A large advertisement on the LED screen outside the apple store is to warm up the iPhone 12 series, which is officially on sale on the 23rd. Shanghai, China, October 21, 2020.
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U.S. wireless giants AT&T and Verizon had big plans last year to advertise why customers should upgrade their phones and start using 5G wireless.
Then the pandemic hit, and with everyone stuck at home, showing off blazing speeds and consumer use cases in stadiums, airports and public places wasn’t just irrelevant — it was gauche. Cloud gaming, checking instant odds on gambling apps from stadiums and downloading Netflix movies at the airport became far less important than the ability to work from home — a better message for cable companies who already deliver high-speed home broadband.
“We almost lost the year,” said David Christopher, EVP of partnerships & 5G ecosystem development for AT&T. “But now, people are excited to get out of their homes and experience 5G in the wild. We will dramatize use cases that matter to customers.”
AT&T and Verizon want to transfer customers as fast as possible to 5G networks — not just to recoup the heavy capital expenditure costs of building out updated nationwide networks but also to lock in customers and keep them from defecting to T-Mobile.
“A focus on 5G isn’t going to be flattering to either Verizon or AT&T,” said Craig Moffett, a wireless analyst at MoffettNathanson. “They are falling far behind T-Mobile in what will soon matter most: 5G speed and coverage. And they charge consumers much higher prices than T-Mobile.”
That puts pressure on both companies to sell consumers on why they should choose AT&T and Verizon — making 5G a marketing challenge as Americans emerge from pandemic quarantines.
Convincing consumers
Getting Americans excited about 5G may not be easy.
A J.D. Power survey last year found that only about a quarter of wireless subscribers said they believed 5G would be significantly faster than current 4G LTE technology, and only 5% of respondents said they’d be willing to pay more for 5G service.
Even the CEO of AT&T Communications, Jeff McElfresh, told CNBC last year he has “always tried to soften folks’ expectations around 5G.”
Much of the messaging about 5G so far has been about enterprise solutions. A Deloitte Insights consumer survey this year found that consumer use cases that demand the faster network simply don’t exist yet.
Verizon last year helped produce a documentary on 5G called “Speed of Thought,” which showed enterprise-focused examples, such as a robotic arm that a physician can use from anywhere and an augmented reality helmet for firefighters to help see through smoke. It also explored cities testing out 5G-enabled technology to avoid car collisions.
AT&T leaders have also said 5G’s real opportunity is in the business cases, particularly in the case of machines and equipment that are communicating via internet-of-things technology.
But both companies plan to illustrate specific consumer use cases in advertisements in the coming months to convince customers to upgrade.
In an outline of its 5G strategy for this year, AT&T detailed use cases including AR-aided shopping experiences for consumers in stores and downloading content at airports. Earlier this year, AT&T announced it would give its customers access to Bookful, which creates augmented reality experiences around books to try to improve reading comprehension. Christopher said viewing a street map through a phone is reliable and seamless in 5G, more easily allowing for activity like an augmented reality guide to a city, whereas it would have consistently lagged with 4G.
Verizon is currently running a number of 5G-related TV ad spots, including those with “Saturday Night Live” star Kate McKinnon about a promotion to receive $800 for a 5G phone when consumers trade in their old device.
Verizon has also done some marketing around what its 5G will do for gaming, both in its Super Bowl spot earlier this year and a digital video released in May that tried to illustrate what video game-like lag would look like in everyday life
But the Verizon campaigns don’t yet show why 5G is necessary or important for average consumers.
In one recent Verizon ad, viewers see a series of images — a man climbing a cell tower, a thunderstorm, cars driving on the street, landscape shots of cities — with voiced-over statements about “next generation service,” “broader spectrum,” and “the more going the extra mile matters.” But the only clear consumer use case shown in the one-minute commercial is video chatting — an activity that doesn’t require 5G.
It’s possible 5G advertising could backfire on both companies if consumers view networks as interchangeable and simply choose the lowest-price offering — which will be T-Mobile, Moffett said.
Christopher points out that educating consumers about 5G will benefit the entire industry. “We’re not going to spend our resources talking about the other guy,” he said. “Everything educates the customer about the broad benefits of 5G as a category, and that’s a good thing, too. We’re happy with that.”
Verizon’s 5G Home strategy
Verizon’s 5G marketing strategy hasn’t kicked into full gear yet because the company still hasn’t lit up its nationwide footprint of C-Band spectrum, said Manon Brouillette, recently named Verizon Consumer Group’s chief operating officer and deputy chief executive officer. Verizon CEO Hans Vestberg has promised 100 million Americans will have access to speeds up to 1 Gigabit per second by March 2022.
“When it comes to messaging, we need to make sure that any consumer understands you don’t need fiber to home anymore,” Brouillette said. “When C-band is here, we can make a sales pitch where we’ll offer one product, in-home and out-of-home, at low latencies, that has never been offered before. That’s the true game changer.”
Verizon already offers 5G Home that runs on millimeter wave technology — faster than C-band — to parts of 47 U.S. cities.
But even when Verizon’s 5G network is up and running across the country, the company still plans on selling separate products — mobile and home — even though they’ll operate on the same network. Verizon currently sells its 5G Home product at a $20 monthly discount for customers that also buy Verizon wireless.
Verizon is planning more “creative” ways to price home and mobile internet together in 2022, said Brouillette. But that packaging may not be enough to convince consumers to switch to Verizon — especially as cable companies such as Comcast and Charter offer their own mobile services (which use Verizon’s own network) with bundled discounts.
“It’s a myth believing one major ad campaign will solve everything,” said Brouillette. “It will come down to performance and execution.”
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.
In this photo illustration a virtual friend is seen on the screen of an iPhone on April 30, 2020, in Arlington, Virginia.
Olivier Douliery | AFP | Getty Images
The Federal Trade Commission on Thursday announced it is issuing orders to seven companies including OpenAI, Alphabet, Meta, xAI and Snap to understand how their artificial intelligence chatbots potentially negatively affect children and teenagers.
The federal agency said AI chatbots may be used to simulate human-like communication and intrapersonal relationships with users, and that it wants to understand what steps these companies have taken to “evaluate the safety of these chatbots when acting as companions,” according to a release.
“Protecting kids online is a top priority for the Trump-Vance FTC, and so is fostering innovation in critical sectors of our economy,” FTC Chairman Andrew Ferguson said in a statement.
Meta declined to comment on the inquiry. Alphabet, Snap and xAI did not immediately respond to CNBC’s request for comment.
The FTC said it is seeking information about how these companies monetize user engagement, develop and approve characters, use or share personal information, monitor and enforce compliance with company rules and terms of service and mitigate negative impacts, among other subjects.
“Our priority is making ChatGPT helpful and safe for everyone, and we know safety matters above all else when young people are involved,” an OpenAI spokesperson told CNBC in a statement. “We recognize the FTC has open questions and concerns, and we’re committed to engaging constructively and responding to them directly.”
Character Technologies, which operates the Character.ai bot, and Instagram, which is owned by Meta, were also named in the release. Character did not immediately respond to CNBC’s request for comment.
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Since the launch of ChatGPT in late 2022, a host of chatbots have emerged, creating a growing number of ethical and privacy concerns, as CNBC has previously reported.
The societal impacts of companions are already profound, even with the industry in its very early stages, as the U.S. suffers through a loneliness epidemic. Industry experts have said they expect the ethical and safety concerns to intensify once AI technology begins to train itself, creating the potential for increasingly unpredictable outcomes.
But some of the wealthiest people in the world are touting the power of companions and are working to develop the technology at their companies. Elon Musk in July announced a Companions feature for users who pay to subscribe to xAI’s Grok chatbot app. In April, Meta CEO Mark Zuckerberg said people are going to want personalized AI that understands them.
“I think a lot of these things that today there might be a little bit of a stigma around — I would guess that over time, we will find the vocabulary as a society to be able to articulate why that is valuable and why the people who are doing these things, why they are rational for doing it, and how it is actually adding value for their lives,” Zuckerberg said on a podcast.
Last month, Sen. Josh Hawley, R-Mo., announced an investigation into Meta following a Reuters report that the company allowed its chatbots to have romantic and sensual conversation with kids.
The Reuters report detailed an internal Meta document that described permissible AI chatbot behaviors during the development and training of the software. In one example, Reuters reported that a chatbot was allowed to have a romantic conversation with an eight-year-old and could say that “every inch of you is a masterpiece – a treasure I cherish deeply.”
Meta made temporary changes to its AI chatbot policies following the Reuters report so the bots do not discuss subjects like self-harm, suicide, eating disorders and avoiding potentially inappropriate romantic conversations.
Similarly, OpenAI outlined its plans to address how ChatGPT will handle “sensitive situations” last month after a lawsuit from a family blamed the chatbot for their teenage son’s death by suicide.
If you are having suicidal thoughts or are in distress, contact the Suicide & Crisis Lifeline at 988 for support and assistance from a trained counselor.
–CNBC’s Salvador Rodriguez and Annie Palmer contributed to this report
Alphabet’s health tech subsidiary Verily used the health data of more than 25,000 patients without authorization and actively covered up those violations, a former company executive alleges.
The executive, Ryan Sloan, claims Verily fired him after he discovered breaches of the Health Insurance Portability and Accountability Act, or HIPAA, and reported his concerns to the company’s senior management.
Patient data in the U.S. is protected under HIPAA, which ensures the sensitive information cannot be disclosed without a patient’s consent.
Sloan’s allegations are detailed in a pending lawsuit in federal court in San Francisco. The suit, which was filed late last year, has not been previously reported.
On Monday, the judge overseeing Sloan’s case denied a request by Verily to dismiss his civil complaint, or to send the dispute to arbitration.
“Verily believes the allegations and contentions alleged in this employment matter that was commenced in 2023 are completely without merit. Verily will defend itself to the full extent of the law,” a company spokesperson told CNBC in a statement. “Verily is an equal opportunity employer, and takes its responsibility and commitment to abide by all laws and regulations seriously. As this is an ongoing legal matter, Verily will not be providing further comment at this time.”
Representatives for Sloan did not comment.
Verily started as a moonshot in 2015 within Alphabet’s innovation lab X, formerly known as Google X. It’s Google’s sister company and operates under Alphabet’s “Other Bets” category.
The company hired Sloan in 2020 to serve as the chief commercial officer of its diabetes and hypertension business, Verily Onduo.
In January 2022, Sloan alleged that he and Julia Feldman, Onduo’s general counsel, discovered Verily had improperly used patients’ protected health information in its research, marketing campaigns, press releases and national conferences. The “extensive violations” affected more than 25,000 patients in Onduo’s diabetes program, according to an amended complaint filed in June.
Sloan and Feldman informed senior Verily leaders of their findings, the filing said, and they repeatedly raised the issue. An internal investigation at Verily confirmed several HIPAA breaches took place, according to the filing.
“Between January and March of 2022, internal investigators at Verily confirmed multiple breaches of fourteen (14) separate HIPAA Business Associate Agreements with large, covered entity clients of Onduo between 2017 and 2021,” the filing said.
Patients who accessed Verily Onduo through these clients – which include Walgreens Boots Alliance, Highmark Health, Quest Diagnostics and Delta Air Lines, among others – may have been affected by the breaches.
Delta said in a statement that it doesn’t have a comment on the suit, “but our employee’s personal information is important to us.”
“We are looking into this and will make sure any impact to our people is appropriately addressed,” the company said.
Quest said in a statement that, “We are not familiar with the allegations and have no further comment.”
Highmark declined to comment. Walgreens did not respond to CNBC’s requests for comment.
Under HIPAA, companies like Verily are supposed to notify impacted parties no later than 60 days after discovering a breach. Verily “decided to delay the decision of notifying the covered entities,” according to the filing, and the company engaged in negotiations to renew many of those contracts “without revealing that a HIPAA breach had recently occurred.”
“During a contract negotiation between Verily and Highmark Health in August of 2022, Verily represented that it was in compliance with HIPAA at all times, while knowingly concealing that a HIPAA breach had occurred,” the filing said.
That same month, Verily terminated Feldman and another employee who was aware of the breaches.
When Sloan reiterated his concerns about the breaches to Lisa Greenbaum, Verily’s then chief revenue officer, in October 2022, she allegedly defended the company’s decision not to disclose them and said that doing so would negatively affect public relations, the filing said.
Greenbaum joined Doximity, another health-care technology company, as chief commercial officer in January 2024, according to her LinkedIn.
Doximity did not immediately respond to request for comment.
In November 2022, Verily allegedly suppressed a press release out of concern that it would draw attention to previous marketing studies that violated its HIPAA Business Associate Agreements. The company removed the press release from its website and instructed employees not to mention it again, according to the filing.
Sloan was officially terminated from Verily in January of 2023, while on protected leave to care for his “critically ill mother,” the filing said.
The lawsuit marks the latest in a series of stumbles at Verily, which, despite raising more than $1 billion from investors, has struggled to latch onto a winning product. Verily is reportedly transitioning from a Limited Liability Company, or an LLC, to an investor-friendly C-corp structure to prepare for a fresh round of funding, according to a report from Business Insider on Wednesday.
Verily originally developed hardware like continuous glucose monitors before pivoting to pandemic response when Covid-19 broke out in 2020, then switched directions again to focus on precision health in 2022.
The company introduced a new artificial intelligence-powered chronic care solution called Verily Lightpath last year, and announced it was selling its stop-loss insurance subsidiary, Granular Insurance Company, in February.
–CNBC’s Lora Kolodny and Dan Mangan contributed to this report
OpenDoor is disrupting the real estate market with its new model. It buys homes and sells them on its platform.
Opendoor
Opendoor stock rocketed 60% higher on Thursday after the retail favorite named Shopify executive Kaz Nejatian as CEO and co-founder Keith Rabois as chairman.
The meme stock hit a 52-week high and continued a stunning run this year, with shares up more than 400% so far.
Former CEO Carrie Wheeler resigned last month following a pressure campaign from investors that included critical comments from Rabois and hedge fund manager Eric Jackson, who has been a key part of the stock’s resurgence this year.
Jackson built a massive following on X in part thanks to his successful bet on Carvana, and then turned his attention to cheering a turnaround at Opendoor.
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Opendoor said Wednesday it was “going into founder mode” by bringing Rabois and Eric Wu, who served as the company’s first CEO before stepping down in 2023, back to the board.
The company went public through a special purpose acquisition company in 2020. Opendoor’s business involves using technology to buy and sell homes, pocketing the gains.
Nejatian said the company will use artificial intelligence to make the process of buying and selling a home “radically simpler, faster and more certain.”
Shares of Opendoor traded below $1 earlier this year, and the company was in danger of being delisted from the Nasdaq.