AI Geekly: Firmware Update

Welcome back to the AI Geekly, by Brodie Woods, brought to you by usurper.ai. This week we bring you yet another week of fast-paced AI developments packaged neatly in a 5 minute(ish) read.

TL;DR AI Policy Hot Swap; AI BATTLESHIP!; Office Subscription Arbitrage

This week we’re on the road out West (west coast best coast?) picking-up the warm AI vibes as temperatures move cooler through the season. We’ll try to be a bit punchier with this week’s note as we’re pressed for time, but we have lots to cover: The US has initiated an update to its government firmware scheduled for January 20, 2025. While technically it’s a rollback to an earlier version (v. 45.0) the coming update to v. 47.0 includes several important release notes as it comes to AI adoption. Next, we’ll take a peek at some recent military developments concerning nations utilizing cutting-edge AI to buttress national defense efforts. Finally, we’ll turn to our friends in Redmond, WA and digest MSFT’s recent decision to give its Copilot AI for free to consumer users (only in select geographies). Read on below!

Working on Updates
Don’t turn off your nation

What it is: Recent developments in US politics will have a profound impact on the development cadence of AI. As the global leader in AI innovation in both hardware and software, decisions made at the Federal level have wide ranging implications for the pace and character of AI advancement.

What it means: Come January, we expect a number of changes based upon commitments made on the campaign trail. These include:

• Repeal of the US AI Act (which sought to introduce monitoring and restrictions on AI models).

• Impact: 

  • Reduction in red tape for AI companies building larger models.

  • Beneficial to Open-Source AI projects (who may not have the financial means to comply with regulatory burden / regulatory capture).

  • Increased risk around Superalignment (ensuring AI goals are aligned with those of humans).

  • Increased risk of unintended impacts to economy and society from unchecked development and deployment.

• Potential replacement of FTC Chair Lina Khan

• Impact:

  • Increased M&A in Tech (including AI). Currently M&A is effectively off the table for Big Tech and start-ups, which is limiting growth and investment as start-ups and VCs have no exit ramp via sale to Big Tech / Big AI to realize gains and reinvest (i.e. the VC model is currently broken).

  • Increased monopolization in Tech and AI as the big players will continue to consolidate power and squeeze out smaller players, hampering entrepreneurship and innovation.

• Note: This action is uncertain, as the VP-elect has voiced praise for Ms. Khan in the past.

• Repeal of the CHIPS Act:

• Impact:

  • Reduced US investment in critical AI chip manufacturing and increased reliance on global supply chain (including Taiwan).

  • Loss of funding for Intel's $8.5 Bn investment in planned expansions in Arizona, Ohio, and New Mexico, affecting AI hardware development.

  • Loss of funding for Micron Technology's $6.1 Bn investment in New York and Idaho facilities aimed at producing advanced memory chips for AI applications.

  • Loss of funding for Texas Instruments' $1.6 Bn construction of new facilities in Texas and Utah, intended to supply semiconductors for AI technologies.

  • Loss of funding for GlobalFoundries' $1.5 Bn expansion in New York and Vermont, crucial for AI chip manufacturing.

  • Loss of funding for SK Hynix's $3.9 Bn investment for an advanced chip-packaging facility in Indiana, essential for AI computing.

• Note: there’s no real advantage to cancelling the Act (ex-reduced spending), we wouldn’t be surprised to see the Act left in place or somehow rebranded, given its importance to maintaining US AI and Tech supremacy

Why it matters: While no future event necessarily happens, we are obligated to consider the potential impacts of the statements by leaders were they to follow through on their commitments. We are encouraged by the VP-elect’s espoused support of Open-Source AI as we believe it will be THE critical element to ensuring the equitable distribution of benefit to society with the expansion of highly advanced AI. To reiterate, we believe that the democratization of AI (via Open Source) is the best way of ensuring that the considerable positives of AI are evenly distributed to members of society as opposed to being concentrated in the hands of the wealthy, government, and tech elites in the way that power and wealth are today distributed.

Defensive Maneuvers
Nations add AI to the arsenal

What it is: Three military developments in AI we wanted to highlight this week:

1. Meta has announced that its open-source AI model, Llama, is now accessible to U.S. government agencies and contractors for national security applications. Collaborations have been established with companies such as Amazon, Microsoft, IBM, Lockheed Martin, and Oracle to facilitate this integration.

2. In a similar vein, Anthropic has partnered with Palantir and Amazon Web Services to provide its Claude AI models to U.S. intelligence and defense agencies.

3. Chinese research institutions linked to the People's Liberation Army have utilized Meta's publicly available Llama model to develop an AI tool named "ChatBIT" for potential military applications. Note this is in direct contravention of the license terms of the model, but we’re not sure that China really cares…

What it means: In the U.S., tech companies are now actively collaborating with defense agencies to enhance operational efficiency and decision-making processes through AI (we view this as equal parts logical application and insurance against cozying-up to prevent shutdown). China's adaptation of open-source AI models for military purposes underscores the international race to leverage AI in defense, raising concerns about the use of US Open-Source AI by adversaries. On the latter point, we’ll note that enemy nations will be able to access and steal any AI technology developed, regardless of whether it is open or closed source (just as nearly all military secrets and technology are lifted via espionage), —the argument to restrict Open-Source AI for national security reasons is flawed and likely an excuse to restrict access for other purposes.

Why it matters: The deployment of AI models like Llama and Claude in defense sectors represents a pivotal shift in military technology, potentially improving efficiency and strategic capabilities. However, these advancements also raise critical considerations regarding the ethical use of AI in military contexts, the enforcement of usage policies, and the treatment of Open-Source models in times of heightened geopolitical competition.

Testing the Waters
Microsoft tries free M365 Copilot in select markets

What it is: Microsoft is considering giving its AI Copilot away for free, as it announced that its AI-powered Copilot features will be available at no additional cost to consumer subscribers of Microsoft 365 Personal and Family plans in Australia, New Zealand, Malaysia, Singapore, Taiwan, and Thailand. Previously, these advanced functionalities required a separate subscription. However, enterprise and professional users will continue to incur additional charges for Copilot services.

What it means: This shift suggests that Microsoft is evaluating different options to ensure the widespread adoption of AI tools among individual consumers, potentially to drive user engagement and satisfaction. By offering Copilot features without extra fees in these non-key-markets, the company can evaluate the impact on its corporate subscriber base —perhaps exposing consumers to the M365 Copilot at home will lead to greater corporate adoption?

Why it matters: Microsoft has invested billions in AI development over the past two years. The decision to forgo additional charges for consumer users is a risky one —had the company adopted such an approach in North America to begin, markets would likely have punished the company; as we covered last week, with the release of Q3 results, Investors have been waiting with bated breath for Big Tech/AI to begin to generate meaningful ROI from their significant (and ongoing) investments in modern AI.

About the Author: Brodie Woods

As CEO of usurper.ai and with over 18 years of capital markets experience as a publishing equities analyst, an investment banker, a CTO, and an AI Strategist leading North American banks and boutiques, I bring a unique perspective to the AI Geekly. This viewpoint is informed by participation in two decades of capital market cycles from the front lines; publication of in-depth research for institutional audiences based on proprietary financial models; execution of hundreds of M&A and financing transactions; leadership roles in planning, implementing, and maintaining of the tech stack for a broker dealer; and, most recently, heading the AI strategy for the Capital Markets division of the eighth-largest commercial bank in North America.