Happy Thursday.
Here’s today’s ITK Daily.
To be ITK, know this:
Europe moves ahead on AI regulation, challenging tech giants’ power: The European Parliament overwhelmingly approved a sweeping package that aims to protect consumers from potentially dangerous applications of artificial intelligence, putting Brussels on a collision course with US tech firms funneling billions into the technology. WP
+ European Union lawmakers on Wednesday took a key step toward passing landmark restrictions on the use of artificial intelligence, putting Brussels on a collision course with American tech giants funneling billions of dollars into the burgeoning technology.
+ The European Parliament overwhelmingly approved the E.U. AI Act, a sweeping package that aims to protect consumers from potentially dangerous applications of artificial intelligence.
+ The legislation takes a “risk-based approach,” introducing restrictions based on how dangerous lawmakers predict an AI application could be.
+ It would ban tools that European lawmakers deem “unacceptable,” such as systems allowing law enforcement to predict criminal behavior using analytics.
+ “We have made history today,” co-rapporteur Brando Benifei, an Italian member of the European Parliament working on the AI Act, said in a news conference. Benifei said the lawmakers “set the way” for a dialogue with the rest of the world on building “responsible AI.”
+ The EU bill builds on scaffolding already in place, adding to European laws on data privacy, competition in the tech sector and the harms of social media.
+ EU Commissioner Thierry Breton is scheduled to visit San Francisco next week to run a “stress test” of Twitter, checking whether the company is in compliance with the Digital Services Act, a law regulating social media platforms that takes effect this fall.
+ Microsoft, OpenAI and Google, are aggressively lobbying governments around the world, saying that they are in favor of new AI regulations.
+ Alex Engler, a fellow at the Brookings Institution studying AI policy, said the E.U. AI Act has the world’s attention. But he warned that no single law will solve the problems presented by AI. “This is going to be decades of adaptation,” he said.
Reuters: From rockets to recruitment, Israel's military refocuses on AI
US launches quiet diplomatic push with Iran to cool tensions: WSJ reports talks in Oman to seek release of American prisoners as Iran wants billions of dollars trapped overseas.
+ India and the US are to announce one of their largest defence deals during PM Narendra Modi’s upcoming state visit to Washington.
Turkey’s Erdoğan plays down Sweden’s NATO hopes: Politico reports his remarks injected a chill into the growing optimism that Sweden could get the NATO green light soon.
Allies pressure Biden to hasten NATO membership for Ukraine: Some members of the military alliance want to set a timetable for Ukraine to join, though only after the war is no longer raging. NYT
Poland says ‘nie’ to another Nordic NATO chief, splitting alliance: WSJ reports Warsaw said to oppose front-runner Danish prime minister and to favor Estonian leader.
NATO turns back to Jens Stoltenberg amid divisions over successor: FT reports the military alliance moves towards an extension for longtime secretary-general as leaders struggle to agree on replacement
Western allies plan to provide long-term security assurances to Ukraine: Bilateral agreements to formalize the level of military and financial support for Kyiv. FT
Reuters: Belarus starts taking delivery of Russian nuclear weapons
BBC: Ukraine war: 'Extremely fierce battles' as Kyiv seeks to advance
AP: Russia steps up aerial strikes on Ukraine, killing at least 6 amid Kyiv counteroffensive
As Kyiv’s counteroffensive heats up, Washington holds its breath: WP reports after 16 months of war, and with tens of billions of dollars of advanced weapons sent, Western backers need Ukraine’s forces to show dramatic gains against Russian occupiers.
CNN: Blinken to travel to China this weekend as US looks to reset relations after spy balloon incident
Blinken to visit China this week: Politico reports Blinken will become the first secretary of State to visit China in five years and the first Cabinet-level official to do so in four years.
China’s foreign minister tells Blinken it’s up to the US to ease tensions: WSJ reports exchange comes days ahead of secretary of state’s visit to Beijing.
Analysis: Xi throws Okinawa into East Asia geopolitical cocktail: Xi speaks of Ryukyu's history, with emphasis on ties with China. Nikkei
Maps are never static...
+ Xi went on to say that the 36 Clans of the Min-People went over to the Ryukyus and settled -- a reference to the movement of people during Ming Dynasty China in the 14th century. He emphasized the need to collect and sort such historic documents to inherit and develop Chinese civilization well.
+ Okinawa, previously known as Ryukyu, is today a popular beach resort.
+ A source familiar with the situation says Okinawa is becoming a test case of Chinese efforts to adjust the past concept of a Sino-centric order, to better align it with today's international situation.
+ One way of accomplishing this might be to soften the "Sino-centric order" so it can be used for geopolitical maneuvering.
+ It was Xi himself who sparked the current Ryukyu boom. Have no doubt that its impact on Sino-Japanese relations will be considerable.
+ Okinawa is not only home to many U.S. military bases, it is the geopolitical linchpin of efforts to ensure security in the Indo-Pacific region. If the US and China clash over Taiwan, Okinawa will also be affected.
China readies for stimulus as economic recovery founders: Beijing expected to cut headline interest rate, but economists say bolder action needed to revitalize growth. FT
To understand China know that Aspirational is not the same as Operational.
+ With a swath of tax breaks and hints at more loans for small businesses, Chinese state planners this week started to respond to a problem already felt by many consumers and investors: the country’s economic recovery is in trouble.
+ After months of disappointing data, economists and traders expect China’s government on Thursday to cut the headline policy interest rate for the first time in almost a year.
+ “It’s not enough,” said Ting Lu, chief China economist at Nomura, of the expected rate cut. “The real reason for the weak growth now is not about high interest rates. It’s more about confidence about the future.”
+ In contrast to policies in the US and Europe designed to directly support households and businesses, Beijing spent heavily building a vast anti-Covid apparatus, mandating mass testing and imposing citywide lockdowns that stifled growth.
Germany mulls downsizing China summit, aims to publish strategy in July: German government meets Chinese counterparts June 20 and hopes to publish strategy in early July before summer recess. Politico
Britain’s future as a clean energy superpower begins in Scotland Sir Keir Starmer
A future Labour government happens only by winning back seats in Scotland.
Energy policies and demand will be a top campaign issue for the upcoming UK general election.
Leader of the Opposition and Leader of the Labour Party Kier Starmer makes an opening pitch to Scottish voters with this oped.
+ "Because so much of our politics and our history is the story of energy — where it comes from, how much it costs, what it is used for and who it benefits — I believe the next chapter can be written in Scotland."
+ "We saw in the prime minister’s visit to the United States last week a glimpse of what that future looks like if we continue down the path of managed decline."
+ "Behind the photoshoots and the stunts, the grim reality was of a British government begging for scraps from the plate, relying on the magnanimity of our allies, hoping we will somehow benefit from the investments they are making rather than making them ourselves."
+ "President Biden once said that when he hears climate change, he thinks jobs. I feel exactly the same."
+ "My goal is no less than Britain becoming a clean energy superpower."
+ "That future starts in Scotland, building on the skills, talent and expertise already abundant in the energy sector here."
+ "It’s why we will establish GB Energy, a publicly-owned energy generation company to build supply chains and create good, long-term, secure and unionised jobs in communities across the country."
+ "There is a crucial choice on energy at the next election: between a Labour government that understands the future and will unleash its huge opportunities in Britain, and a Conservative party and an SNP stuck in the past."
Boris Johnson’s departure opens a door for Sunak: Prime minister can exploit voters’ concerns about Labour’s spending now he has cut loose from disasters of the past. Daniel Finkelstein
+ Brand perception is very hard indeed to change.
+ Not only do brand perceptions last, so does public opinion.
+ Eleven years ago Nico Voigtländer and Hans-Joachim Voth conducted a study of pogroms against Jews in the 14th century. And then into the German election results of 1928. They were able to show that in places where the population blamed Jews for the Black Death and burnt many of them alive, there was a much stronger tendency to vote for the Nazis 600 years later.
+ In other words, over many hundreds of years, sentiment remained broadly the same.
+ What the Tories will wish to describe as a Labour threat — an irresponsible, incontinent economic policy based on borrowing — has already been Tory reality.
+ You can’t make peace with a man like that. So Sunak must accept this reality and take advantage of the freedom this dispute gives him. I am not sure he will — but he must surely realise that any other course is pointless.
The British diplomat trying to win over the US tech industry: Joe White was sent from London to San Francisco to deliver one big message to American tech firms: Britain is friendlier than Europe. Can that work? Politico
Wonderful example of corporate diplomacy here...
Headline: Joe White is leading the British charm offensive in Silicon Valley
Translation: Can Joe White save Britain?
+ The UK wasn’t the first country to send an ambassador to court the wealth and promise of the West Coast. That honor goes to Denmark, which sent an envoy to the region way back in 2017.
+ London, as it builds a fresh new regulatory apparatus apart from the EU, believes that a “nuanced” approach to regulation can lure top tech talent and tons of investment to the UK — especially on artificial intelligence, the fast-growing technology now in the crosshairs of regulators worldwide.
+ White wants the big US tech companies to work with the UK on new, “pro-innovation” rules that would theoretically supercharge the UK’s tech economy through an influx of AI money.
+ “The EU tends to be really quite more prescriptive than we are on these areas,” said Paul Scully, the UK’s Minister for Tech and the Digital Economy and one of White’s bosses back home. Scully said his government’s approach — unlike Brussels — is “not about bashing big tech.”
+ Joe White — who officially serves as the British consul general in San Francisco as well as “technology envoy to the US” — said his presence signals to Silicon Valley that his country is “back on the global stage.” Although the UK sits just 20 miles off the European coast, it’s been outside of the EU’s shared market and rules since the start of 2020. London has been searching for its spot in the world economy ever since.
+ While White frequently notes that the UK is the “second market” for many US tech firms, that factoid is only relevant when viewing the EU’s 27 member states in isolation. Taken together, the European bloc dwarfs the U.K.’s global market share — and whether on AI or anything else, London can’t unilaterally compete with the gravitational pull from Brussels.
+ White calls the UK’s approach to tech “proportional, fair, rational, consistent, open for conversation” — adjectives he sets in implicit contrast to the EU’s rigorous rules or Washington’s toothless tech-bashing.
+ The Uk does have the capacity to move new laws forward with some predictability. And London is now developing a slew of post-Brexit tech regulations, including its Online Safety Bill and an antitrust law, the Digital Markets, Competition and Consumers Bill.
+ London’s plan to become a global player on tech rules explicitly hinges on deeper ties with U.S. lawmakers. And the U.K. is moving aggressively in that direction — in April it applied to join the Washington-led Global Cross-Border Privacy Forum, an effort to stand up an alternative to EU data safeguards that have jammed up transatlantic data flows and infuriated U.S. tech giants. And last week Sunak and Biden agreed to partner on AI rules, which White hailed as a “powerful step forward” on global standards.
+ “The reality of all economies except the U.S. and China is that you can’t build global-scale platform companies inside the domestic economy,” White said. While claiming his country is second to none when it comes to tech talent or its regulatory landscape, White said the U.K.’s tech ambitions have ultimately “got to be aiming for the bigger bloc.”
Macron announces €500 million in funding for AI: AFP reports the French president wants to help create AI 'champions.'
+ @YesSirHumphrey: Diplomacy is about surviving until the next century. Politics is about surviving until Friday afternoon.
Italy says farewell to Silvio Berlusconi with state funeral: AFP reports the media mogul and the former prime minister was given a ceremonial send-off in Milan, the city where he built his business empire.
US Congress continues to grow in racial, ethnic diversity: Pew reports a quarter of voting members of the US Congress identify their race or ethnicity as something other than non-Hispanic White. That makes the 118th Congress the most racially and ethnically diverse to date.
Detroit News: Haley Stevens endorses Elissa Slotkin for US Senate
Miami Mayor Francis X. Suarez has filed FEC paperwork to run for President of the United States in the GOP primary.
CNBC: ‘Trump can’t win’: Koch network releases ads targeting ex-president
+ The political arm of the network backed by billionaire Charles Koch is releasing a slate of digital ads in key states aimed at former President Donald Trump.
Democrats meet with anti-Trump conservatives to fight No Labels 2024 bid: WP reports Biden allies to seek to undermine an effort they see as a threat to the president’s reelection.
+ Inflation has been on a steady downward march for 11 straight months. The unemployment rate has been at or below 4% since January 2022.
How Biden’s big investments spurred a factory boom The Hill
+ “We waited for so long to have these kinds of initiatives,” Miki Banu, a professor of mechanical engineering at the University of Michigan, told The Hill. “This is probably the first time in my life when I’ve seen so many resources become available, which are able to let us put our ideas into practice.”
+ Annual spending on manufacturing construction held somewhat steady during the 2010s, generally keeping within the range of $50 billion to $80 billion, according to U.S. Census Bureau data. Levels were lower and the range of spending tighter in the decade before.
+ But following the passage of three large-scale economic packages loaded with tax incentives and direct funding for industrial projects and operations, investment in manufacturing construction shot up to $189 billion in April on a seasonally adjusted basis, more than doubling pre-pandemic levels.
+ “I think it’s not a conflict if it’s developed in a smart way,” the University of Michigan’s Banu said. “If smart businesses can realize that expanding their manufacturing products and bringing in underdeveloped areas into the process chain — this will help.”
Meanwhile, in San Francisco: "It’s a damn ghost town." -- Rachel Leamy, who runs a shoeshine business in San Francisco, tells the Washington Post how the once-vibrant city is significantly emptier than it was pre-pandemic.
How Republicans and Big Business broke up: Republican lawmakers, accusing CEOs of skewing left, have become less dependent on corporate PAC money than at any time in the past three decades. WSJ
+ Republicans are now less dependent on corporate and industry PACs than at any time in the past three decades, according to a Wall Street Journal analysis based on data from the nonpartisan Center for Responsive Politics.
+ Instead, they are turning to smaller donations from millions of individuals who tend to be wary of big-businesses priorities such as free trade.
+ The Republican Party’s “shifting sentiment away from corporate America is a result of their increasing activism that alienates Republicans and their constituents,” said Matt Sparks, an adviser to McCarthy and his former deputy chief of staff.
+ “I don’t see any reason to take a dime from those folks,” said Sen. Josh Hawley, the Missouri Republican senator who has endorsed several populist bills. “I’m not going to be beholden in any way to their agenda. At the multinational level, more and more of these corporations, their agenda really diverges from the interests of American workers and the American middle class.”
How Elon Musk could affect the 2024 Election The New Yorker
WP: China’s BYD overtakes Tesla in the EV market
Bud Light loses title as top-selling US beer: WSJ reports Modelo Especial in May took over the top sales spot, reflecting the enduring damage from a Bud Light boycott.
Bloomberg: Biggest losers of AI boom are knowledge workers, McKinsey says
+ Could add the equivalent of $2.6 to $4.4 trillion annually
+ May add 0.6% in annual labor productivity growth for 20 years
Silicon Valley confronts the idea that the ‘singularity’ is here: The frenzy over artificial intelligence may be ushering in the long-awaited moment when technology goes wild. Or maybe it’s the hype that is out of control. NYT
+ AI is Silicon Valley’s ultimate new product rollout: transcendence on demand.
+ The Singularity’s intellectual roots go back to John von Neumann, a pioneering computer scientist who in the 1950s talked about how “the ever-accelerating progress of technology” would yield “some essential singularity in the history of the race.”
+ Irving John Good, a British mathematician who helped decode the German Enigma device at Bletchley Park during World War II, was also an influential proponent. “The survival of man depends on the early construction of an ultra-intelligent machine,” he wrote in 1964.
+ The director Stanley Kubrick consulted Mr. Good on HAL, the benign-turned-malevolent computer in “2001: A Space Odyssey” — an early example of the porous borders between computer science and science fiction.
+ Hans Moravec, an adjunct professor at the Robotics Institute at Carnegie Mellon University, thought A.I. would be a boon not just for the living: The dead, too, would be reclaimed in the Singularity. “We would have the opportunity to recreate the past and to interact with it in a real and direct fashion,” he wrote in “Mind Children: The Future of Robot and Human Intelligence.”
Microsoft’s Satya Nadella is betting everything on AI: The CEO can’t imagine life without artificial intelligence—even if it’s the last thing invented by humankind. Wired
+ "The question is, how do humans control these powerful capabilities? One approach is to get the model itself aligned with core human values that we care about. These are not technical problems, they're more social-cultural considerations. The other side is design choices and product-making with context. That means really making sure that the context in which these models are being deployed is aligned with safety."
Bloomberg: Ex-Samsung exec accused of stealing designs to make copycat chip plant in China
+ Official allegedly attempted to copy plant’s designs, plan
+ The official allegedly worked for a Taiwanese-backed company
Goldman’s biggest office beyond New York attests to India’s rise: Global capability centers have evolved far beyond tech support. But their growth presents challenges for multinationals and Indian cities alike. Bloomberg
+ On the eastern side of Bengaluru, the city sometimes called the Silicon Valley of India, sits a campus housing three cube-like glass buildings.
+ These are the offices of Goldman Sachs Group Inc., home to about 8,000 workers, the bank’s largest venue outside New York.
+ “Over the last 30 years, while China specialized in becoming the world’s factory, India specialized in becoming the world’s back office,” said Duvvuri Subbarao, a former governor of the Reserve Bank of India. “Over the years, India moved up the value chain,” he said. But it can’t “take its comparative advantage for granted.”
+ India has roughly 1,600 of the centers, more than 40% of the number worldwide, according to Nasscom, a trade body for the country’s technology industry.
+ “India’s story starts with its demographics and its talent,” said Gunjan Samtani, the country head of Goldman Sachs Services Pvt, the entity that operates the bank’s GCCs in India. A software engineer by trade, he still codes from time to time. “What brought us here even two decades back was our ability to get access to technology and talent.”
+ One of India’s biggest attractions is its supply of workers. In April, it overtook China as the world’s most populous country. It’s now home to almost a fifth of humanity, and more than half its population is under 30, with a median age of 28. That compares to 38 in both the US and China.
+ An example is artificial intelligence. India has about 416,000 AI workers, far short of the more than 1 million it will need by 2026, according to Nasscom.
+ Making the most of India’s demographic advantages “will require significant investments and government attention,” said Partha Iyengar, the country leader for research at Gartner Inc. in India. Only 30%-40% of graduates in India are employable, he estimates. “Not enough attention is being given to this, given the massive scale of intervention required,” he said. “If that is not done on a war footing, the demographic dividend can very easily and quickly turn into a demographic disaster.”
+ At Goldman, Samtani shares the optimism. He points out the bank had one managing director in the city in 2004. Today, in Bengaluru and Hyderabad, 58 people have reached the coveted rank. “If India is not part of the talent story for any firm globally, they’re missing something,” he said.
A moon of Saturn has all the ingredients needed for life: WSJ reports data from NASA spacecraft reveal phosphorus is present in the subsurface ocean of Enceladus.
This alien ocean is the first known to have all elements crucial for life: The subsurface ocean on an icy moon of Saturn appears to have the ingredients needed for “habitability.” WP
+ Enceladus has the only ocean beyond Earth known to contain all six elements needed for life.
+ The claimed discovery of dissolved sodium phosphate, announced in a report published Wednesday in the journal Nature, makes Enceladus all the more intriguing in the search for habitable worlds beyond Earth.
+ Phosphorus is the “P” in CHNOPS, which stands for carbon, hydrogen, nitrogen, oxygen, phosphorus and sulfur — the sextet of elements that, along with water and energy, are foundational to biochemistry on Earth.
It’s 5 am somewhere: Why do people drink so early at airports? Rachel Sugar
+ 9/11 happened, airports locked down, security tightened, and once you were airside, you’d passed a point of no return.
+ For airports, Bednarek said, that proved to be a business opportunity rather than a problem: People were now getting to the airport hours early, and they had to do something to pass the time, whether it was shopping or eating or lounging at the bar.
+ More than 20 percent of arrival flights in the US in the first three months of this year were delayed, more than the same stretch in any year since 2014.
AFP: FIFA agrees deal to broadcast Women's World Cup in 34 European countries
Why Inter Miami’s Lionel Messi deal isn’t done yet; MLS, Apple pushing for All-Star involvement The Athletic
Wow.
Messi is negotiating an Inter Mismi equity option and a cut of Apple TV's MLS Season Pass sales....
#GameChanger
+ No contract between Messi and MLS has been signed, or even finalized, and the lack of an agreement has had a ripple effect on how the league and Inter Miami promote Messi’s arrival. It has also impacted the timeline of multiple deals being negotiated in tandem with Messi’s contract, from a new coach to the players set to join Messi in the summer transfer window.
+ Part of the reason for that is the complicated nature of the deal.
+ The proposed contract includes the option to purchase an equity stake in Inter Miami, and part of the deal also necessitates discussions with Apple regarding revenue share on new subscriptions for the MLS Season Pass service.
+ Multiple sources familiar with the club’s preparations for Messi say that many facets of the team’s travel — hotels, charter flights and the like — are being reevaluated. MLS teams currently use charter flights to get to away matches but the level of comfort on the airplanes they use isn’t much greater than the public.
+ Due to MLS’s single-entity structure, players sign contracts with the league, not individual teams. As such, Garber has been keeping other team owners abreast of the negotiations with Messi.
Jude Bellingham is different – A portrait of Real Madrid’s new superstar The Athletic
+ At an initial €103million (£88m; $110m), Bellingham is now the second-most expensive footballer Britain has ever produced, signed on a deal that could potentially take him top of that list.
The 'skiing factory' seeking to reinvent itself: The model that made Les Arcs one of Europe's largest ski resorts a success for the past 50 years is running out of steam and, in light of the climate crisis, locals are looking for new ways to make a living less dependent on snow. Le Monde
Enjoy the ride + plan accordingly.
-Marc
Marc A. Ross | Chief Communications Strategist @ Caracal
Caracal produces ITK Daily.
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