Technology

➚ MOVE FAST: Milestone. State-backed China Telecom says it has built two large language models using domestically made AI chips. It’s another sign that Chinese technology may be catching up to the US, despite the mainland being cut off from advanced semiconductors like the ones designed by Nvidia.

➘ BREAK THINGS: Millstone. SAP CEO Christian Klein is the latest high-profile European to criticize the region’s AI rules, saying it harms the continent’s competitiveness. He said over regulating the technology would lead innovators to look to the US to build and test their AI models.

We’ve gotten used to apps that show us what a piece of furniture might look like in our home. But the bigger feat, it turns out, is showing us what our home looks like when all the furniture disappears.

Using generative AI, Matterport, the company known for those 3D walkthroughs used by real estate agents, has introduced “Defurnish,” which shows you what your place would look if it were empty.

Generative AI is going to be a game changer when it comes to remodels and decorating ideas, with early movers like Decoratly, Remodeled AI and RoomGPT.

The Nobel-, Emmy-winning genius who became Google’s star antitrust witness

THE SCENE

Just before Google wrapped up the recent three-week US antitrust trial, it called a star witness to the stand who has won a Nobel prize and an Emmy.

The unusual combination of accolades (and there are more) belongs to Paul Milgrom, a Stanford economist known for revolutionizing the field of auctions, and, in the last few years, trying to solve California’s water shortage.

Milgrom’s company, Auctionomics, is at the forefront of an increasingly important field, sometimes referred to as market design, that is set to play an outsized role in the next AI-enabled wave of commerce.

Milgrom’s specialty is using complex mathematics and, more recently, software algorithms, to create the right incentives to make the most complicated auctions go smoothly. Over the years, he also helped shape the online advertising industry by working with dot-com companies to build the marketplaces that eventually became the flourishing ad tech industry.

Colleagues say Milgrom, despite his status, has remained grounded and capable of describing his complicated field in ways anyone can understand — an ability that made him particularly suited for the witness stand last week.

During the Google antitrust trial, Milgrom picked apart the government’s assertions that the company had abused its power, essentially arguing that the prosecution had misinterpreted changes Google made to its advertising auctions over the course of many years. Rather than anticompetitive, Milgrom argued, they were the right choices at the time, given the current technology, to avoid abuse of the system.

During the testimony, US District Judge Leonie Brinkema asked him to explain an aspect of Google’s past auctions, where bidders get one chance to offer the maximum price they would pay for an ad. The winning bidder only has to pay the price of the next lowest bid. This is known as a “sealed bid, second price auction.”

The system is designed, Milgrom testified, to incentivize participants to bid honestly based on what they are willing to pay. The result is almost the same as a traditional “ascending auction” but requires less back and forth, allowing the auction to take place in a millisecond with little risk of technical glitches. (Otherwise, the ad would take too long to appear or slow down a website).

“Now, I still have a question,” Brinkema said. “If I am in a sealed bidding situation and $7 is what I’m willing to pay for this item, you put in a $3 bid. And I win the bid at $7, why am I not paying the $7?”

“If you made a rule that said you have to pay the amount that you bid, then you wouldn’t have bid $7, you would have bid something different,” Milgrom said. “You would say, gee, why would I bid $7, you know, that’s my maximum. It’s only worth $7 to me. I can get it for $7 at the local store. I’m trying to get a bargain here. I’ll bid $5 and see if I can win for that price.”

“Now I understand. Thank you,” Brinkema responded.

Auctionomics co-founder and CEO Silvia Battilana declined to speak about the Google case specifically, but she said taking on the client was a no brainer. The Google ad system is “the holy grail of all auctions,” she said. “You get to reproduce the whole history and everything they did. You’re working on the queen of all auctions.”

The number of years before India will make its first chip, according to the country’s Commerce Minister Piyush Goyal. He noted that he’s in regular touch with the CEO of Micron, one of several US companies looking to expand in India as they hope to diversify their businesses while geopolitical tensions between the US and China grow. On that front, Goyal also told CNBC that 14% of the world’s iPhones are now manufactured in India.

Since Gavin Newsom vetoed California’s blockbuster AI bill, something we long ago projected, I’ve been curious what the bill’s sponsor, state Sen. Scott Wiener, is planning to do next.

Wiener told me in an interview yesterday that the coalition isn’t going anywhere. He pointed out that in the days leading up to Newsom’s veto, more and more prominent people were coming out to support it.

I asked him what he thought about the notion that his bill became in many ways a symbol of resistance to technology and the tech industry.

“I don’t think it’s anti-tech in any way to say let’s promote both AI innovation and protect the public health safety,” he said.

“But the point is valid that, while there were opponents that had very specific, good faith objections to the bill, and I worked with those people, a big chunk of the opposition was very vibes-based,” he said. “Oh, this is going to, in some unspecified way, hurt innovation.”

So part of what Wiener is doing now is working on those vibes. “I’m already having meetings with some of the folks who oppose the bill. I want us to be able to build a broader coalition,” he said.

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