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US Tech Firms Pressure Chinese VCs to Divest Amid Anticipated Foreign Ownership Restrictions
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Kristoffer Lindström
June 07, 2024
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US venture capital is pressuring tech firms to dilute Chinese stakeholding in anticipation of tighter regulations on foreign ownership from Washington. In one case, AI start-up HeyGen asked its Chinese investors to sell shares to US counterparts. The Los Angeles-based company builds customized video avatars, serving high-paying customers like Salesforce, Nvidia, Volvo, and Amazon. Current regulations do not prevent Chinese minority investments in US companies, but concerns are growing about potential foreign influence.
💡 Insight: The increasing reluctance to accept Chinese venture capital in US tech start-ups reflects heightened geopolitical tensions and anticipatory compliance with potential regulatory changes from Washington. Opportunities might arise if a “forced” selling event actually materializes.
Federal regulators are set to probe into Microsoft, Nvidia, and OpenAI's dominant roles in the AI industry, marking an uptick in regulatory scrutiny. The Justice Department will focus on Nvidia's potential antitrust breaches, while the FTC will investigate Microsoft's affiliation with OpenAI and the latter company's conduct. This follows growing concerns about their increasing influence due to the AI explosion.
💡 Insight: The recent surge in regulatory scrutiny on Nvidia, Microsoft, and OpenAI suggests a pivotal shift in the U.S. government's approach to controlling AI market dominance. The scrutiny aims to curb potential monopolistic behaviors early, reflecting a proactive stance much needed to balance innovation with fair market practices. The regulatory intervention could lead to an adjustment of strategic alliances and competitive dynamics within the AI industry, mirroring Europe's preemptive regulatory framework.
Research group Epoch AI's study indicates a 'bottleneck' for AI development, where publicly accessible high-quality text data for training language models could be depleted between 2026 and 2032. This crisis may compel tech companies to tap into private data or rely on less dependable "synthetic data". The study sparks concerns about the future of AI, including the debate over the necessity for larger models and risks of "model collapse" in training AI-generated data.
💡 Insight: The impending shortage of training data could fundamentally alter the landscape of AI development, pushing companies to innovate data sourcing strategies or face constrained model scalability. Increased reliance on synthetic data risks amplifying biases and errors, compromising AI reliability. This bottleneck underscores the urgency for both new data acquisition frameworks and advancements in data-efficient AI methodologies. The opportunity to have or sell private/proprietary data will be enormous.
BRIEF
Meta has introduced its verification service, Meta Verified, for WhatsApp Business users in Brazil, India, Indonesia and Colombia, with further rollouts anticipated. Offering features such as a verified WhatsApp channel, impersonation protection and API access for customer calls, the service costs from $14 monthly. WhatsApp Premium features will also be included. Personalized messaging and AI-driven automated customer support and ad creation tools have also been launched. With a strong user base in India, Meta envisages significant potential for the country's conversational commerce.
Fed up with Meta's AI policies, artists have turned to new artist-run, anti-AI social platform, Cara, resulting in a user growth from 40,000 to 650,000 within a week. Cara, founded by renowned photographer Jingna Zhang, provides a safe space for artists to showcase and promote their work without the risk of becoming data for AI training systems. Despite the recent bill shock from web hosting company Vercel, Zhang remains committed to prioritizing the interests of the artist community, even at the cost of potential venture funding.
Silicon Valley startup Carta plans a secondary sale that could value the company at $2 billion, significantly lower than previous valuations of $7.4 billion and $8.5 billion. Previously focusing on cap table management software, Carta aimed to transition into a global private stock market. Despite recent controversy regarding misuse of customer information and subsequent exit from the secondary trading business, Carta's cap table business still grows amidst profitability challenges in its fund administration operations.
Discord is introducing new tools and beneficial features to better monetize app developers. This includes offerings such as storefronts, reduced fees on initial sales, and the scope for one-time purchases. The company is once again directing its app towards gaming after trying its hand at being a general chatting app. New tools, beginning in the US, UK, and EU, will be further expanded to other regions.
QUICK
Slack Unveils 'Lists' Feature, Revolutionizing Project Management on Collaboration App - Slack has introduced 'lists' for its paid customers, enhancing project tracking and coordination natively within the app. The upcoming AI integration will further improve the feature's capabilities.
Kraken Considers Raising Funds Pre-IPO Amid Surging Crypto Market Interest - Cryptocurrency exchange Kraken is exploring a final funding round over $100 million before an IPO, fueled by invigorated investor interest and a crypto market rally.
Seven AI Raises $36M to Pioneer AI-Driven Cybersecurity Solutions - Greylock Partners led a $36 million funding round for Seven AI, a cybersecurity startup developing autonomous AI-based software to strengthen enterprise defenses.
Humane in $1 Billion Deal Talks with HP amid Criticism Over AI Pin - Following poor reviews of its AI Pin, Humane is potentially courting HP for a $1 billion sale. Criticisms of the pin include overheating and battery issues.
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