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David Sacks, former CEO of Zenefits, is seen here speaking at a 2016 TechCrunch Disrupt in San Francisco, California.
Meet David Sacks, the new White House AI czar
Sacks will not be full-time in the role and will stay at his fund, Craft Ventures, but he will assume a lofty portfolio that covers two of the hottest topics in tech policy: artificial intelligence and crypto. President Joe Biden spent the second half of his term getting his departments and agencies to develop rulemaking on AI — and figuring out how to adopt the technology for their own purposes.
Meanwhile, Gary Gensler, Biden’s Securities and Exchange Commission chair, has ramped up enforcement of fraud in the crypto industry — though he’s stopped short of any sweeping shutdown of the coins. Trump’s election, promises of deregulation, and his personal interest in crypto have led to the skyrocketing price of many cryptocurrencies, including bitcoin.
Trump will take a deregulatory approach to both artificial intelligence and crypto, but it’s up to Sacks to coordinate across a sprawling bureaucracy and determine how to execute that goal. As a Silicon Valley stalwart, and one who has not severed business ties to join the government, Sacks will soon be the face of Trump’s tech policy, likely a heavy hand rolling back rules and regulations started under Biden.
California wants to prevent an AI “catastrophe”
The Golden State may be close to passing AI safety regulation — and Silicon Valley isn’t pleased.
The proposed AI safety bill, SB 1047, also known as the Safe and Secure Innovation for Frontier Artificial Intelligence Models Act, aims to establish “common sense safety standards” for powerful AI models.
The bill would require companies developing high-powered AI models to implement safety measures, conduct rigorous testing, and provide assurances against "critical harms," such as the use of models to execute mass-casualty events and cyberattacks that lead to $500 million in damages. It warns that the California attorney general can take civil action against violators, though rules would only apply to models that cost $100 million to train and pass a certain computing threshold.
A group of prominent academics, including AI pioneers Geoffrey Hinton and Yoshua Bengio,published a letter last week to California’s political leaders supporting the bill. “There are fewer regulations on AI systems that could pose catastrophic risks than on sandwich shops or hairdressers,“ they wrote, saying that regulations are necessary not only to rein in the potential harms of AI but also to restore public confidence in the emerging technology.
Critics, including many in Silicon Valley, argue the bill is overly vague and could stifle innovation. In June, the influential startup incubator Y Combinator, wrote a public letter outlining its concerns. It said that liability should lie with those who abuse AI tools, not developers, that the threshold for inclusion under the law is arbitrary, and that a requirement that developers include a “kill switch” allowing them to turn off the model would be a “de facto ban on open-source AI development.”
Steven Tiell, a nonresident senior fellow with the Atlantic Council's GeoTech Center, thinks the bill is “a good start” but points to “some pitfalls.” He appreciates that it only applies to the largest models but has concerns about the bill’s approach to “full shutdown” capabilities – aka the kill switch.
“The way SB 1047 talks about the ability for a ‘full shutdown’ of a model – and derivative models – seems to assume foundation models would have some ability to control derivative models,” Tiell says. He warned this could “materially impact the commercial viability of foundation models across wide swaths of the industry.”
Hayley Tsukayama, associate director of legislative activism at the Electronic Frontier Foundation, acknowledges the tech industry’s concerns. “AI is changing rapidly, so it’s hard to know whether — even with the flexibility in the bill — the regulation it’s proposing will age well with the industry,” she says.
“The whole idea of open-source is that you’re making a tool for people to use as they see fit,” she says, emphasizing the burden on open-source developers. “And it’s both harder to make that assurance and also less likely that you’ll be able to deal with penalties in the bill because open-source projects are often less funded and less able to spend money on compliance.”
State Sen. Scott Wiener, the bill’s sponsor, told Bloomberg he’s heard industry criticisms and made adjustments to its language to clarify that open-source developers aren’t entirely liable for all the ways their models are adapted, but he stood by the bill’s intentions. “I’m a strong supporter of AI. I’m a strong supporter of open source. I’m not looking in any way to impede that innovation,” Wiener said. “But I think it’s important, as these developments happen, for people to be mindful of safety.” Spokespeople for Wiener did not respond to GZERO’s request for comment.
In the past few months, Utah and Colorado have passed their own AI laws, but they’ve both focused on consumer protection rather than liability for catastrophic results of the technology. California, which houses many of the biggest companies in AI, has broader ambitions. But while California has been able to lead the nation — and the federal government on data privacy — it might need industry support to get its AI bill fully approved in the legislature and signed into law. California’s Senate passed the bill last month, and the Assembly is set to vote on it before the end of August.
California Gov. Gavin Newsom hasn’t signaled whether or not he’ll sign the bill should it pass both houses of the legislature, but in May, he publicly warned against over-regulating AI and ceding America’s advantage to rival nations: “If we over-regulate, if we overindulge, if we chase the shiny object, we could put ourselves in a perilous position.”An AI-generated image of a techno brain crashing against the waves.
You say you want AI revolution?
A year after the launch of ChatGPT, who are the winners and losers, and what's next? Our new columnist Azeem Azhar, founder of Exponential View, and an author and analyst, weighs in.
It’s hard to believe it’s been less than a year since ChatGPT was unveiled by Sam Altman, the boss of OpenAI. Far from the razzmatazz that normally accompanies Silicon Valley launches, Altman posted an innocuous tweet. And the initial responses could be characterized as bemused delight at seeing a new trinket.
But looking back, we can see that ChatGPT was about to unleash a tidal wave of chaos, not merely on the technology industry but the world at large. That chaos has seen the world’s largest technology firms swing their supertankers volte-face.
The industry thrives off having a new technology platform: Crypto is a bust, and the metaverse is still a pipe dream. But today’s AI — the large language models that operate as the brains in ChatGPT — seems like the real deal.
Precarious presumptions
Many of the Big Tech firms, like Alphabet, which initially developed the transformer technologies that underpin the large language model — along with Amazon, Meta, and Apple — underestimated the impact ChatGPT would have. They have since feverishly chased the generative AI train: Alphabet reorganized all its AI talent under Demis Hassabis and rushed out new products, such as Bard; Meta publicly released an impressive range of open-source AI models; Amazon invested $4 billion in OpenAI's competitor, Anthropic; and Apple is readying its own generative tools. Microsoft, meanwhile, had its ducks in a row. The company had built an important strategic deal with OpenAI, brokered by Reid Hoffman, a much-respected Silicon Valley investor who at the time sat on the board of both firms.
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For years, the received wisdom about artificial intelligence was that it would automate many types of white-collar tasks, starting with routine desk work. The research and market forecasts suggested that those of us doing nonroutine cognitive work — lawyers, strategy consultants, policy wonks, readers like you — perform tasks that are too complex for early AI systems. Rather it would be methodical desk work, such as data entry, document review, and customer service, that would be the easiest to automate.
A very different reality
A new study from Harvard Business School and Boston Consulting Group, the white shoe consultants, ixnayed that assumption. They tested nearly 800 consultants, likely graduates of the world’s most selective schools, on typical strategy consulting tasks. Half the group had help from ChatGPT, and the other half worked on their own. The results were stunning. On average, the consultants using ChatGPT completed their work 25.1% faster. And the bottom half of consultants saw the quality of their output increase by 43% — taking their average performance to well above that of the unaided consultant.
This result — matched by other research — throws received wisdom out the window. Even nonroutine work can benefit from AI. And we're not talking about highly advanced AI but rather garden-variety AI people can access on their phones. As a result, employees will be enticed by the productivity gains of using ChatGPT to ignore corporate security policies. The personal win — better quality work, more free time — will be too great for workers. Employers will struggle to rein in this behavior and expose their firms to new potential liabilities.
The road to standardization
At the same time, powerful general technologies do not necessarily work in favor of the employee, as bosses are tempted to substitute capital (machines) for labor (people). Historically, general-purpose technologies have become the sites of political contestation: Think of workers protesting power looms and assembly lines. The dispute is not about the technologies themselves but rather how the gains from the technology are split. It is a fight over power.
The recent screenwriters' strike in Hollywood is just such a battle. In a sense, it is less about the technology and more about the terms on which it is introduced. Similar fights will erupt in different industries and countries in the coming years until new norms emerge. Several artists and writers have filed lawsuits against OpenAI for training its systems in their creative endeavors.
During the Industrial Revolution, the process of normalizing standards took several decades in 18th and 19th century England. The workers’ plight worsened as the gains from automation went to shareholders, giving rise to heart-rending stories Charles Dickens tells. It was likely the success of labor movements that helped wages catch up.
And the tension with workers will be only one fault line. Governments are critical to the process of developing standards and norms, and yet their record of dealing with the impact of technologies in recent decades has been poor. Once the internet went mainstream in the late 1990s, catalyzed by the Clinton-Gore administration, successive American and European governments did little to advance the institutional or regulatory reform this expanded industry needed.
After 9/11, the US government became overly enamored with the surveillance capabilities afforded by the internet and the soft power big American tech firms offered. Washington did little to address the anti-competitive and politically polarizing side effects that allowed tech to morph into Big Tech.
Even late last year, governments were moving in mass but slowly to confront these questions. ChatGPT woke everyone up. Whether in China, the US, the EU, or the UK, figuring out what the institutional guardrails around AI should be has become a belated priority. In the UK, Rishi Sunak is making a late play for global leadership by hosting, this week, an AI Safety Summit with a view toward building a scientifically robust international agency, like the IPCC, to help evaluate, identify, and manage the most worrisome risks posed by AI.
The UN’s Antonio Guterres has announced his own AI advisory body, which may help the Global South develop a voice in how we contend with the beneficial deployment of AI.
Even perfectly designed, which nothing can be, a general-purpose technology will force changes to the rules and behaviors in a society. As I write in my book, the accelerating pace of change means we have a smaller window than normal to turn this chaos into some semblance of order. And that order will require effective national and multilateral governance and institutions that support them. No one quite knows, nor will we know for a while, what “effective” means in this context. Acting too quickly raises more risks: rash regulation, a paucity of deliberation, and, most likely, the exclusion of groups lacking the resources to mount effective lobbying.
If the first year of ChatGPT’s launch was marked by chaos, I doubt, given the accelerating pace of technology, the next year will have less turmoil. But it may, at least, be accompanied by a wider consensus endeavoring to erect some scaffolding from which effective governance, leading to more equitable prosperity, might emerge in the coming years.
Canadian Heritage Minister Pascale St-Onge
Meta faces Canadian watchdog probe
Meta, which owns Facebook and Instagram, started blocking news articles for Canadians in response to a federal law that would force it to share revenue with news outlets. The law won’t take effect for six months, but Meta has reacted aggressively. Rather than comply or consult with the government about next steps, it has moved to just block news links, arguing that people don’t come to the site for that purpose. The federal government has denounced the move.
"We’re going to keep standing our ground,” said Canadian Heritage Minister Pascale St-Onge. “After all, if the government can’t stand up for Canadians against tech giants, who will?”
Both Meta and Alphabet, which owns Google, have said they will block news rather than pay for it, although Google has not responded as aggressively.
Observers think both companies have reason to be uneasy about setting a precedent that governments in other jurisdictions might emulate. But so far, the tech giants appear to be winning the game of chicken. In June, a California link tax bill stalled in the legislature and a similar bill seems to be stuck in Congress.
Canadian media outlets have seen their traffic from Facebook cut — some have seen their page views halved — which has a knock-on effect on potential advertising revenue. But they should not hold their breath hoping to be rescued by the Competition Bureau, according to an analysis by University of Ottawa professor Michael Geist, an expert in e-commerce law, who described the industry’s complaint as “exceptionally weak.”
Tech talent wars & the role of ethics in Big Tech success (long-term)
Facebook whistleblower Frances Haugen still has hope that the corporate culture inside tech companies can change for the better.
"Huge things that seemed impossible [...] all came to be," she says, comparing the idea to historical tectonic shifts like the end of the Cold War or apartheid in South Africa.
Speaking to Ian Bremmer on GZERO World, Haugen says that she doesn't want to tear down social media companies. In fact, she wants them to be successful in the long run "because culture change will come along with that."
Google recently had to ditch a lucrative Pentagon contract in order to retain the best talent.
Facebook, on the other hand, is at a huge disadvantage because it struggles to recruit top talent because of their negative image in the industry.
Watch the GZERO World episode: Why social media is broken & how to fix it
Biden’s executive order cracks down on Big Tech and protects consumers
Marietje Schaake, International Policy Director at Stanford's Cyber Policy Center, Eurasia Group senior advisor and former MEP, discusses tech policy in the United States and the new White House executive order with no less than 72 competition enhancing measures.
How will Biden's executive order crack down on big tech?
The answer is in almost every way. The order clearly seeks stronger antitrust enforcement with specific provisions on data and the impact of its assembling on privacy. The order asks for new rules on surveillance from the FTC but will also allow for assessments of not only future but also past mergers. And that is important because the very wealthy, very powerful tech companies are known to buy up competitors that they may fear, and through those mergers grow their data piles. So, the executive order must cause concern in Silicon Valley. The order goes on to restore net neutrality, which is crucial for smaller companies and noncommercial websites. And the position of consumers improves with the possibility to have products repaired or to see others doing that, which is a practice that is often banned today. So once these various measures are in place, the public interest, innovation, consumer rights, and privacy protection should be better safeguarded from abuse of power by big tech.
Will tech giants be taxed for worldwide profits with a global tax rate?
Get insights on the latest news about emerging trends in cyberspace from Marietje Schaake, International Policy Director at Stanford University's Cyber Policy Center and former European Parliamentarian:
Today, we talk about the "T word", as I often refer to: taxation. But that taboo is finally broken in the United States.
How would a global minimum corporate tax rate, like the one Janet Yellen has called for, affect Big Tech?
Now, ideally, it would ensure a level playing field for all companies, and European leaders embrace the US change of course, but they did add that there should be ways to tax tech giants for their global profits. It's a demand that is widely shared in Europe. So the hope is that that can be arranged between all OECD members.
What has been Silicon Valley's reaction so far?
I haven't heard so much from Silicon Valley, so perhaps they're lobbying US leaders behind the scenes, more so than publicly. But it does look like the US government needs to compromise on that digital tax question to get their global minimum corporate tax rate done at all.
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Podcast: Kara Swisher on Big Tech's Big Problem
Listen: Renowned tech journalist Kara Swisher has no qualms about saying that social media companies bear responsibility for the January 6th pro-Trump riots at the Capitol and will likely be complicit in the civil unrest that may continue well into Biden's presidency. It's no surprise, she argues, that the online rage that platforms like Facebook and Twitter intentionally foment translated into real-life violence. But if Silicon Valley's current role in our national discourse is untenable, how can the US government rein it in? That, it turns out, is a bit more complicated. Swisher joins Ian Bremmer on our podcast.
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