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European Central Bank advocates monitoring and regulation of AI in finance

The European Central Bank (ECB) has issued a call for increased vigilance and potential regulation regarding the use of AI (AI) in the financial sector. While acknowledging the potential benefits of AI, the ECB emphasises the need to mitigate risks to consumers and ensure market stability.

The ECB acknowledges that AI, particularly generative AI, offers several advantages for banks and financial institutions. These include superior information processing capabilities, improved customer service efficiency, and enhanced cybersecurity measures.

However, the ECB highlights several risks associated with the adoption of AI in finance. These risks include herding behaviour, over-reliance on a limited number of AI providers, and increased susceptibility to sophisticated cyberattacks.

Given the potential risks, the ECB advocates for close monitoring of AI implementation in the financial system. It suggests that regulatory initiatives may be necessary to address any market failures that emerge and cannot be adequately managed within the existing regulatory framework.

The use of AI in the EU is regulated by the AI Act, which is the world’s first comprehensive AI law. The regulation imposes transparency obligations and compliance requirements with EU copyright laws on general-purpose and high-risk AI systems. These regulations aim to ensure accountability and mitigate potential harms associated with AI technologies.

The ECB notes that the adoption of AI systems by European financial companies is still in its early stages. Market contacts suggest that some hesitation exists among the Euro area financial institutions, partly due to perceived risks and potential reputational concerns.

Workplace app discontinued as Meta invests in AI and metaverse

Meta Platforms, the parent company of Facebook, announced that it will discontinue its Workplace app, a platform geared towards work-related communications. The social media platform made this decision as it shifted its focus towards developing AI and metaverse technologies. The Workplace app will be phased out for customers starting in June 2026, although Meta will continue to utilise it internally as a messaging board until August 2025, according to a statement from the company.

A spokesperson for Meta stated that they are discontinuing Workplace to focus on building AI and metaverse technologies that they believe will fundamentally reshape the way they work. Over the next two years, Workplace customers will have the option to transition to Zoom’s Workvivo product, which Meta has designated as its preferred migration partner. Workplace was initially launched in 2016 to cater to businesses, offering features such as multi-company groups and shared spaces to facilitate collaboration among employees from different organizations.

Why does it matter?

The discontinuation of Workplace aligns with Meta’s strategic emphasis on advancing AI and metaverse technologies, which it views as integral to the future of digital communication. The strategic change of business direction has raised concerns about escalating costs that could potentially impact the company’s growth trajectory. Despite the discontinuation of Workplace, Meta has assured customers that billing and payment arrangements will remain unchanged until August of this year. Currently, Workplace offers a core plan priced at $4 per user per month, with additional add-ons available starting from $2 per user per month, with monthly bills calculated based on the number of billable users unless a fixed plan is in place.

Microsoft offers relocation to AI employees in China amidst US-China tech tensions

Microsoft is offering its China-based employees working in AI the opportunity to relocate to overseas locations such as the US, Australia, and Ireland, according to sources familiar with the matter. The offer extends to Azure cloud computing team employees, who were notified earlier this week and have until 7 June to decide. Those who opt not to relocate can remain with the China team, although Microsoft has halted new hiring in China, eliminating job openings.

The relocation program affects approximately 700 to 800 people, primarily those engaged in machine learning. Microsoft has offices in Beijing, Shanghai, and Suzhou but has not responded to requests for comment regarding the relocation offer. Last year, Microsoft relocated some of its top AI researchers from China to a new research lab in Vancouver, Canada, as part of its broader AI strategy.

Why does it matter?

The offer to the employees comes amidst escalating geopolitical tensions between the US and China, which have increasingly impacted corporate decisions. At a bilateral meeting in Geneva, US officials expressed concerns about the misuse of AI, particularly by China. The Biden administration is considering new restrictions on exporting proprietary AI models to China, reflecting growing scrutiny over technology transfer.

Despite these tensions, Microsoft remains committed to its AI services in mainland China and Hong Kong, distinguishing itself from competitors like OpenAI and Google, which have restricted access to their AI products in these regions. The potential restrictions on AI software exports would add to existing limitations on Chinese firms’ access to advanced semiconductor technology, further complicating US-China relations in the tech sector.

Bipartisan senators push for $32 billion boost in AI research funding

A bipartisan coalition of US senators, including Majority Leader Chuck Schumer, called on Wednesday for a significant boost in government research funding for A.

Joined by Republicans Mike Rounds and Todd Young, along with Democrat Martin Heinrich, Schumer presented a strategic plan derived from expert consultations to address the rapid advancements and associated challenges of AI. The senators endorsed the national security commission on artificial intelligence report‘s recommendation to allocate at least $32 billion annually for non-defense AI innovation.

‘This is a time in which the dollars related to this particular investment will pay dividends to the taxpayers of this country long term,’ Rounds stated. He emphasised the urgency of matching or surpassing China’s substantial investment in AI, which exceeds US spending by a factor of ten, according to him.

Schumer underscored the importance of this “surge emergency funding” to solidify America’s leadership in AI, particularly in competition with China. He also mentioned that Congress is considering additional significant funding for defense-related AI.

The proposed funding aims to establish a cross-government AI research and development initiative, including an ‘AI-ready data‘ program and enhanced infrastructure for government AI testing and evaluation. The senators highlighted AI’s transformative potential to eliminate debilitating diseases, alleviate traffic congestion, and deliver personalised education for all students.

Efforts to develop consensus on AI policy included a series of forums with industry leaders and experts. Despite these initiatives, progress on AI legislation has been slow, with the Biden administration and lawmakers expressing concerns over AI’s potential to affect elections and societal norms. The administration is separately working on regulatory measures.

Schumer expressed his hope that Congress would pass some form of AI-related legislation by the end of the year, stating, “We’re not going to wait on legislation that addresses every aspect of AI in society.”

US officials have warned about the risks of AI exacerbating biases and enabling election interference through sophisticated deepfakes. They also fear that advanced AI could be weaponized to create bioweapons or launch cyber attacks, with particular concern about China’s capabilities.

In response, the Senate Rules Committee is set to consider legislation aimed at mitigating AI’s impact on elections, including measures to prevent deceptive AI-generated content in campaign advertisements.

TikTok tests AI-powered search feature

TikTok is experimenting with an enhanced search feature, utilising generative AI to provide more comprehensive search results. Dubbed ‘search highlights’, this feature showcases AI-generated snippets at the top of certain search result pages, offering users a glimpse into the full response by clicking through. Initial tests reveal AI-generated responses for queries ranging from recipes to product recommendations, such as ‘best laptops 2024’.

Powered by ChatGPT, TikTok’s AI search results aim to surface relevant content based on user queries. However, the feature has limitations, with not all searches yielding AI-generated answers. Some search queries display results generated by ChatGPT alongside a broader ‘search highlights’ feature.

The birth of the new search tool, backed by AI, reflects TikTok’s ongoing efforts to enhance its in-app search functionality, aligning with users’ habits, particularly among younger demographics. Recognising TikTok’s role as a search destination for recommendations and information, the platform previously experimented with integrating Google Search results and direct links to external websites like Wikipedia and IMDb. By incorporating AI-driven results prominently, TikTok aims to cater to users’ preferences and further solidify its position as a go-to platform for discovering diverse content.

Anthropic unveils AI chatbot Claude in EU

Anthropic, an AI startup backed by tech giants Google and Amazon.com, announced the European release of its generative AI chatbot, Claude, set for Tuesday. The new AI tool places Claude in direct competition with Microsoft-backed OpenAI’s ChatGPT, renowned for its record-breaking 100 million monthly active users just two months post-launch.

While Claude has been accessible online in several countries, this marks its debut availability via the web and iPhones throughout the EU, including non-EU nations like Switzerland and Iceland. Additionally, European businesses can opt for the ‘Claude Team’ plan for €28 ($30.21) per month before value-added tax.

Anthropic, founded by former OpenAI executives and siblings Dario and Daniela Amodei, recently entered the corporate AI market fray by launching a business-oriented version of Claude. This business-oriented tool potentially pits Anthropic against its own backers, Amazon and Google, as they vie for a share of the burgeoning AI business spending.

Dario Amodei, Anthropic’s CEO and co-founder, emphasised Claude’s widespread utility, saying that millions of people worldwide are already using Claude to do things like accelerate scientific processes, enhance customer service or refine their writing. With its European rollout, Anthropic anticipates further innovation and adoption across diverse sectors and businesses.

IMF chief compares AI impact on labour to a ‘tsunami’

AI is poised to drastically reshape the global labour market, according to International Monetary Fund Managing Director Kristalina Georgieva. She likened its impact to a ‘tsunami’, projecting that 60% of jobs in advanced economies and 40% worldwide will be affected within the next two years. Georgieva emphasised the urgency of preparing individuals and businesses for this imminent transformation, speaking at an event organised by the Swiss Institute of International Studies in Zurich.

While AI adoption promises significant gains in productivity, Georgieva warned against potential downsides, including the proliferation of misinformation and the exacerbation of societal inequality. She highlighted the recent vulnerabilities of the world economy, citing shocks like the 2020 global pandemic and the ongoing conflict in Ukraine. Despite these challenges, she noted a resilience in the global economy, with no imminent signs of a widespread recession.

Addressing concerns about inflation, Swiss National Bank Chairman Thomas Jordan emphasised progress in Switzerland’s inflation management. With inflation reaching 1.4% in April, remaining within the SNB’s target range for the 11th consecutive month, Jordan expressed optimism about maintaining price stability in the coming years. However, he acknowledged lingering uncertainties surrounding future economic trends.

UAE’s Technology Innovation Institute launches Falcon 2 rivaling Meta’s Llama 3

The Technology Innovation Institute (TII) of the United Arab Emirates, one of the leading global scientific research centre and the applied research pillar of Abu Dhabi’s Advanced Technology Research Council (ATRC), has launched the second iteration of its large language model (LLM) the Falcon series, Falcon 2. Within the series, it has unveiled two versions:

Falcon 2 11B, an efficient and accessible LLM trained on 11 billion parameters with 5.5 trillion tokens and Falcon 2 11B vision-to-language model (VLM), enabling the conversion of visual inputs into textual outputs. Notably, Falcon 2 11B VLM is the first multimodal model in the top-tier market, offering image-to-text conversion capabilities.

The newly launched models have been tested against leading AI models, where Falcon 2 11B has surpassed Meta’s newly launched Llama 3 and rivalled Google’s Gemma 7B, according to independent verification by Hugging Face, a US-based platform hosting an objective evaluation tool for open LLMs.

TII has made both Falcon 2 11B models open source, aligning with a broader trend in the AI community, giving developers worldwide unrestricted access and contributing to accelerating advancements in AI research and development.

TII aims to expand the Falcon 2 series with models of varying sizes and enhance them with advanced machine learning capabilities like ‘Mixture of Experts’ (MoE). Advanced Technology Research Council Secretary General Faisal Al Bannai, who is also an adviser to the president on strategic research and advanced technology, said they were already working on “Falcon 3 generation”.

The multilingual capabilities of Falcon 2 11B models enable them to tackle tasks in multiple languages, enhancing their effectiveness across diverse industries such as healthcare, finance, e-commerce, education, and legal sectors. Moreover, their ability to run efficiently on minimal hardware makes them highly scalable and adaptable to different infrastructures.

The UAE’s focus on AI has not gone unnoticed, attracting attention from global players and policymakers alike. Emirati AI firm G42‘s strategic shift away from Chinese technology and subsequent $1.5 billion investment from Microsoft.

While the UAE’s AI ambitions have drawn scrutiny, particularly from US officials advocating for allegiance to American or Chinese technology, the country’s strategic partnerships and investments demonstrate a nuanced approach to international relations in the tech sphere.

US Air Force jets engage in dogfight, one piloted by AI

In a groundbreaking demonstration of technological advancement, two US Air Force fighter jets recently engaged in a dogfight over California, with one jet piloted by a human and the other by AI. The AI-piloted jet, named Vista, showcased the Air Force’s strides in AI technology, which dates back to the 1950s but continues to evolve.

The US is in a race with China to maintain superiority in AI and its integration into weapon systems, raising concerns about the potential for future wars fought primarily by machines. Despite assurances from officials that direct human intervention will always be required on the US side, questions linger about adversaries’ intentions and the need for rapid deployment of US capabilities.

AI’s military history traces back to the 1960s and 1970s when systems like the Navy’s Aegis missile defence were developed, which employed if/then rule sets for autonomous decision-making. However, big advancements came in 2012 with the ability of computers to analyse big data and generate their own rule sets, marking a significant milestone dubbed AI’s ‘big bang.’

Why does it matter?

Numerous AI projects are underway across the Pentagon, including enhancing communication between pilots and air operations centres and developing AI-based navigation systems independent of GPS satellites. Safety remains a top priority as AI learns and adapts, with extensive precautions taken to ensure the accuracy and reliability of AI-driven systems. Despite challenges, AI technology promises to revolutionise military operations, offering enhanced capabilities and strategic advantages in future conflicts.

US and China to meet in Geneva for AI risk discussions

The US and China are set to meet in Geneva on Tuesday to discuss advanced AI, with US officials underscoring that Washington’s policies would not be open for negotiation, despite exploring ways to address risks associated with the technology. President Joe Biden’s administration aims to engage China on various fronts to minimise miscommunication between the two countries, with AI being a focal point. Earlier discussions between US Secretary of State Antony Blinken and China’s Foreign Minister Wang Yi in Beijing laid the groundwork for these formal bilateral talks on AI.

Highlighting concerns over China’s rapid deployment of AI across multiple sectors, including civilian, military, and national security, US officials stress the need for direct communication to address security implications for the US and its allies. However, they clarified that talks with Beijing do not involve promoting technical collaboration or negotiating technology protection policies.

Despite competing interests in shaping AI rules, both the US and China hope to explore areas where mutual agreements can enhance global safety. Tarun Chhabra from the US National Security Council and Seth Center from the State Department will lead the discussions with Chinese officials, focusing on critical AI risks. Meanwhile, US Senate Majority Leader Chuck Schumer intends to issue recommendations on addressing AI risks in the coming weeks, emphasising the need for proactive legislation to navigate the competitive landscape with China and regulate AI advancements effectively.