Meet AI’s Low-Paid Trainers

Plus: A potential strike could slow the EV future for the Big Three automakers. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

July 13, 2023

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TOGETHER WITH

Good morning.

The digital economy has toppled its last domino.

Domino’s, the giant multinational that’s helped pioneer pizza delivery, will finally let its dough circles be sold on Uber Eats and Postmates this year. The reason is simple: People are ordering more pizza on apps other than Domino’s own whereas delivery elsewhere is slowing down. According to The Wall Street Journal, Domino’s execs realized the pandemic had turned people on to food-delivery apps. The pandemic did begin quite a while ago now, suggesting Domino’s is as slow on the uptake as an Uber Eats driver whose GPS is down.

Morning Brief

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AI’s secret ingredient is low-paid contractors.

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Baby, you can’t drive my car.

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You can start me up, JPMorgan says.

Tech

Google’s Bard Relies on a Frustrated, Bewildered Shadow Workforce

AI is already creating jobs. Not so good ones.

A Bloomberg report on Wednesday shed light on the contractors working on Google’s Chat-GPT competitor Bard. Their mission is simple: talk to the chatbot and hurriedly fact-check and rate the answers it gives within incredibly short timeframes. They’re probably using Google to do that. Googling so Google can Google better. Very meta. The pay isn’t that great, either.

Generative Mechanical Turk

It’s an open secret that Big Tech relies on armies of contractors, sometimes bigger than their salaried workforce, to refine their products. These contractors’ salaries are often hundreds of thousands less than the median salary at these firms, and they perform grueling tasks like sifting through and tagging graphic videos to hone platforms’ moderation algorithms.

Now with the generative AI arms race in full swing, contractors working for Google told Bloomberg about the Kafka-esque interactions they have with Bard in order to make it less likely to goof up an answer, and potentially lose the company another $100 billion in market value:

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Sources told Bloomberg they were asked to assess the reliability of Bard’s answers on a number of technical topics, including medical doses and state law. The contractors said they sometimes had to make assessments in as little as three minutes.

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Google is pushing particularly hard on medical AI, and has been testing a medical chatbot called Med-PaLM 2 with customers including the Mayo Clinic since April, the WSJ reported on Saturday. Given some generative AI chatbots have difficulty putting the Star Wars franchise in chronological order, let’s pray Google has put a bit more thought into training Med-PaLM 2.

“It’s worth remembering that these systems are not the work of magicians — they are the work of thousands of people and their low-paid labor,” Laura Edelson, a computer scientist at New York University, told Bloomberg.

Contract Killer: Contractors form part of the machinery powering commercial generative AI, but they’re also at the bleeding edge for its consumption as low-cost producers. Rest of World reported on Tuesday that outsourced offshore contractors are already competing with AI-generated work, and in some cases have folded it into their own workdays. While an AI-generated illustration will save time (and therefore money) for the customer, contractors who pay to use tools like Midjourney might find themselves out of pocket. “Employers want workers in these countries because they can pay less wages,” Uma Rani, a senior economist at the United Nations’ International Labour Organization, told Rest of World. “But on the other hand, the amount of [platform] fees workers have to pay — it’s almost double the exploitation that these workers face.”

– Isobel Asher Hamilton

Labor

United Auto Workers Gear Up for Strikes

(Photo by Thomas Good under CC BY-SA 3.0)

The Big Three automakers may soon hit a speed bump in their drive toward an electric future.

United Auto Workers President Shawn Fain has said 150,000 members are ready to strike against Ford, Stellantis, and General Motors if the companies don’t meet their demands during contract negotiations, which kicked off this week.

Which Side Are You On?

Cornell’s ILR Labor Action Tracker logged 417 strikes and seven lockouts across the US in 2022 — up 52% from 2021 — as historically low unemployment rates have boosted workers’ leverage for improving wages and benefits.

UAW leaders recently laid out their top bargaining issues ahead of contracts that expire in September. They include reinstating a cost-of-living adjustment eliminated during the Great Recession, stronger job security, additional training programs, and dismantling tiered pay systems of varying wages and benefits. Fain, who was elected union president earlier this year, says he’s taking a more cut-throat approach to the role than his predecessors:

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A lack of an agreement could end up costing automakers billions of dollars. In 2019, a 40-day strike against GM cost the company $4 billion in lost vehicle production, about twice as much as Wall Street analysts had predicted.

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Negotiations between workers and companies won’t start with the customary handshake. “I hear some of the CEOs talk about how ‘our workers are like family.’ That’s nothing but a lie,” Fain told Detroit Local 4 News. “When our workers have economic justice, then we’ll shake hands. But until then, there’s no point in having some pomp and circumstance.”

Not So Special Delivery: In other transportation-related strike news, UPS drivers are considering walking off, too, which could devastate the package delivery business. Roughly 340,000 Teamsters union members could stop showing up when their contract expires at the end of the month, making it the largest strike against a single employer in US history. The most recent UPS strike, in 1997, lasted just 15 days but cost the company $850 million. And because UPS holds nearly 40% of the delivery market share, other groups like FedEx and Amazon couldn’t easily pick up that slack.

– Griffin Kelly

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Banking

JPMorgan is Hiring More Bankers to Fill SVB Lending Void

One bank’s giant financial collapse is another bank’s treasure.

To fill the void created by SBV’s sudden demise, JP Morgan is hiring dozens of bankers, including more than a few former SVB alumni. Which only makes sense if you think of it.

Move over SVB

SVB was possibly the biggest player in funding and servicing startups, especially in tech. “It’s a very rare thing to have this monopolistic player go away overnight,” Doug Petno of JPMorgan told the Financial Times.

With SVB out of the picture, JPMorgan is looking to take over the mantle:

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JPMorgan has added roughly 20 new bankers to its offices in the UK plus 10 more in Israel. This includes former SVB executives Rosh Wijayarathna and Folake Shasanya, who will serve as managing directors in the UK and Ireland. The bank also brought on John China, a 27-year veteran, as co-head of its innovation economy business in the US.

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This might be rough timing, as funding in startups has been pretty paltry lately. According to preliminary Crunchbase data, Q2 saw investors put only $31.8 billion into seed- through growth-stage rounds for US and Canadian startups, the lowest quarterly total in three years. Not only that, overall deal volume has fallen 35% year-over-year.

Got the Money to Burn: JPMorgan is no stranger to poor investments and bouts of shoddy risk management. It acquired college financial planner Frank for $175 million in 2021. Frank CEO Charlie Javice said the service was used by more than 5 million customers — but it was really less than 300,000. Even more destructive was the infamous 2012 “tempest in a teapot” fiasco when the bank’s chief investment office cost JPMorgan more than $6 billion after bad bets on credit derivatives. JPMorgan manages more than $2.5 trillion in assets, so it can probably survive losing a few billion dollars and the occasional congressional grilling.

– Griffin Kelly

Extra Upside

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Pour one out: America’s oldest craft brewery is closing after 127 years.

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No Holds Barred: Zuckerberg trains with UFC’s Izzy and Volk ahead of potential cage fight with Musk.

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Cooling off: Inflation may be well past its peak.

Just For Fun

Big bird.

Behind the curtain.

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