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Systems of super intelligence are the new moats

Also: US judge finds flaws in artists' lawsuit against AI companies

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AI KATANA
July 21, 2023

Welcome!

Welcome to AI KATANA, where we cover the latest and most significant news, updates, and analyses in the world of artificial intelligence. Today, we delve into Jerry Chen's revisit of his influential 'New Moats' essay, considering how AI and data network effects shape business models. We also explore a recent lawsuit against generative AI companies accused of copyright infringement, and how this could set a precedent for future legal battles. We will examine the innovative use of AI technology by K-pop label HYBE to break down language barriers, and dissect the ongoing debate around AI regulation, focusing on the EU's pioneering legislation. Finally, we'll bring you updates on AI tools, including a new feature for ChatGPT, and venture capital news from the AI-driven FinTech firm, Cognaize. Stay tuned for these stories and more in today's digest.

Sliced:

  • 🆕 Systems of super intelligence are the new moats

  • 👩🏻‍⚖️ US judge finds flaws in artists' lawsuit against AI companies

  • 🇰🇷K-pop's biggest music label HYBE looks to lift language barrier with AI

  • 🚨 How will AI be regulated?

In his 2017 essay "The New Moats", Jerry Chen predicted that AI-powered systems of intelligence would become the next defensible business models. Six years later, he revisits this framework in light of new developments like large language models. While open source models have shifted power away from big tech companies, Chen argues that the fundamentals of building enduring companies remain unchanged. The most adaptable companies that effectively incorporate AI into their products and leverage data network effects will thrive. Ultimately, Chen concludes that the old moats of brand, network effects, scale, and workflows still matter, even in an AI-powered world.

U.S. District Judge William Orrick expressed an inclination to dismiss most of a lawsuit from a group of artists against generative AI companies Stability AI, Midjourney, and DeviantArt, urging the plaintiffs to clarify and support their claims of copyright infringement. Orrick believes the artists should provide more facts given their access to Stability's source code. However, a claim by illustrator Sarah Andersen alleging direct copyright infringement by Stability seems likely to survive the initial dismissal attempt. This case marks the emergence of legal battles against AI companies like Microsoft, Meta, and OpenAI, which allegedly misuse extensive material to train their AI systems. The artists argue Stability "scraped" billions of images online, including their works, without permission to train its Stable Diffusion text-to-image system. However, Orrick expressed doubt about claims that generated images based on their names violated their copyrights.

South Korean music label HYBE is using artificial intelligence to enable singers to release songs in multiple languages simultaneously. HYBE, known for hit boy group BTS, recently released a track by singer MIDNATT in Korean, English, Spanish, Chinese, Japanese, and Vietnamese, thanks to this technology. The singer, who speaks limited English and Chinese, recorded the song "Masquerade" in each language, with AI used to seamlessly combine the vocals with those of native speakers. The technology uses pronunciation, timbre, pitch, and volume components to generate a more natural sound. HYBE, which acquired AI firm Supertone earlier this year, is expected to make the technology accessible to other creators and the public.

The EU is pushing for pioneering legislation regulating artificial intelligence (AI), with laws that could make companies liable for misuse of AI technology, even when they do not control its ultimate applications. This legislation, prompted by rapid technological advancements and concerns about algorithmic bias, misuse of personal data, misinformation, and the potential loss of control over AI, includes measures such as mandating companies to disclose data used for training AI models. Critics argue that this preemptive regulation, seen by some as protectionist, may limit the evolution of AI and hinder economic growth. American tech firms, including OpenAI, worry about overly stringent laws that might force them to exit the EU market, while some argue that regulation could be a strategy to cement their dominance. Alternatives to the EU approach include applying existing laws to AI-powered applications and fostering industry standards and best practices without explicit regulation. However, the rapid advancement and potential risks of AI could hasten the call for stricter regulation.

🛠️ AI tools updates

ChatGPT is introducing a new feature, custom instructions, to enhance user experience by tailoring responses to individual needs. These instructions will be considered in all future conversations, eliminating the need to restate preferences or context each time. The feature will be available to Plus plan users initially, and will be rolled out to all users soon. This tool will also enrich the use of plugins by allowing relevant instruction-based information to be shared. Although potential for misinterpretation exists, particularly during beta testing, safety measures have been adapted to ensure the instructions do not violate usage policies. Personal identifiers are removed from these instructions for privacy, and users can opt out of their data being used to improve model performance. Users can access this feature via settings on the web and iOS. However, it is currently unavailable in the UK and EU.

💵 Venture Capital updates

New York-based intelligent document processing company Cognaize, known for its hybrid intelligence-driven AI solutions for global banking and insurance, announced the completion of an $18M Series A funding round led by Argonautic Ventures and with significant contribution from Metaplanet. The funds will be used to boost Cognaize's growth, furthering product development, sales, and marketing efforts to meet growing global demand. The company's AI platform uses deep-learning AI technologies and financial models, facilitating decision-making and improving results. It has seen notable growth, with both annual recurring revenue and GAAP revenues increasing significantly from the previous year. The Series A funding round success serves as an affirmation of investor trust and the value that Cognaize's AI solutions bring to the financial industry.

🫡 Meme of the day

⭐️ Generative AI image of the day

Before you go, check out how AI created an episode of South Park.