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US tech titans buffeted by economic headwinds and TikTok

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Tech analyst Rob Enderle contends that Meta and Google have 'taken their eye off the ball,' leaving themselves vulnerable to TikTok and other competitors
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US tech titans looking to the future are seeing growth take a beating in the face of foreign competition and a tough economy in the here and now.

With Apple and Amazon due to report quarterly earnings after the close of market Thursday, shares of Meta and Google-parent Alphabet have tanked after disappointing financial results this week.

“This week will go down in the history books of earnings season as one of Big Tech’s worst and ultimately could be a ‘fork in the road moment’ for the stalwarts looking ahead,” Wedbush analyst Dan Ives said in a note to investors.

Management teams will need to “quickly adjust to a much different background” or risk losing their luster for investors who have bet on them for the past decade, he said. 

In the case of Facebook-parent Meta, the decline comes as chief Mark Zuckerberg rolls the dice on building up the metaverse long-term.

“Facebook shifted to Meta, so they took their eye off the ball,” tech analyst Rob Enderle of Enderle Group said.

“In a way they shot themselves in the foot, and allowed TikTok to advance.”

Meta shares were down some 22 percent by mid-day Thursday to $100.52. Over the past year, the price has plunged nearly 67 percent.

Thursday’s drop came one day after the company, already facing stagnating user numbers and cuts in advertising budgets, said its profit had more than halved in the third quarter from a year earlier, and that it plans “significant changes” to bolster efficiency.

The social networking giant also said revenue slipped from the same quarter a year earlier.

Zuckerberg, while admitting the company is navigating “some challenging dynamics,” said on an earnings call Wednesday that “our product trends look better from what I see then some of the commentary I’ve seen suggests.”

He said priorities will include artificial intelligence that powers recommendations at offerings such as its short-form video feature Reels, launched in response to TikTok, which is owned by China-based ByteDance.

TikTok is eating into ad revenue at Meta and Google, but the US tech giants are still way ahead in that market — for now, according to analysts.

– Party over? –

Alphabet this week also reported quarterly earnings that fell short of market expectations as belts tightened in the digital ad market that drives its revenue.

The company said ad revenue that grew just 6 percent when compared with the same period of last year.

Aside from one period at the start of the Covid pandemic, that would mark the weakest revenue growth at Alphabet for any quarter since 2014.

The earnings report showed that ad revenue at YouTube was slightly lower than it was in the same quarter a year earlier, despite a hot trend of people watching video on-demand and snippets on TikTok.

Alphabet shares have sunk 36.4 percent in the past year, and were trading at $92.79 mid-day Thursday.

Alphabet and Google chief Sundar Pichai said on an earnings call that he sees this as a moment when “you take the time to optimize the company to make sure we are set up for the next decade of growth ahead.”

Like Meta, Alphabet is also looking to the future: in its case, investing in artificial intelligence that Pichai says will transform its offerings, and putting resources into “big bets” such as life sciences arm Verily and self-driving cars at Waymo.

Apple’s data privacy changes have also hit the big tech platforms, reducing leeway for ad personalization.

Meanwhile, Meta and Alphabet’s focus on the long-term has left openings for hungry competitors, Enderle contended.

“It is like watching a sports team lose not because they are facing better players, but because the team’s members decide to go out and party every night,” he said.

“If you are not focusing, someone is going to come up and take customers away from you; it is TikTok now but it could easily be someone else.”

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‘Everybody is vulnerable’: Fake US school audio stokes AI alarm

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The fabricated audio clip of the Maryland school principal underscores the ease with which widely available AI and editing tools can be misused to impersonate celebrities and everyday citizens alike
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A fabricated audio clip of a US high school principal prompted a torrent of outrage, leaving him battling allegations of racism and anti-Semitism in a case that has sparked new alarm about AI manipulation.

Police charged a disgruntled staff member at the Maryland school with manufacturing the recording that surfaced in January — purportedly of principal Eric Eiswert ranting against Jews and “ungrateful Black kids” — using artificial intelligence.

The clip, which left administrators of Pikesville High School fielding a flood of angry calls and threats, underscores the ease with which widely available AI and editing tools can be misused to impersonate celebrities and everyday citizens alike.

In a year of major elections globally, including in the United States, the episode also demonstrates the perils of realistic deepfakes as the law plays catch-up.

“You need one image to put a person into a video, you need 30 seconds of audio to clone somebody’s voice,” Hany Farid, a digital forensics expert at the University of California, Berkeley, told AFP.

“There’s almost nothing you can do unless you hide under a rock.

“The threat vector has gone from the Joe Bidens and the Taylor Swifts of the world to high school principals, 15-year-olds, reporters, lawyers, bosses, grandmothers. Everybody is now vulnerable.”

After the official probe, the school’s athletic director, Dazhon Darien, 31, was arrested late last month over the clip.

Charging documents say staffers at Pikesville High School felt unsafe after the audio emerged. Teachers worried the campus was bugged with recording devices while abusive messages lit up Eiswert’s social media.

The “world would be a better place if you were on the other side of the dirt,” one X user wrote to Eiswert.

Eiswert, who did not respond to AFP’s request for comment, was placed on leave by the school and needed security at his home.

– ‘Damage’ – 

When the recording hit social media in January, boosted by a popular Instagram account whose posts drew thousands of comments, the crisis thrust the school into the national spotlight.

The audio was amplified by activist DeRay McKesson, who demanded Eiswert’s firing to his nearly one million followers on X. When the charges surfaced, he conceded he had been fooled.

“I continue to be concerned about the damage these actions have caused,” said Billy Burke, executive director of the union representing Eiswert, referring to the recording.

The manipulation comes as multiple US schools have struggled to contain AI-enabled deepfake pornography, leading to harassment of students amid a lack of federal legislation.

Scott Shellenberger, the Baltimore County state’s attorney, said in a press conference the Pikesville incident highlights the need to “bring the law up to date with the technology.”

His office is prosecuting Darien on four charges, including disturbing school activities.

– ‘A million principals’ –

Investigators tied the audio to the athletic director in part by connecting him to the email address that initially distributed it.

Police say the alleged smear-job came in retaliation for a probe Eiswert opened in December into whether Darien authorized an illegitimate payment to a coach who was also his roommate.

Darien made searches for AI tools via the school’s network before the audio came out, and he had been using “large language models,” according to the charging documents.

A University of Colorado professor who analyzed the audio for police concluded it “contained traces of AI-generated content with human editing after the fact.”

Investigators also consulted Farid, writing that the California expert found it was “manipulated, and multiple recordings were spliced together using unknown software.”

AI-generated content — and particularly audio, which experts say is particularly difficult to spot — sparked national alarm in January when a fake robocall posing as Biden urged New Hampshire residents not to vote in the state’s primary.

“It impacts everything from entire economies, to democracies, to the high school principal,” Farid said of the technology’s misuse.

Eiswert’s case has been a wake-up call in Pikesville, revealing how disinformation can roil even “a very tight-knit community,” said Parker Bratton, the school’s golf coach.

“There’s one president. There’s a million principals. People are like: ‘What does this mean for me? What are the potential consequences for me when someone just decides they want to end my career?'”

“We’re never going to be able to escape this story.”

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TikTok reaches music licensing deal with Universal, ending feud

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The Universal-TikTok deal ends closely watched negotations that saw a breakdown earlier this year as two of the most powerful players in the music and tech industries publicly criticized each other as they jockeyed for leverage
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TikTok and Universal announced a new licensing agreement Thursday, ending a months-long dispute that saw popular music expunged from the social media platform.

The companies released a joint statement that said the new deal included “improved remuneration” for artists and songwriters under the Universal Music Group (UMG) umbrella, and will also assuage concerns over the growth of AI-generated content on TikTok.

Universal chairman Sir Lucian Grainge said “this new chapter in our relationship” would “drive innovation in fan engagement while advancing social music monetization.” 

The deal “focuses on the value of music, the primacy of human artistry and the welfare of the creative community,” he said.

TikTok’s CEO Shou Chew similarly said “we are committed to working together to drive value, discovery and promotion for all of UMG’s amazing artists and songwriters, and deepen their ability to grow, connect and engage with the TikTok community.”

The deal wraps up closely watched negotiations that saw a breakdown earlier this year, with the companies — two of the most powerful players in the music and tech industries — publicly criticizing each other as they jockeyed for leverage.

Universal — whose roster of artists includes Taylor Swift, Drake and Billie Eilish — ordered music from all artists connected to its vast publishing catalog to come down off the app, leaving many concerned over losing the marketing potential TikTok can offer.

Millions of videos involving Universal artists became muted on the platform.

But while the stripped music will now return to TikTok, it comes at a moment of uncertainty for the wildly popular video-sharing app, one week after a new US law demands the company divest from its Chinese parent company ByteDance or be shut out of the American market.

The app has 170 million users in the United States alone.

Neither Universal nor TikTok disclosed any financial terms of the deal.

Several weeks ago, the powerful and popular Swift returned some of her music to the app ahead of the release of her most recent album.

It was unclear exactly how she did it, but Swift does own her own master recordings as well as her songwriting rights, though those two are administered by Universal’s publishing arm.

In their joint statement the companies said they were “working expeditiously to return music by artists represented by Universal Music Group and songwriters represented by Universal Music Publishing Group to TikTok in due course.”

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G7 to phase out coal-fired power plants by mid-2030s

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The mid-2030s phase out agreed by G7 ministers has been described as 'too late' by environmentalists
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G7 ministers agreed a timeframe Tuesday for phasing out coal-fired power plants, setting as a goal the mid-2030s, in a move hailed as significant by some environmentalists but slammed as “too late” by others.

The Group of Seven two-day meeting in Turin was the first big political session since the world pledged at the UN’s COP28 annual climate summit in Dubai in December to transition away from coal, oil and gas.

The G7 commits to “phase out existing unabated coal power generation in our energy systems during the first half of 2030s,” the final statement from energy and climate ministers read.

However it left some wiggle room, saying nations could follow “a timeline consistent with keeping a limit of 1.5-degrees-Celsius temperature rise within reach, in line with countries’ net zero pathways”.

It also preserved a place for coal power if it is “abated”, meaning its emissions are captured or limited by technology — something panned by many as unproven and a distraction from cutting fossil fuel use.

The G7 brings together Canada, France, Germany, Italy, Japan, the UK and US. 

Negotiations over a fixed date were reportedly tricky. Some countries, and many environmentalists, had been pushing for a 2030 limit, but Japan — which relies heavily on coal — was reluctant to set a date.

The leaders of the G7 countries will produce their own statement after a summit in southern Italy in June.

– ‘What about gas?’ –

The 2015 Paris Agreement saw countries agree to cap global warming at “well below” 2C above preindustrial times — with a safer limit of 1.5C if possible.

To keep the 1.5C limit in play, the UN’s climate expert panel has said emissions need to be slashed almost in half this decade, but they continue to rise.

The International Energy Agency (IEA) has said that to reach net zero emissions by 2050 — a key milestone to limit global warming — advanced economies should end all generation by unabated coal-fired power plants by 2030.

Italian Environment and Energy Security Minister Gilberto Pichetto Fratin said the talks had been “intense” but showed the G7 had “grasped” climate change.

Luca Bergamaschi from the Italian climate think tank ECCO said the G7 had taken a “decisive step forward” in translating the Dubai agreement into national policies.

The World Resources Institute hailed the commitment as “a beacon of hope for the rest of the world”.

But Oil Change International said the G7 “have failed” their first post-COP28 test, while the Climate Analytics policy institute said “2035 is too late”.

“Many of these countries have already publicly committed to phase out dates ahead of 2030, and only have a small amount of coal capacity anyway,” Jane Ellis from Climate Analytics said in a statement.

She also pointed out it was “notable that gas has not been mentioned”, despite it being the largest source of the global increase in CO2 emissions in the last decade.

Germany — Europe’s biggest emitter of greenhouse gases — is unwilling to wean off gas, as is G7 host Italy, which is investing in new domestic gas facilities.

– ‘Capable of contributing’ –

The G7 ministers did say they will scale-up battery storage “more than sixfold” by 2030, to support electricity grids powered by renewable energy sources.

They also tackled the thorny issue of plastic pollution amid a heated debate over how to best design a treaty addressing the scourge. 

Plastic waste is now found everywhere from the summits of mountains to the ocean floor and in human blood and breast milk. 

Broadly, the debate is between whether to focus on reducing production, or boosting recycling.

The ministers said they “aspired” to reduce and if necessary restrain the global production of plastic, and renewed their commitments to end plastic pollution by 2040.

Climate watchers are pushing for more funds for adaptation to climate change and energy systems for developing countries, and all eyes will be on the G7 finance minister’s meeting in at the end of May.

The ministers in Turin stressed efforts to raise money to help poorer countries deal with climate change should include “those countries that are capable of contributing”.

Under a UN climate treaty signed in 1992, only a small handful of high-income countries that dominated the global economy at the time were required to pay climate finance — not including China, which has since become wealthier, and is now the world’s largest polluter.

“By making it clear that we were calling on other countries to contribute, we want China to join us in this direction,” Franck Riester, the minister representing France on climate issues, told AFP.

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