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Saturday, June 17, 2023

As Congress races to regulate AI, tech execs want to show them how. - The Washington Post

Congress is racing to regulate AI. Silicon Valley is eager to teach them how.

"Lawmakers are flocking to private meetings, dinners and briefings with AI experts — including CEOs of the companies they’re trying to regulate

The overnight success of AI-powered ChatGPT has triggered a frenzy among Washington lawmakers to draft new laws to address the burgeoning field of artificial intelligence. (Jabin Botsford/The Washington Post)

When Rep. Jerry McNerney took over the House caucus dedicated to artificial intelligence in 2018, his colleagues were not all that interested.

“There was difficulty getting members to attend our meetings,” the California Democrat said, estimating that a typical session would draw about 18 or 20 lawmakersfrom the 435-person body.

McNerney’s counterparts across the Atlantic felt the lack of enthusiasm, too. Brussels was expanding efforts to regulate the technology in 2020, but when Dragos Tudorache, a Romanian member of the European Parliament who co-leads AI work, contacted the U.S. caucus, there seemed to be little political momentum.

That’s changed. The overnight success of AI-powered ChatGPT has triggered a frenzy among Washington lawmakers to draft new laws addressing the promise and peril of the burgeoning field. When Tudorache visited Washington last month, he witnessed a tumult of activity around AI and attended a bipartisan briefing with OpenAI CEO Sam Altman.

“There is a different mood,” Tudorache said in an interview.

But tackling the swiftly evolving technology requires a sophisticated understanding of complicated systems that back AI, which sometimes confound even experts. Congressional salary caps that pale in comparison to Silicon Valley’s sky-high paychecks make it difficult to retain staff technologists, putting lawmakers at a disadvantage in getting up to speed — a goal that has become increasingly urgent as the European Union has leaped ahead of Washington, advancing robust AI legislation just this week.

To catch up, members of Congress and their staffs are seeking a crash course on AI. With Senate Majority Leader Charles E. Schumer (D-N.Y.) preparing to unveil a plan Wednesday for how Congress could regulate AI, lawmakers are suddenly crowding into briefings with top industry executives, summoning leading academics for discussions and taking other steps to try to wrap their heads around the emerging field.

Lawmakers’ gaps in technical expertise have provided an opening for corporate interests. Executives motivated to develop AI without hindrance are flocking to Washington, eager to lend a hand in lawmakers’ education — and influence policy.Schumer said his office has met with close to 100 outside experts, including “CEOs of companies who do AI, scientists, AI academics, leaders in the industry of many different viewpoints, and critics of AI” — among them Microsoft president Brad Smithand Tesla CEO Elon Musk.

This charm offensive has left some consumer advocates uneasy that lawmakers might let the industry write its own rules — which some executives are outright recommending. In an interview this spring, former Google CEO Eric Schmidt argued that the industry, not the government, should be setting “reasonable boundaries” for the future of AI.

“There’s no way a non-industry person can understand what is possible. It’s just too new, too hard. There’s not the expertise,” Schmidt told NBC. “There’s no one in the government who can get it right. But the industry can roughly get it right.”

Other industry leaders are taking a different tact, blitzing Congress with their vision for how Washington should regulate their companies. Altman in May had private meetings and a dinner with lawmakers, where he demonstrated — to their amusement — how ChatGPT could write a speech for them to deliver on the chamber floor. Smith has given legislators a lesson on the technical stack that underpins generative AI models like ChatGPT, including computing infrastructure and applications. And Smith recently unveiled his blueprint for AI regulation at a speech in Washington attended by half a dozen lawmakers.

The stereotyped view that Congress doesn’t understand technology — bolstered by high-profile gaffes in key tech hearings — is “outdated,” Smith said, adding that he is “optimistic” about Congress’s ability to keep pace with AI advances.

Regular briefings have imparted a more formal education. Senate and House leaders have hosted AI discussions with MIT professors, where they reviewed the basics of how AI works and examined challenges with the technology, including how it can exacerbate existing biases.

At a Tuesday briefing with MIT professor Antonio Torralba organized by Schumer’s office, some lawmakers asked basic questions, including how AI learns and where it gets data, said Sen. Jacky Rosen (D-Nev.), a former computer programmer who left the session early.

“They are putting a lot of time and effort into coming up to speed on AI,” said Aleksander Madry, a MIT professor who spoke at a briefing in April arranged by House Speaker Kevin McCarthy (R-Calif.). Madry has since gone on a professional leave and is working at OpenAI.

Sen. Ted Cruz (R-Tex.) has expressed skepticism about these efforts, suggesting that his colleagues’ tech acumen was irredeemably deficient.

“To be honest, Congress doesn’t know what the hell it’s doing in this area,” Cruz said, donning ear buds as he video-conferenced into a Politico tech summit. “This is an institution [where] I think the median age in the Senate is about 142. This is not a tech savvy group.”

Sen. Mark R. Warner (D-Va.), who previously worked as a venture capitalist, brought in researchers and industry leaders to speak to senators after Schumer’s all-member briefing. His guests included a mix of experts, including Microsoft’s chief scientific officer, Eric Horvitz, Center for Security and Emerging Technology executive director Dewey Murdick and deputy national security adviser Anne Neuberger, according to Warner spokeswoman Rachel Cohen.

“Lots of us are all on different paths of our learning curve,” Warner told reporters Tuesday.

The uptick in AI briefings and strong attendance is a major shift for Congress, where a handful of members — some of whom hold degrees in computer science — have long struggled to capture the attention of their peers. Congress hosted its first hearing on AI in 2016, according to Cruz, who said he chaired the session. House lawmakers launched an AI caucus in 2017, and their Senate counterparts launched a similar initiative in 2019.

The rise of generative AI has finally awakened interest in such efforts. Rep. Mark Takano (D-Calif.) said AI is going to impact “every jurisdiction of Congress,” and argues that lawmakers need to respond by reviving the Capitol’s tech think tank, the Office of Technology Assessment, which lawmakers defunded during partisan battles in the 1990s. Takano plans to introduce a bill next month to fund the office, along with Sen. Ben Ray Luj├ín (D-N.M.), who sits on the Commerce Committee.

“What is missing in Congress is a repository of expertise that is more in an anticipatory mode, that has quicker turnarounds, that can deliver responses more quickly,” Takano said. “We want to have expertise that is not tainted or connected to commercial interests.”

Some argue that concerns about the lack of technical expertise on Capitol Hill have been overblown, saying lawmakers have already introduced bills that could address most issues with generative AI, including data protection and algorithmic audit bills.

“Congress’s job is not necessarily to know the ins and outs and nuts and bolts of every single technology that they regulate,” said Anna Lenhart, who worked on tech policy for Rep. Lori Trahan (D-Mass.). “Their job is to understand the impact of technology on society, the risks and the benefits.”

Lawmakers can seek tech assessments from the Government Accountability Office and Congressional Research Service. Zach Graves, the executive director of the Foundation for American Innovation, said GAO’s resources have made gains in recent years, resulting in better preparation for tech hearings, such as the one with Altman.

“They clearly did a lot more of their homework,” Graves said.

Still, some worry that the recent flurry of corporate lobbying on AI has pushed lawmakers uncomfortably close to the industry they’re aiming to regulate.

Unlike clashes with the CEOs of Facebook and Google, lawmakers’ chummy hearing with Altman was a reflection of how effective intimate events, like his private dinner, have been, said Sarah West, the managing director of the AI Now Institute and a former senior adviser on AI at the Federal Trade Commission.

West said executives like Google’s Schmidt are fueling the perception that AI is too difficult for Congress to grasp.

That, she said, is “a convenient narrative that positions accountability out of the hands of the people that the public has vested it in — and into the hands of the industry that is benefiting.”

As Congress races to regulate AI, tech execs want to show them how. - The Washington Post

Thursday, June 15, 2023

TikTok, Shein and Other Companies Distance Themselves From China - The New York Times

As Ties to China Turn Toxic, Even Chinese Companies Are Breaking Them

"Companies are moving headquarters and factories outside the country and cleaving off their Chinese businesses. It’s not clear the strategy will work.

Shoppers looking through rows of racks of clothes.
Shoppers at a Shein pop-up in Plano, Texas, last year. Shein is among the Chinese companies taking steps to distance themselves from their home country.Cooper Neill for The New York Times

As it expanded internationally, Shein, the rapidly growing fast fashion app, progressively cut ties to its home country, China. It moved its headquarters to Singapore and de-registered its original company in Nanjing. It set up operations in Ireland and Indiana, and hired Washington lobbyists to highlight its U.S. expansion plans as it prepares for a potential initial public offering this year.

Yet the clothing retailer can’t shake the focus on its ties with China. Along with other brands like the viral social app TikTok and shopping app Temu, Shein has become a target of American lawmakers in both parties. Politicians are accusing the company of making its clothes with fabric made with forced labor and calling it a tool of the Chinese Communist Party — claims that Shein denies.

“No one should be fooled by Shein’s efforts to cover its tracks,” Senator Marco Rubio, Republican of Florida, wrote in a letter to other lawmakers this month.

As relations between the United States and China turn increasingly rocky, some of China’s most entrepreneurial brands have taken steps to distance themselves from their home country. They have set up new factories and headquarters outside China to serve the United States and other foreign markets, emphasized their foreign ties and scrubbed any mention of “China” from their corporate websites.

TikTok has set up headquarters in Los Angeles and Singapore, and invested in new U.S. operations that it says will wall off its American user data from its parent company, ByteDance. Temu has established a headquarters in Boston, and its parent company, PDD Holdings, has moved its headquarters from China to Ireland.

Chinese solar companies have set up factories outside China to avoid U.S. tariffs on solar panels from China and limit their exposure to Xinjiang, a region that the United States now bars imports from because of its use of forced labor.

JinkoSolar, a behemoth that produces one in 10 solar modules installed globally, has set up a supply chain entirely outside China to make goods for the United States.

Other companies, including those that are foreign-owned, are building walls between their Chinese operations and their global businesses, judging that this is the best way to avoid running afoul of new restrictions or risks to their reputation.

Sequoia Capital, the venture capital firm, said last week that it would split its global business into three independent partnerships, spinning off unique entities for China and India.

Shein said in a statement that it was “a multinational company with diversified operations around the world and customers in 150 markets, and we make all business decisions with that in mind.” The company said it had zero tolerance for forced labor, did not source cotton from Xinjiang and fully complied with all U.S. tax and trade laws.

A spokesperson for TikTok said that the Chinese Communist Party had neither direct nor indirect control of ByteDance or TikTok, and that ByteDance was a private, global company with offices around the world.

“Roughly 60 percent of ByteDance is owned by global institutional investors such as BlackRock and General Atlantic, and its C.E.O. resides in Singapore,” said Brooke Oberwetter, a spokesperson.

Temu did not respond to requests for comment.

Analysts said companies were being driven out of China by a variety of motivations, including better access to foreign customers and an escape from the risk of a crackdown by the Chinese authorities.

Some companies have more practical concerns, like reducing their costs for labor and shipping, lowering their tax bills or shedding the shoddy reputation that American buyers continue to associate with goods made in China, said Shay Luo, a principal at the consulting firm Kearney who studies supply chains.

But a wave of tougher restrictions in the United States on doing business with China appears to be having an effect, too.

Research by Altana, a supply chain technology company, shows that since 2016, new regulations, customs enforcement actions and trade policies that hurt Chinese exports to the United States were followed by “adaptive behavior,” like setting up new subsidiaries outside China, said Evan Smith, the company’s chief executive.

For Chinese companies, going global is not a new phenomenon. The Chinese government initiated a “go out” policy at the turn of the century to encourage state-owned enterprises to invest abroad to gain overseas markets, natural resources and technology.

Private companies like the electronics firm Lenovo, the appliance maker Haier and the e-commerce giant Alibaba soon followed, seeking investment targets and new customers.

As tensions between the United States and China have risen in recent years, investment flows between the countries have slowed. U.S. tariffs on Chinese goods put in place by President Donald J. Trump and maintained by President Biden encouraged companies to move manufacturing from China to countries like Vietnam, Cambodia and Mexico. The pandemic, which halted factories in China and raised costs for moving goods across the ocean, accelerated the trend.

International companies are now increasingly adopting a “China plus one” model of securing an additional source of goods in another country in case of supply interruptions in China. Chinese companies, too, are following this practice, Ms. Luo said.

In the 12 months that ended in April, the share of imports to the United States from China reached its lowest level since 2006.

“It is definitely a rational strategy for these companies to offshore, to move manufacturing or their headquarters to a third country,” said Roselyn Hsueh, an associate professor of political science at Temple University.

In addition to tariffs and the ban on products from the Xinjiang region, the United States has imposed new restrictions on trade in technology and tougher security reviews for Chinese investments.

The Chinese government, too, is clamping down on the transfer of data and currency outside the country, and it has squashed some Chinese companies’ efforts to list their stocks on American exchanges because of such concerns.

Beijing has detained and harassed top tech executives, and foreign consulting firms. And its draconian lockdowns during the pandemic made clear to businesses that they operate in China at the mercy of the government.

“Companies like Shein and TikTok move overseas both to reduce their U.S. regulatory and reputational risk, but also to reduce the likelihood that their founders and staff get intimidated or arrested by Chinese officials,” said Isaac Stone Fish, the chief executive of Strategy Risks, a consultant on corporate exposure to China.

But companies like Shein and Temu still source nearly all of their products from China, and it’s not clear that the changes the Chinese companies are making to their businesses have done much to lower the heat.

The opposition to these companies in Washington is being fueled by an incendiary combination of legitimate concerns over national security and forced labor, and the political appeal of appearing tough on China. It also appears to be driven by the opposition of certain competitors to these services, which are now some of the most downloaded apps in the United States.In March, a group called Shut Down Shein sprang up to pressure Congress to crack down on the retailer. The group, which has hired five lobbyists with the firm Actum, declined to disclose who is funding its campaign.

In a five-hour hearing in March, lawmakers grilled TikTok’s chief executive over whether it would make U.S. user data available to the Chinese government, or censor the information broadcast to young Americans. Legislation is being considered that could permanently ban the app.

Some lawmakers are arguing that JinkoSolar’s U.S.-made panels should not be eligible for government tax credits, and, for reasons that have not yet been disclosed, the company’s Florida factory was raided by customs officials last month.

State governments, which have often been more welcoming to Chinese investment, are also growing more hostile. In January, Glenn Youngkin, the Republican governor of Virginia, blocked a deal for Ford Motor to set up a factory using technology from a Chinese battery maker, Contemporary Amperex Technology, calling it a “Trojan-horse relationship.”

A House committee set up to examine economic and security competition with China is investigating the ties that Temu and Shein have with forced labor in China, and lawmakers are calling for Shein to be audited before its I.P.O.

“The message of our investigation of Shein, Temu, Adidas and Nike is clear: Either ensure your supply chains are clean — no matter how difficult it is — or get out of countries like China implicated in forced labor,” Representative Mike Gallagher, the Republican chair of the committee, said in a statement.

An investigation by Bloomberg in November found that some of Shein’s clothes were made with cotton grown in Xinjiang. In a statement, Shein said it had “built a four-step approach to ensure compliance” with the law, including a “code of conduct, independent audits, robust tracing technology and third-party testing.

Jordyn Holman contributed reporting from New York.

Ana Swanson is based in the Washington bureau and covers trade and international economics for The Times. She previously worked at The Washington Post, where she wrote about trade, the Federal Reserve and the economy. @AnaSwanson"

TikTok, Shein and Other Companies Distance Themselves From China - The New York Times

Monday, June 12, 2023

You can thank slumping laptop sales for the 15-inch MacBook Air

You can thank slumping laptop sales for the 15-inch MacBook Air

A Starlight 15-inch MacBook Air with its lid open on a white table.

The 15-inch MacBook Air is the first Air with a large screen ever.
Photo by Dan Seifert / The Vergenone

“A couple of years ago, laptop sales were through the roof. With the majority of the population stuck at home for both work and school, plus flush with cash from government stimulus checks, many people were in need of better computers for use at home. And many of them bought laptops, to the tune of 340 million units in 2021.

But that wave is long over. Overall laptop sales fell by double digits in 2022, and they haven’t bounced back in 2023. Apple, ever the outlier in so many markets, did manage to squeak out an increase in 2022 over 2021. But the last two quarters have seen the sharpest year-over-year percentage decline in revenue from the Mac in half a decade. Last quarter’s Mac revenue was the lowest since the third quarter of 2020. (Jason Snell over at Six Colors has a lot of handy charts that illustrate this — you want to look for the “Mac revenue” and “year-over-year Mac revenue change” charts.) Despite a huge bump from the revamped MacBook Pro that came out in late 2021 and strong performance from last year’s M2 Air, Mac sales have slowed down a lot.

So what’s a company to do to put some wind back into those sails sales? Well, if you’re Apple, it seems the move is to cut the price of its most popular laptop by $100. It’s also giving the people what they’ve long been asking for: a bigger MacBook Air.

The MacBook Air has long been the standard-bearer for a thin-and-light productivity and creative laptop. The latest models have a combination of performance, battery life, and build quality that Windows laptops just can’t touch. And though it sits firmly in the “over $1,000 premium tier,” the MacBook Air provides a surprisingly good value for what you get, something that isn’t often said about Apple products.

Typically, Apple releases new versions of the Air when it has a new chip to put in them, which then leads to a sales bump. But its next chip, presumably the M3, apparently isn’t ready yet. So instead of a refreshed 13-inch Air with a new processor, we’re getting a bigger MacBook Air with the same chip and performance we’ve seen for the past year.

There’s never been a MacBook Air with a big screen. Despite 15-inch Windows laptops being the most popular size in that world for decades, the biggest screen you could get on a MacBook Air has been in the 13-inch range. If you wanted a Mac laptop with a bigger display (a reasonable request!), you had to pony up for either a slightly larger one in the 14-inch MacBook Pro (starting at $1,999, $800 more than the Air) or opt for an appreciably larger screen in the 16-inch MacBook Pro (starting at $2,499, more than twice the cost of the Air). Beyond those higher prices, the Pro models are thicker, heavier, and generally overpowered for what most people need from a laptop. It was not a fun choice to make if all you wanted was a bigger screen for your browser and spreadsheets.

A big-screened Mac laptop that doesn’t break the bank or your back.
Photo: Dan Seifert / The Vergenone

The 15-inch MacBook Air addresses this need head-on. It weighs 3.3 pounds, is effectively the same thickness as the 13-inch Air, and it starts at $1,299. It’s using the same M2 processor that came out a year ago. It has the same options for RAM and storage, the same expected battery life, and the same port options and webcam. The only difference, aside from the larger screen, is a six-speaker sound system. It fills a long-standing gap in Apple’s laptop lineup, and I have a feeling it’s going to be very popular.

Apple could have released a 15-inch Air basically any time it wanted over the past decade. There could have been 15-inch Intel versions, a 15-inch M1 model, or heck, Apple could have released a 15-inch Air at the same time it debuted the new Air design language and M2 chip a year ago. In fact, there were reports that Apple was planning a 15-inch model before the M2 Air even came out.

But by holding the release to this year, Apple is able to counter the slow Mac performance for the past few quarters and have something new to shore up growth against the strong performance from last year’s M2 Air. It’s a playbook Apple has used in the past — when iPhone sales start to slow down, it expands the lineup to include more models.

Looking at this week’s announcement through the lens of sales numbers and revenue reports can feel a bit cynical, but it’s important to remember that, ultimately, Apple is a massive corporation focused on revenue and profits, and it’s very good at making smart business plays. This is Apple’s ace in its sleeve for the Mac business, and it’s timing the play for when it’s most needed. 

Of course, this isn’t a total loss for consumers: if you’ve been wanting a larger MacBook Air, you finally have the option without having to buy a MacBook Pro you largely don’t need. Though the M2 chip has been out for a year, it’s still an excellent processor and extremely efficient — I have no doubt the 15-inch Air is going to be a top-rated laptop when reviews come out.

I just wish we’d had the option for one without having to wait until now.“