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A Record Year for M&A; CES Showcases Smarter Homes
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Welcome back and Happy New Year. The hype around artificial intelligence appeared to reach a fever pitch in 2021. Companies in a range of industries last year began touting their use of AI-enabled software in everything from automated customer services to supply chain and inventory management systems, among dozens of other core functions. That momentum shows no sign of easing: IT research and consulting firm Gartner Inc. expects global spending on AI to hit $62.5 billion in 2022, up 21.3% from 2021.
Much of the growth is being driven by the Covid-19 pandemic. Take retailers. On-and-off lockdowns and store closures have led to increased investments by stores in e-commerce, and a growing desire to tap a surge in online customer data. The retail sector is now outpacing banking as the market’s top AI spender, as companies including Home Depot Inc. and Wayfair Inc. turn to the technology for a wider range of operations.
All this activity is sounding alarms for regulators, who are wary of the unfettered use of AI in areas that have given rise to charges of bias, such as recruiting. These and other issues are set to be hashed out in the year ahead.
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People visit the 2021 World Artificial Intelligence Conference in Shanghai.
PHOTO: HU ZHIXUAN/ZUMA PRESS
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Across the global AI market, the past year saw a record number of M&A deals, along with ramped up regulatory efforts to curb its use, among other trends, WSJ’s John McCormick reports.
Here are the top four events whose effects could shape future AI development and usage, according to a handful of AI experts and business executives:
Record M&A: There were about 130 AI mergers and acquisitions in 2021 around the globe with the value of the deals exceeding $28 billion, up from 120 global M&A deals valued at $5 billion in 2020, according to Dealogic, including outsized deals like Microsoft Corp.’s $16 billion acquisition of Nuance Communications Inc.
New regulations. The European Union’s executive arm in April proposed a bill to curb the use of AI for applications like hiring and policing, one of the broadest regulatory efforts to date by a Western government.
Attention, shoppers. The retail sector in 2021 was poised to overtake banking as the top AI spender, and set to grow at a compound annual rate of 25.5% between now and 2025, according to market researcher International Data Corp.
Inventive AI. South Africa in July granted a patent for a beverage container based on fractal geometry that listed an AI system as the inventor.
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CES, which took place entirely online in 2021, kicked off Monday with in-person press events in Las Vegas.
PHOTO: DAVID BECKER/GETTY IMAGES
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Despite a surge in Covid-19 cases, the Consumer Technology Association’s annual tech conference kicks off this week in Las Vegas, with organizers expecting some 75,000 in-person attendees and 2,200 exhibitors, including a line of next-generation AI-enabled products, The Wall Street Journal reports.
Getting cozy. Many new products being introduced this year are designed to help users relax and decompress at home, such as smart beds that can nudge you when it is time to wake up, bathtubs that maintain consistent water temperature and air purifiers that also add fragrances to a room, as well as sensor-assisted products like lamps, toilets and bathtubs that respond based on time of day, air quality or who is in the room.
Family matters. CES 2022 will also have plenty of tech for “sandwich generation” users taking care of kids and parents, including an AI-equipped baby monitor that can detect a covered face or a rollover, room sensors to track the movement of seniors, and health and activity wearables designed to meet the needs of every age group.
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$11.8 billion
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The estimated amount that the global retail sector spent on AI in 2021, up from $9.36 billion in 2020, according to market researcher International Data Corp.
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SenseTime said it raised around $700 million from its initial public offering, at the low end of the price range.
PHOTO: -/AGENCE FRANCE-PRESSE/GETTY IMAGES
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SenseTime's Profit Crunch
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Chinese AI company SenseTime overcame headwinds to go public, becoming the first of what are known as China’s four AI dragons to be publicly traded, but it now faces an even bigger challenge to find a path to profitability, The Wall Street Journal reports.
Big raise. SenseTime, which develops facial-recognition technology, said last week that it raised around $700 million from its initial public offering, at the low end of the price range.
Rocky start. The company was forced to delay its IPO last month after the U.S. government added SenseTime to an investment blacklist, alleging that the company’s technology was used in the oppression of mainly Muslim ethnic minorities in China’s Xinjiang region.
Greater scrutiny. While AI is certainly a technology that could ride policy tailwinds, Beijing’s increasing scrutiny of data and algorithms could pose uncertainties to its business.
Concentration. Another problem is that SenseTime’s five biggest customers made up nearly 60% of its revenue in the first six months of 2021, with the largest customer alone accounting for 23%.
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Chinese Quant Fund Issues Apology
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High-Flyer Quant, one of China’s largest managers of quant funds, apologized to clients last week after a rare bout of underperformance from its AI system designed to pick domestic yuan-denominated stocks, design trading algorithms and hedge investment risks, The Wall Street Journal reports.
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PHOTO: MARK SCHIEFELBEIN/ASSOCIATED PRESS
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Losing streak. After producing above stock-market benchmark returns in recent years, by 50 percentage points in some cases, more than 100 of High-Flyer’s products in the past four months declined by more than 10% from their recent peaks to troughs.
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But don’t blame us. High-Flyer last week acknowledged on its WeChat account that some products have underperformed benchmark indexes, blaming its AI system for failing to time trades strategically.
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“It’s overused, misunderstood and presumed to be always good.”
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— Zendesk Inc. CIO Colleen Berube on the misuse of the term "artificial intelligence."
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Contract chip maker GlobalFoundries, based in Malta, N.Y., expects the labor market to remain tight for several years.
PHOTO: GABBY JONES FOR THE WALL STREET JOURNAL
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Chipmakers vie for dwindling talent. The world’s largest chip makers are fighting for workers to staff the billion-dollar-plus facilities that they are building around the world to address a shortage of semiconductors. (The Wall Street Journal)
Squaring away energy. An Italian AI startup plans to resurrect a hydropower plant designed more than 125 years ago by Albert Einstein’s father. (The Wall Street Journal)
Real-world AI model. Lior Cole, a 20-year-old fashion model studying information science at Cornell University, is developing an AI-powered tool that analyzes teachings in the Torah, dubbed Robo Rabbi. (Vogue)
Korean labeling startup to expand. AIMMO, which uses AI to label and categorize image, video, sound, text and sensor fusion data, this week said it raised $12 million in a Series A funding round to help spur global expansion plans. (TechCrunch)
Connecting the dots. Skin-care companies are increasingly touting machine learning and other AI tools as a way to manage acne outbreaks, collecting data via online questionnaires about users’ allergies, current product routine, medications and lifestyle, as well as photos and mail-in skin tests. (Allure)
Feds to review recruiting tools. U.S. government officials are eyeing closer scrutiny of the way AI is being used by employers to sift through job applications and other recruiting efforts, taking their cue from New York City’s recent passage of one of the toughest U.S. laws regulating the use of AI tools in the workplace. (Bloomberg Law)
Latin firms to go big on AI. Roughly 40% of the largest organizations across Latin America will have some form of AI technology in place by 2023, according to research firm International Data Corp. (ZDNet)
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A federal jury convicted Elizabeth Holmes, the startup founder who claimed to revolutionize blood testing, on four of 11 charges that she conducted a yearslong fraud scheme against investors while running Theranos Inc., which ended up as one of Silicon Valley’s most notorious implosions. (The Wall Street Journal)
Apple Inc. briefly touched $3 trillion in market value, making it the first U.S. company to do so. Shares of the iPhone maker crossed that level intraday when they topped $182.856 Monday afternoon, reaching $182.88, according to FactSet. (The Wall Street Journal)
Tesla Inc. has opened a new showroom in Xinjiang, the remote region where Chinese authorities are carrying out a campaign of forcible assimilation against religious minorities that has become a public-relations quagmire for Western brands. (The Wall Street Journal)
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