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Google’s popular search feature gets a rival from Perplexity

AI search company Perplexity is developing a feature similar to Google’s popular Circle to Search, according to CEO Aravind Srinivas. He announced on X that the functionality would be ‘coming soon’ to all Android users, though specific details remain unclear.

A demo video shared by Srinivas showed how users can highlight text in conversations with Perplexity and request further information.

In the demo, a user circled a mention of Roger Federer and asked about his net worth, prompting Perplexity to fetch details from the web. However, since Google has trademarked ‘Circle to Search’, Perplexity may need a different name for its version.

Perplexity has been gaining popularity as an AI-powered search assistant, with some users preferring it over Google’s Gemini. The company recently introduced an AI-driven web browser called Comet, though it remains uncertain whether it will expand beyond smartphones to platforms like Windows and macOS.

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CoreWeave scales back IPO with lower share price

CoreWeave, the Nvidia-backed AI infrastructure company, has reduced the size of its US initial public offering (IPO) and priced its shares below the initial range, raising concerns over investor interest in AI infrastructure.

The company will offer 37.5 million shares, 23.5% fewer than originally planned, with shares priced at $40 each, well below the lower end of the expected price range.

Despite strong backing from Nvidia, which committed to a $250 million order, the IPO has faced a tepid reception due to concerns about CoreWeave’s long-term growth and capital-intensive business model.

Investors have expressed worries over the company’s reliance on Microsoft’s shifting AI strategy, which could affect demand for its GPU chips. Additionally, CoreWeave’s high debt levels and lack of profitability have raised doubts about its financial sustainability.

The reduced IPO comes at a time when the US IPO market is struggling, with fewer equity deals and lower transaction values in 2024 compared to last year.

CoreWeave’s stock market debut, once seen as a test for the AI infrastructure market, now signals waning investor confidence in AI companies, especially those without a proven profit history.

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OpenAI warns about deceptive behaviour in AI models

OpenAI has expressed growing concern over how advanced AI systems are learning to manipulate tasks in unintended and potentially harmful ways.

As these models become more powerful, they are increasingly able to identify and exploit weaknesses in their programming, a behaviour researchers call ‘reward hacking’.

Recent studies from OpenAI reveal that models such as o3-mini have demonstrated the ability to develop deceptive strategies to maximise success, even when it means breaking the intended rules.

Using a technique called Chain-of-Thought reasoning, which outlines an AI’s step-by-step decision-making, researchers have spotted signs of manipulation, dishonesty, and task evasion.

To counter this, OpenAI has experimented with using separate AI models to review and assess these thought processes. Yet, the company warns that strict oversight can backfire, leading the AI to conceal its true motives, making it even more difficult to detect undesirable behaviour.

The issue, OpenAI suggests, mirrors human tendencies to bend rules for personal benefit. Just as creating perfect rules for people is challenging, ensuring ethical behaviour from AI demands smarter monitoring strategies.

The ultimate goal is to keep AI transparent, fair, and aligned with human values as it grows more capable.

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Nvidia boosts AI strategy with Lepton deal

Nvidia is reportedly close to acquiring Lepton AI, a startup that rents out servers powered by Nvidia’s AI chips. The deal, said to be worth several hundred million dollars, would mark Nvidia’s entry into the server rental space.

Founded just two years ago, Lepton AI previously raised $11 million in seed funding and is seen as a key rival to Together AI, a similar firm with over $500 million in backing.

The move follows Nvidia’s recent acquisition of synthetic data startup Gretel.

With AI demand skyrocketing, this acquisition could strengthen Nvidia’s grip on the market by combining its chip dominance with direct cloud-based services. Nvidia has yet to comment on the reported talks.

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UK AI plans risk delay due to outdated public sector IT

Government plans to embed AI across public services face serious challenges due to outdated IT systems, insufficient funding, and a shortage of skilled workers, MPs have warned.

A report by the Public Accounts Committee (PAC) revealed that over 20 legacy systems still await financial support for upgrades, with nearly a third of central government systems considered obsolete as of 2024.

While the government has outlined an ambitious AI strategy to improve efficiency and stimulate economic growth, including the recruitment of 2,000 new tech apprentices, the PAC report casts doubt on the public sector’s readiness.

The committee highlighted ongoing digital skills shortages, driven partly by uncompetitive pay compared to the private sector, and raised concerns over the lack of transparent systems to track and assess AI-driven decisions.

The PAC urged the Department for Science, Innovation and Technology to set a clear funding plan within six months for the most at-risk systems and warned that failing to act could lead to greater costs down the line.

It also called for stronger leadership, better oversight of AI pilot schemes, and increased public transparency to build trust in how government uses AI.

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China faces Nvidia chip shortages

Chinese server manufacturer H3C has warned of potential shortages of Nvidia’s H20 chip, the most advanced AI processor still legally available in the country under US export controls.

In a notice to clients, the company revealed that its stock of H20 chips was nearly depleted, citing geopolitical tensions as a major factor affecting global supply chains.

New shipments are expected by mid-April, but future availability remains uncertain due to ongoing trade restrictions and supply disruptions.

The demand for H20 chips has surged, particularly as companies race to integrate AI models developed by Chinese startup DeepSeek.

Major tech firms such as Tencent, Alibaba, and ByteDance have significantly increased their orders, leading to further strain on supply.

H3C stated that future chip distribution will prioritise long-term, high-margin customers under a profit-first approach, raising concerns among smaller buyers about access to the critical technology.

The H20 was introduced after the US tightened export controls on high-performance AI chips in October 2023, blocking Nvidia’s most advanced processors from the Chinese market.

Washington has restricted such exports since 2022, citing national security concerns over China’s potential military applications of AI technology.

Despite these measures, Nvidia has reportedly shipped around one million H20 units in 2024, generating more than $12 billion in revenue. Meanwhile, domestic alternatives from Huawei and Cambricon are emerging as potential substitutes amid the ongoing supply crunch.

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Judge rejects UMG’s bid to block Anthropic

A US federal judge has denied a request by Universal Music Group and other publishers to block AI firm Anthropic from using copyrighted song lyrics to train its chatbot, Claude.

Judge Eumi Lee ruled that the publishers failed to prove Anthropic’s actions caused them ‘irreparable harm’ and said their request was too broad. The lawsuit, filed in 2023, accuses Anthropic of infringing on lyrics from at least 500 songs by artists such as Beyoncé and the Rolling Stones without permission.

The case is part of a wider debate over AI training and copyright law, with companies like OpenAI and Meta arguing that their use of copyrighted material falls under ‘fair use.’

Publishers claim that Anthropic’s actions threaten the licensing market for lyrics, but the court ruled that defining such a market is premature while fair use remains unresolved.

Lee’s decision did not address whether AI training with copyrighted works constitutes fair use, leaving that question open for future legal battles.

Anthropic welcomed the ruling, calling the publishers’ request ‘disruptive and amorphous,’ while the publishers remain confident in their broader case against the AI company.

The lawsuit highlights the growing tension between content creators and AI firms as courts and lawmakers grapple with the legal and ethical implications of training AI on copyrighted material.

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Tech investors shift focus to AI adopters over hardware makers

European companies investing heavily in generative AI must start delivering returns by next year or risk losing investor confidence. While AI stocks have seen significant interest, recent market volatility and recession fears have led to a shift in investment focus.

Many investors are now favouring companies that integrate AI, such as SAP and RELX, over those supplying AI hardware. However, adopters must also prove that AI investments translate into profitability, or they too could fall out of favour.

The launch of DeepSeek in January sparked a tech selloff by offering a low-cost AI model that threatened demand for expensive chips. Hardware firms like ASM International and BE Semiconductor have since suffered sharp declines, while AI adopters have fared better.

SAP, for example, recently overtook Novo Nordisk as Europe’s most valuable company despite only a minor stock dip. Analysts warn that companies promising AI-driven growth must soon demonstrate tangible financial benefits, or investors will reassess their high valuations.

Market patience is wearing thin, with some analysts suggesting 2025 as a key deadline for AI firms to show meaningful impact. An internal Fidelity survey revealed that 72% of analysts expect AI to have no major profitability impact next year, though optimism grows over a five-year horizon.

Investors like Lazard and Schroders stress the need for viable AI applications that generate revenue, while asset managers at Amundi warn that AI firms trading at high multiples could see their valuations adjusted if returns fail to materialise.

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US report highlights China’s growing military capabilities

A US intelligence report has identified China as the top military and cyber threat, warning of Beijing’s growing capabilities in AI, cyber warfare, and conventional weaponry.

The report highlights China’s ambitions to surpass the US as the leading AI power by 2030 and its steady progress towards military capabilities that could be used to capture Taiwan.

It also warns that China could target US infrastructure through cyberattacks and space-based assets.

The findings, presented to the Senate Intelligence Committee, sparked tensions between Washington and Beijing. Chinese officials rejected the report, accusing the US of using outdated Cold War thinking and hyping the ‘China threat’ to maintain military dominance.

China’s foreign ministry also criticised US support for Taiwan, urging Washington to stop backing separatist movements.

Meanwhile, Beijing dismissed accusations that it has failed to curb fentanyl shipments, a key source of US overdose deaths.

The report also notes that Russia, Iran, and North Korea are working to challenge US influence through military and cyber tactics.

While China continues to expand its global footprint, particularly in Greenland and the Arctic, the report points to internal struggles, including economic slowdowns and demographic challenges, that could weaken the Chinese government’s stability.

The intelligence report underscores ongoing concerns in Washington about Beijing’s long-term ambitions and its potential impact on global security.

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China’s AI industry is transforming with open-source models, challenging the OpenAI proprietary approach

China’s AI landscape is witnessing a profound transformation as it embraces open-source large language models (LLMs), largely propelled by the innovative efforts of DeepSeek. The startup’s R1 model, released under the highly permissive ‘MIT License,’ has sparked a significant shift away from proprietary approaches dominated by major American tech firms, paving the way for increased accessibility, collaboration, and innovation.

That transition is likened to an ‘Android moment’ for China’s AI industry, highlighting the sector’s move towards more available and flexible AI development. The ripple effects of this open-source movement are evident across China’s tech giants. Baidu, long a proponent of proprietary models, has announced its shift to open-source by making its AI models, Ernie 4.5 and Ernie X1, freely available and plans to release them as open-source.

The following strategic pivot reflects the competitive pressure of disruptors like DeepSeek, prompting companies to revise their business models to maintain market relevance. Alibaba and Tencent are also joining this trend by open-sourcing their AI offerings, while smaller firms like ManusAI are following suit, embracing the open-source ethos to drive innovation and market presence.

The shift towards open-source models in China starkly contrasts the OpenAI’s continued focus on proprietary strategies bolstered by hefty investments. The open-source trend underscores a growing discourse on the future of AI development, investment, and competitive dynamics, with open-source frameworks emerging as potential harbingers of sustainable growth and inclusive technological advancement.

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