A bipartisan pair of senators reintroduced the Kids Online Safety Act on Tuesday with updates that aimed to address concerns that the bill could inadvertently cause more harm to the young internet users it seeks to protect. But some activists who raised those issues say the changes are still insufficient.
The bill aims to make the internet a safer place for kids to access by putting the onus on social media companies to prevent and mitigate harms that might come from their services. The new version of the bill defines a set list of harms that platforms need to take reasonable steps to mitigate, including by preventing the spread of posts promoting suicide, eating disorders, substance abuse and more. It would require those companies to undergo annual independent audits of their risks to minors and require them to enable the strongest privacy settings by default for kids.
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Congress and President Joe Biden have made clear online protections for children are a key priority, and KOSA has become one of the leading bills on the subject. KOSA has racked up a long list of more than 25 co-sponsors and the earlier version of the bill passed unanimously out of the Senate commerce committee last year. The new version of the bill has gained support from groups such as Common Sense Media, the American Psychological Association, the American Academy of Pediatrics and the Eating Disorders Coalition.
At a virtual press conference on Tuesday, Sen. Richard Blumenthal, D-Conn., who introduced the bill alongside Sen. Marsha Blackburn, R-Tenn., said that Senate Majority Leader Chuck Schumer, D-N.Y., is “a hundred percent behind this bill and efforts to protect kids online.”
While Blumenthal acknowledged it’s ultimately up to Senate leadership to figure out timing, he said, “I fully hope and expect we’ll have a vote this session.”
A Schumer spokesperson did not immediately respond to a request for comment.
Late last year, dozens of civil society groups warned Congress against passing the bill, warning it could further endanger young internet users in different ways. For example, the groups worried the bill would add pressure for online platforms to “over-moderate, including from state Attorneys General seeking to make political points about what kind of information is appropriate for young people.”
Blumenthal and Blackburn made several changes to the text in response to critiques from outside groups. They sought to more carefully tailor the legislation to limit the duty of care requirements for social media platforms to a specific set of potential harms to mental health based on evidence-backed medical information.
They also added protections for support services like the National Suicide Hotline, substance abuse groups and LGBTQ youth centers to ensure they aren’t unintentionally hampered by the bill’s requirements. Blumenthal’s office said it did not believe the duty of care would have applied to those sorts of groups, but opted to clarify it regardless.
But the changes have not been enough to placate some civil society and industry groups.
Evan Greer, director of digital rights nonprofit Fight for the Future, said Blumenthal’s office never met with the group or shared the updated text in advance of the introduction despite multiple requests. Greer acknowledged the co-sponsors’ offices met with other groups, but said in an emailed statement that “it seems they intentionally excluded groups that have specific issue-area expertise in content moderation, algorithmic recommendation, etc.”
“I’ve read through it and can say unequivocally that the changes that have been made DO NOT address the concerns that we raised in our letter,” Greer wrote. “The bill still contains a duty of care that covers content recommendation, and it still allows state Attorneys General to effectively dictate what content platforms can recommend to minors.”
“The ACLU remains strongly opposed to KOSA because it would ironically expose the very children it seeks to protect to increased harm and increased surveillance,” ACLU Senior Policy Counsel Cody Venzke said in a statement. The group joined the letter warning against its passage last year.
“KOSA’s core approach still threatens the privacy, security, and free expression of both minors and adults by deputizing platforms of all stripes to police their users and censor their content under the guise of a ‘duty of care,'” Venzke added. “To accomplish this, the bill would legitimize platforms’ already pervasive data collection to identify which users are minors when it should be seeking to curb those data abuses. Moreover, parental guidance in minors’ online lives is critical, but KOSA would mandate surveillance tools without regard to minors’ home situations or safety. KOSA would be a step backwards in making the internet a safer place for children and minors.”
At the press conference, in response to a question about Fight for the Future’s critiques, Blumenthal said the duty of care had been “very purposefully narrowed” to target certain harms.
“I think we’ve met that kind of suggestion very directly and effectively,” he said. “Obviously, our door remains open. We’re willing to hear and talk to other kinds of suggestions that are made. And we have talked to many of the groups that had great criticism and a number have actually dropped their opposition, as I think you’ll hear in response to today’s session. So I think our bill is clarified and improved in a way that meets some of the criticism. We’re not going to solve all of the problems of the world with a single bill. But we are making a measurable, very significant start.”
The bill also faced criticism from several groups that receive funding from the tech industry.
NetChoice, which has sued California over its Age-Appropriate Design Code Act and whose members include Google, Meta and TikTok, said in a press release that despite lawmakers’ attempts to respond to concerns, “unfortunately, how this bill would work in practice still requires an age verification mechanism and data collection on Americans of all ages.”
“Working out how young people should use technology is a difficult question and has always been best answered by parents,” NetChoice Vice President and General Counsel Carl Szabo said in a statement. “KOSA instead creates an oversight board of DC insiders who will replace parents in deciding what’s best for children.”
“KOSA 2.0 raises more questions than it answers,” Ari Cohn, free speech counsel TechFreedom, a think tank that’s received funding from Google, said in a statement. “What constitutes reason to know that a user is under 17 is entirely unclear, and undefined by the bill. In the face of that uncertainty, platforms will clearly have to age-verify all users to avoid liability—or worse, avoid obtaining any knowledge whatsoever and leave minors without any protections at all.”
“Protecting young people online is a broadly shared goal. But it would contradict the goals of bills such as this to impose compliance obligations that undermine the privacy and safety of teens,” said Matt Schruers, president of the Computer & Communications Industry Association, whose members include Amazon, Google, Meta and Twitter. “Governments should avoid compliance requirements that would compel digital services to collect more personal information about their users — such as geolocation information and a government-issued identification — particularly when responsible companies are instituting measures to collect and store less data on customers.”
Startup Figure AI is developing general-purpose humanoid robots.
Figure AI
Figure AI, an Nvidia-backed developer of humanoid robots, was sued by the startup’s former head of product safety who alleged that he was wrongfully terminated after warning top executives that the company’s robots “were powerful enough to fracture a human skull.”
Robert Gruendel, a principal robotic safety engineer, is the plaintiff in the suit filed Friday in a federal court in the Northern District of California. Gruendel’s attorneys describe their client as a whistleblower who was fired in September, days after lodging his “most direct and documented safety complaints.”
The suit lands two months after Figure was valued at $39 billion in a funding round led by Parkway Venture Capital. That’s a 15-fold increase in valuation from early 2024, when the company raised a round from investors including Jeff Bezos, Nvidia, and Microsoft.
In the complaint, Gruendel’s lawyers say the plaintiff warned Figure CEO Brett Adcock and Kyle Edelberg, chief engineer, about the robot’s lethal capabilities, and said one “had already carved a ¼-inch gash into a steel refrigerator door during a malfunction.”
The complaint also says Gruendel warned company leaders not to “downgrade” a “safety road map” that he had been asked to present to two prospective investors who ended up funding the company.
Gruendel worried that a “product safety plan which contributed to their decision to invest” had been “gutted” the same month Figure closed the investment round, a move that “could be interpreted as fraudulent,” the suit says.
The plaintiff’s concerns were “treated as obstacles, not obligations,” and the company cited a “vague ‘change in business direction’ as the pretext” for his termination, according to the suit.
Gruendel is seeking economic, compensatory and punitive damages and demanding a jury trial.
Figure didn’t immediately respond to a request for comment. Nor did attorneys for Gruendel.
The humanoid robot market remains nascent today, with companies like Tesla and Boston Dynamics pursuing futuristic offerings, alongside Figure, while China’s Unitree Robotics is preparing for an IPO. Morgan Stanley said in a report in May that adoption is “likely to accelerate in the 2030s” and could top $5 trillion by 2050.
Concerns about stock valuations in companies tied to artificial intelligence knocked the market around this week. Whether these worries will recede, as they did Friday, or flare up again will certainly be something to watch in the days and weeks ahead. We understand the concerns about valuations in the speculative aspects of the AI trade, such as nuclear stocks and neoclouds. Jim Cramer has repeatedly warned about them. But, in the past week, the broader AI cohort — including real companies that make money and are driving what many are calling the fourth industrial revolution — has been getting hit. We own many of them: Nvidia and Broadcom on the chip side, and GE Vernova and Eaton on the derivative trade of powering these energy-gobbling AI data centers. That’s not what should be happening based on their fundamentals. Outside of valuations, worries also center on capital expenditures and the depreciation that results from massive investments in AI infrastructure. On this point, investors face a choice. You can go with the bears who are glued to their spreadsheets and extrapolating the usable life of tech assets based on history, a seemingly understandable approach, and applying those depreciation rates to their financial models, arguing the chips should be near worthless after three years. Or, you can go with the commentary from management teams running the largest companies driving the AI trade, and what Jim has gleaned from talking with the smartest CEOs in the world. When it comes to the real players driving this AI investment cycle, like the ones we’re invested in, we don’t think valuations are all that high or unreasonable when you consider their growth rates and importance to the U.S., and by extension, the global economy. We’re talking about Nvidia CEO Jensen Huang, who would tell you that advancements in his company’s CUDA software have extended the life of GPU chip platforms to roughly five to six years. Don’t forget, CoreWeave recently re-contracted for H100s from Nvidia, which were released in late 2022. The bears with their spreadsheets would tell you those chips are worthless. However, we know that H100s have held most of their value. Or listen to Lisa Su, CEO of Advanced Micro Devices , who said last week that her customers are at the point now where “they can see the return on the other side” of these massive investments. For our part, we understand the spending concerns and the depreciation issues that will arise if these companies are indeed overstating the useful lives of these assets. However, those who have bet against the likes of Jensen Huang and Lisa Su, or Meta Platforms CEO Mark Zuckerberg, Microsoft CEO Satya Nadella, and others who have driven innovation in the tech world for over a decade, have been burned time and again. While the bears’ concerns aren’t invalid, long-term investors are better off taking their cues from technology experts. AI is real, and it will increasingly lead to productivity gains as adoption ramps up and the technology becomes ingrained in our everyday lives, just as the internet has. We have faith in the management teams of the AI stocks in which we are invested, and while faith is not an investment strategy, that faith is based on a historical track record of strong execution, the knowledge that offerings from these companies are best in class, and scrutiny of their underlying business fundamentals and financial profiles. Siding with these technology expert management teams, over the loud financial expert bears, has kept us on the right side of the trade for years, and we don’t see that changing in the future. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust, including NVDA, AVGO, GEV, ETN, META, MSFT.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. Markets: The S & P 500 bounced back Friday, recovering from the prior session’s sharp losses. The broad-based index, which was still tracking for a nearly 1.5% weekly decline, started off the session a little shaky as Club stock Nvidia drifted lower after the open. It was looking like concerns about the artificial intelligence trade, which have been dogging the market, were going to dominate back-to-back sessions. But when New York Federal Reserve President John Williams suggested that central bankers could cut interest rates for a third time this year, the market jumped higher. Rate-sensitive stocks saw big gains Friday. Home Depot rose more than 3.5% on the day, mitigating a tough week following Tuesday’s lackluster quarterly release. Eli Lilly hit an all-time high, becoming the first drugmaker to reach a $1 trillion market cap. TJX also topped its all-time high after the off-price retailer behind T.J. Maxx, Marshalls, and HomeGoods, delivered strong quarterly results Wednesday. Carry trade: We’re also monitoring developments in Japan, which is dealing with its own inflation problem and questions about whether to resume interest rate hikes. That brings us to the popular Japanese yen carry trade, which is getting squeezed as borrowing costs there are rising. The yen carry trade involves borrowing yen at a low rate, then converting them into, say, dollars, and investing in higher-yielding foreign assets. That’s all well and good when the cost to borrow yen is low. It’s a different story now that borrowing costs in Japan are hitting 30-year highs. When rates rise, the profit margin on the carry trade gets crunched, or vanishes completely. As a result, investors need to get out, which means forced selling and price action that becomes divorced from fundamentals. It’s unclear if any of this is adding pressure to U.S. markets. We didn’t see anything in the recent quarterly earnings reports from U.S. companies to suggest corporate fundamentals are deteriorating in any meaningful way. That’s why we’re looking for other potential external factors, alongside the well-known concerns about artificial intelligence spending, the depreciation resulting from those capital expenditures, and general worries about consumer sentiment and inflation here in America. Wall Street call: HSBC downgraded Palo Alto Networks to a sell-equivalent rating from a hold following the company’s quarterly earnings report Wednesday. Analysts, who left their $157 price target unchanged, cited decelerating sales growth as the driver of the rerating, describing the quarter as “sufficient, not transformational.” Still, the Club name delivered a beat-and-raise quarter, which topped estimates across every key metric. None of this stopped Palo Alto shares from falling on the release. We chalked the post-earnings decline up to high expectations heading into the quarter, coupled with investor concerns over a new acquisition of cloud management and monitoring company Chronosphere. Palo Alto is still working to close its multi-billion-dollar acquisition of identity security company CyberArk , announced in July. HSBC now argues the stock’s risk-versus-reward is turning negative, with limited potential for upward estimate revisions for fiscal years 2026 and 2027. We disagree with HSBC’s call, given the momentum we’re seeing across Palo Alto’s businesses. The cybersecurity leader is dominating through its “platformization” strategy, which bundles its products and services. Plus, Palo Alto keeps adding net new platformizations each quarter, converting customers to use its security platform, and is on track to reach its fiscal 2030 target. We also like management’s playbook for acquiring businesses just before they see an industry inflection point. With Chronosphere, Palo Alto believes the entire observability industry needs to change due to the growing presence of AI. We’re reiterating our buy-equivalent 1 rating and $225 price target on the stock. Up next: There are no Club earnings reports next week. Outside of the portfolio, Symbotic, Zoom Communications , Semtech , and Fluence Energy will report after Monday’s close. Wall Street will also get a slew of delayed economic data during the shortened holiday trading week. U.S. retail sales and September’s consumer price index are scheduled for release early Tuesday. Durable goods orders and the Conference Board consumer sentiment are released on Wednesday morning. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.