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us-agency-tasked-with-curbing-risks-of-ai-lacks-funding-to-do-the-job

US agency tasked with curbing risks of AI lacks funding to do the job

AI, NIST, Policy, regulation, syndication / /

more dollars needed —

Lawmakers fear the NIST will have to rely on companies developing the technology.

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They know...

Enlarge / They know…

Aurich / Getty

US president Joe Biden’s plan for containing the dangers of artificial intelligencealready risks being derailed by congressional bean counters.

A White House executive order on AI announced in October calls on the US to develop new standards for stress-testing AI systems to uncover their biases, hidden threats, and rogue tendencies. But the agency tasked with setting these standards, the National Institute of Standards and Technology (NIST), lacks the budget needed to complete that work independently by the July 26, 2024, deadline, according to several people with knowledge of the work.

Speaking at the NeurIPS AI conference in New Orleans last week, Elham Tabassi, associate director for emerging technologies at NIST, described this as “an almost impossible deadline” for the agency.

Some members of Congress have grown concerned that NIST will be forced to rely heavily on AI expertise from private companies that, due to their own AI projects, have a vested interest in shaping standards.

The US government has already tapped NIST to help regulate AI. In January 2023 the agency released an AI risk management framework to guide business and government. NIST has also devised ways to measure public trust in new AI tools. But the agency, which standardizes everything from food ingredients to radioactive materials and atomic clocks, has puny resources compared to those of the companies on the forefront of AI. OpenAI, Google, and Meta each likely spent upwards of $100 million to train the powerful language models that undergird applications such as ChatGPT, Bard, and Llama 2.

NIST’s budget for 2023 was $1.6 billion, and the White House has requested that it be increased by 29 percent in 2024 for initiatives not directly related to AI. Several sources familiar with the situation at NIST say that the agency’s current budget will not stretch to figuring out AI safety testing on its own.

On December 16, the same day Tabassi spoke at NeurIPS, six members of Congress signed a bipartisan open letter raising concern about the prospect of NIST enlisting private companies with little transparency. “We have learned that NIST intends to make grants or awards to outside organizations for extramural research,” they wrote. The letter warns that there does not appear to be any publicly available information about how those awards will be decided.

The lawmakers’ letter also claims that NIST is being rushed to define standards even though research into testing AI systems is at an early stage. As a result there is “significant disagreement” among AI experts over how to work on or even measure and define safety issues with the technology, it states. “The current state of the AI safety research field creates challenges for NIST as it navigates its leadership role on the issue,” the letter claims.

NIST spokesperson Jennifer Huergo confirmed that the agency had received the letter and said that it “will respond through the appropriate channels.”

NIST is making some moves that would increase transparency, including issuing a request for information on December 19, soliciting input from outside experts and companies on standards for evaluating and red-teaming AI models. It is unclear if this was a response to the letter sent by the members of Congress.

The concerns raised by lawmakers are shared by some AI experts who have spent years developing ways to probe AI systems. “As a nonpartisan scientific body, NIST is the best hope to cut through the hype and speculation around AI risk,” says Rumman Chowdhury, a data scientist and CEO of Parity Consultingwho specializes in testing AI models for bias and other problems. “But in order to do their job well, they need more than mandates and well wishes.”

Yacine Jernite, machine learning and society lead at Hugging Face, a company that supports open source AI projects, says big tech has far more resources than the agency given a key role in implementing the White House’s ambitious AI plan. “NIST has done amazing work on helping manage the risks of AI, but the pressure to come up with immediate solutions for long-term problems makes their mission extremely difficult,” Jernite says. “They have significantly fewer resources than the companies developing the most visible AI systems.”

Margaret Mitchell, chief ethics scientist at Hugging Face, says the growing secrecy around commercial AI models makes measurement more challenging for an organization like NIST. “We can’t improve what we can’t measure,” she says.

The White House executive order calls for NIST to perform several tasks, including establishing a new Artificial Intelligence Safety Institute to support the development of safe AI. In April, a UK taskforce focused on AI safety was announced. It will receive $126 million in seed funding.

The executive order gave NIST an aggressive deadline for coming up with, among other things, guidelines for evaluating AI models, principles for “red-teaming” (adversarially testing) models, developing a plan to get US-allied nations to agree to NIST standards, and coming up with a plan for “advancing responsible global technical standards for AI development.”

Although it isn’t clear how NIST is engaging with big tech companies, discussions on NIST’s risk management framework, which took place prior to the announcement of the executive order, involved Microsoft; Anthropic, a startup formed by ex-OpenAI employees that is building cutting-edge AI models; Partnership on AI, which represents big tech companies; and the Future of Life Institute, a nonprofit dedicated to existential risk, among others.

“As a quantitative social scientist, I’m both loving and hating that people realize that the power is in measurement,” Chowdhury says.

This story originally appeared on wired.com.

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Banks use your deposits to loan money to fossil-fuel, emissions-heavy firms

banking, climate change, fossil fuels, Policy, Science, syndication / /

Money for something —

Your $1,000 in the bank creates emissions equal to a flight from NYC to Seattle.

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High angle shot of female hand inserting her bank card into automatic cash machine in the city. Withdrawing money, paying bills, checking account balances and make a bank transfer. Privacy protection, internet and mobile banking security concept

When you drop money in the bank, it looks like it’s just sitting there, ready for you to withdraw. In reality, your institution makes money on your money by lending it elsewhere, including to the fossil fuel companies driving climate change, as well as emissions-heavy industries like manufacturing.

So just by leaving money in a bank account, you’re unwittingly contributing to worsening catastrophes around the world. According to a new analysis, for every $1,000 dollars the average American keeps in savings, each year they indirectly create emissions equivalent to flying from New York to Seattle. “We don’t really take a look at how the banks are using the money we keep in our checking account on a daily basis, where that money is really circulating,” says Jonathan Foley, executive director of Project Drawdown, which published the analysis. “But when we look under the hood, we see that there’s a lot of fossil fuels.”

By switching to a climate-conscious bank, you could reduce those emissions by about 75 percent, the study found. In fact, if you moved $8,000 dollars—the median balance for US customers—the reduction in your indirect emissions would be twice that of the direct emissions you’d avoid if you switched to a vegetarian diet.

Put another way: You as an individual have a carbon footprint—by driving a car, eating meat, running a gas furnace instead of a heat pump—but your money also has a carbon footprint. Banking, then, is an underappreciated yet powerful avenue for climate action on a mass scale. “Not just voting every four years, or not just skipping the hamburger, but also where my money sits, that’s really important,” says Foley.

Just as you can borrow money from a bank, so too do fossil fuel companies and the companies that support that industry—think of building pipelines and other infrastructure. “Even if it’s not building new pipelines, for a fossil fuel company to be doing just its regular operations—whether that’s maintaining the network of gas stations that it owns, or maintaining existing pipelines, or paying its employees—it’s going to need funding for that,” says Paddy McCully, senior analyst at Reclaim Finance, an NGO focused on climate action.

A fossil fuel company’s need for those loans varies from year to year, given the fluctuating prices of those fuels. That’s where you, the consumer, comes in. “The money that an individual puts into their bank account makes it possible for the bank to then lend money to fossil fuel companies,” says Richard Brooks, climate finance director at Stand.earth, an environmental and climate justice advocacy group. “If you look at the top 10 banks in North America, each of them lends out between $20 billion and $40 billion to fossil fuel companies every year.”

The new report finds that on average, 11 of the largest US banks lend 19.4 percent of their portfolios to carbon-intensive industries. (The American Bankers Association did not immediately respond to a request to comment for this story.) To be very clear: Oil, gas, and coal companies wouldn’t be able to keep producing these fuels—when humanity needs to be reducing carbon emissions dramatically and rapidly—without these loans. New fossil fuel projects aren’t simply fleeting endeavors, but will operate for years, locking in a certain amount of emissions going forward.

At the same time, Brooks says, big banks are under-financing the green economy. As a civilization, we’re investing in the wrong kind of energy if we want to avoid the ever-worsening effects of climate change. Yes, 2022 was the first year that climate finance surpassed the trillion-dollar mark. “However, the alarming aspect is that climate finance must increase by at least fivefold annually, as swiftly as possible, to mitigate the worst impacts of climate change,” says Valerio Micale, senior manager of the Climate Policy Initiative. “An even more critical consideration is that this cost, which would accumulate to $266 trillion until 2050, pales in comparison to the costs of inaction, estimated at over $2,000 trillion over the same period.”

Smaller banks, at least, are less likely to be providing money for the fossil fuel industry. A credit union operates more locally, so it’s much less likely to be fronting money for, say, a new oil pipeline. “Big fossil fuel companies go to the big banks for their financing,” says Brooks. “They’re looking for loans in the realm of hundreds of millions of dollars, sometimes multibillion-dollar loans, and a credit union wouldn’t be able to provide that.”

This makes banking a uniquely powerful lever to pull when it comes to climate action, Foley says. Compared to switching to vegetarianism or veganism to avoid the extensive carbon emissions associated with animal agriculture, money is easy to move. “If large numbers of people start to tell their financial institutions that they don’t really want to participate in investing in fossil fuels, that slowly kind of drains capital away from what’s available for fossil fuels,” says Foley.

While the new report didn’t go so far as to exhaustively analyze the lending habits of the thousands of banks in the US, Foley says there’s a growing number that deliberately don’t invest in fossil fuels. If you’re not sure about what your bank is investing in, you can always ask. “I think when people hear we need to move capital out of fossil fuels into climate solutions, they probably think only Warren Buffett can do that,” says Foley. “That’s not entirely true. We can all do a little bit of that.”

This story originally appeared on wired.com.

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Apple wants AI to run directly on its hardware instead of in the cloud

AI, Apple, IPhone, LLMs, syndication / /

Making Siri smarter —

iPhone maker wants to catch up to its rivals when it comes to AI.

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The iPhone 15 Pro.

Enlarge / The iPhone 15 Pro.

Apple

Apple’s latest research about running large language models on smartphones offers the clearest signal yet that the iPhone maker plans to catch up with its Silicon Valley rivals in generative artificial intelligence.

The paper, entitled “LLM in a Flash,” offers a “solution to a current computational bottleneck,” its researchers write.

Its approach “paves the way for effective inference of LLMs on devices with limited memory,” they said. Inference refers to how large language models, the large data repositories that power apps like ChatGPT, respond to users’ queries. Chatbots and LLMs normally run in vast data centers with much greater computing power than an iPhone.

The paper was published on December 12 but caught wider attention after Hugging Face, a popular site for AI researchers to showcase their work, highlighted it late on Wednesday. It is the second Apple paper on generative AI this month and follows earlier moves to enable image-generating models such as Stable Diffusion to run on its custom chips.

Device manufacturers and chipmakers are hoping that new AI features will help revive the smartphone market, which has had its worst year in a decade, with shipments falling an estimated 5 percent, according to Counterpoint Research.

Despite launching one of the first virtual assistants, Siri, back in 2011, Apple has been largely left out of the wave of excitement about generative AI that has swept through Silicon Valley in the year since OpenAI launched its breakthrough chatbot ChatGPT. Apple has been viewed by many in the AI community as lagging behind its Big Tech rivals, despite hiring Google’s top AI executive, John Giannandrea, in 2018.

While Microsoft and Google have largely focused on delivering chatbots and other generative AI services over the Internet from their vast cloud computing platforms, Apple’s research suggests that it will instead focus on AI that can run directly on an iPhone.

Apple’s rivals, such as Samsung, are gearing up to launch a new kind of “AI smartphone” next year. Counterpoint estimated more than 100 million AI-focused smartphones would be shipped in 2024, with 40 percent of new devices offering such capabilities by 2027.

The head of the world’s largest mobile chipmaker, Qualcomm chief executive Cristiano Amon, forecast that bringing AI to smartphones would create a whole new experience for consumers and reverse declining mobile sales.

“You’re going to see devices launch in early 2024 with a number of generative AI use cases,” he told the Financial Times in a recent interview. “As those things get scaled up, they start to make a meaningful change in the user experience and enable new innovation which has the potential to create a new upgrade cycle in smartphones.”

More sophisticated virtual assistants will be able to anticipate users’ actions such as texting or scheduling a meeting, he said, while devices will also be capable of new kinds of photo editing techniques.

Google this month unveiled a version of its new Gemini LLM that will run “natively” on its Pixel smartphones.

Running the kind of large AI model that powers ChatGPT or Google’s Bard on a personal device brings formidable technical challenges, because smartphones lack the huge computing resources and energy available in a data center. Solving this problem could mean that AI assistants respond more quickly than they do from the cloud and even work offline.

Ensuring that queries are answered on an individual’s own device without sending data to the cloud is also likely to bring privacy benefits, a key differentiator for Apple in recent years.

“Our experiment is designed to optimize inference efficiency on personal devices,” its researchers said. Apple tested its approach on models including Falcon 7B, a smaller version of an open source LLM originally developed by the Technology Innovation Institute in Abu Dhabi.

Optimizing LLMs to run on battery-powered devices has been a growing focus for AI researchers. Academic papers are not a direct indicator of how Apple intends to add new features to its products, but they offer a rare glimpse into its secretive research labs and the company’s latest technical breakthroughs.

“Our work not only provides a solution to a current computational bottleneck but also sets a precedent for future research,” wrote Apple’s researchers in the conclusion to their paper. “We believe as LLMs continue to grow in size and complexity, approaches like this work will be essential for harnessing their full potential in a wide range of devices and applications.”

Apple did not immediately respond to a request for comment.

Apple wants AI to run directly on its hardware instead of in the cloud Read More »

adobe-gives-up-on-$20-billion-acquisition-of-figma

Adobe gives up on $20 billion acquisition of Figma

adobe, antitrust, competition, EU, Policy, syndication, UK / /

No deal —

Competition probes in the EU and UK made regulatory approval dicey.

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Adobe and Figma logos

Adobe has abandoned its proposed $20 billion acquisition of product design software company Figma, as there was “no clear path to receive necessary regulatory approvals” from UK and EU watchdogs.

The deal had faced probes from both the UK and EU competition regulators for fears it would have an impact on the product design, image editing, and illustration markets.

Adobe refused to offer remedies to satisfy the UK Competition and Markets Authority’s concerns last week, according to a document published by the regulator on Monday, arguing that a divestment would be “wholly disproportionate.”

Hours later, the two companies issued a mutual statement terminating the merger, citing the regulatory challenges. Adobe will pay Figma $1 billion in a termination fee under the terms of the merger agreement.

“Adobe and Figma strongly disagree with the recent regulatory findings, but we believe it is in our respective best interests to move forward independently,” said Shantanu Narayen, chair and chief executive of Adobe.

The companies had been battling multiple regulatory challenges, with the EU’s executive body, the European Commission, publishing a statement of objections to the deal last month arguing the takeover could “significantly reduce competition in the global markets.”

Margrethe Vestager, the EU’s competition commissioner, said: “By combining these two companies, the proposed acquisition would have terminated all current and prevented all future competition between them. Our in-depth investigation showed that this would lead to higher prices, reduced quality or less choice for customers.”

Competition regulators around the world have sent mixed signals over the aspirations of Big Tech groups hoping to acquire promising start-ups and potential rivals, at a time when public markets have been largely closed to new listings.

The EU’s antitrust watchdog has made a formal objection to Amazon’s $1.7 billion proposed purchase of Roomba-maker iRobot. However, Microsoft was able to complete its $75 billion takeover of games maker Activision after it made revisions to the deal to appease UK regulators.

Speaking with the Financial Times last week, Figma chief executive Dylan Field said: “It is important that those paths of acquisition remain available because very few companies make it all the way to IPO. So many companies fail on the way.”

Shares in Adobe were up almost 2 percent in pre-market trading. Since the deal was announced, Adobe has turned its focus to embedding generative artificial intelligence into its products by, for example, enabling users to create novel stock imagery with AI.

The huge price that Adobe was willing to pay for San Francisco-based Figma had been seen by critics of the deal as an effort to quash the software giant’s most promising new rival in decades.

The deal, which was first negotiated during the COVID-19 pandemic’s boom in tech investment and announced in September 2022, would have valued Figma at roughly 50 times its annual recurring revenue, and double its last private funding round in 2021.

The companies were expected to appear in front of the CMA to contest the regulator’s provisional findings on Thursday this week.

Under its proposed remedies in November, the CMA said it was considering either prohibiting the deal or demanding the divestiture of overlapping operations, such as Adobe’s Illustrator or Photoshop, or Figma’s core product, Figma Design.

Field said that the latter suggestion left him amazed at “the idea of buying a company so you can divest the company.”

“When I read that document and saw that was one of the proposals, I thought it was quite amusing; it felt like a bit of a punchline to a joke. I was surprised to see that as a proposal from the agency.” In a statement on Monday, Field said he was “disappointed in the outcome.”

Earlier on Monday, the CMA had published the companies’ responses to its provisional findings, which Adobe and Figma said contained “serious errors of law and fact” and took “an irrational approach to the gathering and appraisal of evidence.”

“Requiring a multibillion-dollar global divestment of Photoshop or Illustrator in order to address an uncertain and speculative theory of harm is wholly disproportionate,” they wrote.

© 2023 The Financial Times Ltd. All rights reserved. Not to be redistributed, copied, or modified in any way.

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how-microsoft’s-cybercrime-unit-has-evolved-to-combat-increased-threats

How Microsoft’s cybercrime unit has evolved to combat increased threats

Biz & IT, cybercrime, microsoft, Security, syndication / /

a more sophisticated DCU —

Microsoft has honed its strategy to disrupt global cybercrime and state-backed actors.

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Microsoft's Cybercrime Center.

Microsoft’s Cybercrime Center.

Microsoft

Governments and the tech industry around the world have been scrambling in recent years to curb the rise of online scamming and cybercrime. Yet even with progress on digital defenses, enforcement, and deterrence, the ransomware attacks, business email compromises, and malware infections keep on coming. Over the past decade, Microsoft’s Digital Crimes Unit (DCU) has forged its own strategies, both technical and legal, to investigate scams, take down criminal infrastructure, and block malicious traffic.

The DCU is fueled, of course, by Microsoft’s massive scale and the visibility across the Internet that comes from the reach of Windows. But DCU team members repeatedly told WIRED that their work is motivated by very personal goals of protecting victims rather than a broad policy agenda or corporate mandate.

In just its latest action, the DCU announced Wednesday evening efforts to disrupt a cybercrime group that Microsoft calls Storm-1152. A middleman in the criminal ecosystem, Storm-1152 sells software services and tools like identity verification bypass mechanisms to other cybercriminals. The group has grown into the number one creator and vendor of fake Microsoft accounts—creating roughly 750 million scam accounts that the actor has sold for millions of dollars.

The DCU used legal techniques it has honed over many years related to protecting intellectual property to move against Storm-1152. The team obtained a court order from the Southern District of New York on December 7 to seize some of the criminal group’s digital infrastructure in the US and take down websites including the services 1stCAPTCHA, AnyCAPTCHA, and NoneCAPTCHA, as well as a site that sold fake Outlook accounts called Hotmailbox.me.

The strategy reflects the DCU’s evolution. A group with the name “Digital Crimes Unit” has existed at Microsoft since 2008, but the team in its current form took shape in 2013 when the old DCU merged with a Microsoft team known as the Intellectual Property Crimes Unit.

“Things have become a lot more complex,” says Peter Anaman, a DCU principal investigator. “Traditionally you would find one or two people working together. Now, when you’re looking at an attack, there are multiple players. But if we can break it down and understand the different layers that are involved it will help us be more impactful.”

The DCU’s hybrid technical and legal approach to chipping away at cybercrime is still unusual, but as the cybercriminal ecosystem has evolved—alongside its overlaps with state-backed hacking campaigns—the idea of employing creative legal strategies in cyberspace has become more mainstream. In recent years, for example, Meta-owned WhatsApp and Apple both took on the notorious spyware maker NSO Group with lawsuits.

Still, the DCU’s particular progression was the result of Microsoft’s unique dominance during the rise of the consumer Internet. As the group’s mission came into focus while dealing with threats from the late 2000s and early 2010s—like the widespread Conficker worm—the DCU’s unorthodox and aggressive approach drew criticism at times for its fallout and potential impacts on legitimate businesses and websites.

“There’s simply no other company that takes such a direct approach to taking on scammers,” WIRED wrote in a story about the DCU from October 2014. “That makes Microsoft rather effective, but also a little bit scary, observers say.”

Richard Boscovich, the DCU’s assistant general counsel and a former assistant US attorney in Florida’s Southern District, told WIRED in 2014 that it was frustrating for people within Microsoft to see malware like Conficker rampage across the web and feel like the company could improve the defenses of its products, but not do anything to directly deal with the actors behind the crimes. That dilemma spurred the DCU’s innovations and continues to do so.

“What’s impacting people? That’s what we get asked to take on, and we’ve developed a muscle to change and to take on new types of crime,” says Zoe Krumm, the DCU’s director of analytics. In the mid-2000s, Krumm says, Brad Smith, now Microsoft’s vice chair and president, was a driving force in turning the company’s attention toward the threat of email spam.

“The DCU has always been a bit of an incubation team. I remember all of a sudden, it was like, ‘We have to do something about spam.’ Brad comes to the team and he’s like, ‘OK, guys, let’s put together a strategy.’ I’ll never forget that it was just, ‘Now we’re going to focus here.’ And that has continued, whether it be moving into the malware space, whether it be tech support fraud, online child exploitation, business email compromise.”

How Microsoft’s cybercrime unit has evolved to combat increased threats Read More »

this-“smoking-gun”-killed-the-mcdonald’s-ice-cream-hackers’-startup

This “smoking gun” killed the McDonald’s ice cream hackers’ startup

DMCA, DMCA abuse, ice cream, mcdonalds, Policy, Science, syndication / /
Vanilla Soft Serve Ice Cream Cone

A little over three years have passed since McDonald’s sent out an email to thousands of its restaurant owners around the world that abruptly cut short the future of a three-person startup called Kytch—and with it, perhaps one of McDonald’s best chances for fixing its famously out-of-order ice cream machines.

Until then, Kytch had been selling McDonald’s restaurant owners a popular Internet-connected gadget designed to attach to their notoriously fragile and often broken soft-serve McFlurry dispensers, manufactured by McDonald’s equipment partner Taylor. The Kytch device would essentially hack into the ice cream machine’s internals, monitor its operations, and send diagnostic data over the Internet to an owner or manager to help keep it running. But despite Kytch’s efforts to solve the Golden Arches’ intractable ice cream problems, a McDonald’s email in November 2020 warned its franchisees not to use Kytch, stating that it represented a safety hazard for staff. Kytch says its sales dried up practically overnight.

Now, after years of litigation, the ice-cream-hacking entrepreneurs have unearthed evidence that they say shows that Taylor, the soft-serve machine maker, helped engineer McDonald’s Kytch-killing email—kneecapping the startup not because of any safety concern, but in a coordinated effort to undermine a potential competitor. And Taylor’s alleged order, as Kytch now describes it, came all the way from the top.

On Wednesday, Kytch filed a newly unredacted motion for summary adjudication in its lawsuit against Taylor for alleged trade libel, tortious interference, and other claims. The new motion, which replaces a redacted version from August, refers to internal emails Taylor released in the discovery phase of the lawsuit, which were quietly unsealed over the summer. The motion focuses in particular on one email from Timothy FitzGerald, the CEO of Taylor parent company Middleby, that appears to suggest that either Middleby or McDonald’s send a communication to McDonald’s franchise owners to dissuade them from using Kytch’s device.

“Not sure if there is anything we can do to slow up the franchise community on the other solution,” FitzGerald wrote on October 17, 2020. “Not sure what communication from either McD or Midd can or will go out.”

In their legal filing, the Kytch co-founders, of course, interpret “the other solution” to mean their product. In fact, FitzGerald’s message was sent in an email thread that included Middleby’s then COO, David Brewer, who had wondered earlier whether Middleby could instead acquire Kytch. Another Middleby executive responded to FitzGerald on October 17 to write that Taylor and McDonald’s had already met the previous day to discuss sending out a message to franchisees about McDonald’s lack of support for Kytch.

But Jeremy O’Sullivan, a Kytch co-founder, claims—and Kytch argues in its legal motion—that FitzGerald’s email nonetheless proves Taylor’s intent to hamstring a potential competitor. “It’s the smoking gun,” O’Sullivan says of the email. “He’s plotting our demise.”

Although FitzGerald’s email doesn’t actually order anyone to act against Kytch, the company’s motion argues that Taylor played a key role in what happened next. It’s an “ambiguous yet direct message to his underlings,” argues Melissa Nelson, Kytch’s other co-founder. “It’s just like a mafia boss giving coded instructions to his team to whack someone.”

On November 2, 2020, a little over two weeks after FitzGerald’s open-ended suggestion that perhaps a “communication” from McDonald’s or Middleby to franchisees could “slow up” adoption of “the other solution,” McDonald’s sent out its email blast cautioning restaurant owners not to use Kytch’s product.

The email stated that the Kytch gadget “allows complete access to all aspects of the equipment’s controller and confidential data”—meaning Taylor’s and McDonald’s data, not the restaurant owners’ data; that it “creates a potential very serious safety risk for the crew or technician attempting to clean or repair the machine”; and finally, that it could cause “serious human injury.” The email concluded with a warning in italics and bold: “McDonald’s strongly recommends that you remove the Kytch device from all machines and discontinue use.”

This “smoking gun” killed the McDonald’s ice cream hackers’ startup Read More »

elon-musk-told-bankers-they-wouldn’t-lose-any-money-on-twitter-purchase

Elon Musk told bankers they wouldn’t lose any money on Twitter purchase

elon musk, Policy, syndication, Twitter, X / /

Value destruction —

Lenders unlikely to get even 60 cents on the dollar for the bonds and loans.

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Elon Musk and a twitter logo

Elon Musk privately told some of the bankers who lent him $13 billion to fund his leveraged buyout of Twitter that they would not lose any money on the deal, according to five people familiar with the matter.

The verbal guarantees were made by Musk to banks as a way to reassure the lenders as the value of the social media site, now rebranded as X, fell sharply after he completed the acquisition last year.

Despite the assurances, the seven banks that lent money to the billionaire for his buyout—Morgan Stanley, Bank of America, Barclays, MUFG, BNP Paribas, Mizuho and Société Générale—are facing serious losses on the debt if and when they eventually sell it.

The sources did not specify when Musk’s assurances were made, although one noted Musk had made them on several occasions. But the billionaire’s behavior, both in attempting to back out of the takeover in 2022 and more recently in alienating advertisers, has more broadly stymied the banks’ efforts to offload the debt since he engineered the takeover.

Large hedge funds and credit investors on Wall Street held conversations with the banks late last year, offering to buy the senior-most portion of the debt at roughly 65 cents on the dollar. But in recent interviews with the Financial Times, several said there was no price at which they would buy the bonds and loans, given their inability to gauge whether Linda Yaccarino, X’s chief executive, could turn the business around.

One multibillion-dollar firm that specializes in distressed debt called X’s debt “uninvestable.”

Selling the $12.5 billion of bonds and loans below 60 cents on the dollar—a price many investors believe the banks would be lucky to achieve in the current market—would imply losses before accounting for X’s interest payments of $4 billion or more, writedowns that have not yet been publicly reported by the syndicate of lenders, according to FT calculations. The debt is split between $6.5 billion of term loans, as well as $6 billion of senior and junior bonds and a $500 million revolver.

Morgan Stanley, Bank of America, Barclays, MUFG, BNP Paribas, Mizuho and Société Générale declined to comment. A spokesperson for X declined to comment. Musk did not return a request for comment.

The banks have held the debt on their balance sheets instead of selling at a steep loss in the hope that X’s performance will improve following a series of cost-cutting measures. Several people involved in the transaction noted that there was no plan to sell the debt imminently, with one saying there was no guarantee the banks would be able to offload the debt even in 2024.

The people involved in the deal cautioned that Musk’s guarantee was not based on any formal contract. One said they understood it as a boastful statement that the entrepreneur had never let his lenders down.

“I have never lost money for those who invest in me and I am not starting now,” he told Axios earlier this month, when asked about a separate fundraising push by his company X.ai Corp.

Some on Wall Street view Musk’s personal guarantees with skepticism, given that he tried to back out of his agreement to buy Twitter despite a watertight contract, before relenting.

Nevertheless, the guarantee from a man whose net worth Forbes pegs at about $243 billion has helped some of the bankers make the pitch to their internal committees that they can ascribe a higher price to the debt while they hold it on their balance sheets.

Morgan Stanley, the largest lender on the deal, in January disclosed $356 million in mark-to-market losses on corporate loans it planned to sell and loan hedges. Banks rarely report specific losses tied to an individual bond or loan, and often report write-downs of multiple deals together.

Wall Street was saddled with the Twitter buyout loan at the same time they were holding a smattering of other hung bridge loans—deals they were forced to fund themselves after failing to raise cash in public bond and loan markets. The FT has previously reported on large losses tied to other hung loans at the time, including the buyouts of technology company Citrix and television rating provider Nielsen.

How the debt has been marked on bank balance sheets has been an open question for traders and investors across Wall Street, given how much X’s business has deteriorated since Musk bought the company.

Musk, already out of favor with marketers for loosening content moderation, last month lost more advertisers after endorsing an antisemitic post. In November he followed by telling brands that were boycotting the business over his actions to “go fuck” themselves, criticizing Disney’s Bob Iger in particular.

According to a report last week from market intelligence firm Sensor Tower, in November 2023 total US ad spend among the top 100 advertisers on X was down nearly 45 percent compared with October 2022, prior to Musk’s takeover.

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why-scientists-are-making-transparent-wood

Why scientists are making transparent wood

Science, syndication, transparent displays / /

a potential sustainable material —

The material is being exploited for smartphone screens, insulated windows, and more.

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a transparent piece of wood on top of a green leaf

Enlarge / See-through wood has a number of interesting properties that researchers hope to exploit.

Thirty years ago, a botanist in Germany had a simple wish: to see the inner workings of woody plants without dissecting them. By bleaching away the pigments in plant cells, Siegfried Fink managed to create transparent wood, and he published his technique in a niche wood technology journal. The 1992 paper remained the last word on see-through wood for more than a decade, until a researcher named Lars Berglund stumbled across it.

Berglund was inspired by Fink’s discovery, but not for botanical reasons. The materials scientist, who works at KTH Royal Institute of Technology in Sweden, specializes in polymer composites and was interested in creating a more robust alternative to transparent plastic. And he wasn’t the only one interested in wood’s virtues. Across the ocean, researchers at the University of Maryland were busy on a related goal: harnessing the strength of wood for nontraditional purposes.

Now, after years of experiments, the research of these groups is starting to bear fruit. Transparent wood could soon find uses in super-strong screens for smartphones; in soft, glowing light fixtures; and even as structural features, such as color-changing windows.

“I truly believe this material has a promising future,” says Qiliang Fu, a wood nanotechnologist at Nanjing Forestry University in China who worked in Berglund’s lab as a graduate student.

Wood is made up of countless little vertical channels, like a tight bundle of straws bound together with glue. These tube-shaped cells transport water and nutrients throughout a tree, and when the tree is harvested and the moisture evaporates, pockets of air are left behind. To create see-through wood, scientists first need to modify or get rid of the glue, called lignin, that holds the cell bundles together and provides trunks and branches with most of their earthy brown hues. After bleaching lignin’s color away or otherwise removing it, a milky-white skeleton of hollow cells remains.

This skeleton is still opaque, because the cell walls bend light to a different degree than the air in the cell pockets does—a value called a refractive index. Filling the air pockets with a substance like epoxy resin that bends light to a similar degree to the cell walls renders the wood transparent.

The material the scientists worked with is thin—typically less than a millimeter to around a centimeter thick. But the cells create a sturdy honeycomb structure, and the tiny wood fibers are stronger than the best carbon fibers, says materials scientist Liangbing Hu, who leads the research group working on transparent wood at the University of Maryland in College Park. And with the resin added, transparent wood outperforms plastic and glass: In tests measuring how easily materials fracture or break under pressure, transparent wood came out around three times stronger than transparent plastics like Plexiglass and about 10 times tougher than glass.

“The results are amazing, that a piece of wood can be as strong as glass,” says Hu, who highlighted the features of transparent wood in the 2023 Annual Review of Materials Research.

The process also works with thicker wood but the view through that substance is hazier because it scatters more light. In their original studies from 2016, Hu and Berglund both found that millimeter-thin sheets of the resin-filled wood skeletons let through 80 to 90 percent of light. As the thickness gets closer to a centimeter, light transmittance drops: Berglund’s group reported that 3.7-millimeter-thick wood—roughly two pennies thick—transmitted only 40 percent of light.

The slim profile and strength of the material means it could be a great alternative to products made from thin, easily shattered cuts of plastic or glass, such as display screens. The French company Woodoo, for example, uses a similar lignin-removing process in its wood screens, but leaves a bit of lignin to create a different color aesthetic. The company is tailoring its recyclable, touch-sensitive digital displays for products, including car dashboards and advertising billboards.

But most research has centered on transparent wood as an architectural feature, with windows a particularly promising use, says Prodyut Dhar, a biochemical engineer at the Indian Institute of Technology Varanasi. Transparent wood is a far better insulator than glass, so it could help buildings retain heat or keep it out. Hu and colleagues have also used polyvinyl alcohol, or PVA—a polymer used in glue and food packaging—to infiltrate the wood skeletons, making transparent wood that conducts heat at a rate five times lower than that of glass, the team reported in 2019 in Advanced Functional Materials.

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the-quest-to-turn-basalt-dust-into-a-viable-climate-solution

The quest to turn basalt dust into a viable climate solution

carbon capture, climate adaptation, climate adaptation strategies, Science, syndication / /
The quest to turn basalt dust into a viable climate solution

Mary Yap has spent the last year and a half trying to get farmers to fall in love with basalt. The volcanic rock is chock full of nutrients, captured as its crystal structure forms from cooling magma, and can make soil less acidic. In that way it’s like limestone, which farmers often use to improve their soil. It’s a little more finicky to apply, and certainly less familiar. But basalt also comes with an important side benefit: It can naturally capture carbon from the atmosphere.

Yap’s pitch is part of a decades-long effort to scale up that natural weathering process and prove that it can lock carbon away for long enough to make a different to the climate. “The bottleneck is getting farmers to want to do this,” Yap says.

On Thursday, Yap’s young startup, Lithos Carbon, got a $57.1 million boost for its quest to turn basalt dust into a viable climate solution. It came from Frontier, a benefit corporation backed by a consortium of companies aiming to finance promising approaches to carbon dioxide removal, or CDR. Lithos says it will use the funds to soak up 154,000 tons of CO2 by 2028, by sprinkling basalt dust on thousands of acres of US farmland. The average US car emits about 4 tons of CO2 each year.

The carbon removal purchase is the largest yet by Frontier, which was formed last year with nearly $1 billion from its tech-dominated members. Many of those companies, which include Meta, Alphabet, and payments processor Stripe, which owns Frontier, have made climate pledges that require not only reducing the emissions from their operations and supply chains but also “negative emissions”—sucking up carbon from the atmosphere to cancel out other emissions.

That accounting trick has been easier to prove out on paper than in practice. Many companies would have once turned to buying carbon offsets from activities like protecting forests that would otherwise be felled. But some have been trying to move away from those scandal-plagued and often short-lived approaches and into more durable techniques for carbon removal.

The current options for companies seeking negative emissions are limited. Frontier’s purchases are essentially down payments on ideas that are still in their infancy—generally too hard to verify or too expensive, or both, to attract a significant customer base. “What we’re trying to evaluate the field on is whether it’s on the trajectory to get to climate-relevant scale,” says Nan Ransohoff, who leads Frontier and also climate work at Stripe. The group starts with small “prepurchases” meant to help promising startups, and then moves on to “offtake” agreements for larger amounts of carbon that its members can count toward their emissions goals.

The Lithos purchase is one of those larger deals. It prices carbon removals at $370 per ton, about a quarter of which will pay for field monitoring and modeling to verify that carbon is being sequestered away from the atmosphere for the long term. Ransohoff says Frontier believes that Lithos is on a path to its goal of removing CO2 for customers at a cost of less than $100 per ton, and at a rate of at least a half a billion tons per year.

“Most promising” approach

Lithos, founded in 2022, is developing a technology called enhanced rock weathering. It involves spreading a fine dust of basalt across fields before planting. As the rock further weathers from rainfall, it reacts with CO2 in the air. That forms bicarbonate, which locks away the carbon by combining it with hydrogen and oxygen atoms. Ultimately, the compound is washed into the ocean, where the carbon should stay put.

The strategy has the benefit of piggybacking on things that humans already do, Yap says. That’s in contrast with techniques like direct air capture, which involves building industrial plants that suck carbon out of the atmosphere. It’s easy to measure carbon removed that way—it’s all captured there onsite—but critics say it will be difficult to scale up because removing enough carbon to make a difference will require thousands of dedicate, resource-intensive facilities.

Using basalt dust to capture carbon should be more easily scaled up. There are plenty of fields to dump rock dust onto, and plenty of water for carbon to end up in. But the distributed nature of the process also makes measuring how much carbon was actually removed from the atmosphere more difficult.

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EU agrees to landmark rules on artificial intelligence

AI, AI law, Biz & IT, European Union, syndication / /

Get ready for some restrictions, Big Tech —

Legislation lays out restrictive regime for emerging technology.

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EU Commissioner Thierry Breton talks to media during a press conference in June.

Enlarge / EU Commissioner Thierry Breton talks to media during a press conference in June.

Thierry Monasse | Getty Images

European Union lawmakers have agreed on the terms for landmark legislation to regulate artificial intelligence, pushing ahead with enacting the world’s most restrictive regime on the development of the technology.

Thierry Breton, EU commissioner, confirmed in a post on X that a deal had been reached.

He called it a historic agreement. “The EU becomes the very first continent to set clear rules for the use of AI,” he wrote. “The AIAct is much more than a rulebook—it’s a launchpad for EU start-ups and researchers to lead the global AI race.”

The deal followed years of discussions among member states and politicians on the ways AI should be curbed to have humanity’s interest at the heart of the legislation. It came after marathon discussions that started on Wednesday this week.

Members of the European Parliament have spent years arguing over their position before it was put forward to member states and the European Commission, the executive body of the EU. All three—countries, politicians, and the commission—must agree on the final text before it becomes law.

European companies have expressed their concern that overly restrictive rules on the technology, which is rapidly evolving and gained traction after the popularisation of OpenAI’s ChatGPT, will hamper innovation. Last June, dozens of some of the largest European companies, such as France’s Airbus and Germany’s Siemens, said the rules were looking too tough to nurture innovation and help local industries.

Last month, the UK hosted a summit on AI safety, leading to broad commitments from 28 nations to work together to tackle the existential risks stemming from advanced AI. That event attracted leading tech figures such as OpenAI’s Sam Altman, who has previously been critical of the EU’s plans to regulate the technology.

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