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Washington, D.C.’s attorney general sued Amazon on Wednesday, accusing the company of covertly depriving residents in certain ZIP codes in the nation’s capital from access to Prime’s high-speed delivery.

The lawsuit from AG Brian Schwalb alleges that, since 2022, Amazon has “secretly excluded” two “historically underserved” D.C. ZIP codes from its expedited delivery service while charging Prime members living there the full subscription price. Amazon’s Prime membership program costs $139 a year and includes perks like two-day shipping and access to streaming content.

“Amazon is charging tens of thousands of hard-working Ward 7 and 8 residents for an expedited delivery service it promises but does not provide,” Schwalb said in a statement. “While Amazon has every right to make operational changes, it cannot covertly decide that a dollar in one zip code is worth less than a dollar in another.”

Amazon spokesperson Steve Kelly said in a statement it’s “categorically false” that its business practices are “discriminatory or deceptive.”

“We want to be able to deliver as fast as we possibly can to every zip code across the country, however, at the same time we must put the safety of delivery drivers first,” Kelly said in a statement. “In the zip codes in question, there have been specific and targeted acts against drivers delivering Amazon packages. We made the deliberate choice to adjust our operations, including delivery routes and times, for the sole reason of protecting the safety of drivers.”

Kelly said Amazon has offered to work with the AG’s office on efforts “to reduce crime and improve safety in these areas.”

In June 2022, Amazon allegedly stopped using its own delivery trucks to shuttle packages in the ZIP codes 20019 and 20020 based on concerns over driver safety, the suit states. In place of its in-house delivery network, the company relied on outside carriers like UPS and the U.S. Postal Service to make deliveries, according to the complaint, which was filed in D.C. Superior Court.

The decision caused residents in those ZIP codes to experience “significantly longer delivery times than their neighbors in other District ZIP codes, despite paying the exact same membership price for Prime,” the lawsuit says.

Data from the AG shows that before Amazon instituted the change, more than 72% of Prime packages in the two ZIP codes were delivered within two days of checkout. That number dropped to as low as 24% following the move, while two-day delivery rates across the district increased to 74%.

Amazon has faced prior complaints of disparities in its Prime program. In 2016, the company said it would expand access to same-day delivery in cities including Atlanta, Chicago, Dallas and Washington, after a Bloomberg investigation found Black residents were “about half as likely” to be eligible for same-day delivery as white residents.

The ZIP codes in Schwalb’s complaint are in areas with large Black populations, according to 2022 Census data based on its American Community Survey.

The Federal Trade Commission also sued Amazon in June 2023, accusing the company of tricking consumers into signing up for Prime and “sabotaging” their attempts to cancel by employing so-called dark patterns, or deceptive design tactics meant to steer users toward a specific choice. Amazon said the complaint was “false on the facts and the law.” The case is set to go to trial in June 2025.

According to Scwalb’s complaint, Amazon never communicated the delivery exclusion to Prime members in the area. When consumers in the affected ZIP codes complained to Amazon about slower delivery speeds, the company said it was due to circumstances outside its control, the suit says.

The lawsuit accuses Amazon of violating the district’s consumer protection laws. It also asks the court to “put an end to Amazon’s deceptive conduct,” as well as for damages and penalties.

To get packages to customers’ doorsteps, Amazon uses a combination of its own contracted delivery companies, usually distinguishable by Amazon-branded cargo vans, as well as carriers like USPS, UPS and FedEx, and a network of gig workers who make deliveries from their own vehicles as part of its Flex program.

Amazon has rapidly expanded its in-house logistics army in recent years as it looks to speed up deliveries from two days to one day or even a few hours. In July, the company said it recorded its “fastest Prime delivery speeds ever” in the first half of the year, delivering more than 5 billion items within a day.

In relying on its own workforce, Amazon has assumed greater control over its delivery operations.

In his complaint, Schwalb cites an internal company policy that says Amazon may choose to exclude certain areas from being served by its in-house delivery network if a driver experiences “violence, intimidation or harassment.” The company relies on UPS or USPS to deliver packages in excluded areas.

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Google CEO Sundar Pichai says he’d love to do side-by-side comparison with Microsoft’s AI models

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Google CEO Sundar Pichai says he’d love to do side-by-side comparison with Microsoft’s AI models

Google CEO Sundar Pichai speaks in conversation with Emily Chang during the APEC CEO Summit at Moscone West on November 16, 2023 in San Francisco, California. The APEC summit is being held in San Francisco and runs through November 17. 

Justin Sullivan | Getty Images News | Getty Images

Alphabet CEO Sundar Pichai is challenging Microsoft CEO Satya Nadella to an AI duel.

Well, sort of.

“I’d love to do a side-by-side comparison of Microsoft’s own models and our models any day, any time,” Pichai said, speaking at the The New York Times’ Dealbook Summit on Wednesday with interviewer Andrew Ross Sorkin.

Pichai’s comments came after Sorkin read aloud comments from an interview Nadella did earlier this year, in which the Microsoft CEO questioned Google’s place in the AI arms race following the search giant’s AI product mishaps earlier this year.

“Google should have been the default winner in the world of big tech’s AI race,” Nadella said in March on the Norges Bank Investment Management’s podcast. “Google’s a very competent company and obviously they have both the talent and the compute. They’re the vertically integrated player in this. They have everything from data to silicon to models to products and distribution.”

“You guys were the originals when it comes to AI,” Sorkin told Pichai after reading Nadella’s comments. He asked Pichai, “Where [do] you think you are in the journey relative to these other players?”

“They’re using someone else’s models,” added Pichai after saying he’d love to do the side-by-side comparison.

“You’re throwing down the gauntlet,” Sorkin responded.

Laughing, Pichai shook his head adding, “I’m just — I have a lot of respect for them and the team.” 

Large Language Models are a type of artificial intelligence that can analyze and generate human language, trained by vasts amount of data. While Microsoft does have its own AI models, much of the advanced capabilities in its recent offerings are powered by OpenAI’s LLMs.

The market for chatbots and related AI tools has exploded since OpenAI introduced ChatGPT in late 2022, giving consumers a new way to seek information online outside of traditional search. Shortly after, Microsoft it announced a partnership with OpenAI to incorporate ChatGPT into the Bing search engine.

Google has used its own LLMs for years to power its artificial intelligence and search products. Google latest LLMs is its Gemini series, which powers its conversational AI that competes with OpenAI’s GPT models. The company announced more advanced Gemini products in May. 

The latest comments come as tech companies spar amid the escalating AI arms race, particularly between Microsoft and Google.

In October, Microsoft took the unusual step of publicly accusing longtime rival Google of running “shadow campaigns” in Europe, claiming those efforts were designed to discredit the search giant with regulators.

Microsoft did not immediately respond to requests for comment on Pichai’s comments.

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Alibaba-backed Xreal launches augmented reality glasses with new chip as Meta rivalry heats up

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Alibaba-backed Xreal launches augmented reality glasses with new chip as Meta rivalry heats up

The Xreal One Series features the X1 chip which is the company’s first self-designed processor for its glasses.

Xreal

Xreal on Wednesday launched its latest generation of augmented reality (AR) glasses as it looks to fend off competition from the likes of Meta and Snap.

The company, which is backed by Chinese e-commerce giant Alibaba, is hoping to capitalize on the growing interest in AR glasses.

The Xreal One Series features the X1 chip which is the company’s first self-designed processor for its glasses and marks a big step for the product’s capabilities.

Xreal talks up the ability for wearers of its glasses to be able to connect to devices such as a phone, laptop or games console, and see their content on a huge digital screen in front of them. The previous generation of Xreal’s product required a companion device called the Beam for connections to a device, but the latest chip means that the Beam is not required.

“I think that it’s the biggest upgrade in Xreal history and probably the biggest upgrade for the entire consumer AR glasses [sector],” Chi Xu, CEO of Xreal, told CNBC in an interview.

The X1 chip was in the works for three years, Xu said, adding that he sees it as a way to increase the capabilities of the glasses to differentiate from the competition.

“We have to step up to define a chip that is really defining some of the new features for these types of glasses,” Xu said.

Xreal is one of the biggest players in the AR glasses space, but it is facing intense competition from the likes of Snap, which unveiled a new set of its Spectacles in September, as well as Facebook parent Meta’s continued efforts with the Meta Ray-Ban product. Meanwhile, CNBC reported this year that Qualcomm is working on a set of glasses with Google and Samsung.

Xreal is among the companies that are betting on glasses — rather than large headsets like Apple’s Vision Pro or the Meta Quest — to be the mass-market winners in AR.

“People have started to realize a headset doesn’t make sense, we need to go to lighter form factors to the glasses category,” Xu said. “But the challenge for glasses is can we push the limit to deliver a headset experience on a much smaller form factor?”

The Xreal One and Xreal One Pro start at $499 and $599 respectively.

AR, which refers to a technology that overlays digital content over the real world, has been hyped up over the last few years. However, the market had not exploded like many had predicted. Large headsets have proved too expensive or uncomfortable and firms including Xreal and Meta are focusing on how they can make the experience with glasses more compelling.

There is also still a lack of content and killer use cases for the product, an issue Xu said needs to change before the product category reaches a wider user base. The CEO added that this begins with good hardware.

“We need a platform, we need an ecosystem to improve the experience because we don’t have any content yet. But in order to have the developers getting excited … you need to have good hardware to begin with,” Xu told CNBC.

Xu said the company is expecting to sell 500,000 units of its previous products in 2025, roughly doubling the figure of this year.

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Amazon rolls out Buy with AWS button to let software vendors more easily sell to its cloud customers

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Amazon rolls out Buy with AWS button to let software vendors more easily sell to its cloud customers

Amazon Web Services (AWS) CEO Matt Garman delivers a keynote address during the AWS re:Invent conference in Las Vegas on Dec. 3, 2024.

Noah Berger | Getty Images

In 2022, Amazon introduced the Buy with Prime button, allowing premium subscribers to make purchases using their Amazon account even when shopping on other websites.

Now the company is bringing a similar concept to its cloud-computing business.

At its Reinvent conference in Las Vegas on Wednesday, Amazon Web Services said a new Buy with AWS button will be available for cloud software partners to embed on their sites as a way for customers to pay.

AWS is the leading provider of cloud infrastructure, ahead of Microsoft and Google, reeling in over $100 billion in revenue in the past four quarters. Prominent cloud software vendors like Databricks, Wiz and Workday run their products on top of AWS, as well as other clouds, and will now be able to sell services directly to users with AWS accounts via the new button. The checkout option will allow buyers to take advantage of Amazon discounts.

“The intention here is to increase customer loyalty and partner loyalty and, ultimately, win rates,” Matt Yanchyshyn, AWS’ vice president of marketplace and partner services, told CNBC in an interview.

For software companies, the only requirement is that they need to be selling their products through the AWS Marketplace. Amazon reduced fees to 3% or lower in some cases this year, after Microsoft and Google decreased their rates.

On the consumer side, Amazon has an estimated 180 million Prime subscribers in the U.S. The $139 annual subscription includes speedy shipping as well as two-hour grocery delivery and digital services like Prime Video and Amazon Music.

Retailers that want to take advantage of Prime’s massive customer base can pay a fee to add Buy with Prime to their site, and utilize Amazon’s fulfillment network when purchases are made using the button. Amazon said in September that Buy with Prime orders through merchants’ sites are up more than 45% this year from a year earlier.

Buy with AWS has one key difference in that it’s free for software companies to embed. Because the services are running on top of AWS, the purchases result in more revenue for Amazon.

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“Buy with Prime is a separate initiative, but we’re very close to that team and collaborate on technical implementation,” Yanchyshyn said. He added that, while “we definitely sort of trade notes on success,” Buy with AWS is “ultimately a very different use case.” 

Yanchyshyn said that Matt Garman, who was tapped to lead AWS earlier this year, is focused on making partners the center of the customer journey.

“It’s not lip service. He means it,” Yanchyshyn said.

Databricks has enjoyed a clean integration with Microsoft’s cloud since Microsoft started selling a service called Azure Databricks in 2018. Setting up Databricks on AWS has been more complicated, said David Meyer, senior vice president of product management at the data analytics software startup.

Buy with AWS should lead to a higher share of revenue coming from Amazon deployments, he said.

“We should really see an acceleration of people that go and use it on AWS, because it’s so easy,” Meyer said. “I would say that this will give AWS the advantage over other clouds, because AWS will be simpler than the other ones, much like historically Azure was simpler for Databricks.”

Workday plans to employ the button on its Adaptive Planning product, stemming from the $1.5 billion acquisition of Adaptive Insights in 2018. The company, which sells finance and human resources software, wants to see if procurement will be faster when buyers use the button and go through the AWS Marketplace.

“Can we get software in the hands of business users faster with this? That’s the theory that were testing with this capability,” said Matthew Brandt, Workday’s senior vice president of global partners.

Brandt said that if the evaluation goes well, Workday could use the button for more products.

“We have buyers who are not as familiar with us who are very familiar with AWS,” he said. “It validates Workday as a potential provider.”

Ed Anderson, a vice president at industry researcher Gartner, said he wouldn’t be surprised to see other cloud providers launch buy buttons for third-party websites.

“It’s generally all upside,” he said.

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