Microsoft Corp

Latest story

150 Shares189 Views

Biden to Announce A.I. Center in Wisconsin as Part of Economic Agenda

by

The president’s visit will highlight the investment by Microsoft and point to a failed Foxconn project negotiated by Donald J. Trump.President Biden will travel to Wisconsin on Wednesday to announce the creation of an artificial intelligence data center, highlighting one of his administration’s biggest economic accomplishments in a crucial battleground state — and pointing up a significant failure by his immediate predecessor and 2024 challenger.At a technical college in Racine, Mr. Biden will announce that Microsoft will invest $3.3 billion to build the center, which the tech giant estimates will create 2,300 union construction jobs and 2,000 permanent jobs, according to the White House. The project is part of Mr. Biden’s “Investing in America” agenda, which has focused on bringing billions of private-sector dollars into manufacturing and industries such as clean energy and artificial intelligence.In his fourth trip to Wisconsin this year, Mr. Biden will continue an aggressive campaign to paint a contrast between him and former President Donald J. Trump, the presumptive Republican nominee, who is in the fourth week of his criminal trial in connection with payments to a pornographic film star. While in Wisconsin, Mr. Biden will also attend a campaign event, where he will speak to Black voters about the stakes in the election.In a fact sheet released by the White House, the administration said that Mr. Biden’s visit to Racine would showcase “a community at the heart of his commitment to invest in places that have been historically overlooked or failed by the last administration’s policies.”The Microsoft data center will be built on grounds where Mr. Trump, as president, announced in 2017 that Foxconn, the Taiwanese electronics manufacturer, would build a $10 billion factory for making LCD panels. The Foxconn factory was supposed to be one of Mr. Trump’s marquee domestic manufacturing victories: the first major factory run by the electronics supplier in Wisconsin, with a promised 13,000 jobs.Instead, the ill-fated project never materialized as promised, even after receiving millions in subsidies and bulldozing homes and farms to build the factory. The company abandoned its plans and produced only a small fraction of the promised jobs, dealing a major blow to Mr. Trump’s pledge to revitalize American manufacturing as well as to Racine, which lost about 1,000 manufacturing jobs during his four years in office. The information issued by the White House ahead of Mr. Biden’s visit said the new data center would add to the more than 4,000 jobs created in Racine since the president took office.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

More stories

  • 75 Shares169 Views

    in Economy

    Can a Tech Giant Be Woke?

    by

    The December day in 2021 that set off a revolution across the videogame industry appeared to start innocuously enough. Managers at a Wisconsin studio called Raven began meeting one by one with quality assurance testers, who vet video games for bugs, to announce that the company was overhauling their department. Going forward, managers said, the lucky testers would be permanent employees, not temps. They would earn an extra $1.50 an hour.It was only later in the morning, a Friday, that the catch became apparent: One-third of the studio’s roughly 35 testers were being let go as part of the overhaul. The workers were stunned. Raven was owned by Activision Blizzard, one of the industry’s largest companies, and there appeared to be plenty of work to go around. Several testers had just worked late into the night to meet a looming deadline.“My friend called me crying, saying, ‘I just lost my job,’” recalled Erin Hall, one of the testers who stayed on. “None of us saw that coming.”The testers conferred with one another over the weekend and announced a strike on Monday. Just after they returned to work seven weeks later, they filed paperwork to hold a union election. Raven never rehired the laid-off workers, but the other testers won their election in May 2022, forming the first union at a major U.S. video game company.It was at this point that the rebellion took a truly unusual turn. Large American companies typically challenge union campaigns, as Activision had at Raven. But in this case, Activision’s days as the sole decision maker were numbered. In January 2022, Microsoft had announced a nearly $70 billion deal to purchase the video game maker, and the would-be owners seemed to take a more permissive view of labor organizing.The month after the union election, Microsoft announced that it would stay neutral if any of Activision’s roughly 7,000 eligible employees sought to unionize with the Communications Workers of America — meaning the company would not try to stop the organizing, unlike most employers. Microsoft later said that it would extend the deal to studios it already owned.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

  • 113 Shares99 Views

    in Economy

    Microsoft Tops Apple to Become Most Valuable Public Company

    by

    The shift is indicative of the importance of new artificial intelligence technology to Silicon Valley and Wall Street investors.For more than a decade, Apple was the stock market’s undisputed king. It first overtook Exxon Mobil as the world’s most valuable public company in 2011 and held the title almost without interruption.But a transfer of power has begun.On Friday, Microsoft surpassed Apple, claiming the crown after its market value surged by more than $1 trillion over the past year. Microsoft finished the day at $2.89 trillion, higher than Apple’s $2.87 trillion, according to Bloomberg.The change is part of a reordering of the stock market that was set in motion by the advent of generative artificial intelligence. The technology, which can answer questions, create images and write code, has been heralded for its potential to disrupt businesses and create trillions of dollars in economic value.When Apple replaced Exxon, it ushered in an era of tech supremacy. The values of Apple, Amazon, Facebook, Microsoft and Google dwarfed former market leaders like Walmart, JPMorgan Chase and General Motors.The tech industry still dominates the top of the list, but the companies with the most momentum have put generative A.I. at the forefront of their future business plans. The combined value of Microsoft, Nvidia and Alphabet, Google’s parent company, increased by $2.5 trillion last year. Their performances outshined Apple, which posted a smaller share price increase in 2023.“It simply comes down to gen A.I.,” said Brad Reback, an analyst at the investment bank Stifel. Generative A.I. will have an impact on all of Microsoft’s businesses, including its largest, he said, while “Apple doesn’t have much of an A.I. story yet.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber?  More

  • 100 Shares149 Views

    in Economy

    Microsoft Agrees to Remain Neutral in Union Campaigns

    by

    The pledge is unprecedented for Big Tech and makes it easier for roughly 100,000 workers to unionize.Punctuating a year of major gains for organized labor, Microsoft has announced that it will stay neutral if any group of U.S.-based workers seeks to unionize.Roughly 100,000 workers would be eligible to unionize under the framework, which was disclosed Monday by Microsoft’s president, Brad Smith, and the A.F.L.-C.I.O. president, Liz Shuler, during a forum at the labor federation’s headquarters in Washington.The deal effectively broadens a neutrality agreement between Microsoft and a large union, the Communications Workers of America, under which hundreds of the company’s video game workers unionized early this year without a formal National Labor Relations Board election. Officially, it provides a framework in which any group of Microsoft workers can negotiate their own neutrality agreements with similar terms.As part of Monday’s announcement, Microsoft and the A.F.L.-C.I.O. said they would collaborate to resolve issues that arise from the adoption of artificial intelligence in the workplace.Mr. Smith and Ms. Shuler said the partnership would include meetings in which artificial intelligence experts from Microsoft brief labor leaders and workers on developments in the field. Microsoft’s experts will also seek input from workers so they can develop technology in a way that addresses their concerns, such as the risk of job elimination.The two sides said they would work together to help enact policies that would prepare workers for jobs that incorporate artificial intelligence.“Never before in the history of these American tech giants, dating back 50 years or so ago, has one of these companies made a broad commitment to labor rights,” Ms. Shuler said at the forum. “It is historic. Not only have they made a commitment, they formalized it and put it in writing.”Liz Shuler, president of A.F.L.-C.I.O., noted polling that found widespread concern among workers about losing their jobs because of artificial intelligence.Susan Walsh/Associated PressWorkers’ anxiety over artificial intelligence appears to have grown over the past few years. Hollywood writers and actors cited concerns about A.I. as a key reason for their monthslong strikes this year, while Ms. Shuler pointed to recent polling showing widespread concern among workers that artificial intelligence could cost them their jobs.“I can’t sit here and say it will never displace a job,” Mr. Smith said at the forum, alluding to artificial intelligence. “I don’t think that would be honest.” But he added that “the key is to try to use it to make jobs better,” saying the technology could eliminate tasks that people consider tedious.The unveiling of the A.I. initiative comes a few weeks after the board of the start-up OpenAI, which makes ChatGPT, fired the company’s chief executive, Sam Altman, only to accept his reinstatement days later. The episode added to widespread concerns over how to ensure that companies develop and deploy artificial intelligence safely.Microsoft is OpenAI’s biggest investor and played a role in reinstating Mr. Altman.Asked if the OpenAI controversy was an impetus for the new partnership with organized labor, Mr. Smith demurred and said the labor initiative had been in the works for months.“I wouldn’t say what happened in the board room at OpenAI changed it,” he said in an interview after Monday’s forum. “But it raised questions about how A.I. is governed and perhaps it gave even more credence to the kind of partnership we’re announcing today.”When Microsoft announced a neutrality agreement with the communications workers union in June 2022, the offer was conditional: The company was in the process of acquiring the video game maker Activision Blizzard for nearly $70 billion. Microsoft pledged to stay neutral in union elections at Activision if the acquisition succeeded. (The acquisition has since been completed.)The key to artificial intelligence, said Brad Smith, Microsoft’s president, is “to try to use it to make jobs better.”Michael A. McCoy for The New York TimesA few months later, when roughly 300 workers sought to unionize at ZeniMax Media, a video game company owned by Microsoft, Microsoft agreed to abide by the neutrality agreement in that case as well. The agreement allowed them to indicate their preference for a union either by signing authorization cards or anonymously through an electronic platform, a more efficient process than an N.L.R.B. election.The 300 employees unionized — a rarity in Big Tech — and are negotiating a labor contract that includes language restricting the use of A.I. in their workplace.The Communications Workers of America is one of several dozen unions affiliated with the A.F.L.-C.I.O., the country’s largest labor federation. After the ZeniMax campaign, communications union officials believed that Microsoft would probably agree to stay neutral if the union sought to organize workers elsewhere at the company. But Microsoft had never explicitly agreed to do so beyond Activision or ZeniMax. More

  • 150 Shares129 Views

    in Economy

    The Upshot of Microsoft’s Activision Deal: Big Tech Can Get Even Bigger

    by

    President Biden’s top antitrust officials have used novel arguments over the past few years to stop tech giants and other large companies from making deals, a strategy that has had mixed success.But on Friday, when Microsoft closed its blockbuster $69 billion acquisition of the video game publisher Activision Blizzard after beating back a federal government challenge, the message sent by the merger’s completion was incontrovertible: Big Tech can still get bigger.“Big Tech companies will certainly be reading the tea leaves,” said Daniel Crane, a law professor at the University of Michigan. “Smart money says merge now while the merging is good.”Microsoft’s purchase of Activision was the latest deal to move forward after a string of failed challenges to mergers by the Federal Trade Commission and the Justice Department, which are also confronting the big tech companies through lawsuits arguing they broke antimonopoly laws. Leaders at the two agencies had tried to block at least 10 other deals over the past two years, promising to dislodge longstanding ideas from antitrust law that they said had protected behemoths like Microsoft, Google and Amazon.But their efforts ran headlong into skeptical courts, largely leaving those core assumptions untouched. In the case of Microsoft’s Activision deal, the idea that the F.T.C. questioned was a “vertical” transaction, which refers to mergers between firms that are not primarily direct competitors. Regulators have rarely sued to block such deals, figuring that they generally do not create monopolies.Yet “vertical” deals have been especially common in the tech industry, where companies like Meta, Apple and Amazon have sought to grow and protect their empires by spreading into new business lines.In 2017, for instance, Amazon bought the high-end grocery chain Whole Foods for $13.4 billion. In 2012, Meta acquired the photo-sharing app Instagram for $1 billion and then shelled out nearly $19 billion for the messaging service WhatsApp in 2014. Of the 24 deals worth more than $1 billion completed by the tech giants from 2013 to mid-August of this year, 20 were vertical transactions, according to data provided by Dealogic.The sealing of the Microsoft-Activision deal has buttressed the notion that vertical deals generally are not anticompetitive and can still go through relatively unscathed.“There continues to be the presumption that vertical integration can be a healthy phenomena,” said William Kovacic, a former chair of the F.T.C. The F.T.C. is proceeding with its challenge to the Microsoft-Activision deal even as it has closed, said Victoria Graham, a spokeswoman for the agency, who added that the acquisition was a “threat to competition.” The Justice Department declined to comment. The White House did not immediately have a comment.The idea that vertical transactions were less likely to harm competition than combinations of direct rivals has been ingrained since the late 1970s. In the ensuing decades, the Justice Department and F.T.C. took no challenges to vertical deals to court, instead reaching settlements that allowed companies to proceed with their deals if they changed practices or divested parts of their business.Then, in 2017, the Justice Department sued to block the $85.4 billion merger between the phone giant AT&T and the media company Time Warner, in the agency’s first attempt to stop a vertical deal in decades. A judge ruled against the challenge in 2018, saying he did not see enough evidence of anticompetitive harms from the union of companies in different industries.Mr. Biden’s top antitrust officials — Lina Khan, the F.T.C. chair, and Jonathan Kanter, the top antitrust official at the Justice Department — have been even more aggressive in challenging vertical mergers since they were appointed in 2021.That year, the F.T.C. sued to stop the chip maker Nvidia from buying Arm, which licenses chip technology, and the companies abandoned the deal. In January 2022, the F.T.C. announced it would block Lockheed Martin’s $4.4 billion acquisition of Aerojet Rocketdyne Holdings, a missile propulsion systems maker. The companies dropped their merger.But judges rejected many of their efforts for lack of evidence and denied Ms. Khan and Mr. Kanter a courtroom win that would have set new precedent. In 2022, after the D.O.J. sued to block UnitedHealth Group’s acquisition of Change Healthcare, a judge ruled against the agency.Lina Khan, the chair of the Federal Trade Commission, challenged Microsoft’s deal for Activision last year. Tom Brenner for The New York TimesThe F.T.C.’s move to block Microsoft’s purchase of Activision last year was a bold effort by Ms. Khan, given that the two companies do not primarily compete with one another. The agency argued that Microsoft, which makes the Xbox gaming console, could harm consumers and competition by withholding Activision’s games from rival consoles and would also use the deal to dominate the young market for game streaming.To show that would not be the case, Microsoft offered to make one of Activision’s major game franchises, Call of Duty, available to other consoles for 10 years. The company also reached a settlement with the European Union, promising to make Activision titles available to competitors in the nascent market for game streaming, which allowed the deal to go through.In July, a federal judge ultimately ruled that the F.T.C. didn’t provide enough evidence that Microsoft intended to forestall competition through the deal and that the software giant’s concession eliminated competition concerns.The agencies are “facing judges who have said 40 years of economics show that vertical mergers are good,” said Nancy Rose, a professor of applied economics at M.I.T. with an expertise in antitrust, who is among a group of scholars who say vertical deals can be harmful to competition. She said the agencies should not back down from challenging vertical mergers, but that regulators would need to be careful to choose cases they can prove with an abundance of evidence.Ms. Khan and Mr. Kanter have said they are willing to take risks and lose lawsuits to expand the boundaries of the law and spark action in Congress to change antitrust rules. Ms. Khan has noted that the F.T.C. has successfully stopped more than a dozen mergers.Mr. Kanter has said that challenges to mergers from the Justice Department and the F.T.C. have deterred problematic deals.“There are fewer problematic mergers that are coming to us in the first place,” he said in a speech at the American Economic Liberties Project, a left-leaning think tank, in August.Still, bigger companies that have the resources to fight back will probably feel more confident challenging regulators after the Microsoft-Activision deal, antitrust lawyers said. The aggressive posture by regulators has simply become the cost of doing business, said Ryan Shores, who led tech antitrust investigations at the D.O.J. during the Trump administration and is now a partner at the law firm Cleary Gottlieb.“A lot of companies have come to the realization that if they have a deal they want to get through, they have to be prepared to litigate,” he said. More

  • 138 Shares129 Views

    in Economy

    Tech Firms Once Powered New York’s Economy. Now They’re Scaling Back.

    by

    For much of the last two decades, including during the pandemic, technology companies were a bright spot in New York’s economy, adding thousands of high-paying jobs and expanding into millions of square feet of office space.Their growth buoyed tax revenue, set up New York as a credible rival to the San Francisco Bay Area — and provided jobs that helped the city absorb layoffs in other sectors during the pandemic and the 2008 financial crisis.Now, the technology industry is pulling back hard, clouding the city’s economic future.Facing many business challenges, large technology companies have laid off more than 386,000 workers nationwide since early 2022, according to layoffs.fyi, which tracks the tech industry. And they have pulled out of millions of square feet of office space because of those job cuts and the shift to working from home.That retrenchment has hurt lots of tech hubs, and San Francisco has been hit the hardest with an office vacancy rate of 25.6 percent, according to Newmark Research.New York is doing better than San Francisco — Manhattan has a vacancy rate of 13.5 percent — but it can no longer count on the technology industry for growth. More than one-third of the roughly 22 million square feet of office space available for sublet in Manhattan comes from technology, advertising and media companies, according to Newmark.Consider Meta, which owns Facebook and Instagram. It is now unloading a big chunk of the more than 2.2 million square feet of office space it gobbled up in Manhattan in recent years after laying off around 1,700 employees this year, or a quarter of its New York State work force. The company has opted not to renew leases covering 250,000 square feet in Hudson Yards and for 200,000 square feet on Park Avenue South.Spotify is trying to sublet five of the 16 floors it leased six years ago in 4 World Trade Center, and Roku is offering a quarter of the 240,000 square feet it had taken in Times Square just last year. Twitter, Microsoft and other technology companies are also trying to sublease unwanted space.“The tech companies were such a big part of the real estate landscape during the last five years,” said Ruth Colp-Haber, the chief executive of Wharton Property Advisors, a real estate brokerage. “And now that they seem to be cutting back, the question is: Who is going to replace them?”Ms. Colp-Haber said it could take months for bigger spaces or entire floors of buildings to be sublet. The large amount of space available for sublet is also driving down the rents that landlords are able to get on new leases.“They are going to undercut every landlord out there in terms of pricing, and they have really nice spaces that are already all built out,” she said, referring to the tech companies.The tech sector has been a driver of New York’s economy since the late-90s dot-com boom helped to establish “Silicon Alley” south of Midtown. Then, after the financial crisis, the expansion of companies like Google supported the economy when banks, insurers and other financial firms were in retreat.Spotify is trying to sublet five of the 16 floors it leased six years ago in 4 World Trade Center, right.George Etheredge for The New York TimesSmall and large tech companies added 43,430 jobs in New York in the five years through the end of 2021, a 33 percent gain, according to the state comptroller. And those jobs paid very well: The average tech salary in 2021 was $228,620, nearly double the average private-sector salary in the city, according to the comptroller.The growth in jobs fueled demand for commercial space, and tech, advertising and media companies accounted for nearly a quarter of the new office leases signed in Manhattan in recent years, according to Newmark.Microsoft and Spotify declined to comment about their decision to sublet space. Twitter and Roku did not respond to requests for comment. Meta said in a statement that it was “committed to distributed work” and was “continuously refining” its approach.A few big tech companies are still expanding in New York.Google plans to open St. John’s Terminal, a large office near the Hudson River in Lower Manhattan, early next year. Including the terminal, Google will own or lease around seven million square feet of office space in New York, up from roughly six million today, according to a company representative. (Google leases more than one million square feet of that space to other tenants.) The company has more than 12,000 employees in the New York area, up from over 10,000 in 2019.Amazon, which in 2019 canceled plans to build a large campus in Queens after local politicians objected to the incentives offered to the company, has nevertheless added 200,000 square feet of office space in New York, Jersey City and Newark since 2019. The company will have added roughly 550,000 square feet of office space later this summer, when it opens 424 Fifth Avenue, the former Lord & Taylor department store, which it bought in 2020 for $1.15 billion.“New York provides a fantastic, diverse talent pool, and we’re proud of the thousands of jobs we’ve created in the city and state over the past 10 years across both our corporate and operations functions,” Holly Sullivan, vice president of worldwide economic development at Amazon, said in a statement.And though many tech companies continue to let employees work from home for much of the week, they are also trying to woo workers back to the office, which could help reduce the need to sublet space.Salesforce, a software company that has offices in a tower next to Bryant Park, said it was not considering subletting its New York space.“Currently I’m facing the opposite problem in the tower in New York,” said Relina Bulchandani, head of real estate for Salesforce. “There has been a concerted effort to continue to grow the right roles in New York because we have a very high customer base in New York.”New York is and will remain a vibrant home for technology companies, industry representatives said.“I have not heard of a single tech company leaving, and that matters,” said Julie Samuels, the president of TECH:NYC, an industry association. “If anything, we are seeing less of a contraction in New York among tech leases than they are seeing in other large cities.”Google plans to open St. John’s Terminal, right, a new campus near the Hudson River in Lower Manhattan, early next year.Tony Cenicola/The New York TimesFred Wilson, a partner at Union Square Ventures, said tech executives now felt less of a need to be in Silicon Valley, a shift that he said had benefited New York. “We have more company C.E.O.s and more company founders in New York today than we did before the pandemic,” Mr. Wilson said, referring to the companies his firm has invested in.David Falk, the president of the New York tristate region for Newmark, said, “We are right now working on several transactions with smaller, young tech firms that are looking to take sublet space.”Many firms are still pulling back, however.In 2017 and 2019, Spotify, which is based in Stockholm, signed leases totaling more than 564,000 square feet of space at 4 World Trade Center, becoming one of the largest tenants there. It soon had a space with all the accouterments you would expect at a tech firm — brightly colored flexible work areas, eye-popping views and Ping-Pong tables.But in January, Spotify said it was laying off 600 people, or about 6 percent of its global work force. The company, which allows employees to choose between working fully remotely or on a hybrid schedule, is also reducing its office space, putting five floors up for sublet.“On days when I’m by myself, I end up sitting in a meeting room all day for focus time,” said Dayna Tran, a Spotify employee who regularly works at the downtown office, adding that the employees who come in motivate themselves and create community by collaborating on an office playlist. More

  • 150 Shares199 Views

    in Economy

    As Businesses Clamor for Workplace A.I., Tech Companies Rush to Provide It

    by

    Amazon, Box, Salesforce, Oracle and others have recently rolled out A.I.-related products to help workplaces become more efficient and productive.Earlier this year, Mark Austin, the vice president of data science at AT&T, noticed that some of the company’s developers had started using the ChatGPT chatbot at work. When the developers got stuck, they asked ChatGPT to explain, fix or hone their code.It seemed to be a game-changer, Mr. Austin said. But since ChatGPT is a publicly available tool, he wondered if it was secure for businesses to use.So in January, AT&T tried a product from Microsoft called Azure OpenAI Services that lets businesses build their own A.I.-powered chatbots. AT&T used it to create a proprietary A.I. assistant, Ask AT&T, which helps its developers automate their coding process. AT&T’s customer service representatives also began using the chatbot to help summarize their calls, among other tasks.“Once they realize what it can do, they love it,” Mr. Austin said. Forms that once took hours to complete needed only two minutes with Ask AT&T so employees could focus on more complicated tasks, he said, and developers who used the chatbot increased their productivity by 20 to 50 percent.AT&T is one of many businesses eager to find ways to tap the power of generative artificial intelligence, the technology that powers chatbots and that has gripped Silicon Valley with excitement in recent months. Generative A.I. can produce its own text, photos and video in response to prompts, capabilities that can help automate tasks such as taking meeting minutes and cut down on paperwork.To meet this new demand, tech companies are racing to introduce products for businesses that incorporate generative A.I. Over the past three months, Amazon, Box and Cisco have unveiled plans for generative A.I.-powered products that produce code, analyze documents and summarize meetings. Salesforce also recently rolled out generative A.I. products used in sales, marketing and its Slack messaging service, while Oracle announced a new A.I. feature for human resources teams.These companies are also investing more in A.I. development. In May, Oracle and Salesforce Ventures, the venture capital arm of Salesforce, invested in Cohere, a Toronto start-up focused on generative A.I. for business use. Oracle is also reselling Cohere’s technology.Salesforce recently rolled out generative A.I. products used in sales, marketing and its Slack messaging service.Jeenah Moon for The New York Times“I think this is a complete breakthrough in enterprise software,” Aaron Levie, chief executive of Box, said of generative A.I. He called it “this incredibly exciting opportunity where, for the first time ever, you can actually start to understand what’s inside of your data in a way that wasn’t possible before.”Many of these tech companies are following Microsoft, which has invested $13 billion in OpenAI, the maker of ChatGPT. In January, Microsoft made Azure OpenAI Service available to customers, who can then access OpenAI’s technology to build their own versions of ChatGPT. As of May, the service had 4,500 customers, said John Montgomery, a Microsoft corporate vice president.Aaron Levie, chief executive of Box, said generative A.I. creates “a complete breakthrough in enterprise software.”Michael Short/BloombergFor the most part, tech companies are now rolling out four kinds of generative A.I. products for businesses: features and services that generate code for software engineers, create new content such as sales emails and product descriptions for marketing teams, search company data to answer employee questions, and summarize meeting notes and lengthy documents.“It is going to be a tool that is used by people to accomplish what they are already doing,” said Bern Elliot, a vice president and analyst at the I.T. research and consulting firm Gartner.But using generative A.I. in workplaces has risks. Chatbots can produce inaccuracies and misinformation, provide inappropriate responses and leak data. A.I. remains largely unregulated.In response to these issues, tech companies have taken some steps. To prevent data leakage and to enhance security, some have engineered generative A.I. products so they do not keep a customer’s data.When Salesforce last month introduced AI Cloud, a service with nine generative A.I.-powered products for businesses, the company included a “trust layer” to help mask sensitive corporate information to stop leaks and promised that what users typed into these products would not be used to retrain the underlying A.I. model.Similarly, Oracle said that customer data would be kept in a secure environment while training its A.I. model and added that it would not be able to see the information.Salesforce offers AI Cloud starting at $360,000 annually, with the cost rising depending on the amount of usage. Microsoft charges for Azure OpenAI Service based on the version of OpenAI technology that a customer chooses, as well as the amount of usage.For now, generative A.I. is used mainly in workplace scenarios that carry low risks — instead of highly regulated industries — with a human in the loop, said Beena Ammanath, the executive director of the Deloitte A.I. Institute, a research center of the consulting firm. A recent Gartner survey of 43 companies found that over half the respondents have no internal policy on generative A.I.“It is not just about being able to use these new tools efficiently, but it is also about preparing your work force for the new kinds of work that might evolve,” Ms. Ammanath said. “There is going to be new skills needed.”Panasonic Connect began using Microsoft’s Azure OpenAI Service to make its own chatbot in February.Panasonic ConnectPanasonic Connect, part of the Japanese electronics company Panasonic, began using Microsoft’s Azure OpenAI Service to make its own chatbot in February. Today, its employees ask the chatbot 5,000 questions a day about everything from drafting emails to writing code.While Panasonic Connect had expected its engineers to be the main users of the chatbot, other departments — such as legal, accounting and quality assurance — also turned to it to help summarize legal documents, brainstorm solutions to improve product quality and other tasks, said Judah Reynolds, Panasonic Connect’s marketing and communications chief.“Everyone started using it in ways that we didn’t even foresee ourselves,” he said. “So people are really taking advantage of it.” More

  • 100 Shares99 Views

    in Economy

    Microsoft Pledges Neutrality in Union Campaigns at Activision

    by

    The accord could ease the path for thousands of workers to unionize at the game company, which Microsoft is acquiring, and addresses an antitrust objection.Microsoft and the Communications Workers of America union announced an agreement on Monday that would make it easier for employees to unionize at the video game maker Activision Blizzard, which Microsoft is acquiring for $70 billion.Under the deal, which appears to be the first of its kind in the technology industry, Microsoft agreed to remain neutral if any of Activision’s eligible U.S. employees want to unionize, and employees would no longer have to petition the National Labor Relations Board for an election. The company has almost 7,000 employees in the United States, most of whom will be eligible to unionize under the arrangement.A group of nearly 30 employees at one of Activision’s studios voted to unionize through an N.L.R.B. election in May despite Activision’s opposition to holding the election. But completing such a process can be time consuming, with unions and employers sometimes spending months or even years litigating the results.Through the agreement, workers will have access to an expedited process for unionizing, overseen by a neutral third party, in which they will indicate their support for a union either by signing cards or confidentially through an electronic platform.“This process does gives us and Microsoft a way to do this quote unquote election without spending the time, the effort and the controversy that goes along with an N.L.R.B. election,” Chris Shelton, the president of the Communications Workers union, said in an interview.The union said that the neutrality agreement resolved the antitrust concerns it had with the acquisition, and that it now supported the deal, which Microsoft has said will close by the end of next June.Mr. Shelton and Brad Smith, Microsoft’s president, suggested that the deal could pave the way to wider unionization across the company and the industry. “This is a great opportunity for us to work with Chris and the C.W.A. and to learn and innovate,” Mr. Smith said in an interview. Microsoft said it was prepared to “build on” the deal in the future, but did not specifically comment on whether it planned to extend the terms to other gaming workers at the company.Microsoft indicated that under the agreement, it would refrain from an aggressive anti-union campaign if other Activision employees sought to unionize. “In practical terms, it means that we’re not going to try to jump in and put a thumb on the scale,” Mr. Smith said in the interview. “We will respect the fact that our employees are capable of making decisions for themselves and they have a right to do that.”Brad Smith of Microsoft said he was committed to engaging with unions “when employees wish to exercise their rights and Microsoft is presented with a specific unionization proposal.”Markus Schreiber/Associated PressFacing their own union campaigns, companies like Amazon and Starbucks have held frequent mandatory meetings with employees to argue that a union could leave them worse off.The labor board has issued complaints against Amazon that include accusations of threatening workers with a loss of benefits if they unionize, and against Starbucks over accusations that it fired workers who sought to form a union and effectively promised benefits to workers if they chose not to unionize. Both companies have denied the accusations. In a recent case brought by the N.L.R.B. in Arizona, a federal judge denied a request for an injunction to reinstate pro-union workers whom the labor board said Starbucks had forced out illegally.The agreement between Microsoft and the union would also protect workers’ right to communicate among themselves and with union officials about a union campaign — something many employers seek to discourage — and stipulates that disagreements between the company and the union will be resolved through an “expedited arbitration process.” N.L.R.B. complaints can take months or years to resolve.When Microsoft and Activision announced their blockbuster deal in January, the game maker was under stress as it faced accusations that senior executives had ignored sexual harassment and discrimination. Those concerns spurred organizing among Activision employees, including workers at its Raven Software studio in Wisconsin, which has developed games in popular franchises like Call of Duty.After a group of roughly 30 quality assurance, or Q.A., workers announced that they were seeking to unionize, Activision sought to convince the federal labor board that their election should not go forward. The game workers accused Activision of union-busting tactics, like increasing the pay of non-Raven Q.A. workers and splitting Q.A. workers up by embedding them across the Raven studio.Activision maintained that while some changes in this vein had come after the union campaign went public, the broader shift in approach had already been underway — for example, its move to change the status of hundreds of temporary and contingent workers to permanent full-time employees in the fall.The company argued that the entire Raven studio, comprising hundreds of workers, should have been allowed to vote on forming a union, rather than just a few dozen Q.A. workers. Q.A. employees, often on temporary contracts, are commonly considered the most overworked and underpaid members of game studios.In early March, the union signed a letter asking federal regulators to scrutinize the acquisition. “The potential takeover by Microsoft threatens to further undermine workers’ rights and suppress wages,” the letter said.Microsoft has since tried to strike a conciliatory tone. It said it would not stop Activision from voluntarily recognizing the union before a formal election, which Activision did not do. After the Raven Q.A. workers voted in late May to form the first union at a major North American game publisher, Phil Spencer, the head of gaming at Microsoft, told employees that he would recognize the Raven union once the deal between the two companies closed, the gaming news site Kotaku reported, citing a video of an employee town hall.Activision said on Friday that it was starting contract negotiations with the newly unionized Raven workers. “We decided to take this important step forward with our 27 represented employees and C.W.A. to explore their ideas and insights for how we might better serve our employees, players and other stakeholders,” Bobby Kotick, the company’s chief executive, said in a statement.In a blog post this month that appeared to foreshadow the deal, Mr. Smith announced a set of principles to guide Microsoft’s response to labor organizing, an indication that it was taking a more open approach across the company’s businesses.He wrote that he had observed Microsoft’s successful “collaborative experiences with works councils and unions” while working in Europe and said that in the United States the company would pursue “collaborative approaches that will make it simpler, rather than more difficult, for our employees to make informed decisions and to exercise their legal right to choose whether to form or join a union.”In the interview, Mr. Smith called the neutrality agreement “our first opportunity to put those principles into practice.”The Communications Workers of America, which represents employees at companies like AT&T Mobility, Verizon and The New York Times, has sought to organize tech industry workers in recent years. It has begun organizing retail workers at Apple Stores and helped workers at Google form a so-called minority union, which allows them to act together on workplace issues without having to win a union election.About a dozen retail employees at Google Fiber stores in Kansas City, Mo., who are formally employed by a Google contractor, recently voted to join the union.Kellen Browning More

  • 175 Shares199 Views

    in Economy

    Big Tech Is Getting Clobbered on Wall Street. It’s a Good Time for Them.

    by

    Flush with cash, Facebook, Apple, Amazon, Microsoft and Google are positioned to emerge from a downturn stronger and more powerful. As usual.SAN FRANCISCO — Apple, Amazon, Microsoft and the parent companies of Facebook and Google have lost $2.7 trillion in value so far this year, about the annual gross domestic product of Britain.So what have the companies done about this thrashing on Wall Street? Microsoft has doubled its employees’ bonus pool, Google has committed to hiring more engineers, and Apple has showered its top hardware talent with $200,000 bonuses.The dissonance between the stock market’s relative panic and the business-as-usual calm among tech giants foreshadows a period when analysts, investors and economists predict that the world’s largest companies will widen their lead in their respective markets.The bullishness about their prospects reflects an understanding that the companies have tight control of some of the world’s most lucrative businesses: social media, premium smartphones, e-commerce, cloud computing and search. Their dominance in those arenas and toeholds in other businesses should blunt the pains of inflation, even as those challenges hammer big companies such as Walmart and Target and the stock market nears bear market territory.The S&P 500 spent much of Friday below the threshold for what is considered a bear market — commonly defined as 20 percent below its last peak — before rallying late in the afternoon. The index ended the week with a loss of 3 percent, its seventh straight weekly decline. That’s its longest stretch of losses since 2001.In the months ahead, Microsoft, Google, Apple and Amazon are expected to boost hiring, buy more businesses and emerge on the other side of a bearish economy stronger and more powerful — even if they shed some of their total valuation and their relentless growth of the last few years.“Big tech can say, ‘Forget the economy,’” said Richard Kramer, founder of the London-based advisory firm Arete Research. Flush with cash, he said, “they can invest through the cycle.”Read More About Apple‘After Steve’: Jony Ive, who helped define Apple’s iconic look, left as the Tim Cook era took hold. A new book details how they and the company changed following Steve Jobs’s death.A $3 Trillion Company: Four decades after going public, Apple reached a $1 trillion market value in 2018. Now, the company is worth triple that.Trademarks: The tech behemoth has opposed singer-songwriters, school districts and food blogs for trying to trademark names or logos featuring an apple — and even other fruits.AirTags: Privacy groups said that Apple’s new coin-size devices could be used to track people. Those warnings appear to have been prescient.The large companies’ plans contrast sharply with a wave of spending cuts crashing through the rest of the tech sector. Steep declines in share prices at unprofitable companies such as Uber, down 45 percent, and Peloton, down 58 percent, have led their chief executives to cut jobs or consider layoffs. Start-ups are pruning their workforces as venture capital funding slows.Those companies’ plummeting values will create buying opportunities, said Toni Sacconaghi, a tech analyst at Bernstein, a research firm. Large deals may be difficult because the Federal Trade Commission is scrutinizing takeover moves by Facebook, Apple, Amazon, Microsoft and Google, he said, but smaller deals for emerging technology or engineers could be rampant.As people return to work and travel, they are making fewer Amazon purchases, leaving the company with more space and staff than it needs.Roger Kisby for The New York TimesDuring the Great Recession, Facebook, Amazon, Google, Apple and Microsoft acquired more than 100 companies from 2008 to 2010, according to Refinitiv, a financial data company. Some of those deals have become fundamental to their businesses today, including Apple’s acquisition of the chip company P.A. Semi, which contributed to the company’s development of its new laptop processors, and Google’s acquisition of AdMob, which helped create a mobile advertising business.“The big will get bigger and the poor will get poorer,” said Michael Cusumano, deputy dean of the Sloan School of Management at the Massachusetts Institute of Technology. “That’s the way network effects work.”There are caveats to this sense of invulnerability. The big companies’ plans could always change if the economy continues to deteriorate and consumers pull back even further on their spending. And some of the big companies are more vulnerable than others.Meta Platforms, Facebook’s parent company, has fared worse than its peers because its business is facing long-term challenges. It has posted falling profits as its user growth slows amid rising competition from TikTok, and changes in Apple’s privacy policy stymie its ability to personalize ads.Mark Zuckerberg, Meta’s chief executive, has responded by instituting a temporary hiring freeze for some roles. During a recent all-hands meeting with staff, employees asked if layoffs would follow. Mr. Zuckerberg said that job cuts weren’t in the company’s current plans and were unlikely in the future, according to a spokesman. Instead, he said the company was focused on slowing spending and limiting its growth.Amazon sent a similar signal to its employees last month after it posted disappointing results. In a call with analysts, Brian Olsavsky, the company’s finance chief, said Amazon would look to corral costs after it doubled spending on warehouses and staff to keep pace with pandemic orders. As people return to work and travel, they are making fewer Amazon purchases, leaving the company with more space and staff than it needs.But Amazon’s lucrative cloud business, Amazon Web Services, or A.W.S. for short, continues to gush profits. The company plans to lean into its success in the months ahead by increasing its spending on data centers. It also has committed to raising the cap on base compensation of its corporate staff to $350,000, from $160,000. And it is investing in a plan to build a network of satellites to deliver high-speed internet by launching 38 rockets into space.Between them, Facebook, Microsoft, Google, Apple and Amazon had nearly $300 billion in cash, excluding debt, at the end of March, according to Loup Ventures, an investment firm specializing in tech research.The cash reserves could fund accelerated stock buybacks as share prices fall, analysts say. Doing so would increase the companies’ earnings per share, deliver more value to investors and signal to the market that their firms are more valuable than Wall Street is willing to acknowledge.The companies roared ahead during the pandemic as people sequestered at home immersed themselves in a digital world. Customer orders soared on Amazon, for everything from hand sanitizer to Instant Pots. Shuttered stores shifted sales online and ramped up Google and Facebook advertising. Remote students and employees splurged on new iPhones, iPads and Macs.The last tech giant to cull its ranks during a major downturn, Microsoft, is doing the opposite during this turbulent period. Emboldened by a business that has proved more durable than its peers, Microsoft is sweetening salaries, boosting its investments in cloud computing and standing by a $70 billion acquisition of Activision Blizzard that it expects to unlock more sales for its gaming empire.A Call of Duty event in Minneapolis in 2020. Microsoft’s acquisition of Activision Blizzard is expected to unlock more sales for its gaming empire.Bruce Kluckhohn/USA Today Sports, via ReutersSimilar resilience has been on display at Google and Apple. Google, a subsidiary of Alphabet, recently overhauled its performance review process and told staff that they would likely get pay increases, according to CNBC. It also plans to increase its spending on data centers to support its growing cloud business.Tim Cook, Apple’s chief executive, has a longstanding philosophy that Apple should continue to invest for the future amid a downturn. It more than doubled its staff during the Great Recession and nearly tripled its sales. Lately, it has increased bonuses to some hardware engineers by as much as $200,000, according to Bloomberg.John Chambers, who steered Cisco Systems through multiple downturns as its former chief executive, said the companies’ strong businesses and deep pockets could afford them the chance to take risks that would be impractical for smaller competitors. During the 2008 downturn, he said Cisco allowed distressed automakers to pay for technology services with credit at a time when competitors demanded cash. The company risked having to write down $1 billion in inventory, but emerged from the recession as the dominant provider to a healthy auto industry, he said.“Companies break away during downturns,” Mr. Chambers said.Excelling will require disregarding the broader market’s gloom, said David Yoffie, a professor at Harvard Business School. He said previous downturns had shown that even the strongest businesses were susceptible to profit pressures and prone to pulling back. “Firms get pessimistic like everyone else,” he said.The first test for the biggest companies in tech will be contagion from their peers. Amazon’s shares in the electric vehicle maker Rivian Automotive have plunged more than 65 percent, a $7.6 billion paper loss. Apple’s services sales are likely to be crimped by a slowdown in advertising by app developers, which rely on venture-capital funding to finance their marketing, analysts say. And start-ups are scrutinizing their spending on cloud services, which will likely slow growth for Microsoft Azure and Google Cloud, analysts and cloud executives said.“People are trying to figure out how to spend smartly,” said Sam Ramji, the chief strategy officer at DataStax, a data management company.Regulatory challenges on the horizon could darken the big tech companies’ prospects, as well. Europe’s Digital Markets Act, which is expected to become law soon, is designed to increase the openness of tech platforms. Among other things, it could scuttle the estimated $19 billion that Apple collects from Alphabet to make Google the default search engine on iPhones, a change that Bernstein estimates could erase as much as 3 percent of Apple’s pretax profit.But the companies are expected to challenge the law in court, potentially tying up the legislation for years. The probability it gets bogged down leaves analysts sticking to their consensus: “Big Tech is going to be more powerful. And what’s being done about it? Nothing,” Mr. Kramer of Arete Research said.Jason Karaian contributed reporting. More