Issue #15

Buffett steps down from Berkshire, scientists can't stop using AI, UK and Europe lag behind Silicon Valley, and more.

News from May 2 - May 9, 2024

Buffett Steps Down from Berkshire

Greg Abel will replace Warren Buffett as the leader of Berkshire Hathaway, a company valued at $865 billion. Abel has been with Berkshire for 25 years and plans to maintain its focus on long-term investments without paying dividends, similar to Buffett's approach. Abel's leadership assurance came during the annual shareholder meeting, reinforcing the company's commitment to its unique culture.

Buffett expressed confidence in Abel's capabilities, noting that Abel manages almost all of Berkshire's operations except for insurance. Abel's background includes a rise from humble beginnings in Edmonton, Alberta, to overseeing Berkshire's non-insurance businesses. His focus on financial details like inventory levels and cash flows has been noted as more rigorous than Buffett's, indicating a meticulous approach to business management.

Buffett: "Greg is handling everything, I don’t know quite how he does it, but we’ve got the right person."

‍Source

Spirit CEO: ‘Airline Industry Rigged’

Spirit Airlines CEO Ted Christie criticized the airline industry structure as heavily skewed in favor of the largest carriers. Speaking from the company's new facility in Dania Beach, Florida, Christie highlighted the challenges smaller airlines face. Christie: "The Big Four—American, Delta, United, and Southwest—control the market, turning profits while smaller carriers struggle."

Following the federal court's decision to block Spirit's $3.8 billion merger with JetBlue on antitrust grounds, Christie voiced strong objections. Christie: "It was a serious misreading of both the evidence and the law."

The failed merger, which contributed to a nearly 10% drop in Spirit's shares, underscores Christie's broader concerns about competitive fairness. He further remarked on the uneven playing field that disadvantages consumers. Christie: "Nearly all the profits of the US airline industry are concentrated in just two companies, creating a rigged game against consumers."

Source

UK Driverless Car Firm Raises $1.05 Billion 

Wayve, a UK artificial intelligence company, has secured $1.05 billion in funding from SoftBank, Microsoft, and Nvidia, setting a record for the largest investment in a European AI firm. The funds are set aside for advancing Wayve's self-driving technology that uses "embodied AI" to learn from real-world environments.

Prime Minister Rishi Sunak: "This investment anchors the UK’s position as an AI superpower."

Despite the significant investment in Wayve, the UK's competitive position in the global AI market is challenged by dominant U.S. and Chinese firms. The UK competition watchdog is investigating big tech firms for potential monopolistic practices. Meanwhile, UK Transport Secretary Mark Harper mentioned that new regulations expected to pass soon will pave the way for self-driving cars on UK roads by 2026.

Source

Bulletin Board

• Microsoft Invested $10B Due to Worries. Emails released during a Department of Justice antitrust probe reveal Microsoft CTO Kevin Scott's concerns about falling behind Google in AI. In 2019, he wrote, "As I dug in to understand the capability gaps between Google and us for model training, I got very, very worried." This led Microsoft to invest $1 billion in OpenAI, a figure that has grown to $10 billion. Source
• Scientists Can't Stop Using AI. Studies reveal a growing trend of AI use in scientific writing. Research from University College London and Stanford suggests that up to 17.5% of papers in certain fields were AI-assisted in 2023. They identified AI-specific language patterns, such as increased use of words like "intricate" and "pivotal." This surge in AI-written content raises concerns about the integrity and accuracy of scientific publications, prompting calls for transparency and caution in the use of AI in scholarly writing. Source 
• Visa Fights Fraud with AI. Visa has introduced a new AI-powered tool, the VAAI Score, to combat enumeration attacks. This technology assesses the risk of fraudulent transactions in real-time, aiding issuers in detecting and blocking suspicious activities. It's part of Visa's enhanced efforts to curb the $1.1 billion fraud loss from such attacks, particularly in card-not-present transactions. Source
• Musk: SpaceX, Starlink Don’t Use AI. Elon Musk revealed at the Milken Global Conference that SpaceX and Starlink "basically use no AI," emphasizing the current limitations of AI technologies for his ventures. Musk: "I'll ask it questions about the Fermi Paradox, about rocket engine design, about electrochemistry. And so far, the AI has been terrible at all those questions." Musk emphasized the need for AI development that truly benefits humanity, advocating for honesty and accuracy in AI responses. Source 
• UK and Europe Lag Behind Silicon Valley. While Silicon Valley giants like General Catalyst and Andreessen Horowitz are raising billions, UK and European startups struggle to match U.S. investment levels. Silicon Valley secures roughly half of global VC funding, with UK and Europe combined receiving only a quarter. This stark contrast extends to company valuations, where U.S. tech leaders like Microsoft and Apple dwarf their European counterparts. The gap underscores differing investment approaches: U.S. investors often bet big on early-stage companies showing customer traction, a practice less common in Europe, leading to a significant disparity in technological and financial growth. Source

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