From Gmail to Word, your privacy settings and AI are entering into a new relationship
The Microsoft 365 website on a laptop arranged in New York, US, on Tuesday, June 25, 2024.
Bloomberg | Bloomberg | Getty Images
The beginning of the year is a great time to do some basic cyber hygiene. We’ve all been told to patch, change passwords, and update software. But one concern that has been increasingly creeping to the forefront is the sometimes quiet integration of potentially privacy-invading AI into programs.
“AI’s rapid integration into our software and services has and should continue to raise significant questions about privacy policies that preceded the AI era,” said Lynette Owens, vice president, global consumer education at cybersecurity company Trend Micro. Many programs we use today — whether it be email, bookkeeping, or productivity tools, and social media and streaming apps — may be governed by privacy policies that lack clarity on whether our personal data can be used to train AI models.
“This leaves all of us vulnerable to uses of our personal information without the appropriate consent. It’s time for every app, website, or online service to take a good hard look at the data they are collecting, who they’re sharing it with, how they’re sharing it, and whether or not it can be accessed to train AI models,” Owens said. “There’s a lot of catch up needed to be done.”
Where AI is already inside our daily online lives
Owens said the potential issues overlap with most of the programs and applications we use on a daily basis.
“Many platforms have been integrating AI into their operations for years, long before AI became a buzzword,” she said.
As an example, Owens points out that Gmail has used AI for spam filtering and predictive text with its “Smart Compose” feature. “And streaming services like Netflix rely on AI to analyze viewing habits and recommend content,” Owens said. Social media platforms like Facebook and Instagram have long used AI for facial recognition in photos and personalized content feeds.
“While these tools offer convenience, consumers should consider the potential privacy trade-offs, such as how much personal data is being collected and how it is used to train AI systems. Everyone should carefully review privacy settings, understand what data is being shared, and regularly check for updates to terms of service,” Owens said.
One tool that has come in for particular scrutiny is Microsoft’s connected experiences, which has been around since 2019 and comes activated with an optional opt-out. It was recently highlighted in press reports — inaccurately, according to the company as well as some outside cybersecurity experts that have taken a look at the issue — as a feature that is new or that has had its settings changed. Leaving the sensational headlines aside, privacy experts do worry that advances in AI can lead to the potential for data and words in programs like Microsoft Word to be used in ways that privacy settings do not adequately cover.
“When tools like connected experiences evolve, even if the underlying privacy settings haven’t changed, the implications of data use might be far broader,” Owens said.
A spokesman for Microsoft wrote in a statement to CNBC that Microsoft does not use customer data from Microsoft 365 consumer and commercial applications to train foundational large language models. He added that in certain instances, customers may consent to using their data for specific purposes, such as custom model development explicitly requested by some commercial customers. Additionally, the setting enables cloud-backed features many people have come to expect from productivity tools such as real-time co-authoring, cloud storage and tools like Editor in Word that provide spelling and grammar suggestions.
Default privacy settings are an issue
Ted Miracco, CEO of security software company Approov, said features like Microsoft’s connected experiences are a double-edged sword — the promise of enhanced productivity but the introduction of significant privacy red flags. The setting’s default-on status could, Miracco said, opt people into something they aren’t necessarily aware of, primarily related to data collection, and organizations may also want to think twice before leaving the feature on.
“Microsoft’s assurance provides only partial relief, but still falls short of mitigating some real privacy concern,” Miracco said.
Perception can be its own problem, according to Kaveh Vadat, founder of RiseOpp, an SEO marketing agency.
“Having the default to enablement shifts the dynamic significantly,” Vahdat said. “Automatically enabling these features, even with good intentions, inherently places the onus on users to review and modify their privacy settings, which can feel intrusive or manipulative to some.”
His view is that companies need to be more transparent, not less, in an environment where there is a lot of distrust and suspicion regarding AI.
Companies including Microsoft should emphasize default opt-out rather than opt-in, and might provide more granular, non-technical information about how personal content is handled because perception can become a reality.
“Even if the technology is completely safe, public perception is shaped not just by facts but by fears and assumptions — especially in the AI era where users often feel disempowered,” he said.
Default settings that enable sharing make sense for business reasons but are bad for consumer privacy, according to Jochem Hummel, assistant professor of information systems and management at Warwick Business School at the University of Warwick in England.
Companies are able to enhance their products and maintain competitiveness with more data sharing as the default, Hummel said. However, from a user standpoint, prioritizing privacy by adopting an opt-in model for data sharing would be “a more ethical approach,” he said. And as long as the additional features offered through data collection are not indispensable, users can choose which aligns more closely with their interests.
There are real benefits to the current tradeoff between AI-enhanced tools and privacy, Hummel said, based on what he is seeing in the work turned in by students. Students who have grown up with web cameras, lives broadcast in real-time on social media, and all-encompassing technology, are often less concerned about privacy, Hummel said, and are embracing these tools enthusiastically. “My students, for example, are creating better presentations than ever,” he said.
Managing the risks
In areas such as copyright law, fears about massive copying by LLMs have been overblown, according to Kevin Smith, director of libraries at Colby College, but AI’s evolution does intersect with core privacy concerns.
“A lot of the privacy concerns currently being raised about AI have actually been around for years; the rapid deployment of large language model trained AI has just focused attention on some of those issues,” Smith said. “Personal information is all about relationships, so the risk that AI models could uncover data that was more secure in a more ‘static’ system is the real change we need to find ways to manage,” he added.
In most programs, turning off AI features is an option buried in the settings. For instance, with connected experiences, open a document and then click “file” and then go to “account” and then find privacy settings. Once there, go to “manage settings” and scroll down to connected experiences. Click the box to turn it off. Once doing so, Microsoft warns: “If you turn this off, some experiences may not be available to you.” Microsoft says leaving the setting on will allow for more communication, collaboration, and AI served-up suggestions.
In Gmail, one needs to open it, tap the menu, then go to settings, then click the account you want to change and then scroll to the “general” section and uncheck the boxes next to the various “Smart features” and personalization options.
As cybersecurity vendor Malwarebytes put it in a blog post about the Microsoft feature: “turning that option off might result in some lost functionality if you’re working on the same document with other people in your organization. … If you want to turn these settings off for reasons of privacy and you don’t use them much anyway, by all means, do so. The settings can all be found under Privacy Settings for a reason. But nowhere could I find any indication that these connected experiences were used to train AI models.”
While these instructions are easy enough to follow, and learning more about what you have agreed to is probably a good option, some experts say the onus should not be on the consumer to deactivate these settings. “When companies implement features like these, they often present them as opt-ins for enhanced functionality, but users may not fully understand the scope of what they’re agreeing to,” said Wes Chaar, a data privacy expert.
“The crux of the issue lies in the vague disclosures and lack of clear communication about what ‘connected’ entails and how deeply their personal content is analyzed or stored,” Chaar said. “For those outside of technology, it might be likened to inviting a helpful assistant into your home, only to learn later they’ve taken notes on your private conversations for a training manual.”
The decision to manage, limit, or even revoke access to data underscores the imbalance in the current digital ecosystem. “Without robust systems prioritizing user consent and offering control, individuals are left vulnerable to having their data repurposed in ways they neither anticipate nor benefit from,” Chaar said.
Technology
Alibaba has staged a quiet $100 billion rally — AI and Jack Ma’s return are at the heart of it
The Alibaba office building in Nanjing, Jiangsu province, China, on Aug. 28, 2024.
CFOTO | Future Publishing | Getty Images
In November 2023, Jack Ma posted an internal memo at Alibaba, urging the e-commerce giant he helped create to “correct its course.” The message was as a rallying cry by one of China’s most prominent tech leaders to a company going through one of the most tumultuous times in its history.
Alibaba’s share price was near record lows, growth was stalling amid intensifying competition, management changes were coming thick and fast, and Beijing was still closely scrutinizing the company. Ma himself was barely in the public view.
But his message may have instilled some new hope in Alibaba — the e-commerce giant is now seeing growth in its core business and has become one of the leading artificial intelligence players in China and globally, competing with the likes of OpenAI and DeepSeek. And Alibaba is now back in favor with the Chinese government.
Alibaba’s U.S.-listed shares have quietly risen nearly 60% this year, adding more than $100 billion to the company’s valuation.
“China tech has awoken being led by Alibaba and investors globally are viewing this as the best way to way China tech … and we agree. Alibaba is in pole position to benefit from AI and cloud spend,” Dan Ives, global head of technology research at Wedbush Securities, told CNBC.
CNBC spoke to Alibaba’s chairman as well as a former executive and analysts, who painted a picture of the changes at the tech firm that have led to the start of the company’s comeback.
Alibaba’s fall
Alibaba’s downfall was swift. Many have credited its beginning to comments made by Ma in October 2020 where he appeared to criticize China’s financial regulator.
The comments weren’t widely picked up on. Days later, Alibaba’s share price hit a record high with its market capitalization exceeding $858 billion.
Alibaba was riding wave of successes that had seen it grow into the biggest e-commerce player in China, with international expansion on the agenda and its cloud business growing quickly. To top it all off, Alibaba affiliate Ant Group was gearing up for an initial public offering that would raise north of $34 billion, making it the biggest listing in history.
Ant Group, which was also founded by Ma, is a financial technology company that is behind Alipay, one of China’s two most prominent mobile payment systems.
Just two days before Ant Group was scheduled to list in Shanghai and Hong Kong, the IPO was canceled. At the time, Ant cited changes in China’s “regulatory environment.”
Ant Group founder Jack Ma.
Costfoto | Future Publishing | Getty Images
What followed was several years of intense scrutiny on Ma’s empire and China’s biggest technology companies. Regulators clamped down on practices from giants that they viewed as anticompetitive, dished out billions of dollars of fines on companies including Alibaba, forced changes to Ant Group’s structure and brought in a plethora of rules touching many areas of technology.
‘Uncertainty and confusion’
Regulatory scrutiny was one of Alibaba’s headaches in 2021. But it was also facing a number of other issues, including uncertainty around the strength of the Chinese economy that was trying to recover from the Covid-19 pandemic and rising competition.
In particular, newer companies like Pinduoduo and even Douyin, the Chinese version of TikTok, were capturing attention in China in e-commerce.
In March 2023, Alibaba — a sprawling company that does everything from food delivery to cloud computing and movies — decided to split into six separate business groups, each with the ability to raise outside funding and go public. Alibaba thought the move would make these units more agile.
Then came a leadership reshuffle. Alibaba announced in June 2023 that Daniel Zhang, who had been CEO since 2015 and chairman from 2019, would step down from both roles to focus on the cloud business. But just three months later, Zhang suddenly quit the cloud unit.
Eddie Wu, a co-founder of Alibaba, took over as CEO and the head of cloud. Joe Tsai, another co-founder, stepped up to take on the role of chairman.
That was one of the most tumultuous times in Alibaba’s history.
“During that time period a great sense of uncertainty and confusion hovered over employees. While there was a wait-and-see sort of mentality that set in, the problem was that as time passed, many didn’t know just how long that would be,” Brian Wong, a former Alibaba executive and author of “The Tao of Alibaba,” told CNBC.
“While China’s economy during the start of Covid initially remained robust, following the lock-downs everything turned and the combination of disrupted supply chains and changes in the economic climate only compounded the concerns of where all of this was headed.”
Joe and Eddie steady the ship
Wu sought to return Alibaba’s focus to its core e-commerce and cloud businesses and trim down some of the other initiatives the company had plunged into, moving away from the idea of Alibaba as several separate divisions.
Artificial intelligence moved front and center, with Wu and Tsai suggesting the company needed to adopt a startup mentality to keep up with the competition.
“Large companies move very slow and it’s because the decision-making structure is too complicated … So we really needed to get back to nimbleness and act fast,” Tsai said at the CNBC CONVERGE LIVE event in Singapore earlier this month, adding that quick decision-making is key to competing with startup rivals.
Tsai said that he and Wu decided the first thing they needed to do was to “streamline the company.”
“Instead of talking about Alibaba as six different business units, we talked about ourselves as having two core businesses — e-commerce and cloud computing,” Tsai said.
“That simplified everything and our communication. It’s very important that we communicate that to our employees. They need to have a simple structure in their minds in order to move faster.”
Younger people in management were also given the power to make decisions, Tsai said.
“It means that actually letting them make some decisions and letting them make mistakes and train them so that they can recover from mistakes,” Tsai added.
Wu and Tsai also scrapped plans to list Cainiao, Alibaba’s logistics arm, marking a U-turn on previous commitments.
“Eddie is winning plaudits internally for having trimmed the old and built the new. Jack [Ma] and Joe [Tsai] ultimately made the decision to bet on him and it’s paying off,” Duncan Clark, an early advisor to Alibaba and chairman of BDA, told CNBC by email.
Changing political winds
After the Ant Group IPO was scrapped in late 2020, Ma went out of public view. The billionaire was seen as the poster child of Beijing’s move to rein in the power of private companies and entrepreneurs.
The tightening of regulation and government scrutiny also hit investment. Billions of dollars were wiped off the value of Chinese tech companies while venture capital investment in startups plunged.
In a country where government policy and support is key for sectors and companies, Beijing’s apparent antagonism toward private business had dampened spirits in the tech sector. But as China continues to face economic headwinds, the role of the technology sector in boosting the economy is back in focus.
And in February this year, Chinese President Xi Jinping held a rare meeting with entrepreneurs urging them to “show their talents,” in comments seen as giving support to private businesses.
Alibaba’s Ma, among other top Chinese CEOs and founders, were present at that gathering. Ma’s attendance was particularly interesting, given that his empire was under the microscope over the last few years and he had not been seen with China’s political elite for some time.
“Xi’s meeting with Jack Ma also sent out a very clear signal on where the Chinese government’s priorities are at the moment – AI development and the growth of private enterprises are clearly important to China’s economic growth, and we also believe that Alibaba has the support of the Chinese authorities,” Chelsey Tam, senior equity analyst at Morningstar, told CNBC by email.
The meeting has helped Alibaba’s share price this year. And it appears to have also instilled new confidence in Alibaba to hire and invest.
“It gave us the confidence … to put our earnings back into capex [capital expenditure] and investments and also hire people,” Alibaba’s Tsai said, referencing a more than $50 billion investment in AI infrastructure over the next three years that the company announced in February.
AI success
A large part of Alibaba’s stock rally this year has been driven by the euphoria around DeepSeek and investors looking at tech giants in China to see what they’re doing with AI technology.
Alibaba is among China’s leaders, and in 2023, not long after ChatGPT made a splash, the company launched its first AI model called Tongyi Qianwen, or Qwen. The Hangzhou-headquartered company has since aggressively launched numerous models that allow tasks such as video, text and image generation from user prompts.
Alibaba has made its models open source, meaning anyone can download them and build upon them. This has been key to its success. Some of the most popular models on Hugging Face, a global repository of AI models, are built on Qwen.
“Alibaba has been consistently releasing high-impact open source models on Hugging Face since early 2023,” Tiezhen Wang, a machine learning engineer at Hugging Face, told CNBC.
Wang said Alibaba’s models, which cover features like video, image and text generation, “deliver strong performance across tasks.”
While Alibaba was early in the AI model game, it was the release of a research paper from Chinese firm DeepSeek this year that forced all eyes to focus on what was going on in China. DeepSeek claimed its AI model was trained at a fraction of the cost of leading AI players and on less-advanced Nvidia chips, leading to a global stock sell-off.
“DeepSeek was a wake up call that China tech is not just sitting idle on AI and this indirectly benefits Alibaba as the appetite for AI is clear in China,” Wedbush Securities’ Ives said.
AI competition ramps up
Alibaba’s first models actually predate DeepSeek. But competition in China is ramping up. Some of the country’s biggest tech firms from Baidu to Tencent continue to release models.
But there are questions about how Alibaba will make money off open-source AI models that are free. The answer, according to investors, AI experts and the company executives, is Alibaba’s cloud computing business.
Open source allows a company to build a community of developers around a particular model, strengthening its capabilities and also its reach globally.
More availability of AI and growing demand also means Alibaba could ultimately drive growth in its cloud computing business. Alibaba effectively charges companies to use its servers and computing power which is required to run AI applications, even if it’s not Alibaba’s models.
“We run a cloud computing business which will actually benefit from the proliferation of AI, because every time someone trains a model or runs inference … they have they need cloud computing infrastructure, and we sell compute,” Tsai said.
Alibaba’s cloud computing business posted accelerated growth in the December quarter from the quarter before.
“The key I think now is that rather than viewing Alibaba as a losing market share [and] margin e-commerce company it can now be seen as a large cloud [and] AI company benefiting from all the new opportunities,” BDA’s Clark said.
“It’s a complete change in narrative.”
Michael Intrator, co-founder and CEO of CoreWeave, speaks at Web Summit in Lisbon, Portugal, on Nov. 13, 2024.
Carlos Rodrigues | Sportsfile | Web Summit | Getty Images
CoreWeave on Thursday priced shares at $40 in the company’s IPO, raising $1.5 billion in the biggest U.S. tech offering since 2021, CNBC has confirmed.
The company, which provides access to Nvidia graphics processing units for artificial intelligence training and workloads, had planned to sell shares for between $47 and $55 each. At the top end of the range, that would’ve valued CoreWeave at about $26.5 billion, based on Class A and Class B shares outstanding.
The offering is down from 49 million shares to 37.5 million, according to a source familiar with the matter who asked not to be named because the announcement hasn’t been made public yet. Bloomberg was first to report on the $40 price. At that level, CoreWeave’s valuation will be closer to $19 billion, though the market cap will be higher on a fully diluted basis.
Earlier on Thursday, CNBC reported that Nvidia, one of CoreWeave’s largest shareholders, was targeting a $250 million order at $40 per share.
CoreWeave’s shares are set to start trading on the Nasdaq on Friday under the ticker symbol “CRWV.”
The IPO is a major test for tech startups and the venture capital market after an extended lull in new offerings dating back to the beginning of 2022, when soaring inflation and rising interest rates pushed investors out of risky assets. Other tech-related companies that have filed to go public in recent weeks include digital health startup Hinge Health, online lender Klarna and ticketing marketplace StubHub. Bloomberg reported on Wednesday that chat app maker Discord is working on an IPO.
The last venture-backed tech company that raised at least $1 billion for a U.S. IPO was Freshworks in 2021. Last year Reddit and Rubrik each raised about $750 million in their offerings.
After Donald Trump’s election victory in November, Goldman Sachs CEO David Solomon said he expected renewed IPO activity, but President Trump’s imposition of tariffs in recent weeks added uncertainty to economic forecasts and led to increased volatility to tech stocks.
CoreWeave counts Microsoft as its biggest customer by far. Other clients include Meta, IBM and Cohere. Revenue soared more than 700% last year to almost $2 billion, but the company recorded a net loss of $863 million. CoreWeave’s model is capital intensive, requiring hefty purchases of equipment and expenditures on real estate.
A week after filing to go public, CoreWeave announced a contract with OpenAI worth up to $11.9 billion over five years. OpenAI agreed to buy $350 million in CoreWeave stock as part of the deal.
CoreWeave is trying to compete with some of the biggest tech companies in the world, including Amazon, Microsoft and Google, the three leading providers of public cloud infrastructure in the U.S.
WATCH: Nvidia will anchor CoreWeave deal at $40 per share with a $250 million order, sources say
Jaque Silva | Nurphoto | Getty Images
Shares of AppLovin sank 20% on Thursday, their steepest drop on record, as another short-selling firm raised concerns about the company’s digital ad technology and claimed that it’s violating app store rules.
AppLovin tumbled $65.92 to close at $261.70. The stock soared more than 700% last year, the biggest gain among U.S. tech companies, due to enthusiasm surrounding AppLovin’s artificial intelligence technology and the growth it was spurring in its ad business.
But Muddy Waters Research on Thursday became the third short-selling firm to publish a report meant to raise significant investor skepticism. The stock is down 19% in 2025 after Thursday’s drop.
The report said that AppLovin’s ad tactics “systematically” violate app stores’ terms of service by “impermissibly extracting proprietary IDs from Meta, Snap, TikTok, Reddit, Google, and others.” In so doing, AppLovin is funneling targeted ads to users without their consent, Muddy Waters said.
“If APP is not deplatformed, logically, numerous competitors will start copying APP’s techniques because there is little technology involved,” the firm wrote.
Last month, Fuzzy Panda Research was one of two firms, along with short-seller Culper Research, that critiqued AppLovin’s AXON software, which drove its earnings growth and stock surge. The shares dropped 12% on Feb. 26, the day of the short reports. Earlier in February, AppLovin reported a revenue and earnings beat.
After the short reports were published last month, AppLovin CEO Adam Foroughi wrote a blog post, defending his company’s technology and practices, and taking aim at the short sellers trying to profit from AppLovin’s decline.
An AppLovin spokesperson didn’t provide a comment on Thursday, referring CNBC to Foroughi’s post.
“It’s disappointing that a few nefarious short-sellers are making false and misleading claims aimed at undermining our success, and driving down our stock price for their own financial gain, rather than acknowledging the sophisticated AI models our team has built to enhance advertising for our partners,” Foroughi wrote. “It’s also noteworthy that the short reports emerged after our earnings report, where we would be in a period of being unable to respond with financial performance.”
Earlier this month, Fuzzy Panda penned a letter to the S&P 500 inclusion committee reiterating its claims of fraudulent ad tactics and alleging that AppLovin didn’t meet the committee’s “gold standard.” The firm encouraged the committee to keep AppLovin out of the S&P 500.
“AppLovin’s recent revenue growth has been based in data theft, revenue fraud, and the exploitation of our country’s laws protecting children,” the firm wrote to the S&P committee.
One of Muddy Waters’ central claims is that e-commerce advertisers are bailing on AppLovin. The firm said that it analyzed 776 advertisers active early in the first quarter and noted that the churn rate was about 23%, while Foroughi “reportedly claims there has been no churn,” according to the report.
Muddy Waters said it conducted the churn analysis by looking at e-commerce websites that, on Jan. 3, had AppLovin’s AXON pixel. The firm then re-ran those checks from March 24-26, and said it found 21 sites with “broken links,” and another 171 that no longer contained the pixel.
The 23% “churn rate is based only on those customers who removed the pixel,” the firm wrote.
A representative for Muddy Waters declined to comment.
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