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Tag: Business

  • Threads now has ‘tens of millions’ of daily users. But its honeymoon phase may be over | CNN Business

    Threads now has ‘tens of millions’ of daily users. But its honeymoon phase may be over | CNN Business

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    New York
    CNN
     — 

    Two weeks after Meta launched its Twitter competitor Threads and received an unprecedented amount of user signups, the frenzy around the app appears to have come back to Earth.

    After surpassing 100 million user sign-ups in less than a week, user engagement on Threads has slowed. Threads daily active users fell from 49 million on July 7, two days after its launch, to 23.6 million users last Friday, according to a report published this week by web traffic analysis firm Similarweb. The app’s average usage time also fell from 21 minutes to 6 minutes over the same timeframe.

    The slowdown hints at the challenges ahead for Meta as it looks to not only draw users away from Twitter but build a service that reaches a far larger audience. Threads is already facing some of the common issues that often plague social media platforms, including user retention, spam and some early regulatory scrutiny around its approach to content moderation. It’s also not clear yet how much Meta’s investments in building Threads will actually amount to financial returns for the company.

    “I’m very optimistic about how the Threads community is coming together,” Meta CEO Mark Zuckerberg said in a post on the platform Monday. “Early growth was off the charts, but more importantly 10s of millions of people now come back daily … The focus for the rest of the year is improving the basics and retention.”

    Meta executives acknowledged in the early days after Threads’ launch that getting users to sign up for a buzzy new app is much easier than convincing them to continue engaging there long-term. That’s likely even more true for Threads, which launched as a relatively bare-bones app in an effort to capitalize on a moment of weakness at Twitter and also tapped into Instagram’s network to ease the sign-in process.

    Threads on Tuesday rolled out its first batch of updates to the iOS version of the app, including a translation button, a tab on users’ activity feed dedicated to showing who’s followed them and the option to subscribe and receive notifications from accounts a user doesn’t follow.

    Instagram head Adam Mosseri, who is overseeing the Threads launch, has also hinted at plans to add features such as a desktop version of the app, a feed of only accounts a user follows and an edit button. “We’re clearly way out over our skis on this,” Mosseri said in a Threads post the week of the app’s launch.

    In the meantime, Threads is grappling with a common social media issue — spam. Users have complained of replies to posts filling up with spammy links and offering “giveaways” in exchange for new followers. And on Monday, Mosseri said in a Threads post that the platform was “going to have to get tighter on things like rate limits” because “spam attacks have picked up.”

    This “is going to mean more unintentionally limiting active people (false positives),” Mosseri warned. “If you get caught up [in] those protections let us know.”

    Meta declined to clarify whether Mosseri’s post refers to limits on users’ ability to post or read content, or to provide any additional details. But the comment did prompt some snark from Twitter owner Elon Musk, after backlash to Twitter’s own rate limits — restrictions on how many tweets users can read — helped propel Threads’ early growth.

    Meta shares have jumped more than 6% since the Threads launch, but some analysts who follow the company are skeptical that Threads will quickly contribute to the company’s bottom line, if at all.

    Threads could be a way for Meta to eke additional engagement time out of its massive existing user base. The app could also ultimately supplement Meta’s core advertising business, which could use a boost after facing challenges from a broad decline in the online ad market and changes to Apple’s app privacy practices.

    Meta executives have said they will likely incorporate advertising into the platform, once its user base has reached critical mass. But even if Threads continues to add users, “advertisers could be hesitant and possibly wait before allocating ad dollars to Threads because of their uncertainty about long-run user retention and engagement,” Morningstar senior equity analyst Ali Mogharabi said in a recent investor note.

    Like Twitter, Threads could also struggle to attract advertisers because the nature of a real-time news and public conversations app means the content is sometimes negative or controversial. Even before Musk took over Twitter and alienated advertisers, the platform represented a tiny piece of the ad sales market compared to Meta’s properties.

    Threads, however, likely has a leg up on Twitter because Meta is known as a company that provides clear value for advertisers, said Scott Kessler, global tech sector lead at research firm Third Bridge. If anything, he said, the risk may be that some advertisers may think twice about spending on yet another Meta platform versus diversifying their ad strategy.

    For now, analysts will be awaiting Meta executives’ commentary about Threads during its quarterly earnings call next week, including to see if they offer any hints about whether ads may be rolled out on the app ahead of the crucial holiday shopping season.

    “They launched this in July,” Kessler said. “That should give them enough time to build out sufficient tools for holiday shopping season advertising.”

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  • Jill Biden to travel to Paris to commemorate US rejoining UNESCO after Trump exit | CNN Politics

    Jill Biden to travel to Paris to commemorate US rejoining UNESCO after Trump exit | CNN Politics

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    CNN
     — 

    First lady Dr. Jill Biden will travel to Paris next week to celebrate the US rejoining UNESCO, according to senior administration officials, in a visit that will highlight the national security imperative of American involvement in such coalitions and emphasize the role of US leadership in the world.

    President Joe Biden is deploying the first lady, a top surrogate, to commemorate the occasion that reverses a Trump-era decision as he seeks to reassure allies that “America’s back” and signal the White House’s reaffirmed commitment to the organization.

    The US withdrew from UNESCO – the United Nations Educational, Scientific and Cultural Organization – during the Trump administration, with the State Department at the time citing anti-Israel bias and mounting membership dues owed to the international body. The organization promotes cooperation in education, science, culture, and communication, and also designates “world heritage” sites.

    Then-US Ambassador to the UN Nikki Haley, now a GOP presidential candidate, said at the time the organization’s “extreme politicization had become a chronic embarrassment.”

    Dr. Biden, a senior administration official said, will attend and deliver remarks at a UNESCO flag raising ceremony on Tuesday and greet UNESCO Director General Audrey Azoulay.

    A second senior Biden administration official heralded the decision to rejoin the organization as “a milestone that really signifies the return of our leadership in a vital international space.”

    “When we don’t show up in these organizations, other countries will fill the void. And in an era of increasing geopolitical competition, competitors are working hard at the UN to shape the global agenda,” the second senior official said, adding, “If we aren’t in the room, we can’t push back.”

    The US absence from UNESCO, the official said, was “harming our interests” since the decision to withdraw in 2017, noting that the organization has also “made much-needed reforms.”

    A third senior official noted that having the US at the UNESCO table will give the administration influence on “international standards and shared global understanding on issues like protection of World Heritage, the ethics of emerging technology, press freedom, and … education.” New top US priorities for the group, that official said, include investments on Holocaust education, the preservation of cultural heritage in Ukraine, journalist safety and STEM education focused in Africa for women and girls, and artificial intelligence.

    “The Biden administration is committed to playing a leadership role in multilateral venues where our interests, our security and prosperity can be protected and promoted. UNESCO is precisely one of those venues where we believe the benefits of engagement are well worth the investment,” the third official said.

    President Biden has often sought to communicate to US allies in the aftermath of his predecessor’s “America First” presidency that the US will reassert a leading role in what he casts as the battle between democracy and autocracy. Of course, former President Donald Trump is currently leading in GOP primary polling, with posing serious questions ahead for the future of critical US alliances following the 2024 presidential election.

    The first lady is set to depart Washington for Paris on Sunday evening, arriving Monday morning. She will meet with Mrs. Brigitte Macron, spouse of French President Emmanuel Macron, on Tuesday. Dr. Biden will also visit Mont Saint Michel, a UNESCO World Heritage site, and pay her respects to fallen World War II US service members at the Brittany American Cemetery in Normandy during her trip abroad.

    CORRECTION: This story has been updated to correct the timing of Dr. Jill Biden’s meeting with Brigitte Macron.

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  • Republican lawmaker calls TikTok ‘an immediate threat’ and calls for app to be banned | CNN Politics

    Republican lawmaker calls TikTok ‘an immediate threat’ and calls for app to be banned | CNN Politics

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    Washington
    CNN
     — 

    Republican Rep. Cathy McMorris Rodgers of Washington said Sunday that TikTok represents “an immediate threat” from China and called for the short-form video app to be banned in the US.

    The chairwoman of the House Energy and Commerce Committee said on CNN’s “State of the Union” that Congress should pass a data privacy law and ban TikTok in the US after the company’s CEO Shou Chew testified in front of her committee on Thursday.

    McMorris Rodgers said Chew’s testimony “made clear” that TikTok is a threat to the US.

    “What the hearing made clear to me was that TikTok should be banned in the United States of America to address the immediate threat and we also need a national data privacy law,” McMorris Rodgers told CNN’s Jake Tapper.

    The Republican lawmaker cited TikTok and its parent company, ByteDance, being connected to China as evidence of the national security risk.

    While many nations have imposed bans on official government devices out of national security concerns, there is currently no public evidence the Chinese government has spied on people through TikTok.

    The company told CNN in a statement, “The best way to address concerns about national security is with the transparent US-based protection of US user data and systems with robust third-party monitoring, vetting and verification, which we are already implementing.”

    On Sunday, McMorris Rodgers responded to criticism from TikTok users, many of whom mocked lawmakers for their lack of familiarity with the app and questioned why Congress would spend time regulating social media. She noted the rare bipartisan agreement on the national security risks the app presents.

    “I would say there is an immediate threat via TikTok from the Chinese Communist Party. That is the reason that I believe we need to ban TikTok immediately. It is a national security threat,” McMorris Rodgers said. “It united Republicans and Democrats on the committee as to the urgent need for us to take action.”

    Democratic Sen. Mark Warner, who chairs the Senate Intelligence Committee, also shared concerns over the app’s connection to China on Sunday.

    “At the end of the day, TikTok is owned by a Chinese company, ByteDance, and by Chinese law, that company has to be willing to turn over data to the Communist Party or, one of my bigger fears, we have 150 million Americans on TikTok, average of about 90 minutes a day, and how that channel could be used for propaganda purposes or disinformation by the Communist Party,” Warner said in an interview with CBS News.

    McMorris Rodgers also emphasized the need to pass a national data privacy law to restrict all social media platforms from collecting user data, including those based in the US.

    “We need to take action whether it’s TikTok, big tech or other data brokers to restrict the amount of data that they’re collecting to begin with,” she said.

    This story has been updated with additional information.

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  • Where TikTok users may go if the app gets banned | CNN Business

    Where TikTok users may go if the app gets banned | CNN Business

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    CNN
     — 

    On the eve of a high-profile TikTok hearing this week, the company shared that it now has more than 150 million US monthly active users. But after the heated, hours-long hearing, filled with lawmakers telling TikTok’s CEO the app should be banned, some may now be wondering where all those users will go next if the social network disappears.

    The answer: probably other big American tech platforms.

    Many of the largest US social media companies have spent years copying TikTok’s features, which would make a shift away from the platform easier for its creators and users. Instagram, for example, introduced its own short-form video tool in 2020 called Reels. Snapchat has Spotlight, YouTube has Shorts and even Spotify has a TikTok-like video feed with recommended music and other content.

    “Obviously, if a ban is approved and enforced, the content, user count and engagement, and likely ad dollars for Snap, Instagram, and YouTube will increase,” said Ali Mogharabi, an analyst at financial services firm Morningstar, in a recent investor’s note.

    In other words, Washington’s efforts to crack down on TikTok over national security concerns could ultimately benefit some of the same American tech companies that Washington has scrutinized for other reasons, including their market dominance and impact on teens.

    Even if a ban does not happen, it could still benefit these companies. “This uncertainty could push some TikTok content creators to focus more on, and possibly begin, pushing their audiences to other social network platforms,” Mogharabi said.

    At least one company is already seeing a boost. Snap’s stock rose in the days leading up to TikTok’s appearance before Congress amid renewed talks among federal officials of a TikTok ban.

    At the hearing on Thursday, TikTok CEO Shou Chew was grilled by lawmakers who expressed deep skepticism about his company’s attempts to protect US user data and ease concerns about its ties to China. TikTok’s parent company, ByteDance, is based in Beijing and subject to Chinese data request laws that could require it to hand over user data to the government.

    Washington Republican Rep. Cathy McMorris Rodgers, the chair of the House Energy and Commerce Committee, opened Thursday’s hearing by telling Shou: “Your platform should be banned.” As the hearing was taking place, House Speaker Kevin McCarthy said he supports legislation that would effectively ban TikTok and Secretary of State Antony Blinken said TikTok should be “ended one way or another.”

    If that happens, Lian Jye Su, an analyst with ABI Search, believes users will follow their favorite TikTok influencers and content creators wherever they go.

    “Most users will flock to where the content creators go next,” Su said. “Instagram, Snapchat, and Youtube Shorts stand to benefit the most as content creators will still prefer places where they can monetize their content.”

    Smaller platforms have the opportunity to gain ground, too, Su said. Short-form video platform Triller, which reportedly has over 450 million users, is actively courting popular content creators from TikTok with cash bonuses, partnerships and other incentives to switch platforms. Meanwhile, Dubsmach – a Reddit-owned short video platform – and Clash, which allows people to create 21-second looping videos, are other platforms that could be increasingly appealing to creators.

    For now, talk of a TikTok ban may still be premature. The Biden administration has threatened to ban TikTok from the United States unless the app’s Chinese owners agree to spin off their share of the social media platform.

    “I strongly doubt this app will go dark,” Rep. Raja Krishnamoorthi told CNN during a primetime special about TikTok on Thursday. He said a sale is most likely.

    If the app is sold, that could complicate matters for some US tech platforms.

    “For Snap, which has a weaker network effect than Meta, a possibly more trusted US TikTok may make it more difficult to attract users away from or keep them from migrating to TikTok,” Moghaharbi wrote in the investor’s note.

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  • Blinken speaks to Russian foreign minister about WSJ reporter Evan Gershkovich and Paul Whelan | CNN Politics

    Blinken speaks to Russian foreign minister about WSJ reporter Evan Gershkovich and Paul Whelan | CNN Politics

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    CNN
     — 

    US Secretary of State Antony Blinken spoke Sunday with Russian Foreign Minister Sergey Lavrov and called for the “immediate release” of detained Americans Evan Gershkovich and Paul Whelan, according to the US State Department.

    “Secretary Blinken conveyed the United States’ grave concern over Russia’s unacceptable detention of a U.S. citizen journalist,” a readout from the department said.

    “Secretary Blinken further urged the Kremlin to immediately release wrongfully detained U.S. citizen Paul Whelan,” the readout continued, adding that the secretary and Lavrov “also discussed the importance of creating an environment that permits diplomatic missions to carry out their work.”

    Gershkovich, a Wall Street Journal reporter based in Russia, was detained last week on charges of espionage – the first time an American journalist has been detained on such accusations by Moscow since the Cold War. US officials in Moscow had not yet been granted consular access to Gershkovich as of Sunday.

    The Journal’s editor-in-chief, Emma Tucker, said Sunday that the call between Blinken and Lavrov was “hugely reassuring.”

    “We know that the US government is taking the case very seriously right up to the top,” she told CBS News.

    Whelan, meanwhile, is serving out a 16-year prison sentence for the same charges, which he strongly denies. His brother David Whelan said in an email to the press Thursday that his family was sorry to hear “that another American family will have to experience the same trauma that we have had to endure for the past 1,553 days.”

    Whelan has been designated as wrongfully detained by the US State Department, and Gershkovich is expected to receive the same designation but had not yet as of Sunday morning. Tucker said she hopes the US government will act swiftly to label Gershkovich as wrongfully detained, saying it will be anofficial recognition that the charges against the reporter are “entirely bogus.”

    The Russian Foreign Ministry said in a statement that Sunday’s phone call was initiated by the US and that Lavrov told Blinken that Gershkovich’s fate would be determined by a Russian court.

    Lavrov also blamed Washington and the Western press for politicizing the arrest.

    “It was emphasized that it is unacceptable for officials in Washington and Western media to hype up [the issue] with the clear intention of giving this case a political coloring,” the statement said.

    Gershkovich is currently being held in the notorious Lefortovo pre-detention center until May 29. He faces up to 20 years in prison on espionage charges.

    Sunday’s call was only the third time that Blinken has spoken with his Russian counterpart since the war in Ukraine began, and all of those conversations have discussed detained US citizens. The two spoke in person for the first time since the war broke out on the sidelines of the G20 foreign ministers meeting in India last month, and Blinken said he raised the issues of the war, Russia’s suspension of its participation in the New START nuclear agreement, and Whelan’s ongoing detention.

    The chairman of the House Intelligence Committee on Sunday expressed support for the Biden administration’s efforts to negotiate with Russia for Gershkovich’s release.

    “Certainly the Biden administration should continue its efforts to negotiate and to try to get the release of this journalist, but overall, people should be very cautious about staying in Russia,” Republican Rep. Mike Turner of Ohio told CNN’s Dana Bash on “State of the Union.”

    Turner noted that the US government “gave people notice that they should get out of Russia” and said he would continued to encourage people to do so. The Biden administration has echoed those assessments. While the Kremlin has asserted that Russia is safe for accredited journalists, White House press secretary Karine Jean-Pierre told CNN on Friday, “Russia is not safe for Americans.”

    Turner appeared on “State of the Union” on Sunday from southern Poland, where he said he is “meeting with those who are active in intelligence and meeting with our servicemembers who are active in the support of Ukraine.”

    Pressed by Bash on remarks by Chairman of the Joint Chiefs of Staff Gen. Mark Milley that the war in Ukraine will likely not be won this year, the Ohio lawmaker appeared to agree.

    “One thing I can tell you is that Russia is not going to win either,” he said. “This is a war that Russia is not winning, and they’re not winning it because Ukraine realizes that they’re standing up for democracy, they’re fighting for their country. And as they continue to do so, the United States’ assistance and certainly the assistance of our NATO allies and partners are making a huge turnout for the battlefield.”

    This story has been updated with additional reaction.

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  • Federal judge rules Google tried to ‘hide the ball’ by deleting chat logs in a big antitrust case | CNN Business

    Federal judge rules Google tried to ‘hide the ball’ by deleting chat logs in a big antitrust case | CNN Business

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    Washington
    CNN
     — 

    Google intentionally sought to “hide the ball” in a high-profile antitrust case by automatically deleting employee chat messages that could have been used as evidence in the suit, a federal judge ruled Tuesday, dealing a blow to the tech giant.

    The ruling condemns Google’s document preservation practices and their impact on litigation, which could have a broader impact as the company defends a range of suits on multiple fronts.

    Google will not face immediate sanctions for its missteps apart from having to cover the legal fees that plaintiffs incurred in bringing the sanctions motion, wrote Judge James Donato in his order. A non-monetary penalty could still be imposed following further court proceedings. But Donato repeatedly criticized Google this week for trying to keep sensitive chat logs out of the record.

    “The Court concludes that Google intended to subvert the discovery process, and that Chat evidence was ‘lost with the intent to prevent its use in litigation’ and ‘with the intent to deprive another party of the information’s use in the litigation,’” Donato wrote.

    In what Donato described as a “fundamental problem,” Google appeared to turn a blind eye to employees’ liberal use of a chat feature that deletes the logs after 24 hours, according to the ruling. The feature enabled Google employees to have conversations about topics relevant to its app store practices — and the topic of the lawsuit — with greater confidence the messages would not be used in court. Employees were also given the discretion to determine for themselves what constituted conversations that needed to be preserved, Donato wrote.

    That was “in sharp contrast” to how Google automatically preserves company emails that are subject to a litigation hold, he added, saying that Google omitted any mention of its practices surrounding chats until it was specifically forced to address the matter by the plaintiffs’ sanctions motion.

    The Justice Department has filed a similar sanctions motion against Google in an ongoing antitrust suit over Google’s search business. Though that case is unfolding in a different federal court, Donato’s ruling Tuesday could give other courts more ammunition to reach the same conclusion.

    In a statement, Google said it has endeavored to meet its discovery obligations.

    “Our teams have conscientiously worked, for years, to respond to Epic and the state AGs’ discovery requests and we have produced over three million documents, including thousands of chats,” said a Google spokexperson. “We’ll continue to show the court how choice, security, and openness are built into Android and Google Play.”

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  • Who says romance is dead? Couples are using ChatGPT to write their wedding vows | CNN Business

    Who says romance is dead? Couples are using ChatGPT to write their wedding vows | CNN Business

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    CNN
     — 

    When Elyse Nguyen was nearing her wedding date in February and still hadn’t started writing her vows, a friend suggested she try a new source of inspiration: ChatGPT.

    The AI chatbot, which was released publicly in late November, can generate compelling written responses to user prompts and offers the promise of helping people get over writer’s block, whether it be for an essay, an email, or an emotional speech.

    “At first we inputted the prompt as a joke and the output was pretty cheesy with personal references to me and my husband,” said Nguyen, a financial analyst at Qualcomm. “But the essence of what vows should incorporate was there – our promises to each other and structure.”

    She made edits, changed the prompts to add humor and details about her partner’s interests, and added some personal touches. Nguyen ultimately ended up using a good portion of ChatGPT’s suggestions and said her husband was on board with it.

    “It helped alleviate some stress because I had no prior experience with wedding vows nor did I know what should be included,” Nguyen said. “Plus, ChatGPT is a genius with alliteration, analogies and metaphors. Having something like, ‘I promise to be your partner in life with the enthusiasm of a golfer’s first hole in one’ in my back pocket was comical.”

    Nearly five months after ChatGPT went viral and ignited a new AI arms race in Silicon Valley, more couples are looking to it for help with wedding planning, including writing vows and speeches, drafting religious marriage contracts, and setting up websites for the special day.

    Ellen Le recently created some of her wedding website through a new Writer’s Block Assistant tool on online wedding planning service Joy, which was one of the first third-party platforms to incorporate ChatGPT’s technology. (Last month, OpenAI, the company behind ChatGPT, opened up access to the chatbot, paving the way for it to be integrated into numerous apps and services.)

    Le, a product manager at a startup, said she used the feature to draft an “about us” page and write directions from San Francisco to her Napa Valley wedding. The Writer’s Block Assistant tool helps users write vows, best man and maid of honor speeches, thank you cards and wedding website “about us” pages. It also lets users highlight personal stories and select the style or tone before pulling it into a speech.

    “I started drafting my vows and when I typed in how we met, it produced this very delightful story,” Le said. “Some of it was inaccurate, making up certain details, but it gave me a helping hand and something to react to, rather than just spending 10 hours thinking about how to get started.”

    Le said her fiance, who often uses ChatGPT for work, is considering using AI to help with his vows too.

    Joy co-founder and CEO Vishal Joshi, who studied artificial intelligence and electrical engineering at NIT Rourkela in India, said the company launched Writer’s Block Assistant in March after it conducted an internal study that found most of its users were somewhat overwhelmed with getting started on writing vows and speeches, and wished they had help. He said the company has already seen thousands of submissions since launching the tool.

    “Almost two decades ago, AI enthusiasts like myself and my research peers had only dreamt of mass market adoption we are seeing today, and we know this is just the true beginning,” Joshi said. “Just like smartphones, if applied well, the positive impact of AI on our lives can far outshine the negatives. We’re working on responsibly innovating using AI to advance the wedding and event industry as a whole.”

    Michael Grinn and Kate Gardiner used viral AI tool ChatGPT to write the Ketubah, a Jewish wedding contract, for their June wedding.

    ChatGPT has sparked concerns in recent months about its potential to perpetuate biases, spread misinformation and upend certain livelihoods. Now, as it finds its way into marriage ceremonies, it could raise more nuanced questions about whether people risk losing something by injecting technology into what is supposed to be a deeply personal and, for many, spiritual moment in life.

    Michael Grinn, an anesthesiologist with practices in Miami and New York, was experimenting with ChatGPT when he asked it to produce a traditional Ketubah – a Jewish marriage contract – for his upcoming June wedding.

    Grinn and his fiance Kate Gardiner, the founder and CEO of a public relations firm, then requested it make some language changes around gender equality and intimacy. “At the end, we both looked at each other and were like, we can’t disagree with the result,” he said.

    Editing took about an hour, but it still shaved hours off what otherwise could have been a lengthy process, he said. Still, Grinn plans to write his own vows. “I want them to be less refined and something no one else helped me with.”

    He does, however, plan to use ChatGPT for inspiration for officiating his best man’s wedding. “It mostly comes down to time because I’ve been working so much,” he said, “and this is so efficient.”

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  • Seagate to pay $300 million penalty for shipping Huawei hard drives in violation of US export control laws | CNN Business

    Seagate to pay $300 million penalty for shipping Huawei hard drives in violation of US export control laws | CNN Business

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    Reuters
     — 

    Seagate Technology has agreed to pay a $300 million penalty in a settlement with US authorities for shipping over $1.1 billion worth of hard disk drives to China’s Huawei in violation of US export control laws, the Department of Commerce said on Wednesday.

    Seagate

    (STX)     sold the drives to Huawei between August 2020 and September 2021 despite an August 2020 rule that restricted sales of certain foreign items made with US technology to the company. Huawei was placed on the Entity List, a US trade blacklist, in 2019 to reduce the sale of US goods to the company amid national security and foreign policy concerns.

    The penalty represents the latest in a string of actions by Washington to keep sophisticated technology from China that may support its military, enable human rights abuses or otherwise threaten US security.

    Seagate shipped 7.4 million drives to Huawei for about a year after the 2020 rule took effect and became Huawei’s sole supplier of hard drives, the Commerce Department said.

    The other two primary suppliers of hard drives ceased shipments to Huawei after the new rule took effect in 2020, the department said. Though they were not identified, Western Digital

    (WDC)     and Toshiba

    (TOSBF)     were the other two, the US Senate Commerce Committee said in a 2021 report on Seagate.

    The companies did not respond to requests for comment.

    Even after “its competitors had stopped selling to them … Seagate continued sending hard disk drives to Huawei,” Matthew Axelrod, assistant secretary for export enforcement at the Commerce Department’s Bureau of Industry and Security said in a statement. “Today’s action is the consequence.”

    Axelrod said the administrative penalty was the largest in the history of the agency not tied to a criminal case.

    Seagate’s position was that its foreign-made drives were not subject to US export control regulations, essentially because they were not the direct product of US equipment.

    “While we believed we complied with all relevant export control laws at the time we made the hard disk drive sales at issue, we determined that … settling this matter was the best course of action,” Seagate CEO Dave Mosley said in a statement.

    In an order issued on Wednesday, the government said Seagate wrongly interpreted the foreign product rule to require evaluation of only the last stage of its manufacturing process rather than the entire process.

    Seagate made drives in China, Northern Ireland, Malaysia, Singapore, Thailand and the United States, the order said, and used equipment, including testing equipment, subject to the rule.

    In August, the US Department of Commerce sent the company a “proposed charging letter,” warning the company that it may have violated export control laws. The letter kicked off some eight months of negotiations.

    Seagate’s $300 million penalty is due in installments of $15 million per quarter over five years, with the first payment due in October. It also agreed to three audits of its compliance program, and is subject to a five-year suspended order denying its export privileges.

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  • ‘Too good to be true?’ As Shein and Temu take off, so does the scrutiny | CNN Business

    ‘Too good to be true?’ As Shein and Temu take off, so does the scrutiny | CNN Business

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    Hong Kong/New York
    CNN
     — 

    Temu and Shein are taking off in the United States, topping app stores and creating a frenzy with consumers.

    But as the two online shopping platforms become hugely popular, they’re also facing questions over a litany of issues, including how they’re able to sell goods at such strikingly low prices, how transparent they are with the public and how much environmental waste their businesses generate.

    Some of those questions aren’t unique to the two companies: Longtime fast-fashion producers like Zara or H&M

    (HNNMY)     have faced similar concerns.

    But in recent weeks, Temu and Shein have also faced greater scrutiny over their ties to China, the country where their businesses originated and where they continue to rely on manufacturers.

    Shein was started in China, while Temu was launched by a Chinese company that now bills itself as a multinational firm. They are based in Singapore and Boston, respectively.

    That may matter little to policymakers. As US-China tensions remain high, American legislators have increased attempts to restrict technology linked in any way to foreign entities.

    Earlier this month, a US congressional commission called out Shein and Temu in a report that suggested the companies and others in China were potentially linked to the use of forced labor, exploitation of trade loopholes, product safety hazards or intellectual property theft.

    Both firms have enjoyed major success in the United States, noted Nicholas Kaufman, a policy analyst for the US-China Economic and Security Review Commission. This “has encouraged both established Chinese e-commerce platforms and startups to copy their model, posing risks and challenges to US regulations, laws, and principles of market access,” he wrote.

    Temu and Shein have racked up tens of millions of US users

    Shein: 24.5 millionTemu: 22.8 million

  • Note: US monthly active users, as of April 19
  • Source: Sensor Tower, a market intelligence firm

“Like Shein, Temu’s success raises flags about its business practices,” Kaufman added.

Asked about the report, Shein said in a statement that it “takes visibility across our supply chain seriously.”

“For over a decade, we have been providing customers with on-demand and affordable fashion, beauty, and lifestyle products, lawfully and with full respect for the communities we serve,” a spokesperson said.

Temu did not respond to a request for comment.

Temu and Shein have taken the world’s largest retail market — the United States — by storm.

Temu, which runs a marketplace for virtually everything from home goods to apparel to electronics, was launched by PDD Holdings

(PDD) last year. It has quickly become the most downloaded app in the United States, and continues to expand its user base.

PDD was founded in China but recently began billing itself as a Cayman Islands company, citing a new corporate registration there. As of a February regulatory filing, PDD’s head office was in Shanghai. Temu says it doesn’t operate in China.

PDD also owns Pinduoduo, a hugely popular Chinese e-commerce giant that was found in a recent CNN investigation to have the ability to spy on its users.

According to cybersecurity researchers, Pinduoduo can circumvent users’ mobile security to see what they’re doing on other apps, read their messages and even change settings.

While Temu has not been implicated, the allegations about its sister company have invited further scrutiny and were cited in the Congress report on Temu this month. PDD did not respond to CNN’s multiple requests for comment on the investigation.

Shein, which was founded by Chinese entrepreneur Chris Xu, has enjoyed similar success with its app over the last few years. The company initially created a cult following for its fast-fashion apparel and has since branched out into other offerings, such as home goods.

Both companies have gained traction stateside by offering extreme bargains to shoppers, many of whom continue to feel the squeeze from historically high inflation.

A shopper at a Shein pop-up store in New York last October. The company initially created a cult following for its fast-fashion apparel, and has since branched out into other offerings.

“The timing is very advantageous,” said Michael Felice, an associate partner in Kearney’s communications, media and technology practice. “You have extreme pressure on the consumer wallet right now.”

While Temu and Shein may appear similar, they have different business models.

Temu operates as an online store, carrying merchandise from independent sellers. Shein, on the other hand, commissions its own goods through manufacturers it teams up with in what is effectively seen as a supersonic version of fast fashion.

For some consumers, the companies’ low prices have raised eyebrows.

“I think transparency and traceability of product is becoming more important,” said Felice. “When you’re starting to see price points that almost could be too good to be true, you start to ask yourself, ‘Is that too good to be true?’”

Felice also said there was a risk of Temu facing resistance from US consumers as a cross-border business.

“There’s a rising sense of nationalism in markets,” he said. “It will be interesting to see which one wins as the dual pressures of inflation and nationalism take hold on American consumers.”

Lawmakers are also getting more hawkish. While both Temu and Shein have taken steps to separate their businesses from links to China, geopolitical tensions are proving hard to shake off.

Last month, a bipartisan group of US senators introduced legislation that would give the government new powers, including a ban on foreign-linked producers of software.

In a fact sheet distributed by lawmakers, Temu’s surge on US app stores was described as an example of how Chinese consumer technology was becoming more popular.

A screenshot from Temu's commercial unveiled during the Super Bowl in February, encouraging consumers to

“From the history of the companies to where their products come from, it’s very hard to say you’re not related to China,” said Sheng Lu, an associate professor of fashion and apparel studies at the University of Delaware.

Similar to TikTok, which faces the prospect of a US ban, Lu believes that Temu and Shein could face data privacy concerns from regulators.

“They’re large, influential and collect data,” he said. “This can make the companies a potential sensitive topic.”

The fashion industry is responsible for 10% of annual global carbon emissions, more than all international flights and maritime shipping combined, according to the United Nations Environment Programme. Around 85% of clothing ends up in landfills or is burned.

Experts say the problem is even worse with fast fashion, defined as the rapid design and production of cheap and low-quality goods that respond to fleeting trends.

These are “disposable fashion companies,” said Maxine Bédat, founder of the New Standard Institute.

“That’s the crux of what they are. This stuff is not meant to last in your wardrobe,” she added. “Their business wouldn’t function if it did.”

Shein argues that its business model enables it to reduce waste and overproduction by producing small batches and only responding with larger production if demand is shown. The company has set a goal of reducing emissions by 25% by 2030, based on 2021 figures.

A model trying on outfits in Temu's Super Bowl ad. The company runs a marketplace for virtually everything, from apparel to home goods to electronics.

Temu, which markets itself more as a general store than a fashion outlet, also said its model limits unsold inventory and waste by better matching demand with supply.

The company told CNN it offsets emissions for every order with “carbon credits which support wildlife conservation efforts” in the United States, though it did not provide details.

Researchers who study textile waste and sustainability in global supply chains say the companies need to go further.

Shein, for example, often uses low-cost fabrics that are hard to recycle. Compared with other fashion retailers, the company has a much lower percentage of products that mention using sustainable or recycled textile materials, said Lu.

There are also concerns about the conditions of workers who make some of the companies’ products.

In February, a bipartisan group of US senators wrote to Shein, pressing the company on its supply chain practices and calling for greater transparency in its supply chain.

“We are concerned that American consumers may be inadvertently purchasing apparel made in part with cotton grown, picked, and processed using forced labor,” the senators said.

The inquiry was made following a Bloomberg report showing lab testing on two occasions last year found that garments shipped to the United States by Shein were made with cotton from Xinjiang. Washington has banned all imports from the Chinese region over concerns of forced labor.

In a statement to CNN, Shein said it was committed to respecting human rights and adhering to laws and regulations in the countries where it operates. A spokesperson said the company had zero tolerance for forced labor, and worked with third parties to audit supplier factories.

To ensure compliance with US laws, Shein requires that suppliers purchase cotton from approved countries, and has built tracing systems to get visibility into the origins of cotton it uses, the spokesperson added.

Temu has not faced such questions, though its sister company received backlash in 2021 over allegations that it overworks its staff. Pinduoduo said at the time that it would provide counseling following the suicide of a worker.

Worker rights at Shein also made headlines in December, when a documentary by UK broadcaster Channel 4 alleged exploitation at two Chinese factories belonging to its suppliers.

The program claimed staff were working 18 hours a day, making the equivalent of pennies on each item. CNN has not independently verified the allegations.

Shein responded to the claims, saying independent audits had refuted most of the allegations. But it conceded that the investigation had showed workers at two of its suppliers were working longer hours than allowed.

The company has since reduced the size of its orders from those producers on an interim basis, and committed $15 million to upgrade hundreds of its partner factories.

Still, the “working conditions of workers making Shein’s products remain a black box,” said Lu, the University of Delaware professor.

“Shein should be more transparent about their factory conditions and workers’ well-being.”

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  • Microsoft opens up its AI-powered Bing to all users | CNN Business

    Microsoft opens up its AI-powered Bing to all users | CNN Business

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    CNN
     — 

    Microsoft is rolling out the new AI-powered version of its Bing search engine to anyone who wants to use it.

    Nearly three months after the company debuted a limited preview version of its new Bing, powered by the viral AI chatbot ChatGPT, Microsoft is opening it up to all users without a waitlist – as long as they’re signed into the search engine via Microsoft’s Edge browser.

    The move highlights Microsoft’s commitment to move forward with the product even as the AI technology behind it has sparked concerns around inaccuracies and tone. In some cases, people who baited the new Bing were subject to some emotionally reactive and aggressive responses.

    “We’re getting better at speed, we’re getting better at accuracy … but we are on a never-ending quest to make things better and better,” Yusuf Mehdi, a VP at Microsoft overseeing its AI initiatives, told CNN on Wednesday.

    Bing now gets more than 100 million daily active users each day, a significant uptick in the past few months, according to Mehdi. Google, which has long dominated the market, is also adding similar AI features to its search engine.

    In February, Microsoft showed off how its revamped search engine could write summaries of search results, chat with users to answer additional questions about a query and write emails or other compositions based on the results.

    At a press event in New York City on Wednesday, the company shared an early look at some updates, including the ability to ask questions with pictures, access chat history so the chatbot remembers its rapport with users, and export responses to Microsoft Word. Users can also personalize the tone and style of the chatbot’s responses, selecting from a lengthier, creative reply to something that’s shorter and to the point.

    The wave of attention in recent months around ChatGPT, developed by OpenAI with financial backing from Microsoft, helped renew an arms race among tech companies to deploy similar AI tools in their products. OpenAI, Microsoft and Google are at the forefront of this trend, but IBM, Amazon, Baidu and Tencent are working on similar technologies. A long list of startups are also developing AI writing assistants and image generators.

    Beyond adding AI features to search, Microsoft has said it plans to bring ChatGPT technology to its core productivity tools, including Word, Excel and Outlook, with the potential to change the way we work. The decision to add generative AI features to Bing could be particularly risky, however, given how much people rely on search engines for accurate and reliable information.

    Microsoft’s moves also come amid heightened scrutiny on the rapid pace of advancement in AI technology. In March, some of the biggest names in tech, including Elon Musk and Apple co-founder Steve Wozniak, called for artificial intelligence labs to stop the training of the most powerful AI systems for at least six months, citing “profound risks to society and humanity.”

    Mehdi said he doesn’t believe the AI industry is moving too fast and suggested the calls for a pause aren’t particularly helpful.

    “Some people think we should pause development for six months but I’m not sure that fixes anything or improves or moves things along,” he said. “But I understand where it’s coming from concern wise.”

    He added: “The only way to really build this technology well is to do it out in the open in the public so we can have conversations about it.”

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  • Three GOP appointees, including 2 from Trump, will hear the next phase of major abortion pill case | CNN Politics

    Three GOP appointees, including 2 from Trump, will hear the next phase of major abortion pill case | CNN Politics

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    CNN
     — 

    The New Orleans-based appeals court panel that will oversee the next stage in the blockbuster legal challenge to the availability of medication abortion drugs is made up of three Republican appointees, including one Trump nominee who has called abortion a “moral tragedy.”

    Circuit Judges James Ho and Cory Wilson, both Trump nominees, will hear the oral arguments on May 17, alongside Judge Jennifer Walker Elrod, an appointee of George W. Bush.

    The lawsuit was brought by anti-abortion doctors and medical organizations who allege the US Food and Drug Administration broke the law when it approved the medication abortion drug mifepristone more than two decades ago.

    Last month, US District Judge Matthew Kacsmaryk agreed with their arguments and ruled that the approval of the drug should be suspended. 

    However, his ruling was put on hold by the Supreme Court on April 21 and it will remain on hold until the case goes back to the high court, regardless of how the 5th US Circuit Court of Appeals rules on the merits.

    Ho, a former Texas solicitor general, is considered one of the most conservative and strident members of the 5th Circuit, having described abortion as a “moral tragedy” in a 2018 concurring opinion.

    In a 2019 concurring opinion, Ho also said that a trial judge’s ruling – which struck down a 15-week abortion ban and which was affirmed by the 5th Circuit under the then-standing Roe precedent – displayed “an alarming disrespect for the millions of Americans who believe that babies deserve legal protection during pregnancy as well as after birth, and that abortion is the immoral, tragic, and violent taking of innocent human life.”

    The 5th Circuit is considered one of the most conservative in the country has consistently ruled against the Biden Justice Department.

    Wilson earlier this year wrote a majority circuit opinion that said that a federal law that bars gun ownership by people under domestic violence was unconstitutional.

    Elrod penned an opinion last month that struck down the federal ban on bump stocks, which are attachments that essentially allow shooters to fire semiautomatic rifles continuously with one pull of the trigger.

    The medication abortion case is another hugely consequential case to go through the circuit. Mifepristone – the drug being targeted in the lawsuit – is the first pill in the two-pill regimen for terminating a pregnancy. Medication abortion makes up more than half of all abortions obtained in the United States.

    In filings last week, the Justice Department told the 5th Circuit that Kacsmaryk’s conclusions that the drug was unsafe rested “on a series of fundamental errors.”

    “While FDA justified its scientific conclusions in multiple detailed reviews, including a medical review spanning more than 100 pages and assessing dozens of studies and other scientific information, the district court swept the agency’s judgments aside by substituting its own lay understanding of purportedly contrary studies, offering demonstrably erroneous characterizations of the record,” the DOJ’s filing said. 

    The department’s opponents in the case will file a response later on Monday.

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  • ‘Significant risk’ for debt default in early June, CBO reinforces | CNN Politics

    ‘Significant risk’ for debt default in early June, CBO reinforces | CNN Politics

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    CNN
     — 

    There is a “significant risk” that the federal government will no longer be able to pay all its obligations in the first two weeks of June if the debt limit remains unchanged, the Congressional Budget Office said Friday.

    The forecast reinforces both Treasury Secretary Janet Yellen’s estimate and the agency’s earlier warning that House Republicans and President Joe Biden may only have a few weeks to address the debt ceiling or unleash global economic and financial upheaval. Talks are underway between White House and congressional staffers.

    Predicting just when the nation hits the so-called X-date, when a default would occur, is uncertain because of the timing and amount of revenue Treasury collects and the bills it has to pay.

    If government collections wind up being enough to keep Treasury’s coffers flush through early June, then it’s likely the government won’t default at least until the end of July, the CBO said. The agency will get another injection of funds from second quarter estimated tax payments, which are due June 15, and from an “extraordinary measure” that becomes available at the end of that month.

    About $25 billion in pay or benefits for active-duty members of the military, civil service and military retirees, veterans and recipients of Supplemental Security Income is sent out on the first day of the month, according to the CBO.

    Interest payments are made around the 15th day and on the last day of the month. May’s mid-month payment is expected to be roughly $50 billion, per the CBO. End-of-month payments range from $10 billion to $16 billion over the past half year.

    If the nation runs out of cash and extraordinary measures to satisfy all its obligations, which has never happened, it’s unknown how Treasury would react. Some payments could be delayed. These include paychecks for federal employees and contractors, as well as the military. Also, many other government payments could be affected, including funding for food stamps and federal grants to states and municipalities for Medicaid, highways, education and other programs.

    However, payments to Social Security recipients and benefits covered under Medicare Part A, largely hospital care, are financed by trust funds. The Treasury obtains cash to make those payments by borrowing, but the disbursements lower the funds’ balances, which are held in the form of Treasury securities, the CBO said.

    Because of that reduction, the payments have little net effect on the total amount of debt subject to the borrowing cap, the agency said.

    The entitlements’ trust funds may allow Treasury to continue making these payments on time, said Shai Akabas, director of economic policy at the Bipartisan Policy Center.

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  • Mr. ChatGPT goes to Washington: OpenAI CEO Sam Altman set to testify before Congress | CNN Business

    Mr. ChatGPT goes to Washington: OpenAI CEO Sam Altman set to testify before Congress | CNN Business

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    CNN
     — 

    OpenAI CEO Sam Altman is set to testify before a Senate Judiciary subcommittee on Tuesday after the viral success of ChatGPT, his company’s chatbot tool, renewed an arms race over artificial intelligence and sparked concerns from some lawmakers about the risks posed by the technology.

    “Artificial intelligence urgently needs rules and safeguards to address its immense promise and pitfalls,” said Connecticut Democratic Sen. Richard Blumenthal, who chairs the Senate panel on privacy and technology. “This hearing begins our Subcommittee’s work in overseeing and illuminating AI’s advanced algorithms and powerful technology.”

    He added: “I look forward to working with my colleagues as we explore sensible standards and principles to help us navigate this uncharted territory.”

    A growing list of tech companies have deployed new AI tools in recent months, with the potential to change how we work, shop and interact with each other. But these same tools have also drawn criticism from some of tech’s biggest names for their potential to disrupt millions of jobs, spread misinformation and perpetuate biases.

    Also testifying Tuesday will be Christina Montgomery, IBM’s vice president and chief privacy and trust officer, as well as Gary Marcus, a former New York University professor and a self-described critic of AI “hype.”

    Montgomery is expected to urge Congress to adopt a “precision regulation” approach for AI based on specific use cases, and to suggest that lawmakers push companies to test how their systems handle bias and other concerns – and disclose those results.

    As the CEO of OpenAI, Altman, perhaps more than any other single figure, has come to serve as a face for a new crop of AI products that can generate images and texts in response to user prompts.

    Earlier this month, Altman was one of several tech CEOs to meet with Vice President Kamala Harris and, briefly, President Joe Biden as part of the White House’s efforts to emphasize the importance of ethical and responsible AI development.

    In interviews this year, Altman has presented himself as someone who is mindful of the risks posed by AI and even “a little bit scared” of the technology. He and his company have pledged to move forward responsibly.

    Others want Altman and OpenAI to move more cautiously. Elon Musk, who helped found OpenAI before breaking from the group, joined dozens of tech leaders, professors and researchers in signing a letter calling for artificial intelligence labs like OpenAI to stop the training of the most powerful AI systems for at least six months, citing “profound risks to society and humanity.”

    Altman has said he agreed with parts of the letter. “I think moving with caution and an increasing rigor for safety issues is really important,” Altman said at an event last month. “The letter I don’t think was the optimal way to address it.”

    – CNN’s Jennifer Korn contributed to this report.

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  • Inside the Treasury Department team monitoring early economic warning signs as default threat looms | CNN Politics

    Inside the Treasury Department team monitoring early economic warning signs as default threat looms | CNN Politics

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    CNN
     — 

    Nearly five months before the US was projected to hit the debt ceiling, a small team inside the Treasury Department began alerting top officials to early effects already being felt in the US financial system.

    The cost of insuring US debt, as measured by the price of credit-default swaps, was rising – a sign that investors were beginning to view US bonds and other securities as increasingly risky.

    That early warning – and subsequent ones over the last month as the swaps pricing has surged – came out of the Treasury Department’s Markets Room and its eponymous team of nine financial analysts who are responsible for monitoring and analyzing global financial markets to inform the policy work of top Treasury Department and White House officials.

    As the US rapidly approaches a potential default date in early June, top US officials are increasingly relying on the Markets Room to monitor for signs of disruption in the financial markets.

    “In the same way that a doctor wants to understand the vital signs of a patient as they’re thinking about how to treat them, at Treasury keeping abreast of understanding the various ways in which the economy is healthy or unhealthy. And part of that is understanding the market,” Deputy Treasury Secretary Wally Adeyemo told CNN in an interview.

    “So, we’re spending a lot of time with them better understanding what the costs are today, in order to make sure that we’re in a position to share that information with Congress, in order to prevent us from getting into a position where for the first time in our history, we’re unable to pay all of our obligations on time.”

    That work begins each day before dawn, when staffers take turns waking up around 3:30 a.m. ET to compile data about overnight market developments and begin making calls to contacts working in European and Asian markets.

    At around 7 a.m. ET, those data and insights land in the inboxes of top policymakers at the White House and Treasury Department.

    At 9 a.m. ET, before the US markets open, Treasury Secretary Janet Yellen and her senior leadership team huddle virtually with the Markets Room and other key Treasury Department aides for a briefing on the state of the financial markets and issues to watch for that day.

    “Almost every American is influenced by what’s happening around the globe and global markets either through your 401(k), or your attempt to borrow money for your small business or for your home. So, this team of individuals, every morning, provides us a briefing and an update on what’s happening around the world,” Adeyemo said.

    In recent weeks, that daily briefing has heavily focused on reverberations of the debt limit standoff, from updates on auctions of Treasury bills to market reactions and commentary from market analysts and economists.

    Much of the rest of the day is spent monitoring developments in the financial markets and fielding inquiries from top policymakers at Treasury and the White House for analysis on those developments.

    And at the end of the day, the Markets Room also helps policymakers digest the biggest developments in the financial markets with another widely read one-page memo delivered after the US markets close and before the Asian markets open.

    Beyond the Treasury Department, a White House spokesperson said the unit’s twice-daily memos are “a valuable asset” for officials at the National Economic Council and Council of Economic Advisers.

    “Those offices also rely on the Markets Room’s real-time updates – either in memos or meetings – when more regular monitoring is warranted,” the spokesperson said.

    Officials say the Markets Room is focused on monitoring the global economy’s recovery from the pandemic-induced recession, lingering inflation and the trajectory of the global economy.

    Albert Lee, the Markets Room director, described the unit as an early warning system on the global financial system for top US policymakers.

    In the early days of the coronavirus pandemic, the team was among the first to sound alarm bells inside the federal government about early shocks in pockets of the financial system and predicting rate cuts from the Federal Reserve.

    The team also played a critical role during the banking crisis earlier this year, tracking the sharp selloff of stock and outflows of deposit at Silicon Valley Bank that ultimately triggered the bank’s collapse.

    As the Treasury Department acted to address the second-largest bank failure in US history and prevent any spillover effects in the banking sector, top Treasury Department officials leaned on the Markets Room team to track the feedback of their policy actions.

    “It was critically important for us to understand how markets were interpreting the actions that we took that made clear to the American people that your deposits were safe,” Adeyemo said. “We were monitoring signs of distress in the banking sector.”

    With one week until the government can potentially no longer pay its bills, the US stock market is only just beginning to show signs of concern about a potential default and Treasury officials say the team is focused on tracking further reactions from the stock market as well as the Treasury securities market.

    The stock market’s reaction has, up until now, been relatively muted – especially as compared to the 17% drop the S&P 500 suffered amid the 2011 debt ceiling crisis. But Treasury officials say volatility in the securities market is already affecting the federal government, raising the cost to borrow.

    Yields on short-term Treasury securities have surged and recent auctions for securities are leaving a heftier price tag for the federal government, which Adeyemo said recently incurred $80 million in additional costs for a recent auction of Treasury bills.

    “So, the cost of borrowing has already gotten more expensive when it comes to us borrowing in the short term for the US government,” Adeyemo said. “So as the debt limit manufactured crisis goes on, and costs go up for the government, it also means that costs will go up for the American people as well.”

    Adeyemo declined to disclose what contingencies are being prepared should the US default. But when the US faced a similar standoff on the debt in 2011, Federal Reserve officials and Treasury Department officials quietly prepared a plan to prioritize payments on US debt and delay paying other government bills and obligations, like Social Security and payments to veterans, according to transcripts of a central bank meeting released in 2017.

    “The most important thing for the American people, for our country, for our credibility, not only with our creditors, but with the American people is to pay all of our bills on time. That’s what our system is built to do,” Adeyemo said. “I’ve spent a good part of a decade working here at the Treasury Department. What I can tell you is that there’s no plan that would allow us to meet all of our commitments other than Congress, raising the debt limit.”

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  • AI chip boom sends Nvidia’s stock surging after whopper of a quarter | CNN Business

    AI chip boom sends Nvidia’s stock surging after whopper of a quarter | CNN Business

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    New York
    CNN
     — 

    The AI boom is here, and Nvidia is reaping all the benefits.

    Shares of Nvidia

    (NVDA)     exploded 28% higher Thursday after reporting earnings and sales that surged well above Wall Street’s already lofty expectations. That was enough to make investors temporarily forget about America’s dangerous debt ceiling standoff, sending the broader stock market higher — even after credit rating agency Fitch warned late Wednesday that America could soon lose its sterling AAA debt rating.

    Nvidia makes chips that power generative AI, a type of artificial intelligence that can create new content, such as text and images, in response to user prompts. That’s the kind of AI underlying ChatGPT, Google’s Bard, Dall-E and many of the other new AI technologies.

    “The computer industry is going through two simultaneous transitions — accelerated computing and generative AI,” said Jensen Huang, Nvidia’s CEO, in a statement. “A trillion dollars of installed global data center infrastructure will transition from general purpose to accelerated computing as companies race to apply generative AI into every product, service and business process.”

    Huang said Nvidia is increasing supply of its entire suite of data center products to meet “surging demand” for them.

    Last quarter, Nvidia’s profit surged 26% to $2 billion, and sales rose 19% to $7.2 billion, each easily surpassing Wall Street analysts’ forecasts. Nvidia’s outlook for the current quarter was also significantly — about 50% — higher than analysts’ predictions.

    Nvidia’s stock is up nearly 110% this year.

    “There is not one better indicator around underlying AI demand going on … than the foundational Nvidia story,” said Dan Ives, analyst at Wedbush. “We view Nvidia at the core hearts and lungs of the AI revolution.”

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  • China’s answer to Boeing and Airbus isn’t as ‘homegrown’ as it seems. Here’s why | CNN Business

    China’s answer to Boeing and Airbus isn’t as ‘homegrown’ as it seems. Here’s why | CNN Business

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    Hong Kong
    CNN
     — 

    China is claiming a historic win this week after its answer to Boeing and Airbus, the C919, took to the skies for its first commercial flight.

    Beijing calls the aircraft its first large homegrown passenger jet. It’s a prominent symbol of Beijing’s broader “Made in China” strategy, a campaign to reduce national reliance on foreign manufacturers.

    But instead of boosting China’s global stature in technology innovation, experts say the C919 is a symbol of its continued reliance on the West.

    That’s because a large chunk of the plane’s parts come from foreign suppliers, predominantly in North America and Europe. Chinese state media has said about 40% of the model’s components are imported, though experts say the real proportion is much higher.

    While it is normal for manufacturers to source equipment for their planes from around the world, “the C919 is unique in that almost nothing that keeps it in the air is from China,” said Scott Kennedy, who spent two years leading a team that researched China’s decades-long efforts to develop its own commercial aircraft.

    Their conclusion? “The C919 is primarily a non-Chinese airplane with Chinese paint on it,” said Scott, trustee chair in Chinese business and economics at the Center for Strategic and International Studies (CSIS) in Washington.

    The C919 was built by the Commercial Aircraft Corporation of China (COMAC), a state-owned enterprise based in Shanghai, with the stated goal of letting “China-made large aircraft fly in the blue sky.”

    One cannot overstate how difficult that is, according to Shukor Yusof, founder of Endau Analytics, which tracks the aviation industry.

    Currently, only a handful of countries in the world make their own planes — and for good reason, he said, citing extremely high obstacles, such as serious technical expertise, rigorous regulatory requirements and eye-popping amounts of time and resources.

    The C919, for instance, has already cost an estimated $49 billion, according to CSIS, though it says pinning down precisely how much is an almost impossible task because COMAC’s finances are opaque.

    While it’s not COMAC’s first homegrown plane, more attention has been directed to this model because of its size.

    The C919 can seat up to 192 passengers and fly up to 5,550 kilometers (about 3,500 miles).

    COMAC’s first commercial plane, by comparison, is a much smaller regional jet called the ARJ21, which can only fly up to 3,700 kilometers (2,300 miles) and accommodate up to 97 passengers.

    COMAC is also working on a long-range, widebody plane called the CR929. But the project, a joint effort by China and Russia, has likely stalled since Russia’s full-scale invasion of Ukraine last year, said Kennedy.

    “That plane will probably never be more than a photo, never be more than a drawing,” he told CNN. “No one is going to be supplying technology to a Chinese-Russian joint venture.”

    The C919’s maiden commercial flight took place Sunday, flying passengers from Shanghai to Beijing for China Eastern Airlines

    (CEA)    .

    China hopes the C919 will become its alternative to Boeing’s 737 and Airbus’s A320 and cement its status as a high-tech superpower, says Kennedy.

    But because the government has touted the aircraft as a homemade success, analysts have been quick to point out just how much is made outside China.

    In a 2020 analysis, CSIS estimated that approximately 90% of the C919’s main or large-scale component suppliers were from North America and Europe, with only 10% coming from China and other countries in Asia. Yusof cited a similar estimate.

    Kennedy said while it was possible the proportion had changed since the 2020 report, he thought it was unlikely given how tough it would be to change suppliers during the aviation certification process.

    The C919 got the green light for commercial service and mass production in mainland China late last year, after years of delays.

    The C919 passenger jet being welcomed on landing in Beijing on Sunday.

    China has acknowledged the criticism. “Some people have been questioning whether the C919 can be called a domestically-manufactured aircraft when it relies on imports,” Chinese state-run tabloid Global Times said in an editorial Monday.

    “It is true that there is a long list of foreign suppliers for the C919.”

    The aircraft contains “Honeywell’s

    (HON)     electricity system and landing gear, GE’s

    (GE)     flight recorder, CFM Leap’s engine, Parker Aerospace’s flight control system and fuel system, Rockwell Collins’ weather radar and simulate system, and Michelin’s

    (MGDDY)     tires,” the outlet noted. All are US or European companies.

    The government’s position is that other manufacturers often rely on imports, too.

    Boeing and Airbus also depend on “high-quality global suppliers,” state-run newspaper China Daily said in an editorial Wednesday.

    America’s Boeing

    (BA)     sources about 40% to 50% of components for planes such as its 787 Dreamliner from outside the United States, according to Yusof. Airbus

    (EADSF)    , a European plane maker, also sources from countries such as Malaysia, he said.

    China has made no secret of its ambition for COMAC to eventually compete against Airbus and Boeing, which currently command virtually the entire market.

    Yusof said this was unlikely to happen anytime soon.

    For one, COMAC hasn’t distinguished its planes enough to convince carriers to make the switch. Its technology is “already available in the Airbus and in the Boeing planes,” he said.

    It could also take many years for its planes to be certified by US and European aviation regulators.

    But once production ramps up, it’s expected to win more orders at home, or in developing countries where carriers may not be able to afford the current market leaders’ prices. In Indonesia, domestic airline TransNusa became COMAC’s first overseas customer last year.

    “It should be greatly appreciated that another country apart from the Europeans and the Americans are providing an alternative aircraft in the commercial market,” said Yusof.

    But even if China were to price its planes more aggressively, it will take a long time to win people over, he added.

    “Airlines in the world will not be easily persuaded to buy one, because there’s always a stigma [with new players] whether you like it or not,” Yusof said.

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  • Everything you need to know about AI but were too afraid to ask | CNN Business

    Everything you need to know about AI but were too afraid to ask | CNN Business

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    CNN
     — 

    Business executives keep talking about it. Teachers are struggling with what to do about it. And artists like Drake seem angry about it.

    Love it or hate it, everyone is paying attention to artificial intelligence right now. Almost overnight, a new crop of AI tools has found its way into products used by billions of people, changing the way we work, shop, create and communicate with each other.

    AI advocates tout the technology’s potential to supercharge our productivity, creating a new era of better jobs, better education and better treatments for diseases. AI skeptics have raised concerns about the technology’s potential to disrupt jobs, mislead people and possibly bring about the end of humanity as we know it. Confusingly, some execs in Silicon Valley seem to hold both sets of views at once.

    What’s clear, however, is that AI is not going away, but it is changing very fast. Here’s everything you need to know to keep up.

    In the public consciousness, “artificial intelligence” may conjure up images of murderous machines eager to overtake humans, and capable of doing so. But in the tech industry, it’s a broad term that refers to different tools that are trained to perform a wide range of complex tasks that might previously have required some input from an actual person.

    If you use the internet, then you almost certainly use services that rely on AI to sort data, filter content and make suggestions, among other tasks.

    It’s the technology that allows Netflix to recommend movies and that helps remove spam, hate speech and other inappropriate content from your social media feeds. It helps power everything from autocorrect features and Google Translate to facial recognition services, the last of which uses AI that, in Microsoft’s words, “mimics a human capability to recognize human faces.”

    AI can also be successful in developing techniques for solving a wide range of real world problems, such as adjusting traffic signals in real time to manage congestion issues or helping medical professionals analyze images to make a diagnosis. AI is also central to developing self-driving cars by processing tremendous amounts of visual data so the vehicles can understand their surroundings.

    The short answer: ChatGPT.

    For years, AI has largely operated in the background of services we use every day. That changed following the November launch of ChatGPT, a viral chatbot that put the power of AI front and center.

    People have already used ChatGPT, a tool created by OpenAI, to draft lawsuits, write song lyrics and create research paper abstracts so good they’ve even fooled some scientists. The tool has even passed standardized exams. And ChatGPT has sparked an intense competition among tech companies to develop and deploy similar tools.

    Microsoft and Google have each introduced features powered by generative AI, the technology underpinning ChatGPT, into their most widely used productivity tools. Meta, Amazon and Alibaba have said they’re working on generative AI tools, too. And numerous other businesses also want in on the action.

    It’s rare to see a cutting-edge technology become so ubiquitous almost overnight. Now businesses, educators and lawmakers are all racing to adapt.

    Generative AI enables tools to create written work, images and even audio in response to prompts from users.

    To get those responses, several Big Tech companies have developed their own large language models trained on vast amounts of online data. The scope and purpose of these data sets can vary. For example, the version of ChatGPT that went public last year was only trained on data up until 2021 (it’s now more up to date).

    These models work through a method called deep learning, which learns patterns and relationships between words, so it can make predictive responses and generate relevant outputs to user prompts.

    As impressive as some generative AI services may seem, they essentially just do pattern matching. These tools can mimic the writing of others or make predictions about what words might be relevant in their responses based on all the data they’ve previously been trained on.

    AGI, on the other hand, promises something more ambitious — and scary.

    AGI — short for artificial general intelligence — refers to technology that can perform intelligent tasks such as learning, reasoning and adapting to new situations in the way that humans do. OpenAI CEO Sam Altman has teased the possibility of a superintelligent AGI that could go on to change the world or perhaps backfire and end humanity.

    For the moment, however, AGI remains purely a hypothetical, so don’t worry too much about it.

    Anytime there’s an excess of buzz around a technology, it’s good to be skeptical — and there is certainly a lot of that here. Investor fascination with AI has helped push Wall Street back into a bull market, despite lingering economic uncertainty.

    Not all AI tools are equally useful and many companies will certainly tout AI features and strategies simply to tap into the current hype cycle. But even in just the past six months, AI has already shown potential to change how people do numerous everyday tasks.

    One of the biggest selling points around AI chatbots, for example, is their ability to make people more productive. Earlier this year, some real estate agents told CNN that ChatGPT saved them hours of work not only by writing listings for homes for sale but also looking up the permitted uses for certain land and calculating what mortgage payments or the return on investment might be for a client, which typically involve formulas and mortgage calculators.

    Artificial intelligence is also much broader than ChatGPT and other generative AI tools. Even if you think AI chatbots are annoying or might be a fad, the underlying technology will continue to power meaningful advances in products and services for years to come.

    The fear is AI will eliminate millions of jobs. The hope is it will help improve how millions do their jobs. The current reality is somewhere in between.

    Companies will likely need new workers to help them implement and manage AI tools. Employment of data analysts and scientists, machine learning specialists and cybersecurity experts is forecast to grow 30% on average by 2027, according to one recent estimate from the World Economic Forum.

    But the proliferation of AI will also likely put many roles at risk eventually. There could be 26 million fewer record-keeping and administrative jobs by 2027, the WEF predicted. Data entry clerks and executive secretaries are expected to see the steepest losses.

    For now, there are clearly limits to how well AI can do the job of a human on its own. When CNET, a media outlet, experimented with using AI to write articles, it came under scrutiny for publishing pieces with factual errors. Likewise, a lawyer in May made headlines for citing false court cases to a judge provided to him by ChatGPT. In an affidavit, the lawyer said he had never used ChatGPT as a legal research tool before and “was unaware of the possibility that its content could be false.”

    Alphabet CEO Sundar Pichai, left, and OpenAI CEO Sam Altman arrive to the White House for a meeting with Vice President Kamala Harris on artificial intelligence, Thursday, May 4, 2023, in Washington.

    Top AI executives have warned that AI could potentially bring about human extinction. But these same executives are also racing to deploy the technology into their products.

    Some experts say that focusing on far-off doomsday scenarios may distract from the more immediate harms that AI can cause, such as spreading misinformation, perpetuating biases that exist in training data, and enabling discrimination.

    For example, generative AI could be used to create deepfakes to spread propaganda during an election or enable a frightening new era of scams. Some AI models have also been criticized for what the industry calls “hallucinations,” or making up information.

    Even before the rise of ChatGPT, there were concerns about AI acting as a gatekeeper that can determine who does and does not move forward in a hiring process, for example. AI-powered facial recognition systems have also resulted in some wrongful arrests, and research has shown these systems are drastically more prone to error when trying to match the faces of darker skinned people.

    The more AI tools are incorporated into core parts of society, the more potential there is for unintended consequences.

    Regulators in the United States and Europe are pushing for legislation to help put guardrails in place for AI, which could ultimately impact how the technology develops. But it’s unclear if lawmakers can keep pace with the rapid advances in AI.

    Experts believe in the months ahead, generative AI will go on to create even more realistic images, videos, and audio that could further disrupt media, entertainment, tech and other industries. The technology will likely become increasingly conversational and personalized.

    In March, OpenAI unveiled GPT-4, the next-generation version of the technology that powers ChatGPT. According to the company and early tests, GPT-4 is able to provide more detailed and accurate written responses, pass academic tests with high marks and build a working website from a hand-drawn sketch. (Altman has previously said OpenAI is not yet training GPT-5.)

    AI will almost certainly be infused into many more products and services in the coming months. That means we’ll all have to learn how to live with it.

    As ChatGPT put it in response to a prompt from CNN, “AI has the potential to transform our lives … but it’s crucial for companies and individuals to be mindful of the accompanying risks and responsibly address concerns.”

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  • First on CNN: Senators press Google, Meta and Twitter on whether their layoffs could imperil 2024 election | CNN Business

    First on CNN: Senators press Google, Meta and Twitter on whether their layoffs could imperil 2024 election | CNN Business

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    CNN
     — 

    Three US senators are pressing Facebook-parent Meta, Google-parent Alphabet and Twitter about whether their layoffs may have hindered the companies’ ability to fight the spread of misinformation ahead of the 2024 elections.

    In a letter to the companies dated Tuesday, the lawmakers warned that reported staff cuts to content moderation and other teams could make it harder for the companies to fulfill their commitments to election integrity.

    “This is particularly troubling given the emerging use of artificial intelligence to mislead voters,” wrote Minnesota Democratic Sen. Amy Klobuchar, Vermont Democratic Sen. Peter Welch and Illinois Democratic Sen. Dick Durbin, according to a copy of the letter reviewed by CNN.

    Since purchasing Twitter in October, Elon Musk has slashed headcount by more than 80%, in some cases eliminating entire teams.

    Alphabet announced plans to cut roughly 12,000 workers across product areas and regions earlier this year. And Meta has previously said it would eliminate about 21,000 jobs over two rounds of layoffs, hitting across teams devoted to policy, user experience and well-being, among others.

    “We remain focused on advancing our industry-leading integrity efforts and continue to invest in teams and technologies to protect our community – including our efforts to prepare for elections around the world,” Andy Stone, a spokesperson for Meta, said in a statement to CNN about the letter.

    Alphabet and Twitter did not immediately respond to a request for comment.

    The pullback at those companies has coincided with a broader industry retrenchment in the face of economic headwinds. Peers such as Microsoft and Amazon have also trimmed their workforces, while others have announced hiring freezes.

    But the social media companies are coming under greater scrutiny now in part due to their role facilitating the US electoral process.

    Tuesday’s letter asked Meta CEO Mark Zuckerberg, Alphabet CEO Sundar Pichai and Twitter CEO Linda Yaccarino how each company is preparing for the 2024 elections and for mis- and disinformation surrounding the campaigns.

    To illustrate their concerns, the lawmakers pointed to recent changes at Alphabet-owned YouTube to allow the sharing of false claims that the 2020 presidential election was stolen, along with what they described as content moderation “challenges” at Twitter since the layoffs.

    The letter, which seeks responses by July 10, also asked whether the companies may hire more content moderation employees or contractors ahead of the election, and how the platforms may be specifically preparing for the rise of AI-generated deepfakes in politics.

    Already, candidates such as Florida Gov. Ron DeSantis appear to have used fake, AI-generated images to attack their opponents, raising questions about the risks that artificial intelligence could pose for democracy.

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  • TSMC says skilled worker shortage delays start of Arizona chip production | CNN Business

    TSMC says skilled worker shortage delays start of Arizona chip production | CNN Business

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    Shares of Taiwan Semiconductor Manufacturing Co slumped more than 3% Friday after the world’s largest contract chipmaker flagged a 10% drop in 2023 sales and said production due to start next year at its first plant in Arizona would be delayed.

    On Thursday, TSMC

    (TSM)     reported a 23% fall in second-quarter net profit — its first year–on-year drop in quarterly profit since 2019 — as global economic woes take a toll on demand for chips used in everything from cars to cellphones.

    “While the company’s declining revenue and profit were disappointing, its long-term growth prospects remain encouraging,” said Brady Wang, associate director at Counterpoint Research. “Despite facing macroeconomic headwinds, TSMC’s long-term outlook remains robust, supported by mega trends like 5G and high-performance computing.”

    As TSMC steps up its global expansion, the company said production at its first plant in Arizona will be delayed until 2025 due to a shortage of specialist workers.

    “While we are working to improve the situation, including sending experienced technicians from Taiwan to train the local skilled workers for a short period of time, we expect the production schedule of N4 process technology to be pushed out to 2025,” TSMC chairman Mark Liu said Thursday.

    TSMC’s total investment in the US project amounts to $40 billion.

    The company said its position as the largest manufacturer of artificial intelligence chips and high demand for AI have not offset broader end-market weakness as the global economy recovers more slowly than it had expected.

    “The short-term frenzy about the AI demand definitely cannot extrapolate for the long term. Neither can we predict the near future — meaning next year — how the sudden demand will continue or flatten out,” Liu said.

    Still, the company’s earnings of 181.8 billion Taiwan dollars ($5.85 billion) for the quarter ending in June beat forecasts.

    “We see TSMC well-positioned for a strong growth outlook in 2024,” Goldman Sachs said in a research note. “We believe the US expansion delay is also well-expected by investors.”

    Other analysts, too, were upbeat on TSMC, thanks in part to strong demand for AI, which currently accounts for around 6% of the company’s revenue.

    “We expect a solid 2024-onward outlook on the back of its leading position in AI chip manufacturing,” Citi Research analysts said in a note.

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  • Supreme Court takes up case concerning Americans with Disabilities Act ‘tester’ of hotels | CNN Politics

    Supreme Court takes up case concerning Americans with Disabilities Act ‘tester’ of hotels | CNN Politics

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    Washington
    CNN
     — 

    The US Supreme Court on Monday agreed to hear a case concerning whether a self-appointed “tester” of the Americans with Disabilities Act has the right to sue hotels over alleged violations of the civil rights law.

    The court was asked to take the case by Acheson Hotels, which owns and operates a hotel in coastal Maine. The company was sued by Deborah Laufer, who they say has filed hundreds of lawsuits against hotels across the country, claiming their websites are not in compliance with ADA rules that require hotels to disclosure information about how accessible they are to individuals with disabilities.

    Though Laufer doesn’t intend to visit the hotels she’s suing, the lawsuits are brought in an effort to force the hotels to update their websites to be in compliance with the law.

    A district court dismissed Laufer’s suit against Acheson Hotels, ruling she lacked the procedural threshold – known as standing – needed to bring the suit. But an appeals court later ruled in her favor.

    Now, the justices will decide next term whether she has the right to act as a “tester” toward hotels she doesn’t intend to visit.

    “Laufer is one of numerous ‘testers’ who have collectively brought thousands of lawsuits under the ADA. A cottage industry has arisen in which uninjured plaintiffs lob ADA lawsuits of questionable merit, while using the threat of attorney’s fees to extract settlement payments,” the hotel told the justices in court papers. “These lawsuits have burdened small businesses, clogged the judicial system, and undermined the Executive Branch’s exclusive authority to enforce federal law.”

    The hotel run by Acheson Hotels has a notice posted to its website that says, “Please Note: Unfortunately, we do not have the capabilities to provide pet-friendly or ADA compliant lodging. We apologize for the inconvenience!”

    Laufer had urged the justices to take the case, with her attorneys arguing in court papers that they should affirm the appeals court ruling.

    “Without civil rights advocates such as this plaintiff, there would be no enforcement of the ADA,” they wrote in part.

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