🌌 Reshaped #23
The next AI winter, Twitter hacked, semiconductor industry consolidation, a new internationalism, feudal capitalism and much more
Welcome to a new issue of Reshaped, a newsletter for those who do not want to miss a thing about the huge transformations of our time.
The last issue received positive feedback and I promise to deepen the relationship between innovation policy and local development in the future. This week I am focusing on another hot topic: are we at the beginning of a new winter for artificial intelligence? For sure, the summer was long and practitioners start to be skeptical about the big promises of AI enthusiasts.
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News
💰 Analog Devices announced the acquisition of the rival company Maxim Integrated (CNN). Both companies operate in the analog semiconductor industry and are respectively the second and third biggest players. The acquisition is not only one of the most relevant M&As of the year, but also a fundamental step towards the consolidation of the sector. The merger will create a giant with a 15% share of the market under control, close to the industry leader Texas Instrument. In the meantime, SoftBank is exploring the sale or the IPO of Arm, a British chip design company (Nikkei Asian Review). Arm, acquired in 2016 for $30.1 billion, is still the biggest acquisition of the last five years in the semiconductor industry (see table below).
🧨 Several Twitter accounts were hacked on Wednesday, including that of Joe Biden, to post a bitcoin scam (Vox). The magnitude of the hack is not clear yet, which is raising even more concerns about the security of the social media platform. The pressure on Twitter CEO Jack Dorsey to solve these issues will certainly grow.
⚖️ The EU has reversed a previous decision that would have forced Apple to pay $14.9 billion in back taxes to Ireland (The Verge). More precisely, it was the European General Court to reverse the ruling of the European Commission, which is a major defeat for Margrethe Vestager, the EU’s Commissioner for Competition. Apple will continue to benefit from favorable taxation from the Irish government, which is considered unfair for both competitors and other member states.
💻 Dell Technologies is considering to spin off its 81% stake (almost $50 billion) in VMware (Financial Times). Dell had acquired the data center software company back in 2016 for about $63 billion. The move would allow Dell to boost its share price — which is struggling to perform as desired (see chart below, reporting the share price trend during the last five years) — through the sale of the most interesting business under its control.
📱 Google is investing $4.5 billion in the Indian telecommunications giant Reliance Jio (TechCrunch). Together, the two companies will also develop a low-cost Android smartphone. Reliance Jio was already backed by Facebook some months ago and has already raised about $20.2 billion in 2020 so far. Big Tech is particularly attracted by the huge consumer network of the company, which could prove to be fundamental for Western players willing to enter the Indian market.
⛄️ A new AI winter?
The history of AI has been characterized by a succession of periods of hype (AI summers) and backlash (AI winter) towards this game-changing technology. The picture below (taken from Twitter months ago, I could not find the source) summarizes this roller coaster, identifying the two major AI winters during the 1970s and the 1990s.
According to many scholars and practitioners — including some consulting companies that successfully manage to say everything and its contrary in very short time spans — a new AI winter is coming. This is good news if it means that we are going to have a more realistic view of the phenomenon; but, at the same time, the risk of throwing away the efforts of two decades of research should be mitigated. This is also the opinion of philosopher Luciano Floridi in a recent article.
The risk of every AI summer is that over-inflated expectations turn into a mass distraction. The risk of every AI winter is that the backlash is excessive, the disappointment too negative, and potentially valuable solutions are thrown out with the water of the illusions.
As explained by Tim Cross on The Economist, AI was found particularly difficult to implement in many industrial sectors for two specific reasons: data availability and the nature of algorithms.
They struggle with reasoning, generalising from the rules they discover, and with the general-purpose savoir faire that researchers, for want of a more precise description, dub “common sense”. The result is an artificial idiot savant that can excel at well-bounded tasks, but can get things very wrong if faced with unexpected input.
This specific point was further addressed by Ragnar Fjelland in a recent paper, in which he claims that artificial general intelligence (AGI) will never be realized for the same reasons identified almost fifty years ago by the philosopher Hubert Dreyfus in his renowned book What Computers Can't Do: The Limits of Artificial Intelligence (1972). This book was key in the emergence of the first AI winter and, according to Fjelland, it is still valid today. Basically, being the human learning processes implicit and sometimes tacit, they cannot be precisely articulated in an AI algorithm. The big advancements in AI due to Big Data and deep learning only impacted artificial narrow intelligence (ANI), which is task-specific and limited in scope.
I agree with Tim Cross: these advancements might transform the next AI winter into cold autumn. But, even if the success of specific applications of AI might reduce the disillusionment, the backlash seems unavoidable. In any case, as perfectly stated by Luciano Floridi in the abovementioned article, “We need to resist oversimplification. This time let us think more deeply and extensively on what we are doing and planning with AI. The exercise is called philosophy, not futurology”.
Alternative perspectives
🏰 On The Los Angeles Review of Books, Jodi Dean explores the recent trends of capitalism as a form of feudalism, based on low social mobility and elitist capital accumulation. This view pairs with that of famous economists like Branko Milanović and Thomas Piketty. I see this concept of “new feudalism” as a particularly current one, especially in the UBI-as-a-remedy-for-automation debate.
Over the past decade, “neofeudalism” has emerged to name tendencies associated with extreme inequality, generalized precarity, monopoly power, and changes at the level of the state. Drawing from libertarian economist Tyler Cowen’s emphasis on the permanence of extreme inequality in the global, automated economy, the conservative geographer Joel Kotkin envisions the US future as mass serfdom. A property-less underclass will survive by servicing the needs of high earners as personal assistants, trainers, child-minders, cooks, cleaners, et cetera. The only way to avoid this neofeudal nightmare is by subsidizing and deregulating the high-employment industries that make the American lifestyle of suburban home ownership and the open road possible — construction and real estate; oil, gas, and automobiles; and corporate agribusiness.
🌐 On Le Monde, Thomas Piketty explains that it is possible to reinterpret the word “internationalism” from a concept focused on unfettered free-trade to a more development-oriented movement, driven by a quest for social justice.
Firstly, before taking possible unilateral measures, it is crucial to propose to other countries a model for cooperative development based on universal values: social justice, reduction of inequality, conservation of the planet. It is also important to describe in detail the transnational assemblies (such as the French-German Agreement created last year, but with real powers) which ideally would be in charge of global public property and common policies for fiscal and climatic justice. Then, if these social-federalist proposals are not taken up at the moment, the unilateral approach should nevertheless remain incentive-based and reversible. The aim of sanctions is to encourage other countries to exit from fiscal and climatic dumping; the aim is not to establish permanent protectionism.
🌱 On The Conversation, Tomaso Ferrando and Daniel Tischer review the role of banks in the green transition and try to find alternatives to climate finance. In particular, they see a risk in financial actors monopolizing the debate about building a green economy, to the detriment of other civic actors.
But private finance is already capturing this debate and may become a key beneficiary. Getting a green and just transition does not only depend on the voices that are heard, but also those that are silenced. Intellectual and political elites on the side of the banks are making it harder to have a serious discussion about addressing climate change. NGOs and campaign groups are participating, but only if they share the premises and objectives of the financial sector. This crowds out more transformative voices from civil society and the academy, and establishes a false public narrative of agreed actions despite the numerous voices outside of this club. And it also normalises the priority of financial market activities, putting profit before people and planet.
Other readings
🥽 On Government Technology, Daniel Castro explains why governments will accelerate the adoption of augmented and virtual reality technologies, due to the new communication needs that emerged during the COVID-19 pandemic.
💵 On The New Yorker, Linnea Feldman Emison reports about the results of a Universal Basic Income (UBI) experiment in Stockton, a city in California. The promising results are raising the interest of other US cities, willing to engage in similar initiatives.
🏠 On The New York Times, Erin Griffith explains how the recent crisis of Airbnb is having negative consequences on the internal spirit of the company. Because of the long-term implications of COVID-19, the trust mechanism at the basis of Airbnb’s business model is probably going to vanish, which will force the startup to pivot radically. By the way, the practical application of Airbnb’s “stakeholder capitalism” is quite controversial and would have encountered growing concerns over its urban implications.
📣 On The New Republic, Moira Weigel provides a long and detailed analysis of some of the pioneers of the media misinformation industry, dominated by right-wing movements.
Thanks for reading.
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Have a nice weekend!
Federico