Big Tech feels the heat over AI concerns

Today’s top stories

• Veteran Democratic lawmaker Nancy Pelosi called on Joe Biden to “make a decision” quickly on whether he would continue his quest for re-election, stopping short of endorsing his bid for a second term.

• The type of Russian missile that destroyed a Kyiv children’s hospital relies on western-designed components, according to experts and Ukrainian officials, showing the Kremlin’s success at evading sanctions.

• BP raised its forecasts for oil and gas demand in the latest sign that the transition to clean energy has slowed.

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Good evening.

Much has been written about the potential of artificial intelligence to transform our working lives and wider society, but the rapidly growing sector is also feeling the heat over competition and its impact on the environment.

We report today that Microsoft has given up its seat as an observer on the board of OpenAI, the company behind ChatGPT, following noises from regulators about Big Tech’s plans. Apple, which plans to integrate ChatGPT into its devices, has done likewise.

Jonathan Kanter, the top US antitrust enforcer, told the Financial Times last month that he was examining “monopoly choke points and the competitive landscape” on concerns that the already dominant tech giants would take control of the market. The biggest example to date has been Microsoft’s $13bn investment in OpenAI, which came with rights to the start-up’s intellectual property and a share of its profits, although stopped short of an outright acquisition.

Chipmakers are also being hit by US export controls on selling AI processors to Chinese customers. Such is the demand however, that even if companies such as Nvidia are not allowed to sell their high-end chips, huge amounts of sales can still be made from products that fall outside of the restrictions.

Big Tech is also turning its attention to the problems caused by the huge power demands of AI as the industry struggles to keep its climate promises. Microsoft yesterday announced a carbon credit deal with Occidental Petroleum that would allow it to offset emissions by paying Occidental to have the carbon removed from the atmosphere and stored underground. 

Microsoft said in May that its emissions had risen by almost a third since 2020, mainly from the construction of data centres, while Google last week admitted that its emissions had increased by almost half since 2019 from the building of power-intensive infrastructure to support AI.

In the meantime, the flurry of AI deal activity continues. AMD today announced the $665mn acquisition of Finnish start-up Silo AI as the US chipmaker tries to keep up with market leader Nvidia. The acquisition is the largest of a privately held AI start-up in Europe since Google bought UK-based DeepMind for around £400mn in 2014.

Need to know: UK and Europe economy

Bank of England chief economist Huw Pill said key drivers of UK inflation were showing “uncomfortable strength”, highlighting the continued uncertainty over the outlook for interest rates. Traders scaled back their expectations on rate cuts after the remarks.

New UK chancellor Rachel Reeves said the government’s £7.3bn flagship National Wealth Fund to decarbonise Britain’s heavy industry would start investing in areas such as green steel and gigafactories “immediately”.

FT deputy editor Patrick Jenkins says the City of London can regain momentum from Paris and help power UK growth.

Corporate France is bidding au revoir to the pro-business agenda of President Emmanuel Macron as the country heads into a hung parliament that is likely to focus on the radical tax and spend plans of the left. Macron’s centrists are having a tough time finding potential coalition partners.

A top European Central Bank official warned of the threat to Eurozone financial stability from shadow banking — private funds and other sources of finance outside the regulated banks.

Need to know: global economy

The OECD said that if governments are to persuade voters to press on with the net zero transition they needed to make green jobs pay better and guarantee wages for workers who lose their jobs in high-emission industries.

Australia, backed by the US, UK and Japan, accused a Chinese state-backed cyber hacking group of targeting the country’s government and private sector networks. The “malicious” attack had echoes of a group previously identified as Advanced Persistent Threat 40.

A new Big Read looks at the impact of shock therapy on Nigeria, which for years took pride in being Africa’s biggest economy but which has been hit hard by soaring food prices and a fall in its currency.

Can India become a superpower by the time of its centenary in 2047? Chief economics commentator Martin Wolf says the country has a shot at becoming an “advanced” economy by then, but faces formidable internal challenges on the way. India meanwhile is boosting trade with Russia as a hedge against China.

Need to know: business

The US will apply tariffs of 25 per cent to some steel and aluminium imports from Mexico in a bid to stop Chinese metal entering the US across the southern border. The move, which follows a string of tariff hikes on Chinese goods, is an attempt by the Biden administration to shore up support in former industrial heartlands.

Saudi Aramco, the world’s largest oil company, is betting on combustion engines being around for a “very, very long time”. Its stake in a company building fuel-based engines highlights its belief that as the motor industry stops designing and developing its own engines, it will start buying them from third parties.

Financial markets are underpricing clean energy companies and hampering the green transition, according to one of India’s largest renewables groups. The mispricing has prompted some buyout groups to swoop, lured by what they see as bargains.

Coffee prices are set to rise even further from record highs, thanks to climate change, shipping disruptions and new EU regulations, according to Italian industry giant Lavazza.

High interest rates and investor nerves over hybrid working have left it almost impossible to sell big buildings in London.

Vacuum cleaner maker Dyson said it would cut a quarter of its UK workforce as part of a global restructuring.

Fast fashion group Shein is launching a €200mn fund to tackle fashion waste amid concerns over its lack of sustainability. The company, which is planning a listing in London, is rapidly closing in on major fashion retailers such as Zara and H&M after it boomed during the pandemic.

The World of Work

Can online reporting, where staff log harassment on a tech platform, put an end to microaggressions in the workplace? Law firm Hogan Lovells is one of the businesses using the practise to improve relations after noticing employee “reluctance to call out seemingly ‘minor incidents’, which may nonetheless contribute to someone feeling excluded or marginalised”.

People who work under you are trying to win you round and the colleagues you beat for the top job may be looking to sabotage you. The Working It podcast discusses what business leaders should prioritise in their first 100 days.

Some good news

Despite dangerously strong winds, zero visibility and a helicopter rescue for one of his guides, a climber named Hari Budha Magar has become the first ever double above-knee amputee to reach the top of Denali in Alaska, the highest mountain in North America.