempt “to determine whether Microsoft crafted a deal that would give it control of Inflection but also dodge FTC review of the transaction.”

Inflection built a large language model and a chatbot called Pi. Former Inflection employees are now working on Microsoft’s Copilot chatbot.

“If the agency finds that Microsoft should have reported and sought government review of its deal with Inflection, the FTC could bring an enforcement action against Microsoft,” the WSJ report said. “Officials could ask a court to fine Microsoft and suspend the transaction while the FTC conducts a full-scale investigation of the deal’s impact on competition.”

Microsoft told the WSJ that it complied with antitrust laws, that Inflection continues to operate independently, and that the deals gave Microsoft “the opportunity to recruit individuals at Inflection AI and build a team capable of accelerating Microsoft Copilot.”

OpenAI

Microsoft’s investment in OpenAI has also faced regulatory scrutiny, particularly in Europe. Microsoft has a profit-sharing agreement with OpenAI.

Microsoft President Brad Smith defended the partnership in comments to the Financial Times this week. “The partnerships that we’re pursuing have demonstrably added competition to the marketplace,” Smith was quoted as saying. “I might argue that Microsoft’s partnership with OpenAI has created this new AI market,” and that OpenAI “would not have been able to train or deploy its models” without Microsoft’s help, he said.

We contacted OpenAI today and will update this article if it provides any comment.

In January 2024, the FTC launched an inquiry into AI-related investments and partnerships involving Alphabet, Amazon, Anthropic, Microsoft, and OpenAI.

The FTC also started a separate investigation into OpenAI last year. A civil investigative demand sent to OpenAI focused on potentially unfair or deceptive privacy and data security practices, and “risks of harm to consumers, including reputational harm.” The probe focused partly on “generation of harmful or misleading content.”

US agencies to probe AI dominance of Nvidia, Microsoft, and OpenAI Read More »

canada-demands-5%-of-revenue-from-netflix,-spotify,-and-other-streamers

Canada demands 5% of revenue from Netflix, Spotify, and other streamers

netflix, Policy, streaming / /

Streaming fees —

Canada says $200M in annual fees will support local news and other content.

–

Illustrative photo featuring Canadian 1-cent coins with the Canadian flag displayed on a computer screen in the background,

Getty Images | NurPhoto /

Canada has ordered large online streaming services to pay 5 percent of their Canadian revenue to the government in a program expected to raise $200 million per year to support local news and other home-grown content. The Canadian Radio-television and Telecommunications Commission (CRTC) announced its decision yesterday after a public comment period.

“Based on the public record, the CRTC is requiring online streaming services to contribute 5 percent of their Canadian revenues to support the Canadian broadcasting system. These obligations will start in the 2024–2025 broadcast year and will provide an estimated $200 million per year in new funding,” the regulator said.

The fees apply to both video and music streaming services. The CRTC imposed the rules despite opposition from Amazon, Apple, Disney, Google, Netflix, Paramount, and Spotify.

The new fees are scheduled to take effect in September and apply to online streaming services that make at least $25 million a year in Canada. The regulations exclude revenue from audiobooks, podcasts, video game services, and user-generated content. The exclusion of revenue from user-generated content is a win for Google’s YouTube.

Streaming companies have recently been raising prices charged to consumers, and the CBC notes that streamers might raise prices again to offset the fees charged in Canada.

Fees to support local news, Indigenous content

The CRTC said it is relying on authority from the Online Streaming Act, which was approved by Canada’s parliament in 2023. The new fees are similar to the ones already imposed on licensed broadcasters.

“The funding will be directed to areas of immediate need in the Canadian broadcasting system, such as local news on radio and television, French-language content, Indigenous content, and content created by and for equity-deserving communities, official language minority communities, and Canadians of diverse backgrounds,” the CRTC said.

CRTC Chairperson Vicky Eatrides said the agency’s “decision will help ensure that online streaming services make meaningful contributions to Canadian and Indigenous content.” The agency also said that streaming companies “will have some flexibility to direct parts of their contributions to support Canadian television content directly.”

Industry groups blast CRTC

The Motion Picture Association-Canada criticized the CRTC yesterday, saying the fee ruling “reinforces a decades-old regulatory approach designed for cable companies” and is “discriminatory.” The fees “will make it harder for global streamers to collaborate directly with Canadian creatives and invest in world-class storytelling made in Canada for audiences here and around the world,” the lobby group said.

The MPA-Canada said the CRTC didn’t fully consider “the significant contributions streamers make in working directly with Canada’s creative communities.” The group represents streamers including Netflix, Disney Plus, HAYU, Sony’s Crunchyroll, Paramount Plus, and PlutoTV.

“Global studios and streaming services have spent over $6.7 billion annually producing quality content in Canada for local and international audiences and invested more in the content made by Canadian production companies last year than the CBC, or the Canada Media Fund and Telefilm combined,” the group said.

The fees were also criticized by the Digital Media Association, which represents streaming music providers including Amazon Music, Apple Music, and Spotify. The “discriminatory tax on music streaming services… is effectively a protectionist subsidy for radio” and may worsen “Canada’s affordability crisis,” the group said.

The Canadian Media Producers Association praised the CRTC decision, saying the decision benefits independent producers and “tilts our industry toward a more level playing field.”

Canada demands 5% of revenue from Netflix, Spotify, and other streamers Read More »

elon-musk’s-x-defeats-australia’s-global-takedown-order-of-stabbing-video

Elon Musk’s X defeats Australia’s global takedown order of stabbing video

Australian, censorship, elon musk, First Amendment, free speech, julie inman-grant, online safety act, Policy, Twitter, X, x corp / /
Elon Musk’s X defeats Australia’s global takedown order of stabbing video

Australia’s safety regulator has ended a legal battle with X (formerly Twitter) after threatening approximately $500,000 daily fines for failing to remove 65 instances of a religiously motivated stabbing video from X globally.

Enforcing Australia’s Online Safety Act, eSafety commissioner Julie Inman-Grant had argued it would be dangerous for the videos to keep spreading on X, potentially inciting other acts of terror in Australia.

But X owner Elon Musk refused to comply with the global takedown order, arguing that it would be “unlawful and dangerous” to allow one country to control the global Internet. And Musk was not alone in this fight. The legal director of a nonprofit digital rights group called the Electronic Frontier Foundation (EFF), Corynne McSherry, backed up Musk, urging the court to agree that “no single country should be able to restrict speech across the entire Internet.”

“We welcome the news that the eSafety Commissioner is no longer pursuing legal action against X seeking the global removal of content that does not violate X’s rules,” X’s Global Government Affairs account posted late Tuesday night. “This case has raised important questions on how legal powers can be used to threaten global censorship of speech, and we are heartened to see that freedom of speech has prevailed.”

Inman-Grant was formerly Twitter’s director of public policy in Australia and used that experience to land what she told The Courier-Mail was her “dream role” as Australia’s eSafety commissioner in 2017. Since issuing the order to remove the video globally on X, Inman-Grant had traded barbs with Musk (along with other Australian lawmakers), responding to Musk labeling her a “censorship commissar” by calling him an “arrogant billionaire” for fighting the order.

On X, Musk arguably got the last word, posting, “Freedom of speech is worth fighting for.”

Safety regulator still defends takedown order

In a statement, Inman-Grant said early Wednesday that her decision to discontinue proceedings against X was part of an effort to “consolidate actions,” including “litigation across multiple cases.” She ultimately determined that dropping the case against X would be the “option likely to achieve the most positive outcome for the online safety of all Australians, especially children.”

“Our sole goal and focus in issuing our removal notice was to prevent this extremely violent footage from going viral, potentially inciting further violence and inflicting more harm on the Australian community,” Inman-Grant said, still defending the order despite dropping it.

In court, X’s lawyer Marcus Hoyne had pushed back on such logic, arguing that the eSafety regulator’s mission was “pointless” because “footage of the attack had now spread far beyond the few dozen URLs originally identified,” the Australian Broadcasting Corporation reported.

“I stand by my investigators and the decisions eSafety made,” Inman-Grant said.

Other Australian lawmakers agree the order was not out of line. According to AP News, Australian Minister for Communications Michelle Rowland shared a similar statement in parliament today, backing up the safety regulator while scolding X users who allegedly took up Musk’s fight by threatening Inman-Grant and her family. The safety regulator has said that Musk’s X posts incited a “pile-on” from his followers who allegedly sent death threats and exposed her children’s personal information, the BBC reported.

“The government backs our regulators and we back the eSafety Commissioner, particularly in light of the reprehensible threats to her physical safety and the threats to her family in the course of doing her job,” Rowland said.

Elon Musk’s X defeats Australia’s global takedown order of stabbing video Read More »

gamestop-stock-influencer-roaring-kitty-may-lose-access-to-e-trade,-report-says

GameStop stock influencer Roaring Kitty may lose access to E-Trade, report says

Policy / /

“I like the stock” —

E-Trade fears restricting influencer’s trading may trigger boycott, sources say.

–

Keith Gill, known on Reddit under the pseudonym DeepFuckingValue and as Roaring Kitty, is seen on a fragment of a YouTube video.

Enlarge / Keith Gill, known on Reddit under the pseudonym DeepFuckingValue and as Roaring Kitty, is seen on a fragment of a YouTube video.

E-Trade is apparently struggling to balance the risks and rewards of allowing Keith Gill to continue trading volatile meme stocks on its platform, The Wall Street Journal reported.

The meme-stock influencer known as “Roaring Kitty” and “DeepF—Value” is considered legendary for instantly skyrocketing the price of stocks, notably GameStop, most recently with a single tweet.

E-Trade is concerned, according to The Journal’s insider sources, that on the one hand, Gill’s social media posts are potentially illegally manipulating the market—and possibly putting others’ investments at risk. But on the other, the platform worries that restricting Gill’s trading could incite a boycott fueled by his “meme army” closing their accounts “in solidarity.” That could also sharply impact trading on the platform, sources said.

It’s unclear what gamble E-Trade, which is owned by Morgan Stanley, might be willing to make. The platform could decide to take no action at all, the WSJ reported, but through its client agreement has the right to restrict or close Gill’s account “at any time.”

As of late Monday, Gill’s account was still active, the WSJ reported, apparently showing total gains of $85 million over the past three weeks. After Monday’s close, Gill’s GameStop positions “were valued at more than $289 million,” the WSJ reported.

Trading platforms unprepared for Gill’s comeback

In 2021, Gill’s social media activity on Reddit helped drive GameStop stock to historic highs. At that time, Gill encouraged others to invest in the stock—not based on the fundamentals of GameStop business but on his pure love for GameStop. The craze that he helped spark rapidly triggered temporary restrictions on GameStop trading, as well as a congressional hearing, but ultimately there were few consequences for Gill, who disappeared after making at least $30 million, the WSJ reported.

All remained quiet until a few weeks ago when Roaring Kitty suddenly came back. On X (formerly Twitter), Gill posted a meme of a man sitting up in his chair, then blitzed his feed with memes and movie clips, seemingly sending a continual stream of coded messages to his millions of followers who eagerly posted about their trades and gains on Reddit.

“Welcome back, legend,” one follower responded.

Once again, Gill’s abrupt surge in online activity immediately kicked off a GameStop stock craze fueling prices to a spike of more than 60 percent. And once again, because of the stock’s extreme volatility, Gill’s social posts prompted questions from both trading platforms and officials who continue to fret over whether Gill’s online influencing should be considered market manipulation.

For Gill’s biggest fans, the goal is probably to profit as much as possible before the hammer potentially comes down again and trading gets restricted. That started happening late on Sunday night, when it became harder or impossible to purchase GameStop shares on Robinhood, prompting some traders to complain on X.

The WallStreetBets account shared a warning that Robinhood sent to would-be buyers, which showed that trading was being limited, but not by Robinhood. Instead, the platform that facilitates Robinhood’s overnight trading of the stock, Blue Ocean ATS, set the limit, only accepting “trades 20 percent above or below” that day’s reference price—a move designed for legal or compliance reasons to stop trading once the stock exceeds a certain price.

These limits are set, the Securities and Exchange Commission (SEC) noted in 2021, partly to prevent fraudsters from spreading misleading tips online and profiting at the expense of investors from illegal price manipulation. A common form of this fraud is a pump-and-dump scheme, where fraudsters “make false and misleading statements to create a buying frenzy, and then sell shares at the pumped-up price.”

GameStop stock influencer Roaring Kitty may lose access to E-Trade, report says Read More »

isps-seek-halt-of-net-neutrality-rules-before-they-take-effect-next-month

ISPs seek halt of net neutrality rules before they take effect next month

fcc net neutrality, Policy / /

Net neutrality back in court —

Fate of net neutrality may hinge on Supreme Court’s “major questions” doctrine.

–

Illustration of network data represented by curving lines flowing on a dark background.

Getty Images | Yuichiro Chino

As expected, broadband industry lobby groups have sued the Federal Communications Commission in an attempt to nullify net neutrality rules that prohibit blocking, throttling, and paid prioritization.

Lobby groups representing cable, telecom, and mobile Internet service providers sued the FCC in several US appeals courts last week. Industry groups also filed a petition with the FCC on Friday asking for a stay of the rules, claiming the regulations shouldn’t take effect while litigation is pending because the industry is likely to prevail in court.

The FCC is highly likely to reject the petition for a stay, but the groups can then ask appeals court judges to impose an injunction that would prevent enforcement. The industry lost a similar case during the Obama era, but is hoping to win this time because of the Supreme Court’s evolving approach on whether federal agencies can decide “major questions” without explicit instructions from Congress.

The petition for a stay was filed by groups including NCTA-The Internet & Television Association, which represents large cable providers such as Comcast and Charter; and USTelecom, which represents telcos including AT&T, Verizon, and CenturyLink/Lumen.

“By reclassifying broadband under Title II of the Communications Act of 1934, the Commission asserts the power to set prices, dictate terms and conditions, require or prohibit investment or divestment, and more. It should be ‘indisputable’ that the major-questions doctrine applies to that seismic claim of authority,” the petition for a stay said.

Broadband classified as telecommunications

The FCC’s net neutrality order reclassified broadband as telecommunications, which makes Internet service subject to common-carrier regulations under Title II. The order reverses the Trump-era FCC’s classification of broadband as an information service and is scheduled to take effect on July 22. The FCC approved it in a 3-2 vote on April 25.

Despite the industry’s claim that classification is a major question that can only be decided by Congress, a federal appeals court ruled in previous cases that the FCC has authority to classify broadband as either a telecommunications or information service.

The lobby groups claim that without a stay preventing enforcement, their members “will suffer irreparable harm, as they did in the wake of the 2015 Order. In particular, petitioners’ members will be forced to delay or forego valuable new services, incur prohibitive compliance costs, and pay more to obtain capital.”

Lawsuits against the FCC were filed in the US Court of Appeals for the District of Columbia Circuit by CTIA-The Wireless Association, which represents mobile providers; America’s Communications Association (ACA), which represents small and medium-sized cable providers; and the Wireless Internet Service Providers Association (WISPA), which represents fixed wireless providers.

The FCC was sued in other federal circuit appeals courts by the Texas Cable Association, the Ohio Telecom Association, the Ohio Cable Telecommunications Association, the Missouri Internet & Television Association, and Florida Internet & Television Association.

The cases will be consolidated into one court. The DC Circuit appeals court handled challenges to the Obama-era and Trump-era net neutrality decisions, ruling in favor of the FCC both times. Despite the Trump-era repeal, many ISPs still have to follow net neutrality rules because of regulations imposed by California and other states.

FCC: Authority “clear as day”

FCC Commissioner Geoffrey Starks said before the April 25 vote that the FCC’s authority to regulate broadband as a telecommunications service “is clear as day.”

To find otherwise, a court “would need to conclude that ‘this is a major questions case.’ Yet major questions review is reserved for only ‘extraordinary cases’—and this one doesn’t come close,” Starks said. “There’s no ‘unheralded power’ that we’re purporting to discover in the annals of an old, dusty statute—we’ve been classifying communications services one way or the other for decades, and the 1996 [Telecommunications] Act expressly codified our ability to continue that practice.”

If the industry loses at the appeals-court level again, lobby groups would seek review at the Supreme Court. Their hopes depend partly on Justice Brett Kavanaugh, who argued in a 2017 dissent as a circuit court judge that the “net neutrality rule is unlawful and must be vacated” because “Congress did not clearly authorize the FCC to issue the net neutrality rule.”

The CTIA lawsuit against the FCC said, “Given the undisputed fact that broadband Internet is an essential engine of the nation’s economic, social, and political life, the major-questions doctrine requires the FCC to identify clear statutory authority to subject broadband Internet access service to common-carrier regulation. The Order does not and cannot point to such authority. And to the extent there is any statutory ambiguity, the Order’s Title II approach far exceeds the bounds of reasonable interpretation and infringes rights protected by the Constitution.”

ISPs seek halt of net neutrality rules before they take effect next month Read More »