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Today’s top stories
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The US Federal Reserve announces its decision on interest rates at 2pm ET/7pm London time today. Check back here for details and reaction.
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An FT investigation reports how a Russian spy network acquired sensitive technology from EU companies even after a US-led crackdown on the covert smuggling ring. Russian military ships were spotted near Nord Stream pipelines days before the gas links between Russia and Europe were blown up last year.
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Russia accused Ukraine of attempting to assassinate Vladimir Putin with a drone attack on the Kremlin. Both sides stepped up air strikes ahead of an expected counter-offensive by Kyiv.
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Good evening.
The “singularity” — the hypothetical moment artificial intelligence draws level with humans — may be a while off, but more signs are emerging of its potential to disrupt the business world, bringing new opportunities for Big Tech and giving new urgency to the debate on regulation.
US education company Chegg yesterday became one of the first examples of a company acknowledging a hit to its finances as a direct result of generative AI, in this instance the use of chatbot ChatGPT. The announcement sent a chill across the sector, sending Chegg’s shares and those of its rivals plunging.
Other sectors, such as advertising, are more equivocal. WPP, the world’s largest ad group, argues AI is an opportunity rather than a threat, but other agencies are worried about being cut out of the ad process as tech companies such as Meta build systems that cannot only manage but produce personalised ads for their clients.
What is not in doubt is the appetite of tech companies to take advantage of the rapidly evolving science, as evidenced in the current round of earnings statements. An enormous amount of capital expenditure is going into what they hope is a new boom in generative AI. The latest announcement is a new AI chatbot from the co-founders of Google DeepMind and LinkedIn called Pi, adding to similar products launched this year by the likes of OpenAI (the company behind ChatGPT), Google and Snap.
Arguments about regulation are also heating up.
As the Lex column notes, AI taps into a number of existing concerns around privacy, data use, copyright, misinformation and disinformation. The head of Norway’s sovereign wealth fund — the world’s largest — said last week that governments needed to speed up the development of regulation, announcing it would set guidelines for how the companies it invests in should use AI “ethically”.
The EU, encouraged by the European parliament, is drafting what could be the toughest rules on AI so far, with potential fines of up to €30mn or 6 per cent of global annual turnover.
The ethical issue is also the subject of today’s Moral Money newsletter (for premium subscribers), which tackles the question of whether anxiety about generative AI might prompt a broader rethink of whether tech companies really count as ethical investments.
In the meantime, warnings about what AI could do left unchecked are growing. Elon Musk last month joined more than 1,000 researchers and executives to call for a six-month “pause” on development as they railed against a “dangerous” arms race.
The most significant warning, however, came yesterday from Geoffrey Hinton, widely viewed as the godfather of modern AI, who quit his role at Google with a warning about misinformation flooding the public domain and AI displacing more human jobs than predicted.
Hinton said he was worried about the race between Google and Microsoft to launch AI-driven products before appropriate guardrails were in place, and that the moment when AI could surpass human intelligence was coming faster than he had expected.
“I don’t think they should scale this up more until they have understood whether they can control it,” he said.
Listen to the latest in our Night School podcast series for a discussion on the biggest tech stories of the year so far including AI, the US-China tech race and the future of the blockchain.
Need to know: UK and Europe economy
Official data confirmed the extent of soaring food prices in the UK. The price of cheese, milk and eggs rose more than 30 per cent in the past 12 months, while takeaway burgers and fish and chips were up nearly 20 per cent.
Eurozone inflation rose for the first time in six months from 6.9 per cent to 7 per cent in April, complicating the picture for tomorrow’s European Central Bank decision on interest rates. Core inflation, stripping out volatile energy and food prices, fell from 5.7 per cent to 5.6 per cent. Separate data showed demand for loans falling at the fastest rate since the 2008 financial crisis. Eurozone unemployment slipped to a record low of 6.5 per cent in March.
Police in Europe and Latin America have cracked down on Italian mafia group ’Ndrangheta, which is suspected of laundering drug money through hotels, restaurants, car wash companies and grocery chains.
Need to know: Global economy
Sultan Al Jaber, the president-designate of COP28 and head of the Abu Dhabi National Oil Company, promised to “supercharge” global climate finance, finalise a $100bn fund to help poorer countries cope with climate change and spearhead a new push on “low-carbon” tech. Cuts to oil production meant Gulf states faced a big slowdown in growth, the IMF said.
US Treasury secretary Janet Yellen warned the government risked running out of money as soon as June 1 as the perennial debate about the debt ceiling rolled round again.
Our latest Big Read looks at how Tunisia, a country that 10 years ago appeared as a beacon for democracy in the Arab world, is turning back to autocracy.
Need to know: Business
US investment in Chinese stocks has taken a hit as political tensions grow between Washington and Beijing. Foreign consultancies working in China are increasingly being paid a visit by security agents known as “the men in black”, making due diligence on the country’s businesses even harder.
The EU and US warned Malaysia over risks to national security and foreign investment from allowing China’s Huawei to bid for a role in its 5G networks.
Despite taking a financial hit from US restrictions on sensitive technology, Huawei, with Beijing’s support, has had some success in building up its own resources to work around the sanctions.
European investment in China’s car market, meanwhile, hit a record high of €6.2bn last year, despite the deteriorating political environment, as companies tried to claw back market share from ascendant Chinese electric-vehicle makers. Luxury car demand has boosted profitability at Porsche and Aston Martin.
Chile’s move to take state control of lithium projects to develop its vast resources of the component for electric car batteries has been attacked by business, which claims it will erode the country’s investment potential.
BP reported better than expected profits of $5bn for the first quarter, albeit down from 2022’s record levels, and said it would slow down its share buyback programme. Shell, BP and TotalEnergies made more money buying and selling oil, gas and power last year than the four biggest private energy traders, highlighting the growing importance of such activity to their profits.
China is dominating the global market for initial public offerings as US and Europe continue to disappoint, helped by new streamlined listings regimes for the Shanghai and Shenzhen stock exchanges.
The World of Work
Graduates whose education was disrupted by lockdown have weaker teamwork and communications skills than previous cohorts, according to Deloitte and PwC, which are giving extra coaching to their youngest UK staff. The recruits have less confidence doing basic tasks such as making presentations and speaking up in meetings, they said.
If you want to move out of your tech job but worry about selling your transferable skills, careers expert Jonathan Black — and FT readers — offer some advice.
Some good news
Sweden is building the world’s first e-motorway, a permanent electrified road that allows vehicles to recharge while driving. It hopes to build a further 3,000km of electric roads by 2045.
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