How AI is taking over the global economy in one chart - Axios
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How AI is taking over the global economy in one chart

For decades, corporate America has spurned big-lab research-and-development spending, the type that delivered the dizzying and broad tech and economic progress of the last century. But a belief that artificial intelligence is going to drive the next big economic wave has led today's largest companies — like Google, IBM and Microsoft — to revert to the old, ambitious R&D model. And their Chinese competitors — Baidu and Alibaba — aren't far behind.

These five companies — plus Amazon, Facebook and Google — combined are investing more in research and development than many entire economies. In 2015, for instance, the entire U.K. economy — companies and the government — invested $53.8 billion in R&D, less than the $58.2 billion posted by the big eight. Take a look at the chart below.

Data: OECD, Company disclosures; Chart: Andrew Witherspoon / Axios

Why it matters: In an economy in which corporate R&D spending has been conspicuously absent, these companies are investing big on the future. This dynamic underscores the growing advantage that a company like Amazon has over incumbent rivals: Investors bid up Amazon stock to sky-high multiples, lowering its cost of capital and enabling more robust investment and low prices.

A level deeper — more economic inequality: That these companies are investing in the long term is great for the U.S. and Chinese economies. It helps to power economic growth and makes workers more productive. But, at least in the U.S, it's also a sign of growing economic inequality, which underpins income inequality among workers, one reason for the election of President Donald Trump.

One more level down: The outsized spend is also buttressing these companies' market heft and risks a pushback to their monopoly power.

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Melania Trump hires family business employee for WH chief usher

Alex Brandon / AP

Melania Trump selected a Trump International Hotel employee for the White House chief usher position, per NYT. Her decision to hire an employee of the family business is in line with President Trump's penchant for keeping a close network of family and friends as advisers, confidants, and even WH aides.

Timothy Harleth, manager of rooms at the Trump Hotel in Washington, will replace Angella Reid, the former WH chief usher who was the first woman and only the second African American to hold that position. Reid was unexpectedly fired by Trump in May, but the reason for her termination remains unclear.

Harleth will now be in charge of managing the budget, planning family dinners, acting as a confidant to the Trumps, and essentially ensuring things run smoothly in the WH residence. He shares a hospitality background with Reid: she worked at the Ritz-Carlton Hotel before becoming chief usher under Obama.

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Airbnb touts economic impact for middle class to local legislators

Airbnb

Ahead of its participation in the U.S. Conference of Mayors' Summer Meeting in Florida, Airbnb emphasized once more its big sell to local governments in a new report: positive economic impact for the middle class.

According to Airbnb, 60% of U.S. hosts say it has helped them afford to stay in their homes, 51% say they rely on Airbnb income to make ends meet, and 44% of U.S. hosts earn $75,000 a year or less.

Between the lines: Airbnb faces a lot of criticism for contributing to housing crises in cities like San Francisco, and for increasing housing prices, so the home-sharing company is constantly touting such data as a counterpoint, especially to local legislators.

More from this year's report (2016 data):

  • Airbnb supported 730,000 jobs worldwide, including 130,000 in the U.S.
  • $61 billion in estimated economic output from Airbnb worldwide, including $14 billion in U.S. cities.
  • Airbnb has tax agreements with 310 jurisdictions globally, including more than 250 in the U.S. $300 million in hotel and tourist taxes remitted, including more than $270 million in the U.S.
  • 57% of U.S. hosts are in cities with tax agreements.

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DOJ asks Supreme Court to hear Microsoft email case

Swayne B. Hall / AP

The Justice Department is trying to take its drawn-out fight with Microsoft over law enforcement's access to emails stored on overseas servers to the Supreme Court.

Why it matters: Major tech companies are watching this case closely. If the Supreme Court takes the case, the outcome would have far-reaching effects on how tech firms store user data on foreign servers — and how law enforcement can access it. As more and more of our data is stored in the cloud by companies with data centers around the world, the question of how governments (both U.S. and abroad) can access the data is becoming increasingly complicated.

At issue is whether the U.S. government can use a warrant to access messages from one of Microsoft's data centers overseas. An appeals court sided with Microsoft, saying a U.S. warrant wasn't sufficient to obtain those messages and that the DOJ would instead need to request the data through an international process.

What's next: Tech companies including Microsoft are pushing for Congress to update the laws regarding law enforcement access to data centers to create a clear process for accessing data while also protecting privacy. Congress has held hearings on the topic but has not yet acted on legislation.

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The tour company Otto Warmbier used isn't taking Americans anymore

Jon Chol Jin / AP

Young Pioneers Tours (YPT), the tour company that hosted Otto Warmbier on his trip through North Korea may have not been as responsible in keeping its tourists as safe as they should have been, according to fellow trip-goers, Politico Magazine reports

"It seems partying was a bigger part of the job description than taking care of us," one person who used YPT told Politico, adding that "all of the tour guides were young people who get very drunk. It was sort of like there were few or no adults around."

Why it matters: Following Warmbier's death, YPT announced it isn't taking American tourists on its trips anymore because "the assessment of risk for Americans visiting North Korea has become too high," which puts the blame onto Americans and leaves little room for a company role in the security of its tour group. But two incidents in the buildup to Warmbier's detainment raise questions about the security of tourists in YPT's care.

Incident 1: One British trip goer, Danny Gratton, found himself alone in the streets after wandering off with another trip-goer and a few North Koreans on New Years Eve, during what was reportedly a jovial celebration.

  • Unguided tourism is not allowed in North Korea and the country tightly monitors Western tourists, usually by placing North Korean guides with Western guides on tours. Plus, the "disappearance roughly coincides with the time Warmbier allegedly tried to steal the propaganda poster from the hotel, raising questions about whether those two events are related," as Politico writes.
  • Warmbier and Gratton roomed together during the trip. The morning after the alleged disappearance and Warmbier's alleged crime, the hotel "mysteriously and uncharacteristically missed their wake-up call," Gratton told The Washington Post (although he did not disclose his disappearance). Then, when Warmbier was detained by North Korean security services at the airport that day, Gratton said he was the only tour go-er to see it. Gratton said the tour company and the U.S. government never contacted him about the detainment.

Incident 2: When a friend of one of the Western tour guides hid one of the tourists' passport and North Korean soldiers took him to another area and interrogated him, the tour guide allegedly teased the man's wife instead of helping.

One other note: The Daily Mail reports that a British lawyer who went on a separate tour with YPT in North Korea said one of her tour guides brought her to an off-limits floor in their hotel building, which is similar to the location of Warmbier's alleged crime.

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Uber board members had copies of key document in Waymo lawsuit

AP

In a new court document, Uber says that three then-board members—Benchmark's Bill Gurley, Arianna Huffington, and TPG Capital's David Bonderman—received copies of a due diligence report prepared as part of the company's 2016 acquisition of a self-driving truck startup.

All obtained copies of the report through Uber's in-house lawyers, and Bonderman subsequently shredded his copy, according to court documents. Gurley and Bonderman are no longer on Uber's board.

Why it matters: The Uber-Waymo court saga has been overshadowed by the dramatic departure of Uber CEO Travis Kalanick after the board asked him to resign. Whoever ends up taking the helm of Uber will not only have to fix its broken culture, but will also have to deal with the fallout of Waymo's allegations over the use of proprietary self-driving technology, which is vital to Uber's future.

Backstory: At the onset of the case, Anthony Levandowski, a former Waymo employee accused of stealing company secrets before founding and selling his company to Uber, attempted to keep the report from turning up in court by asserting his Fifth Amendment right. The report presumably contains evidence that Levandowski did download 14,000 proprietary files from Waymo prior to leaving the company. The court eventually denied his request to shield the document and ordered Uber and the forensics firm that prepared it to hand it over. Uber later parted ways with Levandowski.

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How Russian hackers launched a cyberattack against Ukraine

Flickr

No nation has felt the force of the Kremlin's cyber warfare more than Ukraine. In December 2015, Russian hackers shut down electricity for more than 250,000 Ukrainians, WIRED found, and the attacks have continued since.

"You can't really find a space in Ukraine where there hasn't been an attack," Kenneth Geers, a NATO ambassador who focuses on cybersecurity, told WIRED. The repeated electrical blackouts and data breaches have impacted government, military, businesses and media in Ukraine.

Why it matters: The Kremlin has made grand demonstrations of its prowess in cyber warfare by attacking its neighbor, Ukraine, to maintain dominance in the region. American intelligence leaders have expressed concerns that Russia may continue carrying out cyberattacks against the U.S. after interfering in the 2016 election. And the mayhem in Ukraine raises questions about how severe those attacks may be.
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The US photo of a close encounter with a Russian fighter jet

Master Sgt Charles Larkin Snr / U.S. European Command via AP

The U.S. has released a photo of when a Russian fighter jet flew within five feet of a U.S. Air Force reconnaissance plane earlier this week over the Baltic Sea in an unsafe maneuver. The move came just after Russia announced it would begin targeting the U.S. west of the Euphrates in an escalation of tensions in the Syrian conflict.

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Senate asks Lynch to disclose Clinton email conversations

Elise Amendola / AP

The Senate Judiciary committee has asked former AG Loretta Lynch to disclose conversations she has had with two people who were implicated in the "dubious" intel that then-FBI Director James Comey relied on before announcing the Clinton investigation was over. The Judiciary Committee is now probing into both Trump and Obama administrations.

The details:

  • The potentially fake report, which could be linked to Russia, alleged that then-DNC Chair Debbie Wasserman Schultz claimed in an email that Lynch told a Clinton staffer the FBI wouldn't probe too far into Clinton.
  • The Judiciary committee now wants to hear about Lynch's conversations with Wasserman Schultz and that staffer.
  • They also asked the staffer, Amanda Renteria, to disclose conversations she had with the FBI and Lynch about the investigation.
  • And they want Lynch to disclose any conversations she had with Clinton's campaign and the DNC about the investigation.
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Spicer: Carrier will maintain its job quota in Trump deal

Darron Cummings / AP

Sean Spicer told reporters Friday that the deal Carrier, the heating and air-conditioning manufacturer, made with Trump in November is still in tact, and that news of the company laying off more than 600 employees from its Indianapolis plant was announced last year.

Yesterday, reports surfaced that Carrier was cutting more than 600 jobs from its Indianapolis plant. Spicer clarified Friday that the lay offs were announced last year and would not affect the company's agreement to maintain the deal's 1,069 job quota.

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Justin Caldbeck takes indefinite leave of absence from Binary Capital

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Venture capitalist Justin Caldbeck is taking an indefinite leave of absence from Binary Capital, the Silicon Valley firm he co-founded, following allegations of unwanted sexual advances by several female entrepreneurs. He also says that he will seek professional counseling.

What follows is a statement that Caldbeck provided to Axios this afternoon.

The past 24 hours have been the darkest of my life. I have made many mistakes over the course of my career, some of which were brought to light this week. To say I'm sorry about my behavior is a categorical understatement. Still, I need to say it: I am so, so sorry.

I direct my apology first to those women who I've made feel uncomfortable in any way, at any time - but also to the greater tech ecosystem, a community that I have utterly failed.

The power dynamic that exists in venture capital is despicably unfair. The gap of influence between male venture capitalists and female entrepreneurs is frightening and I hate that my behavior played a role in perpetrating a gender-hostile environment. It is outrageous and unethical for any person to leverage a position of power in exchange for sexual gain, it is clear to me now that that is exactly what I've done.

I am deeply ashamed of my lack of self-awareness. I am grateful to Niniane, Susan, Leiti, and the other women who spoke up for providing me with a sobering look into my own character and behavior that I can no longer ignore. The dynamic of this industry makes it hard to speak up, but this is the type of action that leads to progress and change, starting with me.

I will be taking an indefinite leave of absence from Binary Capital, the firm I co-founded in 2014. I will be seeking professional counseling as I take steps to reflect on my behavior with and attitude towards women. I will find ways to learn from this difficult experience - and to help drive necessary changes in the broader venture community.

The Binary team will also be taking measures to ensure that the firm is a safe place for founders of all backgrounds to find the support and resources they need to change the world, without abuse of power or mistreatment of any person.

I owe a heartfelt apology to my family, my investors, my portfolio, and the team at Binary, who have been completely blindsided and in no way deserve the pain I've caused. But most of all I apologize again to those who I've hurt during the course of my career - and for the damage I've done to the industry I care so deeply about.