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Emad Mostaque, founder and CEO of Stability AI, speaks during the Bloomberg Technology Summit in San Francisco, California, US, on Thursday, June 22, 2023.

David Paul Morris | Bloomberg | Getty Images

Beleaguered artificial intelligence startup Stability is laying off employees after the exit of its controversial former CEO Emad Mostaque.

Stability, which is behind the popular Stable Diffusion large language model, made more than 20 of its employees redundant to “right-size” the business after a period of unsustainable growth, according to an internal memo obtained by CNBC.

The company’s newly appointed co-CEOs Shan Shan Wong and Christian Laforte told employees in an email Wednesday night that the firm needed to “restructure parts of the business, which will sadly mean saying goodbye to some colleagues.”

“Those who are affected by this have been notified individually and we will be supporting them throughout this period,” Wong and Laforte, who were previously chief operating officer and chief technology officer at the company, respectively, said in the internal memo.

Stability AI’s layoffs amount to about 10% of its global headcount, according to publicly available data online which shows the firm employs around 200 people in total.

The employees affected by the measures are mostly on the operational side of the business and have been notified of their redundancies, according to a person familiar with the matter who spoke with CNBC under condition of anonymity as they were not able to speak publicly on the matter.

Last month, Stability announced its former CEO, Mostaque, was leaving the company to “pursue decentralized AI,” and would be replaced by Wong and Laforte.

Mostaque’s departure follows media reports throwing doubt on his credentials.

A June 2023 Forbes report said that Mostaque misled people including his own investors about receiving a master’s degree from Oxford University, as well as the nature of a partnership with Amazon which Stability characterized as a strategic deal but was nothing more than a standard cloud computing leasing contract.

Mostaque’s response at the time was that several of Forbes’ allegations were “false accusations and misrepresentations.” He said he didn’t receive his Oxford University degree because he didn’t attend his graduation ceremony but had arranged to receive his degrees by post.

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He also doubled down on the deal with Amazon and it’s cloud computing unit Amazon Web Services by describing it as a “strategic business alliance” that saw AWS build an “incredibly rare dedicated compute cluster” completed to the requirements of Stability.

Stability AI is still searching for a permanent CEO to fill the top leadership role. The company said it continues to operate as normal and is still releasing new products, having only recently announced developer APIs, or application programming interfaces, for its Stable Diffusion 3 AI model.

You can read the full memo from co-CEOs Wong and Christian Laforte below:

Dear team,

As you know, over the past couple of weeks the Leadership team have been working hard on a strategic plan to reduce our cost-base, strengthen support with our investors and partners, and enable our teams to continue developing and releasing innovative products. 

Following a review of the global team, we have determined the need to restructure parts of the business, which will sadly mean saying goodbye to some colleagues. Those who are affected by this have been notified individually and we will be supporting them throughout this period.  

These decisions have not been taken lightly and they are intended to right-size parts of the business and focus our operations, which is critical to setting us on a more sustainable path – and to put us in the best possible position to continue developing cutting-edge models and products. Products like the Stable Diffusion 3 API strengthen our deep-tech leadership and demonstrate our unique, systemic importance to the AI ecosystem.

We will meet as planned on Thursday for our regular town hall and we encourage you to ask any questions you might have of our Leadership team in the form that will be sent out shortly. In the meantime, please feel free to discuss any concerns with your manager.

We would like to thank everyone for their dedication and contributions. We recognize the challenges we face, but we have a plan in place. Through the hard work and commitment of this team, we are making progress every day, moving us steadily in the right direction.

Best wishes,

Shan Shan & Christian 

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Google lays off hundreds of ‘Core’ employees, moves some positions to India and Mexico

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Google lays off hundreds of 'Core' employees, moves some positions to India and Mexico

Sundar Pichai, chief executive officer of Alphabet Inc., during Stanford’s 2024 Business, Government, and Society forum in Stanford, California, US, on Wednesday, April 3, 2024.

Justin Sullivan | Getty Images

Just ahead of its blowout first-quarter earnings report last week, Google laid off at least 200 employees from its “Core” teams, in a reorganization that will include moving some roles to India and Mexico, CNBC has learned.

Google’s Core unit is responsible for building the technical foundation behind the company’s flagship products and protecting users’ online safety, according to Google’s website. Core teams include key technical units from information technology, its Python developer team, technical infrastructure, security foundation, app platforms, core developers and various engineering roles.

At least 50 of the positions eliminated were in engineering at the company’s offices in Sunnyvale, California, filings show. Many of the Core teams will hire corresponding roles in Mexico and India, according to internal documents viewed by CNBC.

Asim Husain, vice president of Google Developer Ecosystem, announced some of the layoffs to his team in an email last week. He also spoke at a town hall and told employees that this was the biggest planned reduction for his team this year, an internal document shows.

“We intend to maintain our current global footprint while also expanding in high-growth global workforce locations so that we can operate closer to our partners and developer communities,” Husain wrote in the email.

Alphabet has been slashing headcount since early last year, when the company announced plans to eliminate about 12,000 jobs, or 6% of its workforce, following a downturn in the online ad market. Even with digital advertising rebounding in the past couple quarters, Alphabet has continued downsizing, with layoffs across multiple organizations this year.

CFO Ruth Porat announced in mid-April a restructuring to the company’s finance department, which included layoffs and moving positions to Bangalore and Mexico City. The company’s search boss, Prabhakar Raghavan, told employees at an all-hands meeting in March that Google plans to build teams closer to users in key markets, including India and Brazil, where labor is cheaper than in the U.S.

The latest cuts comes as the company enjoys its fastest growth rate since early 2022, alongside improving profit margins. Last week, Alphabet reported a 15% jump in first-quarter revenue from a year earlier, and announced its first-ever dividend and a $70 billion buyback.  

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“Announcements of this sort may leave many of you feeling uncertain or frustrated,” Husain wrote in the email to developers. He added that his message to developers is that the changes “are in service of our broader goals” as a company.

The teams involved in the reorganization have been key to the company’s developer tools, an area that’s being streamlined by Google as it incorporates more AI into the products. In February, Google announced a major rebrand of its chatbot from Bard to Gemini, the same name as the suit of AI models that power it.

Alphabet is gearing up for its annual developer conference, Google I/O, on May 14, where the company traditionally reveals new developer products and tools that have been underway during the prior year. Husain said in a memo explaining the developer changes that generative AI is at an “inflection point.”

“Recent advances in Generative AI across the industry, including Google’s Gemini, are changing the very nature of software development as we know it,” Husain wrote.

In a separate email, security engineering vice president Pankaj Rohatgi, told his team that, “In order to optimize for our business goals, we are expanding work to other locations, which will result in some role eliminations and proposed role eliminations.”

The Core layoffs also include the governance and protected data group, which will be at the center of regulatory challenges facing the company, particularly as lawmakers across the globe focus more on developments in AI. The European Union’s Digital Markets Act (DMA) went into effect in March, and is aimed at clamping down on anti-competitive practices in tech.

Evan Kotsovinos, Google’s vice president of governance and protected data, wrote about the upcoming changes in an email last week.

Kotsovinos said the team’s success means responding to “escalating regulatory focus” and is contingent on “moving faster.”

Raghavan, Google’s senior vice president overseeing search, recently referenced heightened competition, a more challenging regulatory environment and slower organic growth as the company’s “new operating reality.”

Google confirmed the Core reorganization and layoffs, and a spokesperson told CNBC that employees will be able to apply for open roles within Google and to access outplacement services.

“As we’ve said, we’re responsibly investing in our company’s biggest priorities and the significant opportunities ahead,” the spokesperson said in an email. “A number of our teams made changes to become more efficient and work better, remove layers and align their resources to their biggest product priorities.”

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UnitedHealth CEO tells lawmakers the company paid hackers a $22 million ransom

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UnitedHealth CEO tells lawmakers the company paid hackers a  million ransom

UnitedHealth Group CEO Andrew Witty confirmed for the first time that the company paid a $22 million ransom to hackers who breached its subsidiary Change Healthcare and caused widespread fallout across the health-care sector. Witty’s comments were made during a Wednesday hearing before the U.S. Senate Committee on Finance.

Change Healthcare provides payment, revenue management and other solutions like e-prescription software. The company disconnected affected systems when the threat was detected, leaving many doctors temporarily unable to fill prescriptions or get paid for their services.

UnitedHealth told CNBC in April that it paid a ransom to try and protect patient data. Earlier reports had discovered a $22 million transfer on Bitcoin’s blockchain, but the company had not confirmed the figure until now.

“As chief executive officer, the decision to pay a ransom was mine,” Witty said. “This was one of the hardest decisions I’ve ever had to make, and I wouldn’t wish it on anyone.”

UnitedHealth is one of the largest companies in the world, with a roughly $450 billion market cap. Its business unit Optum — which provides care to 103 million customers — and Change Healthcare — which touches one in three patient records — merged in 2022.

Committee Chairman Sen. Ron Wyden, D-Ore., said in his opening remarks that the Change Healthcare breach serves as a “dire warning about the consequences of too-big-to-fail mega-corporations.”

“Companies that are so big have an obligation to protect their customers and to lead on this issue,” Wyden said.

Witty told the committee that cybercriminals accessed Change Healthcare through a server that was not protected by multi-factor authentication, or MFA, which requires users to verify their identity in at least two different ways. He said UnitedHealth now has MFA in place across all external-facing systems.

“As a result of this malicious cyberattack, patients and providers have experienced disruptions and people are worried about their private health data,” Witty said. “To all those impacted, let me be very clear: I am deeply, deeply sorry.”

Sen. Thom Tillis, R-N.C., held up a bright yellow copy of “Hacking for Dummies” during the hearing, saying the breach is UnitedHealth’s responsibility to fix.

“This is some basic stuff that was missed, so shame on internal audit, external audit and your systems folks tasked with redundancy, they’re not doing their job,” Tillis said.

A filing with the U.S. Securities and Exchange Commission said that UnitedHealth discovered that a cyber threat actor accessed part of Change Healthcare’s information technology network in late February.

Witty said Change Healthcare’s core systems are back online, though some of its secondary support functions are still being restored.

UnitedHealth said in February that the ransomware group Blackcat was behind the attack. Blackcat, which also goes by the names Noberus and ALPHV, steals sensitive data from institutions and threatens to publish it unless a ransom is paid, according to a December release from the U.S. Department of Justice.

UnitedHealth confirmed in April that files containing protected health information and personally identifiable information were compromised in the breach. The company said a data review is ongoing, so it could be months before the company can notify affected individuals.

Witty said Wednesday that UnitedHealth is working with regulators to assess the breach and to inform people if their information has been compromised “as soon as possible.”

Early in March, UnitedHealth launched a temporary funding assistance program to help support providers that have experienced cash flow disruptions due to the cyberattack. There are no fees, interest or other costs on top of the payments, and providers have 45 days to repay the funds once their standard payment operations resume. 

During the hearing, Witty said the company has not yet asked anyone for loan repayments, and it will be up to providers to determine when their operations have officially returned to normal.

Witty did not directly disclose whether UnitedHealth will provide additional support to providers who may be contending with other loans and interest payments because of the breach.

Sen. Michael Bennet, D-Colo., pressed Witty to share how UnitedHealth is working to ensure something like the Change Healthcare breach will not happen again. Witty said the company plans to share what it discovers about the breach with others, adding that there’s a need to focus on reducing the rate of cyberattacks on the health-care sector.

“We are clearly trying to take our responsibility in this attack. We are also trying to learn from it,” he said.

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Amazon-backed Anthropic launches iPhone app and business tier to compete with OpenAI’s ChatGPT

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Amazon-backed Anthropic launches iPhone app and business tier to compete with OpenAI's ChatGPT

Omar Marques | Lightrocket | Getty Images

Anthropic on Wednesday announced its first-ever enterprise offering and a free iPhone app.

The generative artificial intelligence startup is the company behind Claude, one of the chatbots that, like OpenAI’s ChatGPT and Google‘s Gemini, has exploded in popularity in the past year. Anthropic, founded by ex-OpenAI research executives, has backers including Google, Salesforce and Amazon, and in the past year, it’s closed five different funding deals totaling about $7.3 billion.

The new plan for businesses, dubbed Team, has been in development over the last few quarters and involved beta-testing with between 30 and 50 customers in industries such as technology, financial services, legal services and health care, Anthropic co-founder Daniela Amodei told CNBC in an interview, adding that the idea for the service was partially borne out of many of those same customers asking for a dedicated enterprise product.

“So much of what we were hearing from enterprise businesses is people are kind of using Claude at the office already,” Amodei said.

The Team plan offers access to all three of Anthropic’s latest Claude models, with increased usage limits, admin tools and billing management, as well as a longer “context window,” meaning the ability for businesses to have “multi-step conversations” and upload long documents like research papers and legal contracts for processing, according to Anthropic. Other features coming include “citations from reliable sources to verify AI generated claims,” per the release.

The Team offering costs $30 per user per month when billed monthly. It requires a minimum of five users.

Anthropic iPhone app

Anthropic’s first iOS app is free for users across all plans and also available starting Wednesday. It provides syncing with web chats and the ability to upload photos and files from a smartphone.

There are plans to launch an Android app, too. “We actually just hired our first Android engineer, so we are actively working on the Android app,” Amodei told CNBC, adding that the engineer starts next week.

News of the Team plan and iOS app comes more than a month after Anthropic’s debut of Claude 3, a suite of AI models that it says are its fastest and most powerful yet. The new tools are called Claude 3 Opus, Sonnet and Haiku.

The company has said the most capable of the new models, Claude 3 Opus, outperformed OpenAI’s GPT-4 and Google’s Gemini Ultra on industry benchmark tests, such as undergraduate-level knowledge, graduate level reasoning and basic mathematics. This is also the first time Anthropic has offered multimodal support: Users can upload photos, charts, documents and other types of unstructured data for analysis and answers.

The other models, Sonnet and Haiku, are more compact and less expensive than Opus. The company declined to specify how long it took to train Claude 3 or how much it cost, but it said companies like Airtable and Asana helped A/B test the models. In a release on Wednesday, Anthropic confirmed that other current clients using Claude include Pfizer, Asana, Zoom, Perplexity AI, Bridgewater Associates and more currently.

The generative AI field has exploded over the past year, with a record $29.1 billion invested across nearly 700 deals in 2023, a more than 260% increase in deal value from a year earlier, according to PitchBook. It’s become the buzziest phrase on corporate earnings calls quarter after quarter. Academics and ethicists have voiced significant concerns about the technology’s tendency to propagate bias, but even so, it’s quickly made its way into schools, online travel, the medical industry, online advertising and more.

Around this time last year, Anthropic had completed Series A and B funding rounds, but it had only rolled out the first version of its chatbot without any consumer access or major fanfare. Now, it’s one of the hottest AI startups, with a product that directly competes with ChatGPT in both the enterprise and consumer worlds.

Claude 3 can summarize up to about 150,00 words, or a sizeable book, about the length range of “Moby Dick” or “Harry Potter and the Deathly Hallows.” Its previous version could only summarize 75,000 words. Users can input large data sets, and ask for summaries in the form of a memo, letter or story. ChatGPT, by contrast, can handle about 3,000 words.

In January, OpenAI came under fire regarding its enterprise offering, for quietly walking back a ban on the military use of ChatGPT and its other artificial intelligence tools. Its policies still state that users should not “use our service to harm yourself or others,” including to “develop or use weapons.” Before the change, OpenAI’s policy page specified that the company did not allow the usage of its models for “activity that has high risk of physical harm, including: weapons development [and] military and warfare.”

Anthropic’s stance on the military use of Claude is similar to OpenAI’s updated policy.

“The way that we draw the line there today is we don’t discriminate based on industry or based on business, but we have an acceptable use policy that says what you can and can’t use Claude for,” Amodei told CNBC, adding, “Any business in the world that’s not in a sanctioned country, of course, [and] meets basic business requirements, can use Claude for all kinds of back-office applications and things like that, but we have… very strict guidance around Claude not being used for weapons, basically anything that can cause violence or harm people.”

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