After OpenAI hearing, A.I. experts urge Congress to listen to more diverse voices on regulation
OpenAI CEO Sam Altman testifies before a Senate Judiciary Privacy, Technology, and the Law Subcommittee hearing titled ‘Oversight of A.I.: Rules for Artificial Intelligence’ on Capitol Hill in Washington, U.S., May 16, 2023. REUTERS/Elizabeth Frantz
Elizabeth Frantz | Reuters
At most tech CEO hearings in recent years, lawmakers have taken a contentious tone, grilling executives over their data-privacy practices, competitive methods and more.
But at Tuesday’s hearing on AI oversight including OpenAI CEO Sam Altman, lawmakers seemed notably more welcoming toward the ChatGPT maker. One senator even went as far as asking whether Altman would be qualified to administer rules regulating the industry.
Altman’s warm welcome on Capitol Hill, which included a dinner discussion the night prior with dozens of House lawmakers and a separate speaking event Tuesday afternoon attended by House Speaker Kevin McCarthy, R-Calif., has raised concerns from some AI experts who were not in attendance this week.
These experts caution that lawmakers’ decision to learn about the technology from a leading industry executive could unduly sway the solutions they seek to regulate AI. In conversations with CNBC in the days after Altman’s testimony, AI leaders urged Congress to engage with a diverse set of voices in the field to ensure a wide range of concerns are addressed, rather than focus on those that serve corporate interests.
OpenAI did not immediately respond to a request for comment on this story.
A friendly tone
For some experts, the tone of the hearing and Altman’s other engagements on the Hill raised alarm.
Lawmakers’ praise for Altman at times sounded almost like “celebrity worship,” according to Meredith Whittaker, president of the Signal Foundation and co-founder of the AI Now Institute at New York University.
“You don’t ask the hard questions to people you’re engaged in a fandom about,” she said.
“It doesn’t sound like the kind of hearing that’s oriented around accountability,” said Sarah Myers West, managing director of the AI Now Institute. “Saying, ‘Oh, you should be in charge of a new regulatory agency’ is not an accountability posture.”
West said the “laudatory” tone of some representatives following the dinner with Altman was surprising. She acknowledged it may “signal that they’re just trying to sort of wrap their heads around what this new market even is.”
But she added, “It’s not new. It’s been around for a long time.”
Safiya Umoja Noble, a professor at UCLA and author of “Algorithms of Oppression: How Search Engines Reinforce Racism,” said lawmakers who attended the dinner with Altman seemed “deeply influenced to appreciate his product and what his company is doing. And that also doesn’t seem like a fair deliberation over the facts of what these technologies are.”
“Honestly, it’s disheartening to see Congress let these CEOs pave the way for carte blanche, whatever they want, the terms that are most favorable to them,” Noble said.
Real differences from the social media era?
At Tuesday’s Senate hearing, lawmakers made comparisons to the social media era, noting their surprise that industry executives showed up asking for regulation. But experts who spoke with CNBC said industry calls for regulation are nothing new and often serve an industry’s own interests.
“It’s really important to pay attention to specifics here and not let the supposed novelty of someone in tech saying the word ‘regulation’ without scoffing distract us from the very real stakes and what’s actually being proposed, the substance of those regulations,” said Whittaker.
“Facebook has been using that strategy for years,” Meredith Broussard, New York University professor and author of “More Than a Glitch: Confronting Race, Gender, and Ability Bias in Tech,” said of the call for regulation. “Really, what they do is they say, ‘Oh, yeah, we’re definitely ready to be regulated.’… And then they lobby [for] exactly the opposite. They take advantage of the confusion.”
Experts cautioned that the kinds of regulation Altman suggested, like an agency to oversee AI, could actually stall regulation and entrench incumbents.
“That seems like a great way to completely slow down any progress on regulation,” said Margaret Mitchell, researcher and chief ethics scientist at AI company Hugging Face. “Government is already not resourced enough to well support the agencies and entities they already have.”
Ravit Dotan, who leads an AI ethics lab at the University of Pittsburgh as well as AI ethics at generative AI startup Bria.ai, said that while it makes sense for lawmakers to take Big Tech companies’ opinions into account since they are key stakeholders, they shouldn’t dominate the conversation.
“One of the concerns that is coming from smaller companies generally is whether regulation would be something that is so cumbersome that only the big companies are really able to deal with [it], and then smaller companies end up having a lot of burdens,” Dotan said.
Several researchers said the government should focus on enforcing the laws already on the books and applauded a recent joint agency statement that asserted the U.S. already has the power to enforce against discriminatory outcomes from the use of AI.
Dotan said there were bright spots in the hearing when she felt lawmakers were “informed” in their questions. But in other cases, she said she wished lawmakers had pressed Altman for deeper explanations or commitments.
For example, when asked about the likelihood that AI will displace jobs, Altman said that eventually it will create more quality jobs. While Dotan said she agreed with that assessment, she wished lawmakers had asked Altman for more potential solutions to help displaced workers find a living or gain skills training in the meantime, before new job opportunities become more widely available.
“There are so many things that a company with the power of OpenAI backed by Microsoft has when it comes to displacement,” Dotan said. “So to me, to leave it as, ‘Your market is going to sort itself out eventually,’ was very disappointing.”
Diversity of voices
A key message AI experts have for lawmakers and government officials is to include a wider array of voices, both in personal background and field of experience, when considering regulating the technology.
“I think that community organizations and researchers should be at the table; people who have been studying the harmful effects of a variety of different kinds of technologies should be at the table,” said Noble. “We should have policies and resources available for people who’ve been damaged and harmed by these technologies … There are a lot of great ideas for repair that come from people who’ve been harmed. And we really have yet to see meaningful engagement in those ways.”
Mitchell said she hopes Congress engages more specifically with people involved in auditing AI tools and experts in surveillance capitalism and human-computer interactions, among others. West suggested that people with expertise in fields that will be affected by AI should also be included, like labor and climate experts.
Whittaker pointed out that there may already be “more hopeful seeds of meaningful regulation outside of the federal government,” pointing to the Writers Guild of America strike as an example, in which demands include job protections from AI.
Government should also pay greater attention and offer more resources to researchers in fields like social sciences, who have played a large role in uncovering the ways technology can result in discrimination and bias, according to Noble.
“Many of the challenges around the impact of AI in society has come from humanists and social scientists,” she said. “And yet we see that the funding that is predicated upon our findings, quite frankly, is now being distributed back to computer science departments that work alongside industry.”
Noble said she was “stunned” to see that the White House’s announcement of funding for seven new AI research centers seemed to have an emphasis on computer science.
“Most of the women that I know who have been the leading voices around the harms of AI for the last 20 years are not invited to the White House, are not funded by [the National Science Foundation and] are not included in any kind of transformative support,” Noble said. “And yet our work does have and has had tremendous impact on shifting the conversations about the impact of these technologies on society.”
Noble pointed to the White House meeting earlier this month that included Altman and other tech CEOs, such as Google’s Sundar Pichai and Microsoft’s Satya Nadella. Noble said the photo of that meeting “really told the story of who has put themselves in charge. …The same people who’ve been the makers of the problems are now somehow in charge of the solutions.”
Bringing in independent researchers to engage with government would give those experts opportunities to make “important counterpoints” to corporate testimony, Noble said.
Still, other experts noted that they and their peers have engaged with government about AI, albeit without the same media attention Altman’s hearing received and perhaps without a large event like the dinner Altman attended with a wide turnout of lawmakers.
Mitchell worries lawmakers are now “primed” from their discussions with industry leaders.
“They made the decision to start these discussions, to ground these discussions in corporate interests,” Mitchell said. “They could have gone in a totally opposite direction and asked them last.”
Mitchell said she appreciated Altman’s comments on Section 230, the law that helps shield online platforms from being held responsible for their users’ speech. Altman conceded that outputs of generative AI tools would not necessarily be covered by the legal liability shield and a different framework is needed to assess liability for AI products.
“I think, ultimately, the U.S. government will go in a direction that favors large tech corporations,” Mitchell said. “My hope is that other people, or people like me, can at least minimize the damage, or show some of the devil in the details to lead away from some of the more problematic ideas.”
“There’s a whole chorus of people who have been warning about the problems, including bias along the lines of race and gender and disability, inside AI systems,” said Broussard. “And if the critical voices get elevated as much as the commercial voices, then I think we’re going to have a more robust dialogue.”
WATCH: Can China’s ChatGPT clones give it an edge over the U.S. in an A.I. arms race?
Alphabet CEO Sundar Pichai during the Google I/O developers conference in Mountain View, California, on May 10, 2023.
David Paul Morris | Bloomberg | Getty Images
Alphabet‘s stock gained 3% Friday after signaling strong growth in its search and advertising businesses amid a competitive artificial intelligence environment and uncertain macro backdrop.
“GOOGL‘s pace of GenAI product roll-out is accelerating with multiple encouraging signals,” wrote Morgan Stanley‘s Brian Nowak. “Macro uncertainty still exists but we remain [overweight] given GOOGL’s still strong relative position and improving pace of GenAI enabled product roll-out.”
The search giant posted earnings of $2.81 per share on $90.23 billion in revenues. That topped the $89.12 billion in sales and $2.01 in EPS expected by LSEG analysts. Revenues grew 12% year-over-year and ahead of the 10% anticipated by Wall Street.
Net income rose 46% to $34.54 billion, or $2.81 per share. That’s up from $23.66 billion, or $1.89 per share, in the year-ago period. Alphabet said the figure included $8 billion in unrealized gains on its nonmarketable equity securities connected to its investment in a private company.
Adjusted earnings, excluding that gain, were $2.27 per share, according to LSEG, and topped analyst expectations.
Alphabet shares have pulled back about 16% this year as it battles volatility spurred by mounting trade war fears and worries that President Donald Trump‘s tariffs could crush the global economy. That would make it more difficult for Alphabet to potentially acquire infrastructure for data centers powering AI models as it faces off against competitors such as OpenAI and Anthropic to develop largely language models.
During Thursday’s call with investors, Alphabet suggested that it’s too soon to tally the total impact of tariffs. However, Google’s business chief Philipp Schindler said that ending the de minimis trade exemption in May, which created a loophole benefitting many Chinese e-commerce retailers, could create a “slight headwind” for the company’s ads business, specifically in the Asia-Pacific region. The loophole allows shipments under $800 to come into the U.S. duty-free.
Despite this backdrop, Alphabet showed steady growth in its advertising and search business, reporting $66.89 billion in revenues for its advertising unit. That reflected 8.5% growth from the year-ago period. The company reported $8.93 billion in advertising revenue for its YouTube business, shy of an $8.97 billion estimate from StreetAccount.
Alphabet’s “Search and other” unit rose 9.8% to $50.7 billion, up from $46.16 billion last year. The company said that its AI Overviews tool used in its Google search results page has accumulated 1.5 billion monthly users from a billion in October.
Bank of America analyst Justin Post said that Wall Street is underestimating the upside potential and “monetization ramp” from this tool and cloud demand fueled by AI.
“The strong 1Q search performance, along with constructive comments on Gemini [large language model] performance and [AI Overviews] adoption could help alleviate some investor concerns on AI competition,” Post wrote in a note.
WATCH: Gemini delivering well for Google, says Check Capital’s Chris Ballard
CNBC’s Jennifer Elias contributed to this report.
An Amazon employee works to fulfill same-day orders during Cyber Monday, one of the company’s busiest days at an Amazon fulfillment center on December 2, 2024 in Orlando, Florida.
Miguel J. Rodriguez Carrillo | Getty Images
For 10 years, Aaron Cordovez has been selling kitchen appliances on Amazon. Now he’s in a bind, because most of his products are manufactured in China.
Cordovez, co-founder of Zulay Kitchen, said his company is moving “as fast as we can” to move production to India, Mexico and other markets, where tariffs are increasing under President Donald Trump, but are mild compared with the levies imposed on goods from China. That process will likely take at least a year or two to complete, he said.
“We’re making our inventory last as long as we can,” Cordovez said in an email.
Zulay is also temporarily raising the price of some of its milk frothers, smores roasting sticks and other products. The company’s popular kitchen strainer now costs $12.99, up from $9.99 before Trump announced his sweeping tariff proposal earlier this month.
Amazon merchants are hiking prices for everything from diaper bags and refrigerator magnets to charm necklaces and other top-selling items as they confront higher import costs. E-commerce software company SmartScout tracked 930 products on Amazon that have seen increased prices since April 9, with an average jump of 29%.
The price hikes affect a range of categories, including clothing, jewelry, household items, office supplies, electronics and toys.
The trade war with China has threatened to upend sellers on Amazon’s third-party marketplace, which accounts for about 60% of the company’s online sales. Many merchants are based in China or rely on the world’s second-largest economy to source and assemble their products.
Sellers are now faced with the conundrum of raising prices or eating the extra costs associated with Trump’s new tariffs. It’s an existential threat for many sellers, who subsist on razor-thin margins and have, for the last several years, dealt with rising costs on Amazon tied to storage, fulfillment, shipping and advertising fees along with pricing pressure from increased competition.
CEO Andy Jassy told CNBC earlier this month that the company was “going to try and do everything we can” to keep prices low for shoppers, including renegotiating terms with some of its suppliers. But he acknowledged some third-party sellers will “need to pass that cost” of tariffs on to consumers.
Amazon’s stock price is down 15% so far this year, sliding along with the broader market. The company reports first-quarter earnings next week.
Goods imported from China now face import duties of 145%, though Trump said Wednesday his administration is “actively” talking with China about a potential deal to lower tariffs. Chinese officials on Thursday denied that trade talks are taking place.
About 25% of the price increases observed by SmartScout were initiated by sellers based in China, said Scott Needham, the company’s CEO. Last week, stainless steel jewelry maker Ursteel hiked prices on four of its products by $6.50, while apparel brand Chouyatou raised the price of some of its dresses by $2. Both businesses are based in China’s Zhejiang province.
Anker, a Chinese electronics brand and one of Amazon’s largest sellers, has raised prices on one-fifth of its products sold in the U.S., including a portable power bank, which went up to $135 from $110, SmartScout data shows.
Representatives from Anker, Ursteel and Chouyatou didn’t respond to requests for comment.
Zulay, headquartered in Florida, is one of many U.S.-based sellers raising prices. The company is also cutting costs. Cordovez said he’s been forced to lay off 19% of his workforce and slash online ad spending by 85%.
Desert Cactus, based in Illinois, is also taking action. Joe Stefani, the company’s president, has been looking to move production of some of his brand’s college-themed merchandise out of China and into Mexico, India and Vietnam. About half of Desert Cactus’ goods come from China, while the rest are made in the U.S., Stefani said.
An Amazon worker moves a cart filled with packages at an Amazon delivery station in Alpharetta, Georgia, on Nov. 28, 2022.
Justin Sullivan | Getty Images
One of the company’s top products is a customizable license plate frame that’s manufactured in China. At the start of Trump’s first term in 2016, Stefani’s company paid import and shipping fees of 4% on the license plates. That rate has since skyrocketed to 170%, he said.
“The tariffs can’t stay this high,” Stefani said. “There’s so many people that just aren’t going to make it.”
Stefani said he expects Desert Cactus will end up raising prices on some products, though he’s worried shoppers might be put off by sticker shock.
“Will someone be willing to pay $50 for a hat on Amazon?” Stefani said. “You know it’s going to be expensive at the ballpark, but on Amazon we don’t know.”
Dave Dama, co-founder of health and beauty business Pure Daily Care, said the price to manufacture one of his skin-care products in China jumped to $25 from $10. Most Amazon sellers will have no choice but to raise prices, he said.
“If you were selling something for $40 and making a $7 or $8 profit at the end of the day, with these tariffs, those days are gone,” Dama said. “You can’t do that anymore. It’s unsustainable.”
Pure Daily Care plans to stagger price increases over several weeks, and only on products “we absolutely need to,” to keep Amazon’s algorithms from ranking it lower in search results or losing the valuable buy box, he said. The buy box determines which listing pops up first when a shopper clicks on a particular product, and the one that gets purchased when they tap “Add to Cart.”
An Amazon spokesperson said the company’s pricing policies continue to apply.
“As always, sellers set their own prices, and we regularly monitor how we highlight great prices as Featured Offers to provide customers with low prices across a wide selection,” the spokesperson said in a statement.
Dama said his company has enough inventory for some products to last up to six months, which it aims to “stretch as long as possible” in the hope that China and the U.S. can reach a trade deal. The company is also forgoing some sales promotions and discounts, while pausing spend on some display and video ads.
Regarding his inventory, Dama said, “We can try to stretch that seven, eight, nine months, which buys us a lot more time for this thing to work out, hopefully.”
A Pony.ai autonomous car.
Pony.ai
Chinese start-up Pony.ai said Friday it will develop autonomous driving technology in partnership with Tencent Cloud and deploy robotaxi services on tech giant Tencent’s WeChat and other applications.
The Nasdaq-listed company which specializes in autonomous vehicle technology, particularly robotaxis and robotrucks, said in a press release that the deal will include cooperation in areas such as cloud services, map data, information security and intelligent cockpit ecosystems.
The arrangement will also see the two companies integrate Pony.ai’s robotaxi ride-hailing services within Tencent’s popular WeChat app as well as other applications like Tencent Maps.
Both companies had been in talks “for quite some time,” Pony.ai CEO James Peng told CNBC on the sidelines of the Shanghai Auto Show on Friday. He cited Tencent’s huge user base and its cloud offerings as factors supporting the “win-win” collaboration as the start-up continues to scale up.
Following the partnership, Peng said that “hopefully in the near future,” users would be able to call Pony.ai robotaxi rides straight through the WeChat app.
WeChat is known as the world’s most popular ‘super app,’ housing everything from messaging to payment transactions to food delivery services, with a monthly user base of over 1 billion people.
“Pony.ai possesses industry-leading autonomous driving technology accumulations, while Tencent excels in cloud services, mapping, and cockpit ecosystem technologies,” Vice President of Tencent Group and President of Tencent Smart Mobility Zhong Xiangping was quoted as saying in the Friday release.
“This strategic partnership between the two parties is not only about complementing each other’s technologies and resources but also marks a new starting point for collaborative innovation,” he added.
The release said that the partnership would also see both companies collaborate on the development, testing, and operation of Robotaxis, particularly in L4-level autonomous driving.
According to SAE International, L4 is a type of autonomous driving that allows drivers to take their eyes off the road in designated areas. For comparison, L3 is considered a hands-off system, but drivers must actively monitor the vehicle and be ready to take over the wheel.
The Tencent Cloud agreement comes a day after it was reported that Pony.ai unveiled its L4, seventh-generation robotaxi solution at the Shanghai Auto Show on Wednesday. The company’s shares surged about 40% in the U.S. on Thursday.
The start-up continues to establish itself as a prominent player in China’s autonomous driving industry. The company obtained China’s first permit to charge fares for fully driverless taxis in core parts of a business district of Shenzhen, where Tencent is headquartered.
However, the firm may be implicated in increasing trade tensions between China and the U.S. as the latter is a market Pony.ai considers “hugely important” to its expansion plans.
James Peng, co-founder and chief executive of Pony.ai this week reportedly told the Financial Times that the company is considering a secondary listing outside the U.S. amid mounting concerns that Washington will push for the delisting of Chinese companies off the New York Stock Exchange.
If this were to happen, it would come less than six months after the company’s initial public offering in the U.S. Notwithstanding, Peng told FT that a lot of factors need to be considered.
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