FTI Consulting News Bytes – 17 November 2023

FTI Consulting News Bytes

This week, we start by looking at the AI chip market as new entrant Microsoft announces two new chips. We then explore developments in the anti-trust case featuring Epic (maker of gaming mega hit Fortnite) and Google. Meanwhile, Meta and TikTok have challenged the EU over “gatekeeper” designations of some of the platforms’ services. Next, we turn to Alibaba’s decision not to spin off its cloud unit, blaming trade tariffs for its U-turn. Finally, we take a look at IBM’s decision to pull its advertising from X in a fresh challenge to the platform’s advertising proposition and safety principles.

This week’s news

Microsoft enters AI chip market 

Microsoft announced two custom-built computing chips, joining other big tech firms that are bringing key technologies in-house. Its general-purpose chip Cobalt and its specialised AI chip Maia will become part of the company’s Azure cloud offering, writes CNBC, and unlike processors developed by Nvidia and AMD, will not be sold to other companies. Whilst Microsoft provided few technical details to enable a fair comparison with other chips on the market, Scott Guthrie, Executive Vice President of Microsoft’s cloud and AI group, pointed to speed, lower cost and higher quality as key differentiators, adds Reuters. 

Epic v Google anti-trust battle continues

Google’s CEO, Sundar Pichai, testified this week as a witness in the antitrust trial between the company he leads and Epic Games, which has accused Google of monopolistic practices enacted through its app store. The Financial Times adds that Pichai was also questioned about Google’s policy of not retaining internal chat history – an issue that has been a matter of contention throughout the trial. Google’s CEO admitted he was following company policy of deleting chat history after 24 hours, in accordance with recommendations from its Chief Legal Officer, Kent Walker. The latter has been summoned to court and will be questioned in due course over failure to preserve internal messages for potential litigation cases. Epic’s CEO, Tim Sweeney, is also expected to testify in the coming weeks.

TikTok and Meta fight EU “gatekeeper” status

The Financial Times reports that tech giants Meta and TikTok are challenging the European Union’s Digital Markets Act (DMA), arguing that their services should not be subject to the new law aimed at making online markets more competitive, set to take effect in Q1 2024. TikTok challenged the EU’s designation that businesses are dependent on its services to reach customers. Meanwhile Meta appealed the decision to designate Facebook’s Messenger and Marketplace as “core” services. Meta said the appeal does not change its commitment to complying with the DMA. The act seeks to increase competition in digital markets, but some critics argue it may stifle innovation among European digital companies. Companies have until March 6 to comply with the new rules. 

US-China trade tariffs blamed for Alibaba’s spinoff U-turn

Alibaba announced it would no longer proceed with a spinoff of its Cloud Intelligence Group, according to the Wall Street Journal. The Company cited US export restrictions on AI chips as the main reason for the reversed decision, due to their material and adverse impact on the cloud unit’s ability to offer products and services under existing contracts. This follows the Biden administration’s move to expand export controls to include sales to Chinese subsidiaries outside the mainland, as the US Department of Commerce considers new rules to restrict Chinese firms’ access to third-party cloud services using advanced chips. WSJ adds that investors are “unhappy”. In March, Alibaba announced its intention to split into six units to stimulate growth across the business and unlock shareholder value. However, appetite for the restructuring has waned, despite the initial positive market reaction, with September seeing Daniel Zhang’s unexpected resignation from his role to lead the cloud unit. 

IBM suspends advertising on X  

IBM froze its advertisements on X after a report published by non-profit Media Matters indicated they appeared next to pro-Nazi content, Reuters writes. The report has found that ads from brands including IBM, Apple, and other global companies were running next to antisemitic content specifically. These findings come after Elon Musk has appeared to personally endorse far-right talking points in his engagement on the social media platform. As the Company’s advertising business continues to struggle following Musk’s decision to cut staff responsible for content monitoring and safety, it remains to be seen whether X will review its content moderation policy. It would seem, however, that CEO Linda Yaccarino’s official stance that X has been “extremely clear about [its] efforts to combat antisemitism and discrimination” is at odds with reported recent actions of the platform’s Chairman.

Top Tweets of the Week

• Walter Isaacson, Former CEO of CNN, Professor at Tulane University: Starship is the most powerful rocket ever made. It’s designed to carry 100 people to Mars. It just received approvals and is scheduled to launch this Friday morning at 8am ET
• Ed Newton-Rex, Composer and Former VP of Audio at Stability AI: I’ve resigned from my role leading the Audio team at Stability AI, because I don’t agree with the company’s opinion that training generative AI models on copyrighted works is ‘fair use’. [The post continues]

Number of the Week

37% – The year-on-year increase in multi extortion ransomware attacks, according to Palo Alto Networks