Artificial intelligence pioneer calls for the breakup of Big Tech

Steve LeVine
Sep 20

Featured

Artificial intelligence pioneer calls for the breakup of Big Tech

Illustration: Lazaro Gamio / Axios

Yoshua Bengio, the artificial intelligence pioneer, says the centralization of wealth, power and capability in Big Tech is "dangerous for democracy" and that the companies should be broken up.

Why it matters: Bengio is a professor at the University of Montreal and a member of the three-man "Canadian Mafia" that pioneered machine learning, the leading method used in AI. His remarks are notable because of his influence in the AI community and because he or his peers all either directly lead or consult for Big Tech's AI programs. Says Bengio: "Concentration of wealth leads to concentration of power. That's one reason why monopoly is dangerous. It's dangerous for democracy."

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The AI pioneers: Bengio consults for IBM and his colleagues Geoffrey Hinton consults for Google and Yann LeCun for Facebook. Ruslan Salakhutdinov, a protege of Hinton's, runs Apple's AI research effort.

Benigo said the concentration of resources, talent and knowledge among giant tech companies is only increasing and governments must act. "We need to create a more level playing field for people and companies," Bengio told Axios at an AI conference in Toronto last week.

In recent years, Apple, Facebook, Google and Microsoft have amassed a towering lead in AI research. But now, they are subject to growing scrutiny because of their outsized influence on society, politics and the economy. I asked Bengio if the companies should be broken up. He harrumphed and responded that anti-trust laws should be enforced. "Governments have become so meek in front of companies," he said.

"AI is a technology that naturally lends itself to a winner take all," Bengio said. "The country and company that dominates the technology will gain more power with time. More data and a larger customer base gives you an advantage that is hard to dislodge. Scientists want to go to the best places. The company with the best research labs will attract the best talent. It becomes a concentration of wealth and power."

When some of the young people gathered around him looked a bit dejected, Bengio responded, "Don't despair — fight."

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Christopher Matthews
2 hrs ago

Featured

U.S. job growth continued in Dec.

The U.S. economy added 148,000 new jobs in December, while the unemployment rate remained steady at 4.1%, the Labor Department said today. The tally missed economists expectations of a 190,000 increase in employment.

Data: Bureau of Labor Statistics; Chart: Lazaro Gamio / Axios

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Key takeaways:

Job growth in 2017 was relatively strong, but still the slowest since 2011, suggesting we may be entering the later stages of the current economic expansion.
The unemployment rate—the lowest since 3.9% marked in December 2000—also indicates that some of the slowdown could be related to a difficulty finding qualified workers, or a need to raise wages to attract workers back into the labor market
Wage growth in 2017 remained muted at 2.5%, despite such tight labor markets.
The retail sector was the big loser last year, shedding 67,000 jobs overall.
The unemployment rate for African Americans dropped to 6.8%, the lowest since the Labor Department began measuring the stat in 1972.

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Stef W. Kight
4 hrs ago

Featured

DHS may end H-1B extensions for workers with pending green cards

Indranil Mukherjee / Getty

The Department of Homeland Security may end a practice that allows H-1B visas to be extended while the holder's green card is pending, two tech industry sources familiar with the process tell Axios. The possible change is part of President Trump's "Buy American, Hire American" initiatives, as McClatchy DC first reported earlier this week.

Why it matters: This would affect hundreds of thousands of foreign workers who have been working in the U.S. on H-1B visas and have green card applications pending. It would also affect some big tech companies, particularly India-based IT firms that heavily use H-1B visas to fill technical roles.

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Background: This comes as a bipartisan group of lawmakers work on legislation that would make it more difficult to obtain H-1Bs and the Trump administration considers eliminating the ability for spouses of H-1B holders to work in the U.S.

What's happening: DHS is looking at reinterpreting parts of the American Competitiveness in the 21st Century Act, which currently allows H1-B visas to be extended past two three-year terms if they have a green card pending.
What's next: A draft of the rule change is expected to be released mid-February when DHS is set to publish new proposed rules in the Federal Register, according to the sources. If this change is implemented, DHS may face legal challenges for not following the formal process for adopting such a proposal, or for exceeding executive or statutory authority, said one tech industry source following the issue. Lawyers representing workers and companies also told McClatchy DC that they expect lawsuits.

U.S. Citizenship and Immigration Services wouldn't speak to the report, but told Axios in a statement: "The agency is considering a number of policy and regulatory changes to carry out the President's Buy American, Hire American Executive Order, including a thorough review of employment based visa programs."

By the numbers:

There are estimated to be more than a million H1-B holders who are waiting on green cards, Leon Fresco, former deputy assistant attorney general for DOJ, told McClatchy DC, and a vast majority of H-1B holders are Indian tech workers.
Because of green card regulations that require that no more than 7% of issued visas go to any one country, hundreds of thousands of India natives working in the U.S. could face wait periods of 15 years or more before receiving a final decision on their green cards.

Reactions: Two major business organizations spoke out against the possible change.

"It would be tremendously bad policy to tell highly skilled individuals who are applying for permanent residency and have been working in the U.S. for several years that they are no longer welcome," a U.S. Chamber of Commerce spokesperson said in a statement. "This policy would harm American business, our economy, and the country. Further, it is inconsistent with the goals of a more merit based immigration system,"
Dean Garfield, president and CEO of the Information Technology Industry Council which represents companies like Google, Amazon, Facebook and IBM, said that extending H-1B visas for holders with pending green cards is crucial for the tech industry. In a statement to Axios, he said, "Unnecessarily ending or restricting this system would cause economic disruptions for U.S. businesses – for companies of all sizes and across all industries – that depend on these employees to help fill our very real skills gap at a time when we are trying to ignite economic growth."

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Shannon Vavra
5 hrs ago

Featured

Exclusive: Aspen Institute launches cybersecurity initiative

Green light illuminates optical cables connected to data rack servers. Photo: Andrey Rudakov / Bloomberg via Getty Images

IBM CEO Ginni Rometty, Texas Republican Congressman Will Hurd, and former Obama administration Homeland Security Adviser Lisa Monaco are the new tri-chairs of an effort The Aspen Institute is launching this morning that aims to address a wide range of cybersecurity vulnerabilities on a national scale.

Why it's different: The Aspen Cyber Strategy Group, as the effort is known, is starting with the understanding that many past efforts have been more talk than action. It wants its 35 members of academia, the government, and the private sector to contribute concrete actions that can be taken.

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Who's at the table: The group includes the likes of Gen. Keith Alexander, president and CEO of IronNet Cybersecurity; Monika Bickert, head of Product Policy and Counterterrorism for Facebook; Lynn Good, CEO of Duke Energy; Brad Maiorino, executive vice president of Booz Allen Hamilton; and Rep. Adam Schiff, ranking member of the House Intel Committee. The initiative is launching at IBM's White Plains, NY, headquarters.

Why now: According to then-Director of National Intelligence James Clapper, cyberattacks surpassed terrorism in 2013. "We all read about the number of hacks that happen," Hurd said. "It feels sometimes almost like a daily basis." He sees convening this group as a way to move beyond political talking points and develop implementable solutions.

The foreign power factor: Hurd expects the conversation to in part focus on tactics and goals of cyber powers around the world, including Russia and North Korea. "You can't have this conversation without talking about threat actors."
Pooling resources from public and private sector: During her time in government, Monaco said there was never a one-stop shop where government and industry leaders could seek advice on cybersecurity issues. This group is intended to fill that gap, and will include a rotating set of government officials who work on cyber issues, she said.

Potential areas of focus: Securing the Internet of things and addressing election vulnerabilities, for starters. Others include:

Cyber job training: Hurd said he wants training, including developing classroom curriculum, to ensure professionals have the right skills to combat cybersecurity threats. "In the federal government there's 10,000 IT positions that have gone unfilled," he said. "A lot of that is because you have a lot of people who don't have the right skillsets."
Information sharing: Hurd said he hopes the initiative can link the NSA and CIA to the private sector when there's an attack or suspicion that an attack is coming so the agencies can make those attacks "collection priorities" and then later share that information to beef up defenses against similar hacks in the future.

What's next: The group intends to meet several times this year and issue reports from sub-groups once the group selects the topics to focus on this year. Hurd also indicated he'll work with other lawmakers to spearhead future congressional hearings in the House Subcommittee on Information Technology, which he chairs.

Yes, but: Plenty of task forces and industry groups have convened over the years to discuss various concerns about cybersecurity. It's unclear if this initiative will make more progress than its predecessors in developing specific solutions.

Correction: This story's headline has been updated to reflect the fact that The Aspen Institute is launching the initiative, not IBM.

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Christopher Matthews
7 hrs ago

Featured

Americans owe more, save less, and are poorer than in decades

A greater share of Americans have more debt than money in the bank than at any point since 1962, according to Deutsche Bank economist Torsten Slok. And, in a note to clients yesterday, Slok said that, despite record stock market wealth and home price levels just shy of housing-bubble highs, Americans are poorer than at any point in nearly a quarter century.

Why it matters: The data suggest that the third-longest economic expansion in history, and the lowest jobless rate in 17 years, has benefitted an exceedingly thin slice of the American public.

Reproduced from Edward N. Wolf, Survey of Consumer Finances, Deutsche Bank Global Markets Research; Chart: Axios Visuals

Erica Pandey
23 hrs ago

Featured

Macy's holiday sales weren't enough to turn around 2017

Shoppers stop to view Macy's holiday window display in Manhattan. Photo: Victor J. Blue / Bloomberg via Getty Images

Macy's holiday sales were 1% better in 2017 than in 2016, but the retail giant still expects a 3.6–3.9% drop in revenue for fiscal year 2017, CNBC reports. Macy's also plans to close 11 store locations and cut 5,000 jobs early this year — moves that will save the company $300 million in annual expenses — in an effort to focus on growing its online presence. The company's shares were down 4% on the news as of mid-day Thursday.

The big picture: Macy's is part of a widespread implosion of Big Retail.

Christopher Matthews
Jan 4

Featured

Neiman Marcus CEO leaves as retailer struggles with debt

Photo: Getty Images

Neiman Marcus CEO Karen Katz is stepping down from her role, the Wall Street Journal reports, after the luxury retailer reported declining same-store sales in eight of the previous nine quarters, while consistently losing money since the summer of 2016.

Why it matters: The decade-long boom in luxury retail is slowing, but Neiman Marcus' struggles are also related to it being acquired by private-equity groups that saddled the firm with nearly $5 billion in debt, and which has hindered the company's ability to finance long-term investments.

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Luxury retailers have generally thrived following the financial crisis, as they sell tightly-distributed goods, and have been able to avoid the loss of pricing power that has plagued online retailers.

Baby Boomers reaching the age of peak spending power also helped power the Dow Jones Luxury index more than 300% higher between 2009 and 2014, but success in the sector since that time has been mixed.
Companies like Hudson's Bay, owner of Sach's Fifth Avenue, have been forced to cut employees this year, while Nordstrom has been plagued by falling same-store sales.

But Neiman Marcus' woes are also linked to the alacrity with which its private equity sponsors have piled on debt to the company's balance sheet in order to finance a 2013 takeover of the luxury retailer.

The firm announced its first quarter of same-store sales growth in November, but its fifth-straight quarter of earnings declines.
Boosters of private equity say that the added debt, which finances their acquisitions, helps focus companies operations and gives firms tax advantages.
But a number of retailers are exemplifying the risk of too much borrowing, as unexpected downturns can imperial their ability to invest or even pay their bills.

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Ben Geman
Jan 4

Featured

Tesla struggles to break out of Model 3's "production hell"

Photo: Tesla via AP

It's kind of a glass half-empty or half-full question right now when it comes to Tesla's mass-market Model 3 electric sedan. As we reported in the Axios stream yesterday, the Silicon Valley automaker reported a jump in Model 3 production in the fourth quarter, producing 2,425 of the mainstream priced cars compared to a paltry 260 in the prior quarter.

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Yes, but: Tesla has once again delayed its target of producing 5,000-per-week, and the new timeline is to reach that level at the end of the second quarter of this year. Wall Street was not impressed — the stock fell by almost 3% in after-hours trading.

Case in point: Quartz contrasts Tesla's Model 3 production with GM's electric Chevy Bolt:

"GM launched the car in 2015, far ahead of the $35,000 Model 3, Tesla's first mass-market vehicle, and it seemed like no contest at the time. Tesla had amassed an impressive 400,000-person or so waiting list, and no one was lining up to buy GM's comparatively dowdy car months before it rolled off assembly lines. Today, monthly sales keep climbing, and it has reported 22,662 in sales since its debut in Dec. 2016."

Quick take: Tesla's quarterly announcement was exceedingly earnest and humble in tone. Musk seems to understand that he over-promised and that he needs to be ultra-cautious in what he says now.

The big picture: The Los Angeles Times has an in-depth look at the status of the EV and solar power company, and its ability to keep raising money from investors.

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Kia Kokalitcheva
Jan 4

Featured

Volkswagen and Hyundai ink self-driving deals

Photo: Justin Edmonds/Getty Images

Aurora Innovation, an autonomous driving startup founded by an early leader of Google's self-driving effort, has signed partnerships with Volkswagen and Hyundai, according to the Wall Street Journal. The startup will work with each automaker to help them get self-driving fleets on the road in 2021.

Why it matters: A growing number of automakers have teamed up with Silicon Valley's bevy of self-driving startups to ensure they can remain competitive in the autonomous future.

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Twist: Both automakers admitted to the WSJ that they're also in talks with Waymo, the new name of Google's self-driving car unit and Aurora CEO Chris Urmson's old employer. According to Volkswagen, its work with Waymo would be different than its work with Aurora.

Background: Last year, Urmson started the company with Sterling Anderson, who previously oversaw Tesla's Autopilot technology. The startup quietly raised just over $3 million in funding and has opened offices in Silicon Valley and Pittsburgh.

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Ben Geman
Jan 3

Featured

Tesla reports jump in electric Model 3 production

New data: Tesla produced 2,425 of its mainstream-priced Model 3 sedans in the fourth quarter of 2017 and delivered 1,550 of the vehicles, the company said today. Wall Street was unimpressed, sending down Tesla shares by 2% in after-hours trading.

The jump in output follows a disappointing third quarter for the much-heralded car unveiled last year. Tesla produced just 260 in Q3, badly missing its goal of 1,500.

"During Q4, we made major progress addressing Model 3 production bottlenecks, with our production rate increasing significantly towards the end of the quarter," the company said in its latest quarterly update for the production and delivery of its various vehicles released Wednesday afternoon.

Why it matters: Tesla's ability to address what CEO Elon Musk has called "production hell" and churn out the Model 3 at scale is vital for the company's future in the increasingly competitive EV market. But the drop in its share price suggests that the market cannot forget that Musk had originally promised to deliver 5,000 Model 3s a week by the end of 2017.

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The Silicon Valley company, which garners prolific interest in tech and auto circles but is not yet profitable, has invested heavily in the vehicle and related battery production.

The Model 3 is also important for the wider growth of EV deployment, because Tesla is a major player.

What's next: "As we continue to focus on quality and efficiency rather than simply pushing for the highest possible volume in the shortest period of time, we expect to have a slightly more gradual ramp through Q1, likely ending the quarter at a weekly rate of about 2,500 Model 3 vehicles. We intend to achieve the 5,000 per week milestone by the end of Q2," the company said.

The company has been forced to push back its production targets, and now expects to reach the 5,000-per-week level by the end of the second quarter.

Quick take: The quarterly announcement was exceedingly earnest and humble in tone. Musk seems to understand that he over-promised and that he needs to be ultra-cautious in what he says now. Look for the share price to recover over the quarter, if not the coming week.

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Steve LeVine
Jan 3

Featured

E-commerce sales may be twice as high as generally reported

E-commerce sales may be twice as high as generally reported, according to a new calculation by Thomas Paulson, who runs Minneapolis-based Inflection Capital Management.

Buzz: Rather than 9% of retail sales — as reported by the Fed and other sources — Paulson says Amazon and other e-commerce companies grabbed 21% of total U.S. retail sales last year. In 2016, it was 18.7% and the last time the rate was still at 9% was in 2010, he added.

Data: Census Bureau, eBay, Amazon, Inflection Capital Management; Chart: Axios Visuals

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What's happening: Few people buy cars or gasoline online and there are not many who buy groceries or restaurant meals on the internet. Yet, when analysts, such as the Federal Reserve Bank of St. Louis, measure the bite that e-commerce outfits are taking from brick-and-mortar retail, they generally include such purchases.

Why it matters: The impact, Paulson tells Axios, is to vastly understate the scale of the U.S. e-commerce industry, and to overstate the devastation in traditional shops.

"Amazon's gross margin rate is up substantially over the last six years because it has been raising prices and gotten into higher-priced products," Paulson said.

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Newest Stories

Artificial intelligence pioneer calls for the breakup of Big Tech

U.S. job growth continued in Dec.

DHS may end H-1B extensions for workers with pending green cards

Exclusive: Aspen Institute launches cybersecurity initiative

Americans owe more, save less, and are poorer than in decades

Macy's holiday sales weren't enough to turn around 2017

Neiman Marcus CEO leaves as retailer struggles with debt

Tesla struggles to break out of Model 3's "production hell"

Volkswagen and Hyundai ink self-driving deals

Tesla reports jump in electric Model 3 production

E-commerce sales may be twice as high as generally reported

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