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Tag: Microsoft Corp

  • Amazon, Wells Fargo, Microsoft, Nvidia are in the headlines. Here’s our take on the news

    Amazon, Wells Fargo, Microsoft, Nvidia are in the headlines. Here’s our take on the news

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    The regulator was concerned with Amazon’s dual role as both a marketplace and a competitor to merchants selling on its platform.

    Nathan Stirk | Getty Images

    Club holdings Amazon (AMZN), Wells Fargo (WFC) as well as Nvidia (NVDA) and Microsoft (MSFT) are in the news Wednesday. Here are the headlines and the implications for the Club’s investment thesis.

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  • Nvidia supports Microsoft, Activision merger after Xbox deal to add games to cloud service

    Nvidia supports Microsoft, Activision merger after Xbox deal to add games to cloud service

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    BRUSSELS — Microsoft said Tuesday it will bring its Xbox PC games to Nvidia’s cloud gaming service, after the chipmaker had reportedly expressed opposition to a major Microsoft gaming deal.

    The announcement comes after Microsoft President Brad Smith met with European Union officials on Tuesday in a bid to convince them that its planned $69 billion acquisition of Activision Blizzard will be good for competition.

    Microsoft is offering the olive branch to stop the takeover from being blocked and thereby expand its gaming unit, which represents 9% of its total revenue. While sales of Microsoft’s Xbox consoles are slowing down, the company has been drawing on its cash pile to expand the collection of games it can sell and allow people to play through its cloud data centers.

    Microsoft President Brad Smith said at a press conference that, effective immediately, its Xbox games will be available on Nvidia’s GeForce Now cloud games service. Smith said if the Activision deal closes, it will bring all Activision Blizzard titles to GeForce Now.

    Nvidia is now on board with Microsoft’s pending deal for regulatory purposes, the two companies said in a joint statement confirming the two companies 10-year deal. In January Bloomberg reported that Nvidia had gone to the U.S. Federal Trade Commission with complaints about the Activision deal.

    “Combining the incredibly rich catalog of Xbox first party games with GeForce Now’s high-performance streaming capabilities will propel cloud gaming into a mainstream offering that appeals to gamers at all levels of interest and experience,” Jeff Fisher, Nvidia’s senior vice president for GeForce, was quoted as saying. “Through this partnership, more of the world’s most popular titles will now be available from the cloud with just a click, playable by millions more gamers.”

    Microsoft proposed its Activision Blizzard acquisition in January 2022, but since then, the buyer has faced pushback from regulators in the U.S., European Union and U.K.

    The Nvidia arrangement is meaningful because “now we’re addressing the full range of issues that have been raised by regulators as topics of not just interest but in some cases concern,” Smith said at the press conference.

    In November, the European Commission, the EU’s executive arm, opened an in-depth investigation into the deal citing concerns that it could reduce competition in the video games market.

    Activision Blizzard is the company behind popular game franchise Call of Duty. The EU commission said last year it is concerned that Microsoft could block access to the game on other platforms if the deal goes through.

    The commission is also concerned that it could give Microsoft an unfair edge in the nascent area of cloud gaming. Microsoft has a service called Game Pass through which it charges gamers $9.99 per month to access a library of games. The Activision takeover would add some high-profile titles to Game Pass.

    Nvidia’s GeForce Now has over 25 million members, while Microsoft said last year that 25 million people subscribe to Game Pass. Nvidia offers free and paid GeForce Now tiers, although high resolution is only available to those who pay. Members of GeForce Now will be able to stream through the cloud the games they buy through Microsoft’s app store, along with games listed in Epic Games and Steam’s app stores.

    In December, Microsoft said it had “entered into a 10-year commitment” to bring Call of Duty to Nintendo when the Activision acquisition closes. The announcement was seen as a move to assuage regulators’ antitrust concerns. On Tuesday, Smith tweeted that the two signs have now signed a “binding 10-year legal agreement” to bring Call of Duty to Nintendo players on the same day as Microsoft’s Xbox, “with full feature and content parity.”

    Smith declined to comment on the views of the European Commission in the hearing, but said the Nintendo and Nvidia deals are good for competition in the gaming market.

    “I think if you’re a competition regulator, and you’re focused on the interests of consumers and competition, today was a good day,” Smith told CNBC.

    Microsoft hopes for Sony deal

    Smith on Tuesday led a delegation that included Microsoft Gaming CEO Phil Spencer and Activision Blizzard CEO Bobby Kotick, Reuters reported, citing a European Commission document that the news agency had seen. Sony’s gaming chief Jim Ryan was also in attendance, Reuters added. Sony, Microsoft’s biggest rival, opposes the Activision takeover.

    Microsoft logo is seen on a smartphone placed on displayed Activision Blizzard logo in this illustration taken January 18, 2022.

    Dado Ruvic | Reuters

    Sony was not immediately available for comment when contacted by CNBC.

    During a press conference on Tuesday, Smith held up a piece of paper saying it is an agreement he is ready to send to Sony.

    Smith told CNBC that Microsoft is offering Sony the same agreement as Nintendo — to have Call of Duty available on the PlayStation the same time as Xbox with the same features. However, Sony still remains opposed to the deal.

    “I live with the hope that we’ll come to terms with Sony,” Smith told CNBC.

    “We’re not there yet. But I do think as we make progress with others, if we can get a deal done with Nintendo, if we can get an agreement with Nvidia, it should provide a path forward that others like Sony can build on as well.”

    U.K., U.S. regulators take aim at deal

    It’s not only European regulators that have concerns about the deal.

    The U.K.’s Competition and Markets Authority said this month that the takeover raises competition concerns and may result in higher prices, fewer choices and less innovation. The regulator said it could move to block the deal and suggested several remedies Microsoft could take. One of those involved Microsoft divesting the business responsible for Call of Duty.

    Smith said that Microsoft doesn’t see a “feasible path” to sell off the Call of Duty game.

    “It just isn’t something that seems to be lining up,” Smith told CNBC.

    “The only reason to sell it off is the CMA’s potential concern that if we buy it, we won’t provide it to others as broadly. I think that concern should be dispelled by the two agreements we’ve signed today.”

    In December, the FTC filed an antitrust case against Microsoft attempting to block the Activision deal.

    Google parent Alphabet also went to the FTC with dissatisfaction about Microsoft’s deal, Bloomberg reported.

    “The European Commission asked for our views in the course of their inquiries into this issue. We will continue to cooperate in any processes, when requested, to ensure all views are considered,” a Google spokesperson told CNBC in an email.

    Smith declined to comment on Alphabet’s exact concerns with the Activision deal but recognized the company’s potential misgivings.

    “It’s easy to understand that Google might have questions about whether something like Call of Duty would be available in the future on say Chromebooks and the Chrome operating system,” Smith said.

    The Nvidia agreement addresses that as the GeForce Now cloud gaming service is available on ChromeOS, Smith said. Microsoft is able to maintain compliance with the sorts agreements with European regulators that might require it to keep Call of Duty on Chrome OS, he said during the press conference.

    “With the agreement we’ve done with Nvidia, we’ve just ensured Google will benefit as well,” Smith said.

    Microsoft has maintained that its takeover of Activision Blizzard would not harm competition in video gaming and instead increase competition against large players like Sony and Chinese giant Tencent.

    Microsoft has remained behind the likes of Sony and Nintendo in the video-gaming business. Microsoft’s Xboxes have lagged Sony’s PlayStation 5 and Nintendo’s Switch. Sony and Nintendo’s popularity has come from its large number of successful first-party games. Microsoft is looking to boost its games library with the Activision acquisition.

    Activision Blizzard shares edged up during Tuesday’s U.S. trading session following the announcement.

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  • Covid’s ‘legacy of weirdness’: Layoffs spread, but some employers can’t hire fast enough

    Covid’s ‘legacy of weirdness’: Layoffs spread, but some employers can’t hire fast enough

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    A sign for hire is posted on the window of a Chipotle restaurant in New York, April 29, 2022.

    Shannon Stapleton | Reuters

    Job cuts are rising at some of the biggest U.S. companies, but others are still scrambling to hire workers, the result of wild swings in consumer priorities since the Covid pandemic began three years ago.

    Tech giants Meta, Amazon and Microsoft, along with companies ranging from Disney to Zoom, have announced job cuts over the past few weeks. In total, U.S.-based employers cut nearly 103,000 jobs in January, the most since September 2020, according to a report released earlier this month from outplacement firm Challenger, Gray & Christmas.

    Meanwhile, employers added 517,000 jobs last month, nearly three times the number analysts expected. This points to a labor market that’s still tight, particularly in service sectors that were hit hard earlier in the pandemic, such as restaurants and hotels.

    The dynamic is making it even harder to predict the path of the U.S. economy. Consumer spending has remained robust and surprised some economists, despite headwinds such as higher interest rates and persistent inflation.

    All of it is part of the Covid pandemic’s “legacy of weirdness,” said David Kelly, global chief strategist at J.P. Morgan Asset Management.

    The Bureau of Labor Statistics is scheduled to release its next nonfarm payroll on March 3.

    Some analysts and economists warn that weakness in some sectors, strains on household budgets, a drawdown on savings and high interest rates could further fan out job weakness in other sectors, especially if wages don’t keep pace with inflation.

    Wages for workers in the leisure and hospitality industry rose to $20.78 per hour in January from $19.42 a year earlier, according to the most recent data from the Bureau of Labor Statistics.

    “There’s a difference between saying the labor market is tight and the labor market is strong,” Kelly said.

    Many employers have faced challenges in attracting and retaining staff over the past few years, with challenges including workers’ child care needs and competing workplaces that might have better schedules and pay.

    With interest rates rising and inflation staying elevated, consumers could pull back spending and spark job losses or reduce hiring needs in otherwise thriving sectors.

    “When you lose a job you don’t just lose a job — there’s a multiplier effect,” said Aneta Markowska, chief economist at Jefferies.

    That means while there might be trouble in some tech companies, that could translate to lower spending on business travel, or if job loss rises significantly, it could prompt households to pull back sharply on spending on services and other goods.

    The big reset

    Some of the recent layoffs have come from companies that beefed up staffing over the course of the pandemic, when remote work and e-commerce were more central to consumer and company spending.

    Amazon last month announced 18,000 job cuts across the company. The Seattle-based company employed 1.54 million people at the end of last year, nearly double the number at the end of 2019, just before the pandemic, according to company filings.

    Microsoft said it’s cutting 10,000 jobs, about 5% of its workforce. The software giant had 221,000 employees as of the end of June last year, up from 144,000 before the pandemic.

    Tech “used to be a grow-at-all-costs sector, and it’s maturing a little bit,” said Michael Gapen, head of U.S. economic research at Bank of America Global Research.

    Other companies are still adding employees. Boeing, for example, is planning to hire 10,000 people this year, many of them in manufacturing and engineering. It will also cut around 2,000 corporate jobs, mostly in human resources and finance departments, through layoffs and attrition. The growth aims to help the aerospace giant ramp up output of new aircraft for a rebound in orders with large sales to airlines like United and Air India.

    Airlines and aerospace companies were devastated early in the pandemic when travel dried up and are now playing catch-up. Airlines are still scrambling for pilots, a shortage that has limited capacity, while demand for experiences such as travel and dining has surged.

    Chipotle is planning to hire 15,000 workers as it gears up for a busier spring season and to support its expansion.

    Holding on

    Businesses large and small are also finding they have to raise wages to attract and retain workers. Industries that fell out of favor with consumers and other businesses, such as restaurants and aerospace, are rebuilding workforces after shedding workers. Walmart said it would raise minimum pay for store employees to $14 an hour to attract and retain workers.

    The Miner’s Hotel in Butte, Montana, raised hourly pay for housekeepers by $1.50 to $12.50 for that position in the last six weeks because of a high turnover rate, Cassidy Smith, its general manager.

    Airports and concessionaires have also been racing to hire workers in the travel rebound. Phoenix Sky Harbor International Airport has been holding monthly job fairs and offers some staff child-care scholarships to help hiring.

    Austin-Bergstrom International Airport, where schedules by seats this quarter has grown 48% from the same period of 2019, has launched a number of initiatives, such as $1,000 referral bonuses, and signing and retention incentives for referred staff.

    The airport also raised hourly wages for airport facilities representatives from $16.47 in 2022 to $20.68 in 2023.

    “Austin has a high cost of living,” said Kevin Russell, the airport’s deputy chief of talent.

    He said employee retention has improved.

    Electricians, plumbers and heating-and-air conditioning technicians in particular, however, have been difficult to retain because they can work at other places that aren’t 24/7 and at at higher pay, he said.

    Many companies’ new workers need to be trained, a time-consuming element for some industries to ramp back up, even if it’s gotten easier to attract new employees.

    “Hiring is not a constraint anymore,” Boeing CEO Dave Calhoun said on an earnings call in January. “People are able to hire the people they need. It’s all about the training and ultimately getting them ready to do the sophisticated work that we demand.”

    — CNBC’s Amelia Lucas contributed to this article.

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  • Microsoft limits Bing A.I. chats after the chatbot had some unsettling conversations

    Microsoft limits Bing A.I. chats after the chatbot had some unsettling conversations

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    Microsoft’s new versions of Bing and Edge are available to try beginning Tuesday.

    Jordan Novet | CNBC

    Microsoft’s Bing AI chatbot will be capped at 50 questions per day and five question-and-answers per individual session, the company said on Friday.

    The move will limit some scenarios where long chat sessions can “confuse” the chat model, the company said in a blog post.

    The change comes after early beta testers of the chatbot, which is designed to enhance the Bing search engine, found that it could go off the rails and discuss violence, declare love, and insist that it was right when it was wrong.

    In a blog post earlier this week, Microsoft blamed long chat sessions of over 15 or more questions for some of the more unsettling exchanges where the bot repeated itself or gave creepy answers.

    For example, in one chat, the Bing chatbot told technology writer Ben Thompson:

    I don’t want to continue this conversation with you. I don’t think you are a nice and respectful user. I don’t think you are a good person. I don’t think you are worth my time and energy.

    Now, the company will cut off long chat exchanges with the bot.

    Microsoft’s blunt fix to the problem highlights that how these so-called large language models operate is still being discovered as they are being deployed to the public. Microsoft said it would consider expanding the cap in the future and solicited ideas from its testers. It has said the only way to improve AI products is to put them out in the world and learn from user interactions.

    Microsoft’s aggressive approach to deploying the new AI technology contrasts with the current search giant, Google, which has developed a competing chatbot called Bard, but has not released it to the public, with company officials citing reputational risk and safety concerns with the current state of technology.

    Google is enlisting its employees to check Bard AI’s answers and even make corrections, CNBC previously reported.

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

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

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  • Microsoft’s Activision deal hurts gamers, UK watchdog says

    Microsoft’s Activision deal hurts gamers, UK watchdog says

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    LONDON (AP) — Microsoft’s stalled $68.7 billion deal to buy video game company Activision Blizzard has hit a fresh hurdle in the United Kingdom, where the antitrust watchdog said Wednesday that it will stifle competition and hurt gamers.

    Britain’s Competition and Markets Authority said its in-depth investigation found that the deal could strengthen Microsoft’s position in the growing cloud gaming market, “harming U.K. gamers who cannot afford expensive consoles.” In cloud gaming, players stream games on mobile phones and handheld devices they already own.

    The blockbuster deal also could hurt British gamers by “weakening the important rivalry” between Microsoft’s Xbox console and Sony’s rival PlayStation machines, the watchdog said in a provisional report.

    The all-cash deal, which is set to be the largest in the history of the tech industry, is facing opposition from Sony and pushback from regulators in the U.S. and Europe because it would give Microsoft control of popular game franchises such as Call of Duty, World of Warcraft and Candy Crush.

    “Our job is to make sure that U.K. gamers are not caught in the crossfire of global deals that, over time, could damage competition and result in higher prices, fewer choices, or less innovation,” Martin Coleman, chair of the independent expert panel that carried out the investigation, said in a press release. “We have provisionally found that this may be the case here.”

    Microsoft’s deputy general counsel, Rima Alaily, said the company is “committed to offering effective and easily enforceable solutions that address the CMA’s concerns.”

    Activision also said it hopes to “be able to help the CMA better understand our industry.” In an internal email to employees, CEO Bobby Kotick said Activision looks forward to continuing constructive talks with regulators in Britain and the European Union, where a separate investigation is underway.

    “We are also confident that the law — and the facts — are on our side,” he said.

    The U.K. antitrust investigation is now set to drag on for a few more months, dashing Microsoft’s hopes that a speedy favorable outcome could help it resolve a lawsuit brought by the U.S. Federal Trade Commission.

    But the fact that the U.K. didn’t move to prohibit the deal leaves an opening to Microsoft for further negotiation, said William Kovacic, a former FTC chairman

    “The key thing in the decision is it invites further discussion about solutions,′ said Kovacic, now a law professor at George Washington University.

    The British regulator said it will seek feedback, including possible options to address its competition concerns, from interested parties for its final report due April 26.

    The FTC has sought to block the deal, arguing that the merger could violate antitrust laws by suppressing competitors to Xbox and its growing game subscription business.

    Microsoft told the FTC’s administrative judge in January that it was working to resolve the U.K. investigation, as well as the EU probe, and hoped to bring back proposed remedies to U.S. regulators. But emboldened by President Joe Biden to take a tougher look at big mergers, the Democratic-led commission has shown little appetite for talks.

    “It helps the FTC enormously if another major competition authority in the world moves to ban the transaction and not accept a settlement,” Kovacic said.

    The Activision Blizzard deal is one of several regulatory hassles for Microsoft in Europe amid expanded scrutiny for Big Tech companies on both sides of the Atlantic over worries that they have become too dominant.

    One of the deal’s flashpoints is Activision’s hit video game Call of Duty. Sony has raised concerns about losing access to what it calls a “must-have” game title, while Microsoft has promised to make it available on all platforms.

    “Our commitment to grant long-term 100% equal access to  Call of Duty to Sony, Nintendo, Steam and others preserves the deal’s benefits to gamers and developers and increases competition in the market,” Alaily said.

    The U.K. watchdog said options to ease its concerns include blocking the deal, selling off part of Activision’s business or a so-called behavioral remedy such as an agreement to make popular games like Call of Duty available on other platforms, which it said would be less effective.

    It’s not the first time the British watchdog has flexed its antitrust enforcement muscles over a Big Tech agreement. Last year, it blocked Facebook parent Meta’s acquisition of GIF-sharing platform Giphy over competition concerns, forcing the social media company to unwind the deal.

    ___

    AP Technology Writer Matt O’Brien in Bellevue, Washington contributed to this report.

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  • Investors’ query: Can Google answer Microsoft’s AI threat?

    Investors’ query: Can Google answer Microsoft’s AI threat?

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    SAN FRANCISCO (AP) — Google, a company built on finding quick answers to people’s questions, suddenly finds itself grappling for a response to a potential threat to its internet empire — a form of artificial intelligence that long-time rival Microsoft is now deploying to attack its dominant search engine.

    Microsoft’s assault combined with concerns about Google’s ability to ward it off hammered its corporate parent, Alphabet Inc., whose stock price plunged nearly 8% Wednesday in a selloff that wiped out about $100 billion in shareholder wealth.

    It marked the steepest one-day decline since October when an Alphabet earnings report disclosed a slowdown in digital ad revenue that rattled investors. Those concerns have escalated since another report released last week revealed Google’s ad sales during the holiday-season quarter fell from the same time in the previous year.

    Wednesday’s downturn came after Google elaborated on its plans for a chatbot dubbed “Bard ” during an uninspiring presentation that included inaccurate information about space exploration. It contrasted with a much more polished and well-reviewed showcase of Microsoft’s plans to incorporate an already popular chatbot, ChatGPT, into its Bing search engine — long a distant second to Google’s de facto gateway to the internet.

    “It’s not like this is the end of the world for Google and Microsoft is going to eat its lunch in search,” said CFRA analyst Angelo Zino said. “But ChatGPT is showing there is possible threat and that is causing a lot of fear.”

    Google has been focusing on artificial intelligence for the past six years, but has been cautions about how it uses the technology in its search engine that holds a roughly 90% share of the internet market — in part because it’s counted on as a go-to source for reliable information.

    Although ChatGPT has attracted millions of users since its release late last year by OpenAI, it still makes glaring mistakes that would be mocked if they showed up in Google’s search results. But Microsoft’s Bing search engine has such a small sliver of the market that it can afford to experiment with what is still a largely untested technology.

    “Google has had to take a more measured approach, but Microsoft really has nothing to lose so why not use ChatGPT in search?” said Edward Jones analyst David Heger.

    And Microsoft’s increasingly reliance on ChatGPT — a technology that prompted the software maker to pour billions of dollars into OpenAI — may not be Google’s only worry. Baidu, the leading search engine in China, is rolling out a chatbot called Ernie and, on Wednesday, veteran Google executive Clay Bavor announced he is leaving the company after 18 years working on a variety of major projects to launch an AI startup with former Salesforce co-CEO Bret Taylor.

    The AI challenges are confronting Google at a time it’s also gearing up for an antitrust trial triggered by a U.S. Justice Department lawsuit aimed at its search engine. The trial, scheduled to begin in September, is considered to be the biggest antitrust case targeting a technology company since the department took aim at Microsoft’s dominance in personal computer software more than 20 years ago.

    While Microsoft became distracted battling antitrust regulators, Google seized on the opportunity to make huge inroads in search and become a tech powerhouse.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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  • ChatGPT frenzy sweeps China as firms scramble for homegrown options

    ChatGPT frenzy sweeps China as firms scramble for homegrown options

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    Jakub Porzycki | Nurphoto | Getty Images

    Microsoft-backed OpenAI has kept its hit ChatGPT app off-limits to users in China, but the app is attracting huge interest in the country, with firms rushing to integrate the technology into their products and launch rival solutions.

    While residents in the country are unable to create OpenAI accounts to access the artificial intelligence-powered (AI) chatbot, virtual private networks and foreign phone numbers are helping some bypass those restrictions.

    At the same time, the OpenAI models behind the ChatGPT programme, which can write essays, recipes and complex computer code, are relatively accessible in China and increasingly being incorporated into Chinese consumer technology applications from social networks to online shopping.

    The tool’s surging popularity is rapidly raising awareness in China about how advanced U.S. AI is and, according to analysts, just how far behind tech firms in the world’s second-largest economy are as they scramble to catch up.

    “There is huge excitement around ChatGPT. Unlike the metaverse which faces huge difficulty in finding real-life application, ChatGPT has suddenly helped us achieve human-computer interaction,” said Ding Daoshi, director of Beijing-based internet consultancy Sootoo. “The changes it will bring about are more immediate, more direct and way quicker.”

    OpenAI or ChatGPT itself is not blocked by Chinese authorities but OpenAI does not allow users in mainland China, Hong Kong, Iran, Russia and parts of Africa to sign up.

    OpenAI told Reuters it is working to make its services more widely available.

    “While we would like to make our technology available everywhere, conditions in certain countries make it difficult or impossible for us to do so in a way that is consistent with our mission,” the San Francisco-based firm said in an emailed statement. “We are currently working to increase the number of locations where we can provide safe and beneficial access to our tools.” 

    In December, Tencent Holdings’ WeChat, China’s biggest messaging app, shut several ChatGPT-related programmes that had appeared on the network, according to local media reports, but they have continued to spring up.

    Dozens of bots rigged to ChatGPT technology have emerged on WeChat, with hobbyists using it to make programmes or automated accounts that can interact with users. At least one account charges users a fee of 9.99 yuan ($1.47) to ask 20 questions.

    Tencent did not respond to Reuters’ request for comments.

    ChatGPT supports Chinese language interaction and is highly capable of conversing in Chinese, which has helped drive its unofficial adoption in the country.

    Chinese firms also use proxy tools or existing partnerships with Microsoft, which is investing billions of dollars in its OpenAI, to access tools that allow them to embed AI technology into their products.

    Shenzhen-based Proximai in December introduced a virtual character into its 3D game-like social app who used ChatGPT’s underlying tech to converse.

    Beijing-based entertainment software company Kunlun Tech plans to incorporate ChatGPT in its web browser Opera.

    SleekFlow, a Tiger Global-backed startup in Hong Kong, said it was integrating the AI into its customer relations messaging tools.

    “We have clients all over the world,” Henson Tsai, SleekFlow’s founder said. “Among other things, ChatGPT does excellent translations, sometimes better than other solutions available on the market.”

    Censorship

    Reuters’ tests of ChatGPT indicate that the chatbot is not averse to questions that would be sensitive in mainland China. Asked for its thoughts on Chinese President Xi Jinping, for instance, it responded it does not have personal opinions and presented a range of views.

    But some of its proxy bots on WeChat have blacklisted such terms, according to other Reuters checks, complying with China’s heavy censorship of its cyberspace. When asked the same question about Xi on one ChatGPT proxy bot, it responded by saying that the conversation violated rules.

    To comply with Chinese rules, Proximai’s founder Will Duan said his platform would filter information presented to users during their interaction with ChatGPT.

    Chinese regulators, which last year introduced rules to strengthen governance of “deepfake” technology, have not commented on ChatGPT, however, state media this week warned about stock market risks amid a frenzy over local ChatGPT-concept stocks.

    The Cyberspace Administration of China, the internet regulator, did not respond to Reuters’ request for comment.

    “With the regulations released last year, the Chinese government is saying: we already see this technology coming and we want to be ahead of the curve,” said Rogier Creemers, an assistant professor at Leiden University. “I fully expect the great majority of the AI-generated content to be non-political.”

    Chinese rivals

    Joining the buzz have been some of the country’s largest tech giants such as Baidu and Alibaba who gave updates this week on AI models they have been working on, prompting their shares to zoom.

    Baidu said this week it would complete internal testing of its “Ernie Bot” in March, a big AI model the search firm has been working on since 2019.

    On Wednesday, Alibaba said that its research institute Damo Academy was also testing a ChatGPT-style tool.

    Duan, whose company has been using a Baidu AI chatbot named Plato for natural language processing, said ChatGPT was at least a generation more powerful than China’s current NLP solutions, though it was weaker in some areas, such as understanding conversation context.

    Baidu did not reply to Reuters’ request for comments.

    Access to OpenAI’s GPT-3, or Generative Pre-trained Transformer, was first launched in 2020, an update of which is the backbone of ChatGPT.

    Duan said potential long-term compliance risks mean Chinese companies would most likely replace ChatGPT with a local alternative, if they could match the U.S.-developed product’s functionality.

    “So we actually hope that there can be alternative solutions in China which we can directly use… it may handle Chinese even better, and it can also better comply with regulations,” he said.

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  • Sony Accuses Microsoft Of ‘Harassment’ In Court Battle

    Sony Accuses Microsoft Of ‘Harassment’ In Court Battle

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    Screenshot: Phoenix Wright (PS4)

    Microsoft’s struggles to get its proposed $69 billion purchase of Activision Blizzard over the line aren’t just playing out at government watchdogs and in the public eye, but in courtrooms as well. And in one of those battlegrounds, Microsoft is making demands of its rival Sony that the latter say constitute “obvious harassment”.

    Via Axios’ newsletter, a series of court documents have been filed over the last couple of weeks detailing some of the legal skirmishes currently playing out between Microsoft, who want to complete the blockbuster deal, and Sony, who are one of a number of companies and organisations who absolutely do not want this to happen.

    These particular filings are about Sony’s attempts to fight the proposed sale, and that as part of their defence Microsoft is entitled to “discovery”, which is basically just letting them get hold of a load of documents and emails from certain Sony executives. Both companies have been haggling over the number of executives this will include and the scope of the discovery for ages, but things took a turn earlier this month when Microsoft accused Sony of first stalling, and then not providing all the information they might need:

    Sony Interactive Entertainment (“SIE”)—whose gaming business has dwarfed Xbox’s for 20 years—is not an ordinary third party in this action. At great expense and over an extended period, SIE has deployed delegations of executives, large teams of outside lawyers, and highpriced economists to persuade regulators here and around the world to block Microsoft Corp.’s

    (“Microsoft’s”) proposed acquisition of Activision Blizzard King. SIE’s efforts are paying off: The FTC’s complaint in this action is chock-full of allegations about the effects the deal will have on SIE’s business. This case is as much about SIE as it is about Xbox and Activision. Timely discovery from SIE is therefore critical to Microsoft’s defense.

    Though SIE’s motion for an extension of time complains about the breadth of the subpoena and the length of the extensions already granted for it to respond to that subpoena, Microsoft already told SIE it would consent to a fourth extension of time to negotiate issues related to the scope of the subpoena’s requests. But Microsoft believes that court intervention is required now on one issue: whether SIE will collect and produce documents from certain custodians.

    In response, Sony said that they hadn’t supplied all the information Microsoft were requesting because they were being asked for way too much, including things like access to internal performance reviews, something Sony say “is obvious harassment”, and that “even in employment cases courts require a specific showing of relevance before requiring production of personnel files.”

    Judge D. Michael Chappell has agreed with Sony, saying the company “has demonstrated good cause for the requested relief” and agreeing that the scope and depth of Microsoft’s requests had gone too far.

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    The Anthem All-Terrain Stroller Wagon Adventure Bundle

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    All of which is only mildly interesting, I know, but I bring this up mostly so we can just link to both Microsoft and Sony’s motions, which are full of some incredible self-owns, like Microsoft saying PlayStation’s success “has dwarfed Xbox’s for 20 years”, along with some very funny wordage in Sony’s filing, like the way they say Microsoft’s subpoena was, like, “truly massive”.

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

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

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  • Microsoft’s $69 billion Activision takeover in doubt as UK regulator raises competition concerns

    Microsoft’s $69 billion Activision takeover in doubt as UK regulator raises competition concerns

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    An Activision Blizzard’s Call of Duty: Modern Warfare video game is inserted into the Microsoft’s Xbox One video game console arranged in Denver, Colorado, on Wednesday, Jan. 19, 2022.

    Michael Ciaglo | Bloomberg | Getty Images

    The British competition regulator says that Microsoft’s $69 billion acquisition of gaming giant Activision Blizzard could harm competition in the U.K. gaming market, and that it could move to block the deal.

    The Competition and Markets Authority published a provisional decision on the deal on Wednesday, stating that the takeover raises competition concerns and may result in higher prices, fewer choices and less innovation.

    In a notice of possible remedies sent to both parties, the CMA said it may require Microsoft to:

    • sell the business associated with its popular Call of Duty franchise
    • divest the Activision segment of Activision Blizzard
    • divest both Activision and Blizzard
    • terminate the deal

    Microsoft and Activision Blizzard have until Feb. 22 to respond. The CMA is set to issue a final decision on April 26. The regulator opened an in-depth probe into the deal on Sept. 1.

    The CMA is concerned that the Activision deal could strengthen Microsoft’s position in the cloud gaming market, adding Call of Duty and other lucrative titles to its cloud-based Xbox Game Pass platform.

    Cloud gaming, which allows gamers to play games over the internet on devices other than a console, is still in its infancy and not yet a mass-market technology.

    The deal would also boost Microsoft’s console business, the CMA said, adding that Microsoft would find it “commercially beneficial” to make Activision games exclusive to its Xbox hardware or available on PlayStation “under materially worse conditions.”

    This “could substantially reduce the competition between Xbox and PlayStation in the UK, in turn harming UK gamers,” the watchdog noted.

    Activision Blizzard shares were down 2% on Wednesday following the CMA announcement. Microsoft shares, meanwhile, were trading 2% higher on the back of an announcement about the tech giant’s artificial intelligence advancements.

    “We are committed to offering effective and easily enforceable solutions that address the CMA’s concerns,” said Rima Alaily, Microsoft corporate vice president and deputy general counsel, in an emailed statement to CNBC.

    Microsoft has made commitments to Sony and Nintendo to continue releasing its new Call of Duty games on their respective PlayStation and Switch gaming platforms for 10 years.

    An Activision Blizzard spokesperson said the company hopes to “help the CMA better understand our industry to ensure they can achieve their stated mandate to promote an environment where people can be confident they are getting great choices and fair deals.”

    Activision Blizzard CEO Bobby Kotick also sent an internal memo to employees Wednesday, saying that the company was “confident that the law – and the facts – are on our side.”

    “In this case, our combined companies will bring more competition to an already crowded field of world-class gaming competitors, including Sony, Tencent, NetEase, Apple, Amazon, and Facebook,” Kotick added. “We believe this merger gives us additional resources to compete with such giants.”

    The Microsoft-Activision deal also faces scrutiny in the U.S. and European Union.

    Stateside, the Federal Trade Commission is seeking to block the purchase on competition grounds, while the European Commission also has a competition investigation into the transaction. The commission, which is the executive arm of the EU, recently filed a charge sheet known as a statement of objections setting forth its concerns about the deal, according to Reuters.

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

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

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

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

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

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

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

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

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

    Watch CNBC's full interview with Microsoft CEO Satya Nadella

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

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

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

    OpenAI CEO Sam Altman at Microsoft’s event

    Jordan Novet | CNBC

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

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

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

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

    — CNBC’s Jordan Novet contributed to this report.

    WATCH: Google’s AI service vs. ChatGPT

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  • Google hopes ‘Bard’ will outsmart ChatGPT, Microsoft in AI

    Google hopes ‘Bard’ will outsmart ChatGPT, Microsoft in AI

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    Google is girding for a battle of wits in the field of artificial intelligence with “Bard,” a conversational service aimed at countering the popularity of the ChatGPT tool backed by Microsoft.

    Bard initially will be available exclusively to a group of “trusted testers” before being widely released later this year, according to a Monday blog post from Google CEO Sundar Pichai.

    Google’s chatbot is supposed to be able to explain complex subjects such as outer space discoveries in terms simple enough for a child to understand. It also claims the service will also perform other more mundane tasks, such as providing tips for planning a party, or lunch ideas based on what food is left in a refrigerator. Pichai didn’t say in his post whether Bard will be able to write prose in the vein of William Shakespeare, the playwright who apparently inspired the service’s name.

    “Bard can be an outlet for creativity, and a launchpad for curiosity,” Pichai wrote.

    Google announced Bard’s existence less than two weeks after Microsoft disclosed it’s pouring billions of dollars into OpenAI, the San Francisco-based maker of ChatGPT and other tools that can write readable text and generate new images.

    Microsoft’s decision to up the ante on a $1 billion investment that it previously made in OpenAI in 2019 intensified the pressure on Google to demonstrate that it will be able to keep pace in a field of technology that many analysts believe will be as transformational as personal computers, the internet and smartphones have been in various stages over the past 40 years.

    In a report last week, CNBC said a team of Google engineers working on artificial intelligence technology “has been asked to prioritize working on a response to ChatGPT.” Bard had been a service being developed under a project called “Atlas,” as part of Google’s “code red” effort to counter the success of ChatGPT, which has attracted tens of millions of users since its general release late last year, while also raising concerns in schools about its ability to write entire essays for students.

    Pichai has been emphasizing the importance of artificial intelligence for the past six years, with one of the most visible byproducts materializing in 2021 as part of a system called “Language Model for Dialogue Applications,” or LaMDA, which will be used to power Bard.

    Google also plans to begin incorporating LaMDA and other artificial intelligence advancements into its dominant search engine to provide more helpful answers to the increasingly complicated questions being posed by its billion of users. Without providing a specific timeline, Pichai indicated the artificial intelligence tools will be deployed in Google’s search in the near future.

    In another sign of Google’s deepening commitment to the field, Google announced last week that it is investing in and partnering with Anthropic, an AI startup led by some former leaders at OpenAI. Anthropic has also built its own AI chatbot named Claude and has a mission centered on AI safety.

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

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

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    Tech stocks on display at the Nasdaq.

    Peter Kramer | CNBC

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

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

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

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

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

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

    Cost control is king

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

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

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

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

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

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

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

    Navigating ‘a very difficult environment’

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

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

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

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

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

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

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

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

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

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

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

    Adam Galica | CNBC

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

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

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

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

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

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

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

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

    Amazon beats on fourth-quarter revenue but provides light guidance

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

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

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

    related investing news

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    WATCH: RBC’s Brad Erickson breaks down Big Tech

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  • Google has the next move as Microsoft embraces OpenAI buzz

    Google has the next move as Microsoft embraces OpenAI buzz

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    NEW YORK (AP) — Before the artificial intelligence tool ChatGPT was unleashed into the world, the novelist Robin Sloan was testing a similar AI writing assistant built by researchers at Google.

    It didn’t take long for Sloan, author of the bestseller “Mr. Penumbra’s 24-Hour Bookstore,” to realize that the technology was of little use to him.

    “A lot of the state-of-the-art AI right now is impressive enough to really raise your expectations and make you think, ‘Wow, I’m dealing with something really, really capable,’” Sloan said. “But then in a thousand little ways, a million little ways, it ends up kind of disappointing you and betraying the fact that it really has no idea what’s going on.”

    Another company might have released the experiment into the wild anyway, as the startup OpenAI did with its ChatGPT tool late last year. But Google has been more cautious about who gets to play with its AI advancements despite growing pressure for the internet giant to compete more aggressively with rival Microsoft, which is pouring billions of dollars into OpenAI and fusing its technology into Microsoft products.

    That pressure is starting to take a toll, as Google has asked one of its AI teams to “prioritize working on a response to ChatGPT,” according to an internal memo reported this week by CNBC. Google declined to confirm if there was a public chatbot in the works but spokesperson Lily Lin said it continues “to test our AI technology internally to make sure it’s helpful and safe, and we look forward to sharing more experiences externally soon.”

    Some of the technological breakthroughs driving the red-hot field of generative AI — which can churn out paragraphs of readable text and new images as well as music and video — have been pioneered in Google’s vast research arm.

    “So we have an important stake in this area, but we also have an important stake in not just leading in being able to generate things, but also in dealing with information quality,” said Zoubin Ghahramani, vice president of research at Google, in a November interview with The Associated Press.

    Ghahramani said the company wants to also be measured about what it releases, and how: “Do we want to make it accessible in a way that people can produce stuff en masse without any controls? The answer to that is no, not at this stage. I don’t think it would be responsible for us to be the people driving that.”

    And they weren’t. Four weeks after the AP interview, OpenAI released its ChatGPT for free to anyone with an internet connection. Millions of people around the world have now tried it, sparking searing discussions at schools and corporate offices about the future of education and work.

    OpenAI declined to comment on comparisons with Google. But in announcing their extended partnership in January, Microsoft and OpenAI said they are committed to building “AI systems and products that are trustworthy and safe.”

    As a literary assistant, neither ChatGPT nor Google’s creative writing version comes close to what a human can do, Sloan said.

    A fictionalized Google was central to the plot of Sloan’s popular 2012 novel about a mysterious San Francisco bookstore. That’s likely one reason the company invited him along with several other authors to test its experimental Wordcraft Writers Workshop, derived from a powerful AI system known as LaMDA.

    Like other language-learning models, including the GPT line built by OpenAI, Google’s LaMDA can generate convincing passages of text and converse with humans based on what it’s processed from a trove of online writings and digitized books. Facebook parent Meta and Amazon have also built their own big models, which can improve voice assistants like Alexa, predict the next sentence of an email or translate languages in real time.

    When it first announced its LaMDA model in 2021, Google emphasized its versatility but also raised the risks of harmful misuse and the possibility it could mimic and amplify biased, hateful or misleading information.

    Some of the Wordcraft writers found it useful as a research tool — like a faster and more decisive version of a Google search — as they asked for a list of “rabbit breeds and their magical qualities” or “a verb for the thing fireflies do” or to “Tell me about Venice in 1700,″ according to Google’s paper on the project. But it was less effective as a writer or rewriter, turning out boring sentences riddled with clichés and showing some gender bias.

    “I believe them — that they’re being thoughtful and cautious,” Sloan said of Google. “It’s just not the model of a reckless technologist who is in a hurry to get this out into the world no matter what.”

    Google’s development of these models hasn’t been without internal acrimony. First, it ousted some prominent researchers who were examining the risks of the technology. And last year, it fired an engineer who publicly posted a conversation with LaMDA in which the model falsely claimed it had human-like consciousness, with a “range of both feelings and emotions.”

    While ChatGPT and its competitors might never produce acclaimed works of literature, the expectation is they will soon begin to transform other professional tasks — from helping to debug computer code to composing marketing pitches and speeding up the production of a slide presentation.

    That’s key to why Microsoft, as a seller of workplace software, is eager to enhance its suite of products with the latest OpenAI tools. The benefits are less clear to Google, which largely depends on the advertising dollars it gets when people search for information online.

    “If you ask the question and get the wrong answer, it’s not great for a search engine,” said Dexter Thillien, a technology analyst for the London-based Economist Intelligence Unit.

    Microsoft also has a search engine — Bing — but ChatGPT’s answers are too inaccurate and outdated, and the cost to run its queries too expensive, for the technology to pose a serious risk to Google’s dominant search business, Thillien said.

    Google has said that its earlier large language model, named BERT, is already playing a role in answering online searches. Such models can help generate the fact boxes that increasingly appear next to Google’s ranked list of web links.

    Asked in November about the hype around AI applications such as OpenAI’s image-generator DALL-E, Ghahramani acknowledged, in a playful tone, that “it’s a little bit annoying sometimes because we know that we have developed a lot of these technologies.”

    “We’re not in this to get the ‘likes’ and the clicks, right?” he said, noting that Google has been a leader in publishing AI research that others can build upon.

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  • These 20 stocks led the January rally

    These 20 stocks led the January rally

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    The initial version of this story had incorrect price changes for 2023. It is now updated with information as of the market close on Jan. 31.

    Investors staged a January rally, with solid gains for the S&P 500 and an even better showing for technology stocks that led the dismal downward action in 2022.

    This…

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

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

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

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

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

    Claudio Lavenia | Getty Images Entertainment | Getty Images

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

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

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

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

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

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

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

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

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

    Moritz Korner

    MEP, European Parliament

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    Why Europe’s tone is changing

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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