Company founder Charles Lazarus showcased Toys ‘R’ Us AI-generated short promotional clip at the 2024 Cannes Lions Festival in France. In an effort to regenerate interest in the brand, Lazarus collaborated with the creative agency Native Foreign using OpenAI’s Sora. Except for a few tweaks that require human input the 66-seconds video was created entirely by Sora.
Sora is a diffusion model capable of three modes of video creation. In addition to using text prompts to create videos, it is capable of extending, modifying and filling in missing frames in an existing video. For instance, it can take a video with static noise and gradually transform it by removing the noise over many steps. The AI model can also animate elements in an image.
Company CMO, Kim Miller, informed festival attendees that despite the film’s AI base, production required human involvement throughout the process, including a dependence on intuition. The film received mixed reviews on social media, with some even calling it creepy.
The Bank for International Settlements (BIS) has advised central banks to harness the benefits of AI while cautioning against its use in replacing human decision-makers. In its first comprehensive report on AI, the BIS highlighted the technology’s potential to enhance real-time data monitoring and improve inflation predictions – capabilities that have become critical following the unforeseen inflation surges during the COVID-19 pandemic and the Ukraine crisis. While AI models could mitigate future risks, their unproven and sometimes inaccurate nature makes them unsuitable as autonomous rate setters, emphasised Cecilia Skingsley of the BIS. Human accountability remains crucial for decisions on borrowing costs, she noted.
The BIS, often termed the central bank for central banks, is already engaged in eight AI-focused projects to explore the technology’s potential. Hyun Song Shin, the BIS’s head of research, stressed that AI should not be seen as a ‘magical’ solution but acknowledged its value in detecting financial system vulnerabilities. However, he also warned of the risks associated with AI, such as new cyber threats and the possibility of exacerbating financial crises if mismanaged.
The widespread adoption of AI could significantly impact labour markets, productivity, and economic growth, with firms potentially adjusting prices more swiftly in response to economic changes, thereby influencing inflation. The BIS has called for the creation of a collaborative community of central banks to share experiences, best practices, and data to navigate the complexities and opportunities presented by AI. That collaboration aims to ensure AI’s integration into financial systems is both effective and secure, promoting resilient and responsive economic governance.
In conclusion, the BIS’s advisory underscores the importance of balancing AI’s promising capabilities with the necessity for human intervention in central banking operations. By fostering an environment for shared knowledge and collaboration among central banks, the BIS seeks to maximise AI benefits while mitigating inherent risks, thereby supporting more robust economic management in the face of technological advancements.
Italy’s financial watchdog, Consob, has begun experimenting with AI to enhance its oversight capabilities, particularly in the initial review of listing prospectuses and the detection of insider trading. According to Consob, these AI algorithms aim to swiftly identify potential instances of insider trading, which traditionally requires significantly more time when conducted manually.
The agency reported that its AI algorithms can detect errors in just three seconds, a task typically taking a human analyst at least 20 minutes. These efforts were part of testing conducted last year using prototypes developed in collaboration with Scuola Normale Superiore University in Pisa, alongside an additional model developed independently.
Consob views the integration of AI as pivotal in enhancing the effectiveness of regulatory controls to detect financial misconduct. The next phase involves transitioning from prototype testing to fully incorporating AI into Consob’s regular operational procedures. That initiative mirrors similar efforts by financial regulators globally who are increasingly leveraging AI to bolster consumer protection and regulatory oversight.
For instance, in the United Kingdom, the Financial Conduct Authority (FCA) has utilised AI technologies to combat online scams and protect consumers. That trend underscores a broader international movement within regulatory bodies to harness AI’s potential in safeguarding market integrity and enhancing regulatory efficiency.
According to insider sources, India’s digital currency, the e-rupee, has seen a sharp decline in usage, dropping to just one-tenth of its peak usage in December. The Reserve Bank of India (RBI) launched the e-rupee in a pilot program in December 2022, aiming to provide a digital alternative to physical cash. By December 2023, the pilot had successfully reached a target of 1 million daily retail transactions, largely driven by user incentives and partial salary disbursements to bank employees via the e-rupee. However, daily transactions have plummeted to about 100,000 since the incentives waned.
The transaction drop highlights a need for more organic demand for the e-rupee. Sources involved in the project indicated that the remaining transactions are primarily due to banks continuing to disburse employee benefits through digital currency. At the end of each month, this practice temporarily boosts transaction numbers to between 250,000 and 300,000 per day. Despite the earlier push to test the system’s resilience at scale, the RBI is now focused on refining the technology and developing practical use cases for the e-rupee rather than expanding the pilot rapidly.
The challenge faced by the e-rupee is common. A survey by the Bank of International Settlements found that among 86 central banks, a third are piloting a central bank digital currency (CBDC). Even countries that have launched CBDCs, such as the Bahamas and Jamaica, have yet to experience much success. The Federal Reserve Bank of Kansas City noted that consumer adoption of CBDCs requires more than just the technology itself; it needs to offer additional value compared to traditional cash. As the RBI continues developing the e-rupee, the focus will be on creating compelling use cases that encourage widespread adoption.
Shopify is launching its new AI chatbot, ‘Sidekick,’ in early access as part of its 2024 Summer Edition updates. Sidekick, initially revealed last year, is designed to assist merchants with tasks such as creating discount codes, generating store reports, and suggesting blog post ideas. Currently, Sidekick is available to merchants with English stores in North America, but Shopify plans to expand its availability to other languages and regions.
In addition to Sidekick, Shopify announced several other AI tools to improve merchant efficiency. One notable feature is AI-powered product categorisation, which helps merchants by automatically suggesting taxonomy for product listings, making items more discoverable. Another tool provides suggested replies for customer chats in Shopify Inbox, although these replies need to be finalised by the merchant. Shopify is considering allowing AI to handle customer chats independently in the future.
Shopify is also enhancing its AI-powered image generator, which was launched in January, by integrating it into its iOS and Android apps and expanding its use within the Shopify admin. Over the past six months, Shopify merchants have saved over one million AI-generated images, highlighting the tool’s popularity and effectiveness.
The EU antitrust regulators have accused Apple of violating the bloc’s tech rules, potentially leading to a substantial fine. The European Commission, responsible for antitrust and technology regulation, announced its preliminary findings following an investigation initiated in March. That move marks the first charge under the Digital Markets Act (DMA), a law designed to curb Big Tech’s dominance and foster fair competition. Apple could face fines of up to 10% of its global annual turnover if it fails to address the concerns.
EU’s antitrust chief, Margrethe Vestager, highlighted issues with Apple’s new terms, which allegedly restrict app developers’ ability to communicate freely with their users and establish contracts. Apple maintains that it has made several changes to comply with the DMA based on feedback from app developers and the Commission. However, the Commission criticised Apple’s business terms, particularly allowing app developers to redirect customers to external websites to complete transactions and the fees charged for initial customer acquisition through the App Store.
The Commission is also investigating Apple’s new contractual requirements for third-party app developers and app stores. Key issues include the core technology fee, the multi-step process to download alternative app stores on iPhones, and eligibility criteria for developers to offer alternative app stores or distribute apps directly. Apple’s recent fee implementations in the EU have drawn criticism, notably from ‘Fortnite’ creator Epic Games. Additionally, Vestager criticised Apple’s delay in launching AI-powered features in the EU, which the company attributed to the DMA, suggesting that Apple might consider its AI integration anti-competitive.
Democratic lawmakers in California are quickly advancing bill SB 1144, which requires online marketplaces to collect identity data from high-volume sellers who advertise online but transact offline. If passed, sellers on platforms like Craigslist, Facebook Marketplace, and NextDoor must provide identity verification, which could include biometrics and personal details such as bank account information, Social Security numbers, or driver’s licenses.
The proposal aims to combat the resale of stolen goods, targeting sellers who make over $5,000 in profit and complete at least 200 transactions annually. It is part of a broader legislative effort to address retail theft in the state, a problem the California Retailers Association says has reached crisis levels.
However, US tech lobby groups, including TechNet, argue that these requirements will harm the economy by deterring businesses from operating in California. They claim that excessive data collection is unnecessary and will disproportionately benefit large retailers at the expense of smaller online marketplaces. Critics also argue that the bill’s requirements are too vague and could inadvertently target unintended users and sites.
The bill, expected to reach Governor Gavin Newsom’s desk within weeks, now lies between the need for law enforcement to collect data to fight crime and concerns about privacy and economic impact from the tech industry.
Why does it matter?
Similarly, in New York and Chicago, shoplifting has surged, creating a shadow economy where stolen goods are sold on resale sites and at illicit pawn shops. Last year, a new federal law, the Inform Consumer Act, took effect, requiring online marketplaces like eBay, Facebook Marketplace, and Amazon to verify the identities and bank information of high-volume sellers to combat the online sale of stolen goods.
Amazon has expanded its generative AI tools for product listings to sellers in France, Germany, Italy, Spain, and the UK. These tools, designed to streamline the process of creating and enhancing product listings, can generate product descriptions, titles, and details and fill in any missing information. The rollout follows an initial introduction in the US and a quieter launch in the UK earlier this month.
The new AI tools aim to help sellers list products more quickly by allowing them to enter relevant keywords or upload product photos, after which the AI generates a product title, bullet points, and descriptions. While the AI-generated content can be edited, Amazon advises sellers to review the generated listings thoroughly to avoid inaccuracies. The company continuously improves these tools to make them more effective and user-friendly.
Earlier this year, Amazon also introduced a tool enabling sellers to create product listings by posting a URL to their existing website, though it remains uncertain when this feature will be available outside the US. The expansion of AI tools to European markets raises regulatory concerns, particularly regarding GDPR and the Digital Services Act, which require transparency in AI applications.
Why does it matter?
Despite these regulatory challenges, Amazon’s use of generative AI marks a significant advancement in e-commerce. By leveraging diverse sources of information, Amazon’s AI models can infer product details with high accuracy, improving the quality and efficiency of product listings at scale. However, the precise data used to train these models remains unclear, highlighting ongoing concerns about data privacy and usage.
Amazon announced plans to invest €10 billion ($10.75 billion) in Germany, emphasising the country’s growing importance in cloud computing and retail. The majority of this investment, totalling €8.8 billion, will be allocated by 2026 to expand Amazon Web Services (AWS), particularly focusing on enhancing cloud infrastructure to support AI technologies across Europe.
German Chancellor Olaf Scholz hailed the investment, highlighting its potential to create over 4,000 jobs this year. That move comes amidst Germany’s economic challenges, including an energy crisis and bureaucratic hurdles that have hindered investment.
Amazon’s latest commitment brings its total planned investments in Germany to €17.8 billion, underscoring its long-term strategic focus on the country. Earlier reports indicated AWS’s consideration of multi-billion investments to expand data centres in Italy, further illustrating Amazon’s broader ambitions in Europe’s digital infrastructure sector.
The investment signals Amazon’s confidence in Germany’s business environment and its strategic position in Europe, aiming to bolster AWS’s AI and cloud services capabilities to meet increasing regional demand. That is expected to boost employment and enhance Amazon’s technological footprint in Europe’s largest economy.
The International Monetary Fund (IMF) has recommended fiscal policies for governments grappling with the economic impacts of AI, including taxes on excess profits and a levy to address AI-related carbon emissions. In a recent report, the IMF highlighted the rapid advancement of generative AI technologies like ChatGPT, which can simulate human-like text, voices, and images from simple prompts, noting their potential to spread quickly across industries.
One key suggestion from the IMF involves implementing a carbon tax to account for the significant energy consumption of AI servers used in data centres. These servers contribute to global emissions, currently amounting to up to 1.5%. The IMF emphasised the need to factor these environmental costs into the price of AI technologies.
The report also raised concerns about AI’s impact on job markets, predicting potential wage declines as a proportion of national income and increased inequality. It warned that AI could exacerbate job losses across various sectors, affecting white-collar professions such as law and finance and blue-collar jobs in manufacturing and trade.
Why does it matter?
To address these challenges, the IMF proposed measures such as enhancing capital income taxes, including corporation tax and personal income taxes on capital gains. It suggested reconsidering corporate income tax policies to prevent profit shifting and ensure fair taxation across sectors.
Additionally, the IMF recommended policies to support workers affected by AI-driven automation, including extending unemployment insurance and focusing on education and training programs tailored to new technologies. While the report expressed caution about universal basic income due to potential fiscal implications, it acknowledged the need for future considerations if AI disruption intensifies.
Era Dabla-Norris, co-author of the report and deputy director of the IMF’s fiscal affairs department, highlighted the importance of preparing for potential disruptions from AI and designing effective policies to mitigate their impacts on economies and societies.
