Large cloud providers see business booming due to AI enthusiasm but there’s a huge pushback coming against big tech in the US.
These are the top tech news stories on today’s Hashtag Trending.
I’m your host Jim Love, CIO of IT World Canada and Tech News Day in the US.
Sometimes the news just hits the same themes. First, two big stories about cloud hyperscalers Google and Amazon, who really didn’t hit the first wave of AI. Microsoft has blown out its earnings expectations, the two big competitors Azure and Google are still doing incredibly well. But with all of that success there are three stories that show that the huge growth has drawn the attention of the US government.
Google Cloud, Alphabet’s cloud division, has reported its second consecutive quarter of positive income gains, despite customers continuing to streamline their spending. The tech giant announced in its Q2 2023 earnings that Google Cloud posted an operating income of $395 million for the three-month period ending June 30, a significant improvement over its $590 million losses in the same quarter of 2022.
The cloud segment’s profitability was driven by a surge in enterprise AI enthusiasm, with the cloud segment revenue also up 28 per cent year over year. Google CEO Sundar Pichai highlighted the growing interest from customers in AI, leading to increased conversations and engagements.
Generative AI is transforming the cloud business, prompting hyperscalers to reconfigure infrastructure to accommodate workloads and deliver new enterprise-grade capabilities. Google Cloud’s business strategy tightly intertwines cloud and AI, with a focus on AI-optimized infrastructure, large language models, AI platform services, and new generative AI offerings.
Despite the positive results, Google Cloud continues to face challenges. CFO Ruth Porat, who will soon become president and chief investment officer, noted that the company experienced headwinds in Q2 due to moderation in consumption growth as customers optimize their spend. Additionally, delays in data center construction projects were reported in the first half of the year, but buildout plans are underway.
Porat also indicated that the company expects elevated levels of investment in technical infrastructure through the latter half of 2023, primarily to support AI opportunities across the company, including investments in proprietary TPUs, GPUs, and data center capacity.
Sources include: CIO Dive
Amazon is taking a different approach. You could fault Google for being such a leader but not getting out of the starting gate on AI. But Amazon didn’t really have an AI offering. So what are they doing? They are embracing all AI offerings by putting together an API service called Bedrock that allows for integration with many services – and this seems to be paying off.
AWS is adding models from Anthropic, Stability AI, and Cohere. These new additions join the roster of generative AI technologies available via Bedrock since its launch in April.
Bedrock is being shaped into a marketplace for generative AI tools and technologies, with AWS VP of database, analytics, and ML, Swami Sivasubramanian, stating that organizations will need to choose the right model for the right job.
Many models allow customers to select based on their needs and the offerings perceived strengths. Anthropic’s Claude 2, which is similar to OpenAI’s ChatGPT, can ingest hundreds of pages of text to produce longer documents than ChatGPT. Stability AI’s Stable Diffusion XL 1.0 suite of models specialize in generating images and video from text prompts. Cohere offers two separate models, Command and Embed, for generating and understanding text.
In addition to expanding the number of models on Bedrock, AWS introduced a low-code automation “agents” tool and brought online the NVIDIA H100 Tensor Core GPU-powered compute capabilities. In plain English, stuff that AI needs to process. Two additional tools, an ML-augmented vector search tool for OpenSearch Serverless and generative AI enhancements to AWS’s QuickSight BI service, are now in preview.
Will this “Swiss Army Knife” of AI tools work as a strategy in the long term? It’s doing well so far.
Sources include: CIO Dive
Now the bad news – well, if you’re big tech. Governments have long been suspicious of big tech and they’ve done a few things to try to restrain what they see as large anti-competitive companies. And it’s true to some extent. Big tech has proven it can miss the boat entirely and still buy out an exciting new company or get on the train for something they’ve totally missed by just spending enough money. Imagine if AT&T or some other company had bought Google as a start-up. Or if another company had bought Facebook?
They couldn’t or didn’t or whatever, but these two companies came out of nowhere and became giants, and appear at least, to be able to buy up any potential competitors. Microsoft didn’t have to develop generative AI – it could just invest 10 billion in OpenAI.
The only person who has been able to “tank” one of the big social media or tech giants has been Elon Musk and that takes an incredible talent. Aside from that, everyone else has been able to buy their way out of even being late to market. Remember that Facebook got onto the big metaverse thing but dropped that, and had the money to get into AI in a big way.
But governments, made nervous by the power of these big tech companies, are starting to push back.
U.S. senators Elizabeth Warren, a Democrat, and Lindsey Graham, a Republican, two people who would not get together on anything else, announced on Thursday their intention to introduce an ambitious bill aimed at curbing the influence of Big Tech companies. The proposed legislation would establish a new government regulator with the authority to oversee Meta Platforms’ Facebook, Alphabet’s Google, Amazon, and other major tech platforms.
Previous attempts to regulate Big Tech have fallen short in Congress, despite ongoing legal battles waged by federal agencies against Google and Facebook over alleged antitrust violations. This new bill would not only create a regulatory commission but also amend antitrust law to prevent these companies from favoring their own products over their competitors. For instance, Amazon has faced accusations of prioritizing its own brands in consumer searches on its platform.
The proposed law would also empower the commission to halt certain acquisitions by these companies and, in some cases, force asset sales. It would also ensure some privacy protections and restrict foreign ownership and access to data by foreign adversaries.
The proposed Digital Consumer Protection Commission would be structured similarly to the Federal Trade Commission, with five commissioners and a maximum of three from any one political party.
Senators Warren and Graham and I can’t emphasize how truly opposite these two are, have gotten together and are stressing the importance of this bill in protecting American consumers from the immense power wielded by these tech companies.
Sources include: Reuters
And on another front, U.S. senators, concerned about the potential risks of artificial intelligence (AI), plan to hold hearings later this year to discuss possible legislative safeguards. Senate Majority Leader Chuck Schumer announced the initiative on Thursday, emphasizing the bipartisan interest in AI and the need for legislation that encourages innovation while also mitigating potential risks.
This comes in response to concerns voiced by both Democratic and Republican senators about the potential misuse of AI, including its potential use in creating biological weapons.
The global legislative focus on AI intensified after the rise of generative AI, which uses data to create new content, and it demonstrated its ability to answer complex queries with human-like conversations.
Schumer also mentioned that senators were briefed on AI by experts from the U.S. Energy Department, the National Science Foundation, and the Defense Advanced Research Projects Agency (DARPA).
In a related development, the Senate Homeland Security and Governmental Affairs Committee voted to send a bill to the full Senate that would establish a chief AI officer in each federal agency and create a council for these officers to coordinate the federal government’s use of this emerging technology.
Sources include: Reuters
The Federal Trade Commission (FTC) is reportedly finalizing an extensive antitrust lawsuit against Amazon. This could potentially lead to a break-up of parts of the company. The lawsuit, which is expected to be officially filed as early as August, accuses Amazon of abusing its market dominance to reward merchants who use its logistics and advertising services, punish those who don’t, and blocking lower prices on competing websites.
The FTC has been preparing the case for several months, interviewing dozens of witnesses, including Amazon CEO Andy Jassy and former CEO Jeff Bezos, and collecting millions of documents. The lawsuit alleges that Amazon requires third-party retailers on its site to offer goods at their lowest prices on the platform, preventing them from being found cheaper elsewhere. Amazon has previously denied these allegations, stating that sellers set their own prices.
The FTC is also targeting Amazon’s Prime subscription service, arguing that it illegally solidifies the company’s market power. The lawsuit points out that more than half of Amazon’s sales come from third-party merchants who now pay an average commission of over 50 per cent on every sale, up from 35.2 per cent in 2016. The increase is attributed to Amazon raising its Fulfillment by Amazon fees every year and increasing storage fees.
If the lawsuit is successful, FTC chair Lina Khan is likely to seek a court-ordered restructuring of Amazon. The FTC is expected to file its case in federal court rather than its in-house tribunal.
Sources include: Tech Spot
Charles Dickens might have said it best – “it was the best of times, it was the worst of times.” At least for big tech.
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