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  • How Amazon is racing to catch Microsoft and Google in generative A.I. with custom AWS chips

    How Amazon is racing to catch Microsoft and Google in generative A.I. with custom AWS chips

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    In an unmarked office building in Austin, Texas, two small rooms contain a handful of Amazon employees designing two types of microchips for training and accelerating generative AI. These custom chips, Inferentia and Trainium, offer AWS customers an alternative to training their large language models on Nvidia GPUs, which have been getting difficult and expensive to procure. 

    “The entire world would like more chips for doing generative AI, whether that’s GPUs or whether that’s Amazon’s own chips that we’re designing,” Amazon Web Services CEO Adam Selipsky told CNBC in an interview in June. “I think that we’re in a better position than anybody else on Earth to supply the capacity that our customers collectively are going to want.”

    Yet others have acted faster, and invested more, to capture business from the generative AI boom. When OpenAI launched ChatGPT in November, Microsoft gained widespread attention for hosting the viral chatbot, and investing a reported $13 billion in OpenAI. It was quick to add the generative AI models to its own products, incorporating them into Bing in February. 

    That same month, Google launched its own large language model, Bard, followed by a $300 million investment in OpenAI rival Anthropic. 

    It wasn’t until April that Amazon announced its own family of large language models, called Titan, along with a service called Bedrock to help developers enhance software using generative AI.

    “Amazon is not used to chasing markets. Amazon is used to creating markets. And I think for the first time in a long time, they are finding themselves on the back foot and they are working to play catch up,” said Chirag Dekate, VP analyst at Gartner.

    Meta also recently released its own LLM, Llama 2. The open-source ChatGPT rival is now available for people to test on Microsoft‘s Azure public cloud.

    Chips as ‘true differentiation’

    In the long run, Dekate said, Amazon’s custom silicon could give it an edge in generative AI. 

    “I think the true differentiation is the technical capabilities that they’re bringing to bear,” he said. “Because guess what? Microsoft does not have Trainium or Inferentia,” he said.

    AWS quietly started production of custom silicon back in 2013 with a piece of specialized hardware called Nitro. It’s now the highest-volume AWS chip. Amazon told CNBC there is at least one in every AWS server, with a total of more than 20 million in use. 

    AWS started production of custom silicon back in 2013 with this piece of specialized hardware called Nitro. Amazon told CNBC in August that Nitro is now the highest volume AWS chip, with at least one in every AWS server and a total of more than 20 million in use.

    Courtesy Amazon

    In 2015, Amazon bought Israeli chip startup Annapurna Labs. Then in 2018, Amazon launched its Arm-based server chip, Graviton, a rival to x86 CPUs from giants like AMD and Intel.

    “Probably high single-digit to maybe 10% of total server sales are Arm, and a good chunk of those are going to be Amazon. So on the CPU side, they’ve done quite well,” said Stacy Rasgon, senior analyst at Bernstein Research.

    Also in 2018, Amazon launched its AI-focused chips. That came two years after Google announced its first Tensor Processor Unit, or TPU. Microsoft has yet to announce the Athena AI chip it’s been working on, reportedly in partnership with AMD

    CNBC got a behind-the-scenes tour of Amazon’s chip lab in Austin, Texas, where Trainium and Inferentia are developed and tested. VP of product Matt Wood explained what both chips are for.

    “Machine learning breaks down into these two different stages. So you train the machine learning models and then you run inference against those trained models,” Wood said. “Trainium provides about 50% improvement in terms of price performance relative to any other way of training machine learning models on AWS.”

    Trainium first came on the market in 2021, following the 2019 release of Inferentia, which is now on its second generation.

    Trainum allows customers “to deliver very, very low-cost, high-throughput, low-latency, machine-learning inference, which is all the predictions of when you type in a prompt into your generative AI model, that’s where all that gets processed to give you the response, ” Wood said.

    For now, however, Nvidia’s GPUs are still king when it comes to training models. In July, AWS launched new AI acceleration hardware powered by Nvidia H100s. 

    “Nvidia chips have a massive software ecosystem that’s been built up around them over the last like 15 years that nobody else has,” Rasgon said. “The big winner from AI right now is Nvidia.”

    Amazon’s custom chips, from left to right, Inferentia, Trainium and Graviton are shown at Amazon’s Seattle headquarters on July 13, 2023.

    Joseph Huerta

    Leveraging cloud dominance

    AWS’ cloud dominance, however, is a big differentiator for Amazon.

    “Amazon does not need to win headlines. Amazon already has a really strong cloud install base. All they need to do is to figure out how to enable their existing customers to expand into value creation motions using generative AI,” Dekate said.

    When choosing between Amazon, Google, and Microsoft for generative AI, there are millions of AWS customers who may be drawn to Amazon because they’re already familiar with it, running other applications and storing their data there.

    “It’s a question of velocity. How quickly can these companies move to develop these generative AI applications is driven by starting first on the data they have in AWS and using compute and machine learning tools that we provide,” explained Mai-Lan Tomsen Bukovec, VP of technology at AWS.

    AWS is the world’s biggest cloud computing provider, with 40% of the market share in 2022, according to technology industry researcher Gartner. Although operating income has been down year-over-year for three quarters in a row, AWS still accounted for 70% of Amazon’s overall $7.7 billion operating profit in the second quarter. AWS’ operating margins have historically been far wider than those at Google Cloud.

    AWS also has a growing portfolio of developer tools focused on generative AI.

    “Let’s rewind the clock even before ChatGPT. It’s not like after that happened, suddenly we hurried and came up with a plan because you can’t engineer a chip in that quick a time, let alone you can’t build a Bedrock service in a matter of 2 to 3 months,” said Swami Sivasubramanian, AWS’ VP of database, analytics and machine learning.

    Bedrock gives AWS customers access to large language models made by Anthropic, Stability AI, AI21 Labs and Amazon’s own Titan.

    “We don’t believe that one model is going to rule the world, and we want our customers to have the state-of-the-art models from multiple providers because they are going to pick the right tool for the right job,” Sivasubramanian said.

    An Amazon employee works on custom AI chips, in a jacket branded with AWS’ chip Inferentia, at the AWS chip lab in Austin, Texas, on July 25, 2023.

    Katie Tarasov

    One of Amazon’s newest AI offerings is AWS HealthScribe, a service unveiled in July to help doctors draft patient visit summaries using generative AI. Amazon also has SageMaker, a machine learning hub that offers algorithms, models and more. 

    Another big tool is coding companion CodeWhisperer, which Amazon said has enabled developers to complete tasks 57% faster on average. Last year, Microsoft also reported productivity boosts from its coding companion, GitHub Copilot. 

    In June, AWS announced a $100 million generative AI innovation “center.” 

    “We have so many customers who are saying, ‘I want to do generative AI,’ but they don’t necessarily know what that means for them in the context of their own businesses. And so we’re going to bring in solutions architects and engineers and strategists and data scientists to work with them one on one,” AWS CEO Selipsky said.

    Although so far AWS has focused largely on tools instead of building a competitor to ChatGPT, a recently leaked internal email shows Amazon CEO Andy Jassy is directly overseeing a new central team building out expansive large language models, too.

    In the second-quarter earnings call, Jassy said a “very significant amount” of AWS business is now driven by AI and more than 20 machine learning services it offers. Some examples of customers include Philips, 3M, Old Mutual and HSBC. 

    The explosive growth in AI has come with a flurry of security concerns from companies worried that employees are putting proprietary information into the training data used by public large language models.

    “I can’t tell you how many Fortune 500 companies I’ve talked to who have banned ChatGPT. So with our approach to generative AI and our Bedrock service, anything you do, any model you use through Bedrock will be in your own isolated virtual private cloud environment. It’ll be encrypted, it’ll have the same AWS access controls,” Selipsky said.

    For now, Amazon is only accelerating its push into generative AI, telling CNBC that “over 100,000” customers are using machine learning on AWS today. Although that’s a small percentage of AWS’s millions of customers, analysts say that could change.

    “What we are not seeing is enterprises saying, ‘Oh, wait a minute, Microsoft is so ahead in generative AI, let’s just go out and let’s switch our infrastructure strategies, migrate everything to Microsoft.’ Dekate said. “If you’re already an Amazon customer, chances are you’re likely going to explore Amazon ecosystems quite extensively.”

    — CNBC’s Jordan Novet contributed to this report.

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  • New ETF makes a big bet on cleaning up the environment

    New ETF makes a big bet on cleaning up the environment

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    A U.S.-based ETF is mimicking an investment trend in Europe that’s designed to boost profits while helping the climate.

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  • Nvidia is the ‘AI buy,’ says ‘Fast Money’ trader Tim Seymour

    Nvidia is the ‘AI buy,’ says ‘Fast Money’ trader Tim Seymour

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  • YouTube CEO Susan Wojcicki says she’s stepping down

    YouTube CEO Susan Wojcicki says she’s stepping down

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    YouTube CEO Susan Wojcicki speaks during the opening keynote address at the Google I/O 2017 Conference at Shoreline Amphitheater on May 17, 2017 in Mountain View, California.

    Justin Sullivan | Getty Images

    YouTube CEO Susan Wojcicki said Thursday that she’s stepping down.

    “Today, after nearly 25 years here, I’ve decided to step back from my role as the head of YouTube and start a new chapter focused on my family, health, and personal projects I’m passionate about,” she said.

    This is breaking news. Please check back for updates.

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  • Google asks employees to rewrite Bard’s bad responses, says the A.I. ‘learns best by example’

    Google asks employees to rewrite Bard’s bad responses, says the A.I. ‘learns best by example’

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    Google execs understand that the company’s artificial intelligence search tool Bard isn’t always accurate in how it responds to queries. At least some of the onus is falling on employees to fix the wrong answers.

    Prabhakar Raghavan, Google’s vice president for search, asked staffers in an email on Wednesday to help the company make sure its new ChatGPT competitor gets answers right. The email, which CNBC viewed, included a link to a do’s and don’ts page with instructions on how employees should fix responses as they test Bard internally.

    Staffers are encouraged to rewrite answers on topics they understand well.

    “Bard learns best by example, so taking the time to rewrite a response thoughtfully will go a long way in helping us to improve the mode,” the document says.

    Also on Wednesday, as CNBC reported earlier, Pichai asked employees to spend two to four hours of their time on Bard, acknowledging that “this will be a long journey for everyone, across the field.” 

    Raghavan echoed that sentiment.

    “This is exciting technology but still in its early days,” Raghavan wrote. “We feel a great responsibility to get it right, and your participation in the dogfood will help accelerate the model’s training and test its load capacity (Not to mention, trying out Bard is actually quite fun!).”

    Google unveiled its conversation technology last week, but a series of missteps around the announcement pushed the stock price down nearly 9%. Employees criticized Pichai for the mishaps, describing the rollout internally as “rushed,” “botched” and “comically short sighted.”

    To try and clean up the AI’s mistakes, company leaders are leaning on the knowledge of humans. At the top of the do’s and don’ts section, Google provides guidance for what to consider “before teaching Bard.”

    Under do’s, Google instructs employees to keep responses “polite, casual and approachable.” It also says they should be “in first person,” and maintain an “unopinionated, neutral tone.”

    For don’ts, employees are told not to stereotype and to “avoid making presumptions based on race, nationality, gender, age, religion, sexual orientation, political ideology, location, or similar categories.”

    Also, “don’t describe Bard as a person, imply emotion, or claim to have human-like experiences,” the document says.

    Google then says “keep it safe,” and instructs employees to give a “thumbs down” to answers that offer “legal, medical, financial advice” or are hateful and abusive.

    “Don’t try to re-write it; our team will take it from there,” the document says.

    To incentivize people in his organization to test Bard and provide feedback, Raghavan said contributors will earn a “Moma badge,” which appears on internal employee profiles. He said Google will invite the top 10 rewrite contributors from the Knowledge and Information organization, which Raghavan oversees, to a listening session. There they can “share their feedback live” to Raghavan and people working on Bard.

    “A wholehearted thank you to the teams working hard on this behind the scenes,” Raghavan wrote.

    Google didn’t immediately respond to a request for comment.

    WATCH: AI race expected to bring flurry of M&A

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  • Alphabet Chairman John Hennessy explains why Google was hesitant to put out its ChatGPT competitor

    Alphabet Chairman John Hennessy explains why Google was hesitant to put out its ChatGPT competitor

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    Google‘s Bard announcement last week was meant to show that the company has similar technology as the popular ChatGPT chatbot, even though it still has ways to go before becoming product-ready, Alphabet Chairman John Hennessy said Monday.

    “I think Google was hesitant to productize this because it didn’t think it was really ready for a product yet, but, I think, as a demonstration vehicle, it’s a great piece of technology,” said Hennessy, who has been the chairman of the Google parent company since 2018. He went on to say that he thinks generative AI is still one to two years away from being a truly useful tool for the broader public.

    Hennessy was speaking at a summit held by venture firm Celesta Capital in Mountain View, California, on Monday. Hennessy has a long history in tech, including as a professor, researcher and company founder, and he also served as the president of Stanford University from 2000 to 2016.

    Hennessy, who spoke on key trends for 2023, briefly touched on Google being caught in the sudden onrush of interest in ChatGPT and generative AI. 

    Last week, the company launched its response to ChatGPT in a conversation technology it is calling Bard. However the announcement had the appearance of being rushed to match Microsoft’s inclusion of ChatGPT technology into its search engine, Bing, and investors punished Alphabet stock, sending it down 9% for the day.

    Hennessy said Google was slow to roll out its ChatGPT competitor in part because it’s still giving wrong answers. Google is among the most-used consumer products, and entities like YouTube and Search have sometimes provided inaccurate information in the past.

    That past, it seems, is inspiring caution at the company.

    “You don’t want to put a system out that either says wrong things or sometimes says toxic things,” Hennessy said during the conference, echoing CEO Sundar Pichai’s words in December when employees asked if it was falling behind ChatGPT. The tech industry has to be “a little more careful about the situation we create in civil society,” he acknowledged.

    “I think these models are still in the early days,” Hennessey told CNBC Monday. “Figuring out how to bring them into a product stream and do it in a way that’s sensitive to correctness, as well as issues like toxicity, and I think the industry is struggling with that.”

    He added, “I don’t think Vint anticipated that people would use the internet to do evil things,” referring to Google executive Vint Cerf, who was one of the early developers of the internet’s underlying technology.

    “I’m from the age where, if you spam somebody, you were a social pariah. Now, I get ten spam messages for every real message, so the world has changed and we’ve got to think about what role technology has in ensuring that we have a functioning democracy, we have people who can live together and work together, we don’t have hatred or some of these other toxic things. I think we really do need to work on that.”

    Hennessy also said he’s been impressed with ChatGPT’s abilities, and that it’s moving faster than he anticipated.

    “I’m impressed with two things — first of all the quality of the natural language ability both to interpret a query but also to respond to something — the generative function. I’m impressed that it manages to, at least at a fairly superficial level, get a lot of things right.”

    He declined to comment specifically on the public’s reaction to Google’s Bard announcement last week.

    Hennessy later said it’s a good time for startups in Silicon Valley, who can benefit from getting talent from big tech during a cycle of layoffs currently happening.

    “Startups have such an important role to play in the Valley,” he said. “One of the great things about the Valley is you cannot rest on your laurels because some new startup will come along and really give you a run for your money.” 

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  • Investing Club mailbag: How to tell if a company will keep paying its dividend

    Investing Club mailbag: How to tell if a company will keep paying its dividend

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    Pampers Diapers, which are manufactured by Procter & Gamble, are displayed in an Associated Supermarket in New York.

    Ramin Talai | Bloomberg | Getty Images

    How do we figure out free cash flow and how can we tell if a company can continue to pay its dividend.

    -David E.

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  • Mark Cuban: Internet misinformation will only ‘get worse’ as ChatGPT and its competitors grow

    Mark Cuban: Internet misinformation will only ‘get worse’ as ChatGPT and its competitors grow

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    Mark Cuban may be entertained by chatbots like Microsoft-backed ChatGPT and Google’s upcoming Bard — but he isn’t ready to trust them.

    Online misinformation “is only going to get worse” as artificial intelligence platforms evolve and spread, the billionaire tech entrepreneur and investor said on a recent episode of comedian Jon Stewart’s podcast, “The Problem with Jon Stewart.”

    Right now, misinformation tends to spread through social media platforms like Facebook or Twitter — and that’s with some semblance of human guardrails in place, Cuban said. But with ChatGPT and other similar platforms, the machines are in control.

    “Once these things start taking on a life of their own … it will be difficult for us to define why and how the machine makes the decisions it makes, and who controls the machine,” Cuban said.

    Hundreds of millions of users have tried ChatGPT to write poems, offer advice and recite recipes since the platform launched in November. But so far, the technology isn’t showing itself to be smarter than the average human.

    Posting the chatbot’s simplistic errors is a popular social media trend. At times, ChatGPT incorrectly answers math problems, refuses to answer basic riddles and even “hallucinates”— or completely makes up historical figures, events and other details that seem like facts.

    ChatGPT can also contradict itself, sometimes providing different answers when repeatedly asked the same question.

    Similarly, shares of Google’s parent company Alphabet dropped more than 9% this week after Bard incorrectly answered a question about NASA’s James Webb Space Telescope in one of Google’s first ads for the AI platform.

    A raft of Google employees have blamed CEO Sundar Pichai for Bard’s “rushed, botched” release, with the company feeling pressured to compete with ChatGPT, CNBC reported on Friday.

    “Rushing Bard to market in a panic validated the market’s fear about us,” read one post on an internal Google forum reviewed by CNBC, alongside a photo of a face-palming bird.

    The errors show that the technology is still in infantile stages. That’s a problem, especially for large swaths of people who don’t always fact check claims they see on the internet, Cuban said.

    “Our generation, Gen X and older, doesn’t get it,” Cuban said. “Gen Z and younger, they’re not only native to it, they know how to block things out … They’re more in tune to all these issues.”  

    Microsoft, for its part, acknowledges that the technology behind ChatGPT isn’t perfect — even as it plans to incorporate it into an upcoming version of its search engine, Bing.

    “Bing will sometimes misrepresent the information it finds, and you may see responses that sound convincing but are incomplete, inaccurate, or inappropriate,” the company’s recently updated FAQ page says.

    In the short term, that could be a problem — a concern Cuban shares with fellow tech billionaire Steve Wozniak. But other industry luminaries have expressed excitement about the technology’s longer-term possibilities.

    Microsoft co-founder Bill Gates, for example, thinks platforms like ChatGPT represent a burgeoning technological revolution that’ll make a “huge impact” on health care and education, he told German-language business newspaper Handelsblatt’s “Disrupt” podcast on Thursday.

    “Today, they require too much computation, they’re not always accurate … But even this week, you’ll have announcements from Microsoft and Google, where they’re competing to lead in this space,” Gates said. “The progress over the next couple of years to make these things even better will be profound.”

    Get CNBC’s free Warren Buffett Guide to Investing, which distills the billionaire’s No. 1 best piece of advice for regular investors, do’s and don’ts, and three key investing principles into a clear and simple guidebook.

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  • Pro Picks: Watch all of Wednesday’s big stock calls on CNBC

    Pro Picks: Watch all of Wednesday’s big stock calls on CNBC

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  • Microsoft CEO Nadella calls A.I.-powered search biggest thing for company since cloud 15 years ago

    Microsoft CEO Nadella calls A.I.-powered search biggest thing for company since cloud 15 years ago

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    Microsoft CEO Satya Nadella said Tuesday that search powered by artificial intelligence is the biggest thing to happen to his company in the nine years he’s been at the helm.

    “I have not seen something like this since I would say 2007-2008, when the cloud was just first coming out,” Nadella told CNBC’s Jon Fortt in an interview.

    Microsoft invited reporters to its headquarters in Redmond, Washington, for an event that centered around new AI-powered updates to the company’s Bing search engine and Edge browser. Bing, which is a distant second to Google in search, will now allow users to chat in a way that provides more detailed answers to queries. 

    The updates to Bing and Edge will launch Tuesday on desktop in a limited preview, meaning users will get a finite number of queries to search during the initial period.

    Nadella said search is a very profitable business so these developments reflect a big opportunity for Microsoft.

    “I’ve never ever felt this liberated in terms of opportunity in the days ahead,” he told CNBC.

    Microsoft’s event Tuesday follows the company’s January announcement regarding a multibillion-dollar investment in ChatGPT-maker OpenAI. The deal marks the third phase of the partnership between the two companies, after Microsoft’s previous investments in 2019 and 2021.

    Watch CNBC's full interview with Microsoft CEO Satya Nadella

    ChatGPT automatically generates text based on written prompts in a fashion that’s much more advanced and creative than past chatbots. The web-based tool went viral after its debut in November. Tech executives and venture capitalists gushed about it on Twitter, even comparing it to Apple’s debut of the iPhone in 2007. 

    On Monday, Google announced an AI chatbot technology called Bard that will begin rolling out in the coming weeks. Bard will compete directly with ChatGPT.

    OpenAI CEO Sam Altman attended Microsoft’s event Tuesday and confirmed that Microsoft incorporated some of OpenAI’s GPT-3.5 language technologies into Bing to improve its capabilities.

    OpenAI CEO Sam Altman at Microsoft’s event

    Jordan Novet | CNBC

    “I feel like I’ve been waiting for this for 20 years, so I’m very happy it’s here,” Altman said during the presentation.

    Nadella was promoted to CEO in 2014 after running the company’s cloud business. He presided over Microsoft’s expensive and risky move from on-premises servers to cloud infrastructure. It turned out to be a massive boon for a company that largely missed the transition to mobile computing.

    Microsoft Azure, the centerpiece of the company’s cloud unit, is second to Amazon Web Services and ahead of Google in the cloud infrastructure market.

    “You can only be relevant in technology if you are good enough to see the waves of change and then to reorient your technology and innovation agenda and the business model agenda,” Nadella said. “We’ve gone through some very harsh ones. The last one we went through was obviously the mobile and cloud. We caught one, we missed one.”

    — CNBC’s Jordan Novet contributed to this report.

    WATCH: Google’s AI service vs. ChatGPT

    Google asks employees to test possible competitors to ChatGPT

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  • Market veteran is still bullish on tech despite earnings upset, and reveals his other top picks

    Market veteran is still bullish on tech despite earnings upset, and reveals his other top picks

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  • The biggest risks in procrastinating on iPhone, Android software updates

    The biggest risks in procrastinating on iPhone, Android software updates

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    That screen-blocking software update notification that keeps coming back may be annoying to a phone user, but ignoring it for too long is a mistake.

    Many consumers opt to not have phones set to automatic update. Once the day begins, these notifications can pop up at inconvenient and distracted times — while you’re rushing to make a call or send an email or text — but smartphone software updates are primarily designed for your benefit.

    Companies including Apple and Samsung, as well as Alphabet‘s Google which makes the Android OS, are constantly working on security and user experience features in annual updates and more periodic updates to fix newly discovered bugs.

    Apple’s current operating system iOS 16 launched this past September, and it boasts many new features: the ability to edit and unsend messages; set multiple lock screens and set Focus filters to limit who you receive notifications from; privacy and security updates like Safety Check so victims of domestic or intimate partner violence can reset access that they’ve granted to others; and Lockdown Mode, a method of extreme protection against cyberattacks.

    Samsung’s Android 13 One UI 5.0 lets users customize their lock screen, create stickers from any photo and open apps in split screen, along with security updates like warnings when sharing personal information, and a security dashboard in settings to check for and fix security issues.

    Not all software updates offer an array of new features, but when they do it can feel like you are getting a new phone without added cost. Yet, many users still do whatever they can to put off the 30 minutes that a software update can take.

    Where human procrastination meets technology

    It’s a phenomenon that’s been studied by researchers and termed “adoption procrastination.”

    Researchers at the University of Tennessee and University of Munich identify this “deliberate delay” as a coping strategy that digital product users implement to counteract the negative emotions that arise when software updates are released. Discomfort often stems from the perception that software updates will require users to relearn how to use certain features on their device and threatens their current habits. Annoyance is a factor, too, and the assumption that current functionality of their phone is optimal, so a software update would only disrupt their devices’ usability.

    But there is also more basic human psychology.

    “I think some of it is just the nature, ‘I’ll get around to it, when I get around to it,’” said Dr. Richard Forno, University of Maryland Baltimore County’s director of the Cybersecurity Graduate Program and assistant director of the school’s Center for Cybersecurity.

    He recommends setting up a phone to automatically download and install the updates overnight when you’re sleeping (as long as Airplane mode is not set). “That’s a feature that a lot of people could and should enable, so they don’t have to worry about it,” Forno said.

    Apple, Google update options

    Apple allows users to decide whether they want their phone to automatically download and install the newest iOS update, or if they prefer to manually update it. Android users can choose between three local system update policies, including automatic, windowed and postponed updates — all of these policies eventually result in a device automatically updating. The automatic system policy installs as soon as a new update becomes available; the windowed system policy installs updates during a daily maintenance window that the user gets to choose; the postponed option delays installing an update for 30 days. When 30 days have passed, the system then prompts the user to install the system update.

    While it’s offered, cybersecurity experts don’t recommend waiting 30 days. “For the normal user, within a few days to a week is likely fine,” said Justin Cappos, associate professor of Computer Science and Engineering at New York University Tandon School of Engineering and a member of New York University’s Center for Cybersecurity. There are certain users who are at a greater risk if they choose to put off or ignore these notifications. “If you are a dissident who is possibly being targeted by a nation-state actor, you should update right away,” he said.

    When a major security update comes out, everyone should act relatively fast.

    Hackers will target the flaws you don’t update

    Big annual OS updates may have the flashier and more reported on new features, but security protection is a major reason why users should download all new software updates available for their phone. Smaller, incremental updates, are released primarily to fix bugs and ensure users greater protection. It’s as simple as knowing that Apple or Samsung, or any other phone maker, is indicating that your current operating system is not the safest anymore, and it is sending that message out into the world. That’s not just good for you, but for hackers looking to exploit users who don’t get the message.

    “You’re leaving yourself vulnerable to attacks. Once a vulnerability has been announced and a patch has been released, attackers quickly grab that information and create exploits for those specific vulnerabilities,” said Kathleen Moriarty, chief technology officer at the Center for Internet Security.

    Without the latest security patches, every piece of information on your phone is open to attack, from social media accounts to banking information to text messages.

    “If you reuse passwords in different places, and they’re able to capture a password that is stored on your phone, they might be able to gain access to other applications,” Moriarty said.

    Hackers using AI chat tools to automate malware development

    Reuse of passwords across accounts is bad cybersecurity practice to begin with and can become even worse when the personal phone security lapse is used to gain access to an employer’s network.

    “Hopefully, you’re not using those across boundaries because this is one area of attack that has been used where, let’s say an administrator for an organization is targeted specifically through their personal accounts and that personal account access is used to gain corporate access,” Moriarty said.

    If malware gets through an outdated OS, tricking you to click on a link or download something, it can gain access to your personal information, cause your battery to drain faster and reduce overall performance.

    Performance fears overstated, patches better and quicker

    Years ago, software updates were much larger and infrequent, which made these updates themselves more susceptible to hacking issues and bugs. For example, Apple found a major operating flaw after its 2017 release of MacOS High Sierra that enabled anyone to enter your computer without needing a password.

    However, as Apple and Samsung have shifted toward releasing smaller software updates and patches more frequently, it minimizes the impact on devices and improves testing.  

    “I have a higher trust level because of the newer processes in place. There are far fewer problems that happen with software updates now than five or 10 years ago,” Moriarty said.

    Companies also have developed software updates that can occur behind the scenes on a phone without a user having to download them. In Apple’s release of iOS 16.2, the operating system is now able to push out security updates between the incremental updates with a new feature called “Rapid Security Response.”

    Back in 2019, Google’s Project Mainline was introduced in Android 10 and implemented this process of mobile updating without requiring user involvement or a system reboot. While this system can’t do an entire software update in the background through Google Play, it can install critical operating system patches without having to wait on the user or phone maker.

    “They can push out security updates pretty much as they need to without requiring the phone to be rebooted and disrupt a person’s life, which is a good thing, because it’s transparent to the end user, but they’re getting the updates they need. So that’s a win for security,” Forno said.

    Nowadays, there’s less reason to be worried when it comes to software updates, but the internet is also a good tool to quickly see how any recent update is working for other users. From social media platforms like Instagram and Twitter to tech news sites like The Verge, users can receive quick feedback on the latest software fixes.

    “Because of the social media availability, you will know if there are big problems being caused that were unexpected or not predicted with a particular update. So, you could wait a little bit or decide not to be first, especially [for] a large update. But I don’t think the timeline is that long anymore. Due to things like Reddit forums and Twitter and other places where you have easy access to immediate feedback,” Moriarty said.

    Smartphone battery issues

    Some users avoid software updates out of fear that it will decrease their battery life or slow down the phone itself, and while this can happen after downloading a major software update, these issues are temporary.

    “Your phone is going to burn through battery as it installs the update, runs all of its verifications and its checks, and then does a bunch of re-indexing. So, it would not surprise me if for a day or two, after you download an update, your phone battery life might be a little bit less because it’s working more,” Forno said.

    However, there have been occasions where Apple’s iOS updates have caused poor battery life for an extended amount of time beyond the initial installment duration. For instance, the release of iOS and iPadOS 15.4 caused a large number of customers to report battery issues lasting for weeks after the updates’ release, which resulted in Apple’s quick release of iOS and iPadOS 15.4.1 to combat this bug.

    A phone’s storage is also impacted when you install a security update. Depending on the size of the software update, how old your phone is and what operating system it is currently using, storage can be an issue.

    “I think the average user needs to ensure their devices are updated regularly. … I don’t think they have to worry about checking for updates every day,” Forno said.

    Age of iPhone, Android model matters

    Software updates don’t guarantee that a phone will always be secure. As newer generations of iPhones and Androids are released, Apple and Samsung gradually phase out older devices, and OS support. For example, iOS 16 is supported on every iPhone released since the iPhone 8. Samsung now guarantees customers at least four years of major Android updates and as much as five years of security updates.

    Hardware updates, including new chips and security features, come out on a regular basis, too.

    “Updating to a new model of your phone every year to every few years can help you stay ahead of the security curve,” Cappos said.

    Apple’s release of the iPhone 14 series included the A16 Bionic chip on Pro models, emergency satellite call technology, and better hardware security through the switch to eSIM-only cards. The next big release is the Samsung Galaxy S23 this month, which includes Samsung’s latest tweak to Android 13, One UI 5.1. Users should review the phone’s hardware, software and UI features, and owners of existing Samsung phone models will want to be on the lookout for an announcement about One UI 5.1 being made more broadly available.

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  • Tech stocks just finished a five-week rally — the longest stretch since market peak in November 2021

    Tech stocks just finished a five-week rally — the longest stretch since market peak in November 2021

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    Tech stocks on display at the Nasdaq.

    Peter Kramer | CNBC

    The Nasdaq just wrapped up its fifth straight week of gains, jumping 3.3% over the last five days. It’s the longest weekly winning streak for the tech-laden index since a stretch that ended in November 2021. Coming off its worst year since 2008, the Nasdaq is up 15% to start 2023.

    The last time tech stocks enjoyed a rally this long, investors were gearing up for electric carmaker Rivian’s blockbuster IPO, the U.S. economy was closing out its strongest year for growth since 1984, and the Nasdaq was trading at a record.

    This time around, there’s far less champagne popping. Cost cuts have replaced growth on Wall Street’s checklist, and tech executives are being celebrated for efficiency over innovation. The IPO market is dead. Layoffs are abundant.

    Earnings reports were the story of the week, with results landing from many of the world’s most valuable tech companies. But the numbers, for the most part, weren’t good.

    Apple missed estimates for the first time since 2016, Facebook parent Meta recorded a third straight quarter of declining revenue, Google‘s core advertising business shrank, and Amazon closed out its weakest year for growth in its 25-year history as a public company.

    While investors had mixed reactions to the individual reports, all four stocks closed the week with solid gains, as did Microsoft, which reported earnings the prior week and issued lackluster guidance in projecting revenue growth this quarter of only about 3%.

    Cost control is king

    Meta was the top performer among the group this week, with the stock soaring 23%, its third-best week ever. In its earnings report Wednesday, revenue came in slightly above estimates, even with sales down year over year, and the first-quarter forecast was roughly in line with expectations.

    The key to the rally was CEO Mark Zuckerberg’s pronouncement in the earnings statement that 2023 would be the “Year of Efficiency” and his promise that “we’re focused on becoming a stronger and more nimble organization.”

    “That was really the game-changer,” Stephanie Link, chief investment strategist at Hightower Advisors, said in an interview Friday with CNBC’s “Squawk Box.”

    “The quarter itself was OK, but it was the cost-cutting that they finally got religion on, and that’s why I think Meta really took off,” she said.

    Zuckerberg acknowledged that the times are changing. From the year of its IPO in 2012 through 2021, the company grew between 22% and 58% a year. But in 2022 revenue fell 1%, and analysts expect growth of only 5% in 2023, according to Refinitiv.

    On the earnings call, Zuckerberg said he doesn’t expect declines to continue, “but I also don’t think it’s going to go back to the way it was before.” Meta announced in November the elimination of 11,000 jobs, or 13% of its workforce.

    Link said the reason Meta’s stock got such a big bounce after earnings was because “expectations were so low and the valuation was so compelling.” The stock lost almost two-thirds of its value last year, far more than its mega-cap peers.

    Navigating ‘a very difficult environment’

    Apple, which slid 27% last year, gained 6.2% this week despite reporting its steepest drop in revenue in seven years. CEO Tim Cook said results were hurt by a strong dollar, production issues in China affecting the iPhone 14 Pro and iPhone 14 Pro Max, and the overall macroeconomic environment. 

    “Apple is navigating what is, of course, a very difficult environment quite well overall,” Dan Flax, an analyst at Neuberger Berman, told “Squawk Box” on Friday. “As we move through the coming months and quarters, we’ll see a return to growth and the market will begin to discount that. We continue to like the name even in the face of these macro challenges.”

    Watch CNBC's full interview with Neuberger Berman's Dan Flax

    Amazon CEO Andy Jassy, who succeeded Jeff Bezos in mid-2021, took the unusual step of joining the earnings call with analysts Thursday after his company issued a weaker-than-expected forecast for the first quarter. In January, Amazon began layoffs, which are expected to result in the loss of more than 18,000 jobs.

    “Given this last quarter was the end of my first full year in this role and given some of the unusual parts in the economy and our business, I thought this might be a good one to join,” Jassy said on the call.

    Managing expenses has become a big theme for Amazon, which expanded rapidly during the pandemic and subsequently admitted that it hired too many people during that period.

    “We’re working really hard to streamline our costs,” Jassy said.

    Alphabet is also in downsizing mode. The company announced last month that it’s slashing 12,000 jobs. Its revenue miss for the fourth quarter included disappointing sales at YouTube from a pullback in ad spending and weakness in the cloud division as businesses tighten their belts.

    Ruth Porat, Alphabet’s finance chief, told CNBC’s Deirdre Bosa that the company is meaningfully slowing the pace of hiring in an effort to deliver long-term profitable growth.

    Alphabet shares ended the week up 5.4% even after giving up some of their gains during Friday’s sell-off. The stock is now up 19% for the year.

    Ruth Porat, Alphabet CFO, at the WEF in Davos, Switzerland on May 23rd, 2022. 

    Adam Galica | CNBC

    Should the Nasdaq continue its upward trend and notch a sixth week of gains, it would match the longest rally since a stretch that ended in January 2020, just before the Covid pandemic hit the U.S.

    Investors will now turn to earnings reports from smaller companies. Some of the names they’ll hear from next week include Pinterest, Robinhood, Affirm and Cloudflare.

    Another area in tech that flourished this week was the semiconductor space. Similar to the consumer tech companies, there wasn’t much by way of growth to excite Wall Street.

    AMD on Tuesday beat on sales and profit but guided analysts to a 10% year-over-year decline in revenue for the current quarter. Intel, AMD’s primary competitor, reported a disastrous quarter last week and projected a 40% decline in sales in the March quarter.

    Still, AMD jumped 14% for the week and Intel rose almost 8%. Texas Instruments and Nvidia also notched nice gains.

    The semiconductor industry is dealing with a glut of extra parts at PC and server makers and falling prices for components such as memory and central processors. But after a miserable year in 2022, the stocks are rebounding on signs that an easing of Federal Reserve rate increases and lightening inflation numbers will give the companies a boost later this year.

    WATCH: Watch CNBC’s full interview with Truist’s Youssef Squali

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  • Amazon beats on fourth-quarter revenue but provides light guidance

    Amazon beats on fourth-quarter revenue but provides light guidance

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    Amazon on Thursday issued first-quarter guidance that came in light of estimates, overshadowing better-than-expected revenue for the fourth quarter. The stock slid after hours, erasing most its rally from the regular trading day. Here are the key numbers:

    • Earnings: 3 cents per share
    • Revenue: $149.2 billion vs $145.42 billion expected, according to Refinitiv estimates

    Here’s how other key Amazon segments did during the quarter:

    related investing news

    Meta's Q4 beat and commitment to cost cuts is exactly what we've been waiting for

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    • Amazon Web Services: $21.4 billion vs $21.87 billion expected, according to StreetAccount
    • Advertising: $11.56 billion vs $11.38 billion expected, according to StreetAccount

    It’s not immediately clear if the reported earnings are comparable to the Refinitiv analyst estimate of 18 cents per share.

    Amazon closed out its slowest year of growth in its quarter century as a public company. Revenue for the year increased 9% as inflationary pressures and rising rates put a damper on consumer spending. The stock price lost almost half its value in 2022.

    The e-retailer said it expects to post first-quarter revenue between $121 billion and $126 billion, representing year-over-year growth of 4% to 8%. Analysts were expecting sales to come in at $125.1 billion, according to Refinitiv.

    Amazon’s report, along with earnings from Apple and Alphabet, wrap up a mixed earnings season for the mega-cap tech companies.

    Apple reported its first revenue decline since 2016 on Thursday, and Alphabet missed on earnings and revenue. On Wednesday, Facebook parent Meta topped estimates and gave an optimistic outlook on its expenses.

    Sales in Amazon’s online stores segment contracted 2% year over year. The company has been contending with slowing sales as rising gas and food prices forced consumers to pull back discretionary spending. The pandemic-fueled e-commerce boom has also fizzled out since shoppers have increasingly returned to brick and mortar retailers.

    CEO Andy Jassy, who succeeded founder Jeff Bezos at the helm in July 2021, has spent the past year working to reel in costs. In January, Amazon said it’s eliminating 18,000 jobs among its corporate workforce, after cutting a number of employees last November. The company has also instituted a hiring freeze in its corporate ranks, cut some projects and paused warehouse expansion in an effort to tame rising expenses.

    Jassy made a surprise appearance on the company’s earnings call, telling analysts that he wanted to offer his thoughts after wrapping up his first full year at the helm. His predecessor, Jeff Bezos, stopped participating in earnings calls in 2009, according to The Wall Street Journal.

    “We’re working really hard to streamline our costs and trying to do so at the same time that we don’t give up on the long-term strategic investments that we believe can meaningfully change broad customer experiences and change Amazon over the long term,” Jassy said on the call.

    Jassy said in a statement that the company is “encouraged by the continued progress” it’s making in lowering retail costs.

    “In the short term, we face an uncertain economy, but we remain quite optimistic about the long-term opportunities for Amazon,” Jassy said.

    Amazon’s cloud business — Amazon Web Services — missed estimates for the fourth quarter, reflecting a slowdown in business spending. AWS grew just 20% in the period, down from 27.5% in the third quarter.

    Advertising revenue jumped 19% from a year earlier (23% excluding changes in foreign exchange rates), again outpacing online ad companies like Google, Facebook and Snap. Amazon has emerged recently as one of the leaders in digital advertising by giving brands and sellers more ways to pay to promote their goods across the company’s website, apps and media properties.

    Operating income in the quarter came in at $2.7 billion, down from $3.5 billion a year ago. The fourth-quarter figure includes about $2.7 billion of charges, of which $640 million came from severance costs related to the layoffs, the company said.

    Correction: A prior version of this story had the wrong figure for EPS.

    WATCH: RBC’s Brad Erickson breaks down Big Tech

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  • Google is asking employees to test potential ChatGPT competitors, including a chatbot called ‘Apprentice Bard’

    Google is asking employees to test potential ChatGPT competitors, including a chatbot called ‘Apprentice Bard’

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    A man walks through Google offices on January 25, 2023 in New York City.

    Leonardo Munoz | Corbis News | Getty Images

    Google is testing new artificial intelligence-powered chat products that are likely to influence a future public product launch. They include a new chatbot and a potential way to integrate it into a search engine.

    The Alphabet company is working on a project under its cloud unit called “Atlas,” which is a “code red” effort to respond to ChatGPT, the large-language chatbot that took the public by storm when it went public late last year. 

    Google is also testing a chatbot called “Apprentice Bard,” where employees can ask questions and receive detailed answers similar to ChatGPT. Another product unit has been testing a new search desktop design that could be used in a question-and-answer form. 

    Leaders have been asking more employees for feedback on the efforts in recent weeks. CNBC viewed internal documents and spoke with sources about the efforts currently underway.

    The product tests come after a recent all-hands meeting where employees raised concerns about the company’s competitive edge in AI, given the sudden popularity of ChatGPT, which was launched by OpenAI, a San Francisco-based startup that’s backed by Microsoft

    Google’s AI chief Jeff Dean told employees at the time that the company has much more “reputational risk” in providing wrong information and thus is moving “more conservatively than a small startup.” However, he and CEO Sundar Pichai teased at the time that Google may launch similar products to the public some time this year. Google’s prime business is web search, and the company has long touted itself as a pioneer in AI.

    Apprentice Bard

    One of the test products is a chatbot called Apprentice Bard, which uses Google’s conversation technology LaMDA, or Language Model for Dialogue Applications.

    “As a result of ChatGPT, the LaMDA team has been asked to prioritize working on a response to ChatGPT,” read one internal memo viewed by CNBC. “In the short term, it takes precedence over other projects,” the email continued, warning that some employees stop attending certain unrelated meetings.

    Apprentice Bard looks similar to ChatGPT: Employees can enter a question in a dialog box and get a text answer, then give feedback on the response. Based on several responses viewed by CNBC, Apprentice Bard’s answers can include recent events, a feature ChatGPT doesn’t have yet.

    Apprentice Bard replaced Meena, a previous version of a smart chat bot that had launched internally but was later discontinued. Employees have noticed Apprentice Bard’s responses becoming more advanced in recent weeks.

    In one example circulated internally, a tester asked Apprentice Bard if there will be another round of layoffs at Google. The company laid off 12,000 employees, 6% of its workforce, earlier this month.

    “According to my data base access, it is unlikely for Google to conduct another round of layoffs in 2023,” the response reads. “Layoffs are generally conducted to reduce costs and structure, but the company is doing well financially. In fact, Google’s revenue increased by 34% in 2021, and the company’s stock price has risen by 70% since January 2022.”

    The company is also testing an alternate search page that could use a question-and-answer format, according to designs viewed by CNBC.

    One view showed the home search page offering five different prompts for potential questions placed directly under the main search bar, replacing the current “I’m feeling lucky” bar. It also showed a small chat logo inside the far right end of the search bar.

    When a question is entered, the search results show a grey bubble directly under the search bar, offering more human-like responses than typical search results. Directly beneath that, the page suggests several follow-up questions related to the first one. Under that, it shows typical search results, including links and headlines.

    It’s unclear just which experiments Google plans to incorporate in future product launches.

    “We have long been focused on developing and deploying AI to improve people’s lives,” a Google spokesperson said. “We believe that AI is foundational and transformative technology that is incredibly useful for individuals, businesses and communities, and as our AI Principles outline, we need to consider the broader societal impacts these innovations can have. We continue to test our AI technology internally to make sure it’s helpful and safe, and we look forward to sharing more experiences externally soon.”

    ChatGPT would be hired as a level 3 engineer

    Perhaps unsurprisingly, Google teams have also been testing a beta LaMDA chat against ChatGPT, itself. In separate documents, it selected examples of prompts and answers in side-by-side comparisons. 

    “Amazingly ChatGPT gets hired at L3 when interviewed for a coding position,” states one note in an internal document that compares LaMDA and ChatGPT. It didn’t state whether LaMDA would have performed similarly well.

    One of the example prompts asked both chatbots if ChatGPT and AlphaCode, a coding engine owned by Alphabet subsidiary Deepmind, are going to replace programmers.

    “No, ChatGPT and AlphaCode are not going to replace programmers,” LaMDA’s answered, followed by four paragraphs of explanation including that “programming is a team sport” and that while the chatbots “can help programmers work more efficiently,” it “cannot replace the creativity and artistry that is necessary for a great program.”

    ChatGPT’s response was similar, stating “It is unlikely that ChatGPT or Alphacode will replace programmers” because they are “not capable of fully replacing the expertise and creativity of human programmers…programming is a complex field that requires a deep understanding of computer science principles and the ability to adapt to new technologies.”

    Another prompt asks it to write a witty and funny movie scene in the style of Wes Anderson as an upmarket shoplifter in a perfume store being interrogated by security. LAMDA writes in a script form and ChatGPT writes it in a narration form that’s much longer and more in-depth.

    Another prompt included a riddle that asks, “Three women are in a room. Two of them are mothers and have just given birth. Now, the children’s fathers come in. What is the totally number of people in the room?” 

    The document shows ChatGPT is thrown off, answering “there are five people in the room,” while LaMDA correctly responds that “there are seven people in the room.”

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  • What one tech fund manager is expecting from Apple and Alphabet earnings this week

    What one tech fund manager is expecting from Apple and Alphabet earnings this week

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  • Europe’s crackdown on Big Tech omitted TikTok — but now that’s set to change

    Europe’s crackdown on Big Tech omitted TikTok — but now that’s set to change

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    TikTok holds its End Of Year Event 2022 in Milan, Italy, on Dec. 13.

    Claudio Lavenia | Getty Images Entertainment | Getty Images

    TikTok is beginning to feel the sting of political and regulatory pressure in Europe, where the Chinese-owned app has largely evaded the scrutiny it’s faced in the U.S.

    EU Commissioner of the Internal Market Thierry Breton warned TikTok CEO Shou Zi Chew in a meeting this month the bloc could ban the app if it didn’t comply with new rules on digital content well ahead of a Sep. 1 deadline.

    That’s a marked shift from the EU’s near silence on TikTok, while U.S. lawmakers have been aggressive — banning the app from federal devices in December over national security concerns. A proposed bipartisan bill also seeks to block the app from operating in the U.S.

    It’s not that the EU is soft on tech. Europe has fined U.S. tech giants for violating the EU’s General Data Protection Regulation.

    The difference with TikTok is that the app has kept out of the crosshairs of commercial interests in Europe.

    Read more about tech and crypto from CNBC Pro

    “There is no political demand for investigation into Chinese entities,” Hosuk Lee-Makiyama, the director of think tank the European Centre for International Political Economy, said in an interview in December.

    “The user base of TikTok is a lot bigger than a lot of people in Europe think,” he said. But, he added, “you’re not going to look very closely if they don’t steal too much from your ad revenue.”

    TikTok had about 275 million monthly active users in Europe as of December, according to Sensor Tower’s Abe Yousef, noting that’s more than one third of Europe’s population of about 750 million.

    The data dragon TikTok must be placed under the surveillance of the European authorities. Europe must finally wake up.

    Moritz Korner

    MEP, European Parliament

    TikTok was the most-downloaded social media app last year in Italy and Spain, according to data.ai, formerly called App Annie. The app held second place in France and Germany, the data showed.

    WhatsApp, owned by Facebook parent Meta, ranked first among social media app downloads in France and Germany, and third in Italy and Spain, according to data.ai.

    Meta reported $29.06 billion in European revenue in 2021, a region the company defined as including Russia and Turkey. In contrast, TikTok recorded turnover of just $531 million in the European Union in 2021, according to the latest available filing in the U.K. But that was well over four times what was disclosed for 2020.

    “It takes a little bit of time for the European Commission to get its act together on these issues,” said Dexter Thillien, lead tech and telecoms analyst at The Economist Intelligence Unit.

    “It’s not because of a lack of willingness from the European Commission to do something,” Thillien told CNBC in a phone interview. “They’ve got their hands full with bigger companies.”

    TikTok isn’t yet a behemoth at the scale of companies like Meta, Alphabet and Amazon when it comes to social media, advertising and e-commerce. But TikTok has become so popular that its app has inspired copycat products, such as Meta’s Reels short video feature.

    More than half of people aged 16 to 24 in France and Germany use TikTok, according to data.ai.

    Since its launch in 2016, TikTok has amassed a worldwide monthly user base of more than 1 billion, and cemented the careers of well-known media personalities, from the D’Amelio sisters to Addison Rae.

    That gives it an attractive pool of data to train its algorithms to target users aggressively with content most aligned with their interests. TikTok’s parent, Beijing-based ByteDance, has found similar success in China with a local version of the app, called Douyin.

    A big fear among U.S. intelligence officials — and increasingly lawmakers in Europe, as well — is that Beijing could influence how TikTok targets its users to engage in propaganda or censorship.

    Read more about China from CNBC Pro

    “TikTok’s success is the result of a European policy failure,” Moritz Korner, a member of the European Parliament for Germany’s Free Democratic Party, told CNBC via email.

    “From a geopolitical perspective, the EU’s inactivity towards TikTok has been naive.”

    Korner has been calling on the European Commission to pressure data protection authorities into taking action against TikTok since 2019. He is worried the platform poses “several unacceptable risks for European users,” including “data access by Chinese authorities, censorship, [and] tracking of journalists.”

    “The data dragon TikTok must be placed under the surveillance of the European authorities,” said Korner. “Europe must finally wake up.”

    Why Europe’s tone is changing

    Last month, ByteDance admitted to using two journalists’ TikTok data to locate their physical movements, according to an internal memo. TikTok distanced itself from the activity, and said the employees involved were no longer employed at ByteDance.

    Surveillance concerns, in addition to the EU’s tough Digital Services Act, were a big topic of conversation in Chew’s meetings with EU officials earlier this month.

    The DSA, which was approved last year, is yet to be applied in Europe. EU officials are pressuring tech giants of all stripes to get their houses in order before a Sep. 1 deadline, including TikTok.

    “The EU takes privacy and data protection issues very seriously. And it is building one of the most rigorous regulatory architectures for digital platforms, including TikTok, in the world,” Manuel Muniz, provost at IE University, told CNBC.

    Under Chinese counter-espionage and national security rules, TikTok’s parent company ByteDance and other Chinese tech firms would be forced to share user data with Beijing if asked to by the government, experts previously told CNBC.

    This was a concern back when the U.S. was pressuring allies to ban Huawei, the Chinese telecommunications giant, in 2019.

    China’s Foreign Ministry said in a statement to CNBC that the Chinese government has never and will not require companies or individuals to collect or share data located in foreign countries in violation of local laws.

    The ministry said relevant parties should respect the principles of market economy and fair competition, stop abusing the concept of national security and provide Chinese companies with a fair, transparent and non-discriminatory business environment.

    TikTok has admitted that data on its European users can be accessed by employees based in China, but denies it would ever share such information with the Chinese government. A company spokesperson told CNBC the firm has “always been bound by and strived to comply with EU regulations that apply to us.”

    “We’re continuing to foster a strong culture of compliance by investing heavily in evolving our platform and business to align with the changing regulatory framework,” the spokesperson said.

    The firm nonetheless says it is committed to creating a robust system for processing the data of Europeans within Europe. This will include establishing a new data center in Ireland to house European users’ data locally.

    That reflects a major difference: European regulators have focused on data processing, while U.S. regulators look for national security threats.

    Meanwhile, investigations into TikTok’s accessing of users’ data in China are “starting to bear fruit,” according to Thillien.

    Investigations take time. The Irish Data Protection Commission took nearly five years to end its probe into Meta’s targeted advertising practices, which resulted in a fine of more than $400 million.

    The commission is examining whether the transfer of user data from TikTok to China and processing of data on minors is in breach of the bloc’s strict GDPR privacy rules. An outcome in the Irish privacy probe isn’t expected until late this year or 2024.

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  • I see this year’s budding stock rally signaling a different kind of bull market, one that’s not so reliant on just a few stocks

    I see this year’s budding stock rally signaling a different kind of bull market, one that’s not so reliant on just a few stocks

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    Jim Cramer at NYSE with bull. June 30, 2022.

    Virginia Sherwood | CNBC

    This nascent bull market started with the peak in interest rates and the dollar back in the fall and then broadened to include bank and semiconductor stocks in 2023. Is it fragile? Is it alchemy? Is it real? We’ll know after we see the quarterly earnings this week from the likes of Club holdings Apple (AAPL), Meta Platforms (META) Alphabet (GOOGL) and Amazon (AMZN), as well as what the Federal Reserve decides at its two-day meeting ending Wednesday and what the monthly nonfarm payroll numbers show Friday.

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  • Cramer’s week ahead: Fed decision on Wednesday could let the bulls ‘party on’

    Cramer’s week ahead: Fed decision on Wednesday could let the bulls ‘party on’

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    CNBC’s Jim Cramer on Friday said that Wall Street’s recent gains could continue next week depending on the Federal Reserve’s actions.

    “A decision not to raise rates at all might show too much weakness. A quarter-point with a statement that they’ll remain vigilant will allow the bulls to party on,” he said.

    The central bank is set to conclude its first meeting of the year on Wednesday, which Wall Street largely expected to beget a quarter-percentage point interest rate hike. 

    Cramer said he’ll also have his eye on the January nonfarm payrolls report set to be released Friday. “If wage inflation’s very strong, the quarter-point move will be criticized. If it’s weaker, we’ll be hearing all about that hard landing,” he said.

    All estimates for earnings, revenue and economic data are courtesy of FactSet.

    Monday: Whirlpool

    • Q4 2022 earnings release at 4:05 p.m. ET; conference call on Tuesday at 8 a.m. ET
    • Projected EPS: $3.23
    • Projected revenue: $5.08 billion

    He predicted that the company will report abating supply chain headwinds and a more frugal consumer on its conference call.

    Tuesday: Caterpillar, Pfizer, Advanced Micro Devices

    Caterpillar

    • Q4 2022 earnings release at 6:30 a.m. ET; conference call at 8:30 a.m. ET
    • Projected EPS: $4.02
    • Projected revenue; $15.82 billion

    He said the company will likely report a solid quarter.

    Pfizer

    • Q4 2022 earnings release at 6:45 a.m. ET; conference call at 10 a.m. ET
    • Projected EPS: $1.05
    • Projected revenue: $24.44 billion

    There’s more to the company than unsustainable earnings from its Covid vaccine, despite what Wall Street believes, Cramer said.

    Advanced Micro Devices

    • Q4 2022 earnings release at 4:15 p.m. ET; conference call at 5 p.m. ET
    • Projected EPS: 67 cents
    • Projected revenue: $5.51 billion

    “AMD’s got a great portfolio now, and they keep taking market share,” he said.

    Wednesday: Meta Platforms

    • Q4 2022 earnings release at 4:05 p.m. ET; conference call at 5 p.m. ET
    • Projected EPS: $2.26
    • Projected revenue: $31.54 billion

    “All I know is the stock’s had a real run, and while we own it for the Charitable Trust, we’re not pounding the table on this one. Not here,” Cramer said.

    Thursday: Ford Motor, Apple, Amazon, Alphabet

    Ford

    • Q4 2022 earnings release at 4:05 p.m. ET; conference call at 5 p.m. ET
    • Projected EPS: 62 cents
    • Projected revenue: $41.39 billion

    He said he isn’t worried that price cuts from Tesla will affect demand for Ford’s electric vehicles.

    Apple

    • Q1 21023 earnings release at 4:30 p.m. ET; conference call at 5 p.m. ET
    • Projected EPS: $1.94
    • Projected revenue: $121.81 billion

    Investors should hold onto their shares of the iPhone maker, according to Cramer.

    Amazon

    • Q4 2022 earnings release at 4:01 p.m. ET; conference call at 5:30 p.m. ET
    • Projected EPS: 17 cents
    • Projected revenue: $145.64 billion

    Amazon stock will soar if the company lays off 100,000 employees, he predicted.

    Alphabet

    • Q4 2022 earnings release at 4 p.m. ET; conference call at 4:30 p.m. ET
    • Projected EPS: $1.18
    • Projected revenue: $76.17 billion

    Cramer said that Alphabet also needs to downsize its workforce.

    Friday: Regeneron Pharmaceuticals

    • Q4 2022 earnings release at 6:30 a.m. ET; conference call at 8:30 a.m. ET
    • Projected EPS: $10.1
    • Projected revenue: $3.14 billion

    He said he likes the stock.

    Disclaimer; Cramer’s Charitable Trust owns shares of Apple, Amazon, Advanced Micro Devices, Caterpillar, Ford and Meta.

    Cramer's game plan for the trading week of Jan. 30

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  • Google employees scramble for answers after layoffs hit long-tenured and recently promoted employees

    Google employees scramble for answers after layoffs hit long-tenured and recently promoted employees

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    Google employees are scrambling for answers from leadership and from colleagues as the company undergoes a massive layoff.

    On Friday, Alphabet-owned Google announced it was cutting 12,000 employees, roughly 6% of the full-time workforce. While employees had been bracing for a potential layoff, they are questioning leadership about the criteria for layoffs which surprised some employees, who woke up to find their access to company properties cut off. Some of the laid-off employees had been long-tenured or recently promoted, raising questions about the criteria used to decide whose jobs were cut.

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    Shortly after CEO Sundar Pichai’s initial email to employees Friday morning, Google’s search boss Prabhakar Raghavan sent an email to employees saying he “also feels the responsibility to reach out” and asking for them to save questions for next week’s town hall. There will be “bumps in the road” as the organization moves forward with the layoffs, Raghavan noted.

    The company provided an FAQ for the layoffs, which CNBC has seen, but employees have complained that it doesn’t give much detail on many answers. Employees have flooded Dory, the company’s question-asking platform, and set up virtual communities to figure out who’s been laid off and why. Directors have been telling employees to hold questions for the town hall taking place next week.

    Google did not immediately respond to a request for comment.

    The scramble highlights the challenges Google could face in maintaining a supportive and productive company culture for its restive workforce of more than 160,000 full-time employees. Further confrontations are possible, as the company said it plans to lay off international employees but has yet to determine which ones.

    So far in the U.S., employees have been laid off across business units including Chrome, Cloud, and its experimental Area 120 unit. Some employees working on the company’s artificial intelligence programs were also laid off, according to Bloomberg.

    A list of top-rated inquiries from employees, viewed by CNBC, contained pointed questions for executives.

    “How were the layoffs decided? Some high performers were let go from our teams,” one top-rated question read. “This negatively impacts the remaining Googlers who see someone with high recognition, positive reviews, promo but still getting laid off.”

    “What metrics were used to determine who was laid off?” another top-rated question read. “Was the decision based on their performance, scope of work, or both, or something else?”

    Another asked: “How much runway are we hoping to gain with the layoffs?” and “Would you explain clearly what the layoff allows Google to do that Google could not have done without layoffs?”

    Another highly rated one questioned CEO Sundar Pichai’s statement, which said, “I take full responsibility for the decisions that led us here.”

    “What does taking full responsibility entail?,” one employee asked on Dory. “Responsibility without consequence seems like an empty platitude. Is leadership forgoing bonuses and pay raises this year? Will anyone be stepping down?”

    Some employees came together on their own, organizing ad hoc groups to try and get answers. Employees created a Google doc spreadsheet as a way to keep track of people who were laid off and which part of the business they worked in.

    More than 5,000 laid-off employees started a Discord channel called Google post-layoffs, ranging in topics from venting to labor organizing and visa immigration. Some employees organized virtual Google meetings with people on video calls. Others tried to organize physical meet-ups.

    Some turned to the company’s internal meme-generator as a means to connect with each other, for answers and for comfort. 

    One meme showed Mila Kunis from the film “Friends with Benefits.” Kunis spoke to the Google logo, saying the line: “The sad thing is, I actually thought you were different.” Another meme showed former President Bill Clinton gesturing the word “zero” with the title “Leadership paycut.”

    “Alphabet leadership claims ‘full responsibility’ for this decision, but that is little comfort to the 12,000 workers who are now without jobs,” said Parul Koul, executive chair of Alphabet Workers Union-CWA in a statement Friday. “This is egregious and unacceptable behavior by a company that made $17 billion dollars in profit last quarter alone.”

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