TheChek News Flow

Google reportedly moved forward with the troubled launch of its AI chatbot Bard last month despite internal warnings from employees who described the tool as a “pathological liar” prone to spewing out responses riddled with false information that can “result in serious injury or death.”

Current and former employees allege that Google ignored its own AI ethics during a desperate effort to catch up to competitors, such as Microsoft-backed OpenAI’s popular ChatGPT, Bloomberg reported on Wednesday.

Google’s push to develop Bard reportedly ramped up late last year after ChatGPT’s success prompted top brass to declare a “competitive code red,” according to the outlet.

Microsoft’s planned integration of ChatGPT into its Bing search engine is widely seen as a threat to Google’s dominant online search business.

Google rolled out Bard to US users last month in what it has described as an “experiment.”

However, many Google workers voiced concerns before the rollout when the company tasked them with testing out Bard to identify potential bugs or issues – a process known in tech circles as “dogfooding.”

Bard testers flagged concerns that the chatbot was spitting out information ranging from inaccurate to potentially dangerous.

One worker described Bard as a “pathological liar” after viewing erratic responses, according to a screenshot of an internal discussion obtained by Bloomberg. A second employee reportedly referred to Bard’s performance as “cringe-worthy.”

In one instance, a Google employee asked Bard for directions on how to land a plane – only for the service to respond with advice likely to result in a crash, according to Bloomberg.

In another case, Bard purportedly answered a prompt about scuba diving with suggestions “which would likely result in serious injury or death.”

Google CEO Sundar Pichai raised eyebrows when he admitted that the company didn’t “fully understand” its own technology.

“You know, you don’t fully understand. And you can’t quite tell why it said this, or why it got [it] wrong,” Pichai said during interview on “60 Minutes” last Sunday.

In February, an unnamed Google employee quipped on an internal forum that Bard was “worse than useless” and asked executives not to launch the chatbot in its current state.

“AI ethics has taken a back seat,” Meredith Whittaker, a former Google employee and current president of the privacy-focused Signal Foundation, told Bloomberg. “If ethics aren’t positioned to take precedence over profit and growth, they will not ultimately work.”

Employees who spoke to the outlet said Google executives opted to refer to Bard and other new AI products as “experiments” so that the public would be willing to overlook their early struggles.

As Bard advanced closer to a potential launch, Google purportedly relaxed requirements for AI that are meant to dictate when a particular product is safe for public use.

In March, Jen Gennai, Google’s AI principles ops & governance lead, overrode an assessment by members of her own team which stated that Bard was not ready for release due to its potential to cause harm, sources told Bloomberg.

Gennai pushed back on the report in a statement, stating that internal reviewers suggested “risk mitigations and adjustments to the technology, versus providing recommendations on the eventual product launch.”

A committee of senior leaders for Google’s product, research, and business leaders then determines whether the AI project should move forward and what adjustments are needed, Gennai added.

“In this particular review, I added to the list of potential risks from the reviewers and escalated the resulting analysis to this multi-disciplinary council, which determined it was appropriate to move forward for a limited experimental launch with continuing pre-training, enhanced guardrails, and appropriate disclaimers,” Gennai said in a statement to The Post.

Google spokesperson Brian Gabriel said “responsible AI remains a top priority at the company.”

“We are continuing to invest in the teams that work on applying our AI Principles to our technology,” Gabriel told The Post.

At present, Google’s website for Bard still labels the tool as an “experiment.”

A “FAQ” section included on the site openly declares that Bard “may display inaccurate information or offensive statements.”

“Accelerating people’s ideas with generative AI is truly exciting, but it’s still early days, and Bard is an experiment,” the site says.

Bard’s launch has already resulted in some embarrassment for the tech giant.

Last month, app researcher Jane Manchun Wong posted an exchange in which Bard sided in the Justice Department’s antitrust officials in pending litigation against Google by declaring its creators held a “monopoly on the digital advertising market.”

In February, social media users pointed out that Bard had provided an inaccurate answer about the James Webb Space Telescope in a request to a prompt that was included in a company advertisement.

Scrutiny over Google’s Bard chatbot has intensified amid a broader debate over the potential risks associated with the unrestrained development of AI technology.

Billionaire Elon Musk and more than 1,000 experts in the field signed an open letter calling for a six-month pause in the development of advanced AI until proper guardrails were in place.

Despite his safety concerns, Musk is rapidly advancing with the launch of his own AI startup as competition builds in the sector. Google and Microsoft are just two rivals in the increasingly crowded field.

In the “60 Minutes” interview, Pichai declared that AI would eventually impact “every product across every company.”

He also expressed his support for government regulations to address potential risks.

“I think we have to be very thoughtful,” Pichai said. “And I think these are all things society needs to figure out as we move along. It’s not for a company to decide.”

French startup Kate has raised a $7.6 million (€7 million) funding round from a bunch of business angels. As I wrote in my previous article on Kate, the company has ambitious goals when it comes to everyday mobility. It plans to use the funding to develop an alternative to regular cars (electric or not) by making something smaller, cheaper and easier to maintain.

Investors in the startup include Julien Lemoine (co-founder and CTO of Algolia), Emmanuelle Brizay (AC8 INVEST), Christophe Maurissen (Managing Director at Alcogroup), Romain Afflelou (CEO of Cosmo Connected), Benoît Charles-Lavauzelle (CEO of Theodo) and Antoine Leconte (founder of Cheerz).

And Kate isn’t starting from scratch. The company acquired NoSmoke, a small manufacturer of electric vehicles inspired by the Mini Moke. This way, Kate can reuse some parts and borrow some manufacturing processes that have been used to produce the leisure cars.

But Kate’s next car, which is currently called the K1, will be designed to be used every single day and not just for your vacation house. In Europe, people moving from A to B use a large vehicle — like a regular car — for 84% of their trips. It represents 11% of the CO2 emissions. And yet, 98% of trips are shorter than 80 kilometers (that’s 50 miles).

The Kate K1 is going to be a lightweight car that can reach a top speed of 90 km/h (56 mph). It isn’t designed for your long-distance trips. In that case, you’re better off renting a normal car. It isn’t designed for big cities either as public transportation, bikes and shared vehicles work better in this environment.

But the Kate K1 would work well for people living in the suburbs or the countryside. It would work fine to drop off your kid at school, head to work and swing by the supermarket. It will have four seats and the entry level should offer a battery range of 200 kilometers (124 miles).

Kate has an aggressive timeline as it wants to unveil the K1 in the third quarter of 2023. In addition to the mysterious renderings, here’s what the Original, the leisure car that is currently available, looks like:

French carmaker aims to protect ‘residuals’ of its models, says finance chief Thierry Piéton

Renault has warned that cutting electric vehicle prices will “kill” the residual value of cars, hours after Tesla vowed to keep reducing its own rates to drive sales higher.

The French carmaker said on Thursday its main aim was to keep customers’ monthly lease payments as low as possible, which would require it to protect the “residual value” of a car.

“When you cut prices significantly, residual value takes a hit,” said Renault’s finance chief Thierry Piéton.

“There is no big incentive to go cut the prices and kill the residuals and go into a spiral that some of the competition has done,” he added. “If it results short term in slightly lower volume, so be it.”

Tesla has slashed prices by up to 20 per cent on some models since the start of the year, leading to fears of a price war across the industry.

The US electric-car maker has seen the residual value of its vehicles fall significantly over the same period, the Financial Times reported last month, potentially making its cars more expensive to lease.

Elon Musk on Wednesday indicated Tesla would keep lowering prices to pursue its target of growing market share.

Shares in Renault dropped 6 per cent in Paris on Thursday, though the stock has risen 50 per cent in the past year.

In luxury watches, revenues are up but volumes are down, creating new winners, losers, opportunities and threats, writes Robin Swithinbank.

Is the clock ticking for the Swiss watch industry? That depends on how you read the figures.

Judged by its revenues, it’s booming. According to the Federation of the Swiss Watch Industry (FH), in 2022 Swiss watch companies exported watches with a value of 24.8 billion Swiss francs ($27.6 billion), an all-time record and a year-on-year jump of 11.4 percent.

But at the same time, the industry is haemorrhaging volumes. In 2015, Switzerland exported 28.1 million watches, a figure the FH said had fallen to just 15.8 million last year.

Some analysts say the industry will never recover lost volumes, and that the current figure is propped up by a shrinking pool of groups and brands, particularly Rolex and the Swatch Group.

In March, Morgan Stanley released a report that estimated Rolex and the Swatch Group — which owns Omega, Longines and Tissot, among others — accounted for around 80 percent of Swiss watch exports by volume. That included a million of Swatch Group’s MoonSwatch, a $260 mash-up between Swatch and Omega that caused a buying frenzy on launch last March.

“We have lost half of the volume of the Swiss watch industry in only 20 years,” said Oliver Müller, founder of the Swiss consultancy LuxeConsult and one of the Morgan Stanley report’s authors. “Those volumes are gone forever.”

Recently, most of the pain has been absorbed by the lower end of the market. The FH’s 2022 figures indicate that watches with an export value (roughly half the retail price) of between 200 and 500 Swiss francs took the brunt of the impact, falling 24 percent in value and 22.2 percent in volume last year.

It now appears there’s no escaping that Apple’s Watch, which arrived in 2015, has decimated that end of the Swiss market. Some estimates suggest Apple now shifts more than 50 million units a year, more than three times the Swiss watch industry’s total output by volume.

Not that everyone’s worried. “It’s no concern for our part of the market,” said Cartier’s chief executive Cyrille Vigneron at a press conference during the recent Watches and Wonders Geneva fair. “The market above 3,000 Swiss francs [at export] is not plummeting at all. The Swiss watch market is not about volume.”

He had a point. The FH’s 2022 report showed watches with an export value above 3,000 Swiss francs climbed in value by 15.6 percent that year. And the trend has continued. In February, the category grew by a further 13.7 percent compared to the same month last year.

Other brand bosses have expressed concern, though. “I feel more comfortable when we [Swiss watchmakers] have big volumes,” said Julien Tornare, chief executive of LVMH’s Zenith brand. “Someone affording a less expensive watch might get the virus, enjoy wearing a watch and buy more expensive watches later. It’s feeding the industry.”

One explanation is that the watch industry is simply reflecting global luxury trends, concentrating around fewer brands and higher-end products. “You see this worldwide premiumisation of society in fashion, in wine, in art, in cars,” said Jean-Marc Pontroué, chief executive of Richemont’s Panerai brand.

Pontroué said over the past five years he had introduced low-volume, high-priced watches with unique VIP experiences attached to them (such as Arctic adventures or training with the Italian special forces) in order to raise the average price point of his watches. “We have seen the value [of our watches] has increased two to three times more than the volume,” he said. Richemont does not break out results by brand.

The shift up in price has created a void down below. Brands such as Omega and TAG Heuer were once considered a “first luxury watch,” but with everyday sports watches such as the Speedmaster and the Carrera now costing around $6,500, younger, first-time buyers of Swiss watches are often priced out.

Smartphones have killed the camera industry, but smartwatches have not killed the watch industry.

Guillaume Laidet is the chief executive of the recently revived heritage brand Nivada Grenchen. The company’s Swiss-made mechanical watches start from $750. “The big groups have abandoned the below $2,000 category and we’re taking the space they’re leaving,” he said. “This gives us a niche to exploit and a big opportunity to grow our business, because people still like to have something mechanical on the wrist. For a big occasion, you don’t want to have a smartwatch like everyone else.”

Laidet said his most recent watch, the F77, had driven revenues of half a million dollars during a 77-hour sales window that doubled as a launch stunt earlier this month. The stainless steel sports watch costs $1,150 and is sold out, according to the brand’s website. “There is a market, but the big groups want maximum profit in the short term,” said the Frenchman, who was previously employed at LVMH and Richemont.

Tornare said he felt it was important the Swiss watch industry maintained a foothold in the lower-price segment. “It’s healthy to have a wide base, which we have less and less,” he said. “At some point, we need to work as an industry to make people appreciate mechanical watches even when it’s at an entrance price.”

But Pontroué argued that the industry’s repositioning and recent resilience were proof it was on the right track. “Smartphones have killed the camera industry, but smartwatches have not killed the watch industry,” he said. “This country continues to export billions of Swiss francs worth of watches every year. The difference is we are now associated to the luxury world.”

Müller, however, said there would be casualties. “The worries are not for the verticalised groups and brands such as Swatch Group, Richemont and Rolex, but for literally all the others,” he said. “In the long run, the groups will largely over-perform the market and polarise it. An industry without volumes can’t provide innovation and sustainable production prices.”

Company pushed to become less reliant on products high in sugar and saturated fats

A group of institutional investors in Nestlé has increased pressure on the world’s largest food company to become less reliant on unhealthy products and warned that consumers’ overconsumption of packaged goods with limited nutritional value poses “systemic risks” to financial returns.

Shareholders with more than $3tn in combined assets under management are calling on the Switzerland-based group to set a target to increase the proportion of its revenues from healthier foods and drinks. Ahead of Nestlé’s annual general meeting in Lausanne on Thursday, they said they were prepared to “escalate” the matter unless directors addressed their concerns.

The public statement, co-ordinated by responsible investment charity ShareAction and signed by institutions including Legal & General Investment Management and several public pension funds, is the latest initiative in a long-running campaign among concerned shareholders to push food companies to make their products more nutritious.

Several governments have introduced taxes on high-sugar products and restrictions on advertising as the industry comes under increased scrutiny over the extent to which it contributes to global obesity.

The investors’ intervention comes even as Nestlé, whose confectionery brands include KitKat, Milkybar and Smarties, has recently become more open about the nutritional value of its product line-up.

The statement — whose signatories include EOS at Federated Hermes, which acts on behalf of clients on environmental, social and governance matters and advises them on voting at AGMs — is also in spite of the company’s commitment to publish a target for increased sales of healthier fare.

The group said it was calling for Nestlé — whose portfolio also spans Cheerios cereal, Maggi noodles and Buitoni pasta — to specify a target for the proportion of its revenues from healthier foods, whereas the company said the goal would be to increase sales of such products in absolute terms.

Nestlé, which said it had “set a new standard in corporate transparency” across the industry, last month disclosed that less than half of its portfolio of mainstream products could be considered “healthy”, using a commonly accepted definition.

Mark Schneider, chief executive, said Nestlé had made progress in reducing sodium, sugar and saturated fats. However, he also indicated there were limits to how far the company could push healthier alternatives and that treats such as chocolate were not meant to be healthy.

While the coalition of investors said it welcomed the increased disclosure from Nestlé, it added that supermarkets were “flooded with less healthy foods, causing significant harm to population health”, and that this created “systemic risks to investor returns”.

The investors said they wanted to work “constructively” with the board, but added they were willing “to escalate our engagement” if the company failed to provide the necessary assurances.

“They have fallen short of setting a target in the way we wanted them to,” said Jessica Attard, programme director at ShareAction. “Nestlé’s responses to many of our questions have been quite poor.”

She added that a shareholder resolution to increase pressure on Nestlé had been “on the table” for the AGM year, but “we agreed to delay, on the basis that Nestlé have agreed to continue to engage with us”.

Nestlé said: “We are the first company to report on the nutritional value of our entire global portfolio against a single externally recognised, nutrient profiling scheme.

“We are determined to maintain our industry leadership in nutrition: Nestlé topped the Global Access to Nutrition Index in 2021 and 2018 and ranked first in the nutrition measurement area of the World Benchmarking Alliance.”

‘Inflation is still too high,’ says New York Fed President John Williams

A top Federal Reserve official said the central bank had more work ahead to bring down inflation, suggesting another interest-rate increase would be warranted at the Fed’s meeting in two weeks.

“Inflation is still too high, and we will use our monetary policy tools to restore price stability,” said New York Fed President John Williams in a speech Wednesday night to a group of financial-industry professionals in Manhattan.

Investors see a greater than 80% chance that the Fed will raise rates by a quarter point at its May 2-3 meeting, according to CME Group. Mr. Williams, a close ally of Fed Chair Jerome Powell, offered little to push back against those expectations just days before central-bank officials begin their traditional premeeting quiet period when Fed officials don’t communicate publicly before their decision.

Fed policy makers raised rates by a quarter-point at each of their two meetings this year, most recently in March, to a range between 4.75% and 5%. The Fed has been trying to slow investment, spending and hiring to combat inflation.

But officials have signaled greater uncertainty about the rate outlook because of banking-system stress last month, triggered by the closures of two midsize banks experiencing huge outflows of deposits.

Mr. Williams said stresses in the banking system had stabilized, but he said he anticipated they would lead to tighter lending standards for households and businesses, which would in turn reduce consumer spending. He said it was too soon to judge the magnitude and duration of any such tightening.

The New York Fed leader pointed to signs that both demand for labor and inflation were cooling, and he said he expected inflation to decline to around 3.5% this year. The Fed’s preferred inflation gauge, the personal consumption-expenditures price index, climbed 5% in February from a year earlier.

“The thing that makes this very difficult [is that] we’re in an economy that’s very strong,” he said. “So the tightening that might happen in credit conditions—that’s in the context of what is otherwise a very strong economy.”

The Fed’s job is to balance the risks of a sharper slowdown from any lending pullback with the risks of a stronger-than-anticipated growth because of better global economic activity, including in Europe and China, said Mr. Williams. “The uncertainty can go both ways,” he said. “I’ve been surprised by the economic data.”

The advertising holding company says first-quarter net revenue rose 10% from a year earlier

Publicis Groupe SA reported higher-than-expected organic growth of 7.1% in the first quarter, and the advertising holding company said demand for its services continues despite the choppy macroeconomic environment.

Analysts expected 5.89% growth in the quarter, according to FactSet.

Paris-based Publicis, which owns agencies such as Saatchi & Saatchi, Leo Burnett and Zenith, also said it expects to hit organic growth this year in the top half of its previously stated range of 3% to 5%. Organic growth refers to the change in net revenue excluding the effects of acquisitions, disposals and currency fluctuations.

The firm also reported first-quarter net revenue of 3.08 billion euros, equivalent to $3.37 billion, up 10% year-over-year.

Despite mixed signals for the U.S. economy, advertising is still expected to grow in 2023, according to forecaster Magna, a media research and investment firm that is part of Interpublic Group of Cos.’ Mediabrands. The economic climate would have typically led Magna to expect advertising to fall, but growth in areas including ad-supported streaming video are bringing new spending into the marketing field, the company said when it released its forecast last month.

Publicis echoed that perspective, citing continuing growth while acknowledging caution from some marketers.

“We have seen, so far, some local cuts in traditional advertising, but not material enough to have an impact,” said Publicis Chief Executive Arthur Sadoun. “We are also starting to see some delay in decisions for bigger investments like business transformation. That has not been so much the case in [the first quarter], but it could be the case later in the year.”

According to Publicis, a third of its revenue comes from data and technology services. The company and its competitors in recent years have developed consulting businesses to help clients adapt their businesses digitally, whether to build apps or develop new e-commerce strategies.

“There is no way our clients are going to stop investing in that transformation, because if they do, they die,” Mr. Sadoun said. “Maybe they’re going to do it at a slower pace, but they will continue to do it.”

Rival Omnicom Group on Tuesday said its organic revenue grew 5.2% in the first quarter from the same quarter a year earlier.

Along with Omnicom, Publicis competes with Interpublic and WPP PLC. Analysts from research firm MoffettNathanson wrote in a note this week that the agencies are well-positioned to weather the broader macroeconomic environment because their clients include many larger companies that can absorb rising costs from inflation.

“If one were to want to be in any part of the broader media [and] advertising landscape at the moment, there are far worse places to be than an agency,” the analysts wrote.