Edition # 10

Dear Readers,

Welcome to another edition of Digital Data Pulse. In this issue, we begin with a fascinating report on Mapping the World's Readiness for Artificial Intelligence, revealing a stark contrast between the preparedness of developing countries and their developed counterparts. We also spotlight a groundbreaking AI tool that predicts responses to cancer therapy, promising advancements in medical treatment. On the regulatory front, significant developments are unfolding: the EU has postponed compliance deadlines for its AI Act, granting businesses additional time to adapt, while Japan is striving to become the most AI-friendly nation, countering stringent EU regulations. In response to these regulatory shifts, Apple has delayed the launch of its AI-powered features in Europe, citing EU tech rules, and YouTube is taking a firm stance against AI-generated true crime deepfakes. Meanwhile, in the US, the 5th Circuit has scrapped plans to implement an AI rule following objections from lawyers. Additionally, Big Tech faces intensified antitrust scrutiny, with Apple and Microsoft already under investigation and the DOJ and FTC now targeting Nvidia. Lastly, we explore the dynamic landscape of digital trade, as highlighted by a WTO High-level panel discussing development opportunities within the digital economy, and the UK’s efforts to dismantle digital trade barriers.?

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AI

Mapping the World's Readiness for Artificial Intelligence Shows Prospects Diverge

IMF Blog: New AI Preparedness Index Dashboard tracks 174 economies based on their digital infrastructure, human capital, labor policies, innovation, integration and regulation.

Artificial intelligence can increase productivity, boost economic growth, and lift incomes. However, it could also wipe out millions of jobs and widen inequality.

It could endanger 33 percent of jobs in advanced economies, 24 percent in emerging economies, and 18 percent in low-income countries. But, on the brighter side, it also brings enormous potential to enhance the productivity of existing jobs for which AI can be a complementary tool and to create new jobs and even new industries.

Most emerging market economies and low-income countries have smaller shares of high-skilled jobs than advanced economies, and so will likely be less affected and face fewer immediate disruptions from AI. At the same time, many of these countries lack the infrastructure or skilled workforces needed to harness AI’s benefits, which could worsen inequality among nations.

As the Chart of the Week shows, wealthier economies tend to be better equipped for AI adoption than low-income countries.?

Measuring preparedness is challenging, partly because the institutional requirements for economy-wide integration of AI are still uncertain. As the dashboard shows, different countries are at different stages of readiness in leveraging the potential benefits of AI and managing the risks.

Under most scenarios, AI will likely worsen overall inequality, a troubling trend that policymakers can work to prevent. To this end, the dashboard is a response to significant interest from our stakeholders in accessing the index. It is a resource for policymakers, researchers, and the public to better assess the AI preparedness and, importantly, to identify the actions and design the policies needed to help ensure that the rapid gains of AI can benefit all.

For policymakers, those in advanced economies should expand social safety nets, invest in training workers, and prioritize AI innovation and integration. Coordinating with one another globally, these countries also should strengthen regulation to protect people from potential risks and abuses and build trust in AI. The policy priority for emerging market and developing economies should be to lay a strong foundation by investing in digital infrastructure and digital training for workers.

AI tool predicts response to cancer therapy

NIH: Scientists have created an AI tool that uses routine clinical data to predict how cancer patients will respond to immunotherapy drugs known as checkpoint inhibitors. Developed by researchers at the NIH's National Cancer Institute and Memorial Sloan Kettering Cancer Center, the new AI scoring system, LORIS, relies on six readily available biomarkers, including tumor mutational burden and clinical features such as age, cancer type, and blood tests. LORIS has demonstrated greater accuracy in predicting patient responses and survival rates compared to existing models. This advancement has the potential to significantly improve personalized cancer treatment, although larger clinical studies are needed for further validation. This breakthrough highlights the transformative power of AI in oncology, paving the way for more precise and personalized cancer treatments.

The EU delays compliance deadlines for its AI Act, giving businesses more time to adapt.?

OC: ? The compliance deadlines for the European Union's new AI legislation have been revised due to a delay in its publication, even though the text has been finalized. The AI Act is set to become binding law 20 days after its publication in the Official Journal, now anticipated for early August. This postponement provides businesses with additional time to comprehend and prepare for the upcoming compliance obligations and to await further guidance from the AI Office.

Japan Aims to Become Most AI-Friendly Nation, Countering EU Regulations

Tech Times: ? Japan's recent actions on artificial intelligence indicate a shift from its previously laissez-faire stance, with legislators from the ruling Liberal Democratic Party (LDP) advocating for a modest regulatory framework. Masaaki Taira, leader of the LDP AI project team, stated that Japan is not inclined toward strict regulations and aims for minimal interference, maintaining a "slightly loose" AI policy compared to the EU. This flexible approach is designed to attract talent and finance.

Recent legislation, such as the app store regulation bill, underscores Japan's support for innovation by prioritizing competition over heavy regulation. Despite some criticism, the AI Strategic Council continues to examine AI-related risks and consider stricter controls in response to the EU's AI Act.?

Experts note that Japan's lenient AI regulations have attracted significant investments from tech giants like Microsoft, Google, and Amazon. These developments highlight Japan's growing appeal as a hub for AI innovation, balancing the need for a policy that fosters growth while navigating global competitive pressures.

Apple to delay launch of AI-powered features in Europe, blames EU tech rules:

Reuters: ? Apple has announced it will delay the launch of three new artificial intelligence features in the European Union due to compliance with the EU's Digital Markets Act (DMA). The delayed features, Phone Mirroring, SharePlay Screen Sharing enhancements, and Apple Intelligence, are designed to enhance AI capabilities and integration across its devices. These features were originally intended for the iPhone 15 Pro, iPhone 15 Pro Max, and devices with the M1 chip and later versions.

The U.S. tech giant expressed concerns that the DMA's interoperability requirements could compromise user privacy and data security. Apple emphasized its commitment to working with the European Commission to find a solution that would allow these features to be introduced in the EU without risking user safety. This decision comes as Apple aims to bolster its AI offerings amid declining sales, underscoring the ongoing challenges tech companies face in navigating regulatory landscapes while advancing technology.

YouTube is cracking down on AI-generated true crime deepfakes

Verge: The platform’s harassment and cyberbullying policy will prohibit content that “realistically simulates” deceased children and victims of crimes or deadly events.

YouTube is updating its cyberbullying and harassment policies and will no longer allow content that “realistically simulates” minors and other victims of crimes narrating their deaths or the violence they experienced.

The update appears to take aim at a genre of content in true crime circles that creates disturbing AI-powered depictions of victims — including children — that then describe the violence against them. Some of the videos use AI-generated, childlike voices to describe gruesome violence that occurred in high-profile cases. Families of victims depicted in the videos have called the content “disgusting.”

YouTube’s policy update will result in a strike that removes the content from a channel and also temporarily limits what a user can do on the platform. A first strike, for example, limits users from uploading videos for a week, among other things. If the policy is violated again within 90 days, penalties increase, with the eventual possibility of having the entire channel removed.

Platforms including YouTube have in recent months unveiled AI-driven creation tools, and along with them new policies around synthetic content that could confuse users. TikTok, for one, now requires creators to label AI-generated content as such. And YouTube itself announced a strict policy around AI voice clones of musicians — with another set of looser rules for everyone else.

5th Circuit scraps plans to adopt AI rule after lawyers object

Reuters: The 5th U.S. Circuit Court of Appeals in New Orleans announced it would not adopt a pioneering rule aimed at regulating the use of generative AI by lawyers. Initially proposed in November, the rule intended to ensure attorneys using AI tools like OpenAI's ChatGPT verified the accuracy of citations and legal analysis in their filings. Non-compliance could have led to sanctions and the striking of submissions.

Had it been implemented, the 5th Circuit would have become the first of the 13 federal appeals courts to specifically govern AI use, though some district courts and judges have already adopted similar policies. The proposal emerged amid concerns over AI "hallucinations," where AI-generated briefs included citations to non-existent cases. However, public comments from lawyers largely opposed the rule, arguing that existing regulations were sufficient to maintain the accuracy of court filings.

In its notice, the court emphasized that parties and counsel are still responsible for ensuring the truthfulness and accuracy of their filings, as current rules require. The court reiterated that claiming "I used AI" will not excuse sanctionable offenses. This decision underscores the ongoing debate over the integration of AI in legal practice and the responsibility of lawyers to uphold standards of accuracy and reliability.

Big Tech

Apple becomes first US tech giant charged under Europe’s new antitrust law — and faces billions in fines

New York Post: Apple has become the first US tech giant to be charged under the European Union’s tough new antitrust tech law — potentially exposing it to billions of dollars in fines for allegedly stifling developers in its App Store.

The iPhone maker has allegedly breached the EU’s Digital Markets Act by preventing app developers from easily steering customers to cheaper offers outside the App Store, the European Commission said Monday.

If confirmed to have breached the law, Apple could be fined up to 10% of its total worldwide revenue — a figure that could amount to tens of billions of dollars, as the company’s global revenue in 2023 totaled $383 billion.

Microsoft hit with EU antitrust charge over Teams app, risks hefty fine

Reuters: European Union regulators have charged Microsoft with violating antitrust rules by bundling its Teams video conferencing software with other productivity tools like Word and Excel, thereby stifling competition. The case originated during the Covid-19 pandemic, when remote work increased the reliance on video conferencing and collaboration tools such as Zoom, Slack, and Teams. In 2020, Slack, now owned by Salesforce, filed a complaint alleging that Microsoft's bundling practices were anti-competitive, prompting the initial E.U. investigation.

Regulators argue that Microsoft gained an unfair "distribution advantage" by not providing customers with the option to purchase Teams separately from other software. Additionally, rivals have faced difficulties in making their video conferencing services compatible with Microsoft's software.

In response, Microsoft stated it had taken steps to address the issue, including agreeing to sell Teams separately from its Office products last year. However, the European Commission deemed these measures "insufficient" and called for further unspecified changes to restore competition.

Chip darling Nvidia takes its turn in the antitrust hot seat

MSN: The Biden administration has prioritized revitalizing high-value manufacturing in the U.S., with a focus on AI chip makers like Nvidia, which has recently surpassed Apple in market value. This surge has drawn the attention of antitrust enforcers.

Traditionally, the Justice Department and FTC have targeted internet giants such as Google and Amazon in their efforts to curb Big Tech abuses. Nvidia, the leading producer of chips for training advanced AI models, has now emerged as a key player in the AI boom, significantly increasing its market power and making substantial gains for its shareholders.

Mizuho Securities estimates that Nvidia controls at least 70 percent of the market for AI chips used in training large-language models like ChatGPT, with competitors like Intel, Advanced Micro Devices in the U.S., and Huawei in China lagging behind. While U.S. antitrust laws require evidence of both monopoly power and anti-competitive conduct, it remains unclear if Nvidia has engaged in any illegal abuse of its market dominance.

Digtial Trade

High-level panel highlights development opportunities offered by the digital economy

WTO: ?At the Aid for Trade Global Review on 27 June, a high-level panel on "Harnessing the benefits of digital trade" explored the potential of digital trade to drive growth and innovation in developing economies. Speakers emphasized the rapid expansion of digitally delivered services and the crucial need for building the infrastructure necessary for countries to engage in the digital economy. The panel discussed the challenges and opportunities for developing economies, particularly in Africa, to harness their digital trade potential. Key areas of focus included enhancing digital connectivity, creating a supportive regulatory environment, and strengthening trade capacity building.

In her opening remarks, WTO Director-General Ngozi Okonjo-Iweala highlighted the transformative potential of the digital economy, stating, "The digital economy presents immense opportunities for growth, innovation, development, and inclusivity. Trade in digitally delivered services is the fastest-growing segment of global trade, expanding at an average of 8% per year since 2005 and quadrupling in value to reach $4.25 trillion last year. This growth surpasses that of trade in goods and other services and holds particular promise for Africa and other developing regions."

UK seeks to break down digital trade barriers, says minister

Reuters: Anne-Marie Trevelyan, Britain's newly appointed trade minister, is set to outline plans to dismantle digital trade barriers to support UK businesses in exporting their services. In a speech to London Tech Week, she will emphasize the importance of digital trade and the challenges British businesses face due to protectionist measures in other countries. Trevelyan aims to create opportunities for UK businesses and consumers by advocating for the removal of these barriers, which she believes will enhance productivity, job creation, and economic growth.

Traditionally, trade deals have focused on eliminating barriers to goods trade. However, post-Brexit, the UK is prioritizing agreements that also address digital trade and establish common standards in professional services, aiming to stimulate growth in the service sector.

See you in the next edition!