WSJ : ChatGPT and Advanced AI Face New Regulatory Push in Europe

ChatGPT and Advanced AI Face New Regulatory Push in Europe
European legislators to add new provisions for powerful AI to pending bill

PARIS—European Union lawmakers want to give regulators new powers to govern the development of technologies like those behind ChatGPT, the biggest push so far in the West to curb one of the hottest areas in artificial intelligence.

The breakneck pace of AI development in recent months requires a new set of rules tailored to powerful, general-purpose AI tools, a group of influential EU lawmakers say in an open letter they plan to publish Monday.

The group of lawmakers, who have been charged with hammering out a new draft of what the bloc calls its AI Act, say they are committed to adding provisions to the bill aimed at “steering the development of very powerful artificial intelligence in a direction that is human centric, safe and trustworthy,” according to a copy of the letter reviewed by The Wall Street Journal.

“With the rapid evolution of powerful AI, we see the need for significant political attention,” the lawmakers write. They add that the EU’s pending bill, which policy makers aim to pass into law later this year, “could serve as a blueprint for other regulatory initiatives in different regulatory traditions and environments around the world.”

The EU Parliament statement, coming from some of the most powerful voices in crafting the AI Act, adds new momentum to calls from some researchers and technologists for regulators to slow or pause development of very powerful AI tools, in part to allow regulators to catch up.

Late last month, a group of AI researchers and tech executives including Elon Musk signed an open letter from the Future of Life Institute that called for a six-month moratorium on the training of the next generation of AI tools to give time for the regulators and industry to set safety standards. A separate group of AI ethicists and researchers wrote another open letter last week urging the EU to include provisions that cover possible risks from “general purpose AI.”

Dragos Tudorache, a Romanian member of European Parliament who co-leads the body’s work on the AI Act along with Italian member Brando Benifei, said the group crafted Monday’s letter in part in response to the Future of Life Institute’s letter. In addition to calling for a pause in training advanced AI models, that letter described one possible risk from AI as “loss of control of our civilization” and urged regulators to step up work with AI developers.

“We share some of the concerns expressed in this [Institute] letter, even while we disagree with some of its more alarmist statements,” the EU lawmakers said in Monday’s letter. They add that they think that regulation can help humanity reap the benefit of AI and avoid “more challenging future scenarios.”

“Together, we can steer history in the right direction,” they add.

The EU’s AI bill is nearing its final stretch of debate as more regulators globally are jumping into the fray. China’s top internet regulator earlier this month proposed rules to control artificial-intelligence tools similar to ChatGPT.

In the U.S., the Biden administration has begun examining whether checks need to be placed on the tools. Last month, Italy temporarily banned ChatGPT on privacy grounds and the U.K. released a paper suggesting regulators oversee development of AI with a focus on tools’ safety, transparency and fairness.

It isn’t clear yet what new provisions the EU Parliament will propose adding to the AI Act. Monday’s letter says the rules are needed for a type of AI tools called foundation models, which are trained on massive sets of data, and underpin some of the most recent advances in AI. Foundation models include some large language models like those behind tools like ChatGPT from Microsoft Corp. -backed startup OpenAI, which can respond cogently to textual questions.

The signatories of Monday’s letter are set to meet this week to hash out their proposals and agree to a common position, which the full Parliament would vote on in May. In the past, some members of European Parliament have called for much more robust transparency about how such powerful AI tools are built, fairness requirements for the data used to build them and ongoing audits of their safety and predictability.

After the European Parliament agrees on a draft, which it is expected to do next month, it will negotiate with members of the EU’s Council, which represents member states. The Council settled on its own AI Act draft late last year, but its draft left open to the European Commission, the bloc’s executive arm, to determine any specific requirements for general-purpose AI. Both chambers must vote to approve a compromise text for a bill to become a law—something policy makers say they hope to do later this year.

The Swedish government, which holds the Council’s rotating presidency, has called the legislation a priority and said it was prepared to convene discussions as soon as the Parliament has agreed on its position.

The European Commission recognizes the need to consider specific rules for general-purpose AI and will support lawmakers in their efforts, an official said.

Adding any new rules to the AI Act that govern the development of general-purpose AI tools like foundation models would represent a major shift in approach. Until now, the legislation has taken what policy makers call a risk-based approach and saved the toughest rules for what the EU deems to be risky applications of AI, such as a ban on most police use of facial-recognition technology. But new rules for foundation models would apply to such technology no matter to what end use they might be put.

Tech companies and their lobbyists have in the past argued that the law should stick to a risk-based focus on specific AI applications, and not put too many restrictions on AI development because it would impede innovation. But some tech researchers have also joined academics and technologists in expressing support for rules that would slow a race by companies to roll out advanced new AI tools.

Current drafts of the bill would impose fines of up to 6% of a company’s global revenue in case of noncompliance.

Monday’s open letter also included other, broader calls to action from the EU lawmakers. They urged the EU’s executive arm and President Biden to convene a high-level global summit on AI, aimed at agreeing to preliminary governing principles for how to deploy the technology. They also suggested that the Trade and Technology Council, a U.S.-EU body that gathers again next month, hammer out an agenda for the summit at its next meeting.

The legislators also called on companies and AI laboratories to “significantly increase transparency towards and dialogue with regulators” and “ensure they maintain control over the evolution of the artificial intelligence they are building.”

FT : Chinese property prices rise ahead of first-quarter GDP release

Chinese property prices rise ahead of first-quarter GDP release
New home values climb at fastest pace in 21 months but uneven consumer recovery clouds outlook

Prices of new homes in China rose at the fastest pace in 21 months in March, in the latest sign of green shoots for the world’s second-biggest economy as it recovers from three years of pandemic restrictions and Beijing eases up a crackdown on the debt-laden property sector.

New home prices rose 0.5 per cent on the previous month, according to official data, following a 0.3 per cent increase in February.

The positive data signalled some relief for China’s ailing property sector, which has suffered a liquidity crisis over the past two years, and followed better than expected export figures released last week, as China’s trade was buoyed by shipments of electric vehicles and their components as well as an increase in trade with Russia.

The encouraging data came ahead of China’s first-quarter gross domestic product figures, set for release on Tuesday. Economists polled by Reuters forecast growth of 4 per cent for the first three months of the year as Beijing chases a full-year target of 5 per cent.

The People’s Bank of China on Monday kept its one-year medium-term lending facility rate — which sets the floor for the country’s benchmark interest rate — at 2.75 per cent. Analysts said the lack of easing from the central bank suggested that the first-quarter GDP data was expected to be on target.

China posted GDP growth of just 3 per cent last year, falling short of a 5.5 per cent target that was already the lowest in decades and raising concerns about a structural slowdown in the economy’s expansion.

“If the GDP report [for the first quarter] comes in close to market expectations then the speed of the economic recovery is on track,” said Iris Pang, chief greater China economist at ING. She added that with growth forecast to continue rising in the second quarter, “we expect the PBoC to keep interest rates unchanged”.

Nomura analysts noted on Monday that electricity consumption growth had increased “markedly” to 5.9 per cent year on year in March, from 2.3 per cent over the first two months of the year.

This was evidence that China’s economy had entered a “sweet spot” in the wake of Beijing suddenly dropping President Xi Jinping’s zero-Covid controls in late December and backing off from property sector tightening, they said.

Still, Beijing’s growth target for 2023 is the lowest in decades, and economists have warned of an uneven recovery despite the fledgling signs of improvement in exports and the property sector.

One crucial area of concern for the pace of the recovery is the strength of consumer services, a driver of economic and jobs growth for the country of 1.4bn.

China last week reported softer than expected consumer price data, with a 0.7 per cent year-on-year increase for March, trailing forecasts of 1 per cent.

Citi said the weak inflation result signalled that “this year’s consumption recovery will be a recovery of two halves”.

“Services recovery is steady, but it’s not a supercharged rebound,” the US bank’s analysts said. “Meanwhile, goods consumption could be struggling with the payback of stimulus support, especially for autos,” they added, noting that it “could also take some time for the property stabilisation to benefit related downstream consumption”.

FT : THG receives takeover bid from Apollo

THG receives takeover bid from Apollo
Ecommerce group’s shares surge more than 40% after approach

THG’s shares jumped more than 40 per cent on Monday after the ecommerce retailer revealed it had received a takeover bid from Apollo.

The company, formerly known as The Hut Group and which owns websites Lookfantastic and Myprotein, did not disclose the terms of the preliminary proposal and made no further comment.

Apollo must make its intentions clear by May 15 or walk away, THG said in a statement on Monday. The announcement pushed the shares up 44 per cent to 95p, valuing the company at £1.2bn, a day before it posts annual results.

It comes following months of speculation about the group’s future as a listed company after it floated with great fanfare in London in 2020 at an opening valuation of about £5.4bn — the largest IPO in the country since 2017.

However, co-founder and chief executive Matthew Moulding, a prolific social media user, said this month that he “wouldn’t recommend” listing on the London Stock Exchange.

“The way we’ve been treated since joining the LSE has done nothing but add fuel to our insatiable fighting spirit,” he wrote on Instagram. “It’s certainly not an experience I’d recommend to anyone, but it’s been a decent test of our start-up mentality.”

He previously said he would give up his “golden share” in the business to allay concerns about corporate governance, but he has yet to do so. This gives the entrepreneur, who still owns about 25 per cent of the company, the power to veto any takeover deals.

THG has previously been subject to takeover interest from a range of investors, including property tycoon Nick Candy and THG non-executive director Iain McDonald, seeking to take advantage of a share price that has plunged over the past 18 months. A year ago THG rejected a bid from investors Belerion Capital and King Street Capital Management that valued the company at £2bn. 

The retailer has also come under pressure from activist investors such as Kelso, which has bought a stake and sees the current share price as trading at a discount. In particular, Kelso has argued that THG’s nutrition business, which includes the Myprotein brand, could alone be worth more than the company’s entire market capitalisation.

Sparta Capital, founded in 2021 by former Elliott Management portfolio manager Franck Tuil, also has a stake in THG.

A person close to Sparta argued that Apollo’s interest in THG wasn’t surprising since the company is significantly undervalued but any offer would have to come with an outsized premium to make sense.

Apollo did not immediately respond to a request for comment.

The group’s interest in THG is the latest example of private equity groups seeking to take UK companies private.

In the past week, credit card processor, London-listed Network International Holdings and Dechra Pharmaceuticals have announced that they are fielding interest from buyout firms including CVC Capital Partners and EQT. Apollo has also been involved in long-running talks to take energy services business Wood Group private. 

>>> US Early premarket gappers


Early premarket gappers

  • Gapping up:
    • RXDX +69.7%, AMRX +8.8%, MTB +4%, LIVN +3.3%, CLLS +2.9%, MAXR +2.6%, ME +2.3%, ZFOX +2.2%, OCUL +2.1%, PEBO +2%, AMX +2%, ARGX +1.4%, TECK +1.3%, YY +1%, SGML +1%
  • Gapping down:
    • ASIX -2%, GALT -2%, HIVE -1.2%, RCEL -1%, MRK -0.7%

>>> Europe : Brokers Upgrades & Downgrades - 17th of April 2023 V2(+)

>>> Up
* HP Inc Raised to Overweight at JPMorgan; PT $35
* Interparfums Raised to Buy at Gilbert Dupont; PT 83 euros (+)
* Kingspan Raised to Outperform at Exane; PT 77 euros (+)
* Lumentum Raised to Overweight at JPMorgan; PT $60
* Murphy Oil Raised to Buy at Jefferies; PT $41
* National Grid PT Raised to 1,275 pence at JPMorgan
* RS Group Raised to Outperform at RBC; PT 1,000 pence
* Shop Apotheke PT Raised to 150 euros from 140 euros at Jefferies
* SLM Raised to Overweight at JPMorgan; PT $17
* Solvay Raised to Buy at KBC Securities; PT 155 euros (+)
* TeamViewer SE Raised to Buy at Berenberg; PT 21 euros
* Tryg Raised to Buy at ABG; PT 169 kroner

>>> Down
* Dell Technologies Cut to Neutral at JPMorgan; PT $47
* EssilorLuxottica Cut to Market Perform at Bernstein
* Fortum cut to Neutral from Buy at Citi
* Givaudan Cut to Hold at Berenberg; PT 3,300 Swiss francs
* Muehlhan Cut to Hold at M.M. Warburg (+)
* Prometheus Cut to Neutral at BTIG
* Prometheus Cut to Hold at Stifel; PT $200
* Sampo Cut to Hold at ABG; PT 46.50 euros
* Tele2 Cut to Hold at DNB Markets; PT 110 kronor
* Teradyne Cut to Underweight at JPMorgan; PT $81
* VAT Cut to Reduce at Baader Helvea; PT 259 Swiss francs (+)

>>> Initiation
* Coca-Cola HBC Rated New Buy at Goodbody; PT 2,950 pence
* Diageo Rated New Hold at Goodbody; PT 3,700 pence
* Fluence Energy Rated New Market Perform at BMO; PT $24
* ISS Rated New Buy at DNB Markets; PT 171 kroner

>>> Call
* Bossard Sees Solid Start to the Year as Sales Beat, Baader Says
* Givaudan Cut to Hold at Berenberg on Lack of Upcoming Catalysts
* JPMorgan Strategists Favor Defensives and Are Underweight Value (+)
* Morgan Stanley’s Wilson Says Earnings Estimates Too Optimistic (+)
* Power Generator Earnings Nearing Peak, Fortum Downgraded at Citi
* RS Group Raised at RBC With Risk-Reward Now More Attractive
* TeamViewer Upgraded at Berenberg, Turnaround Being Ignored

>>> Stoxx 600 Pre-Market Indications

  • Glencore (8GC TH) +1.8%
    • Glencore Digs in for Battle as Momentum Shifts Against Teck (1)
  • Aker BP (ARC TH) +1.6%
  • Rio Tinto (RIO1 TH) +1.6%
    • Watch European Miners as Iron Ore Nears 2023 Low on Weak Demand
  • Aroundtown (AT1 TH) +1.3%
  • Halma (H11 TH) +1.2%
  • NN (2NN TH) +1.2%
  • BAE (BSP TH) +1.1%
  • GSK (GS71 TH) +1.1%
    • GSK Says Gepotidacin’s Phase III Trials Met Primary Endpoint
  • TUI (TUI1 TH) +1.1%
  • BAT (BMT TH) +0.9%
  • Yara (IU2 TH) -0.8%
  • Evotec SE (EVT TH) -0.8%
  • BNP Paribas (BNP TH) -0.8%
    • European Bank Debt Shakes Off Swiss Hangover: Marcus Ashworth
  • Santander (BSD2 TH) -1%
  • AB InBev (1NBA TH) -1.1%
    • Beer, China Reopening Plays are Citi’s 1Q European Drinks Picks
  • Ferrari (2FE TH) -1.2%
  • Ericsson (ERCB TH) -1.3%
    • Nordic Telecoms, Equipment Makers Kick Off EMEA TMT 1Q Earnings
  • Norsk Hydro (NOH1 TH) -1.8%
    • Hydro Says Strike to Gradually Affect Ops at Karmoy and Ardal
  • Vestas (VWSB TH) -1.8%
  • Unibail (1BR1 TH) -2.9%

>>> TradeGate Pre-Market Indications

DAX:
  • Merck KGaA (MRK TH) +0.7%
  • SAP (SAP TH) -0.3%
MDAX:
  • TeamViewer SE (TMV TH) +3.2%
    • TeamViewer Upgraded at Berenberg, Turnaround Being Ignored
  • Aroundtown (AT1 TH) +2%
    • Bloomberg Europe Aggregate Index Down, OAS Narrows
  • Hensoldt (HAG TH) +1.3%
  • ProSieben (PSM TH) -0.6%
  • Thyssenkrupp (TKA TH) -0.7%
SDAX:
  • MorphoSys (MOR TH) +3.1%
    • MorphoSys, Incyte Say 5-Yr Monjuvi Data Show Curative Potential
  • Traton (8TRA TH) +3%
    • Traton Prelim 1Q Sales About EU11.2B, Est. EU10.46B
  • Energiekontor (EKT TH) +1.2%
  • PNE AG (PNE3 TH) +1.1%
  • SFC Energy (F3C TH) +1%
  • flatexDEGIRO (FTK TH) -0.7%

FT : Elon Musk’s SpaceX to attempt first Starship launch

Elon Musk’s SpaceX to attempt first Starship launch
Mission represents important step in billionaire’s quest to bring humans to Mars


Elon Musk’s SpaceX is set to make its first attempt to launch its huge Starship rocket into space, marking what could be an important milestone in the billionaire’s bid to carry astronauts to Mars.

SpaceX said on Sunday that the rocket could be launched from its base in Texas during a 90-minute window beginning on Monday. If the rocket is not ready to launch during that window, SpaceX has alternative launch times available later in the week.

On Sunday, Musk sought to lower expectations for the launch attempt. In a discussion broadcast on Twitter, he warned that many issues could delay the launch or cause the rocket to fail. “Just don’t blow up the launch pad,” he added.

If the launch is successful, the rocket would reach an altitude of 150 miles and complete a 90-minute trip, ending in a splashdown in the Pacific Ocean off Hawaii. SpaceX will not attempt to recover either of the rocket’s two stages — its Super Heavy booster and the Starship on top that will one day carry crews to space — though eventually those parts will be designed to be reused.

Powered by 33 of SpaceX’s Raptor engines, the rocket is set to become the most powerful ever to be launched into space. The company has said it will have more than 16mn pounds of thrust, roughly twice that of the previous record holder, the Saturn V rocket that carried Americans to the moon in the 1960s and 1970s.

Starship was designed to take humans to Mars, the purpose that Musk set for SpaceX when he founded the company in 2002.

Long before then, Starship was co-opted by Nasa to take part in the first attempt to return astronauts to the moon since 1972. With the ability to carry payloads of as much as 100 tons, Starship could also transform the economics of reaching orbit, challenging SpaceX’s own Falcon 9 rockets as the main workhorse for reaching space.