- Julian's Monthly Update
- Posts
- EU AI Regulation is here
This weeks takes
The EU’s new AI act, why it’s important
Microsoft and why this boring business is incredible under the hood
Why you should just send that email
Wow! Thank you for sharing the email to your friends. Really cool to see you all continue to do that!
Articles
One of the most important issues in technology is how to regulate AI. The EU is getting ready to pass legislation, which will dictate how its member states should regulate AI.
The biggest mistake governments made in the era of social media, was letting it get too big before stepping in. They’ve learned their lesson and are applying it to AI.
The EU AI Act Is similar to GDPR in that it attempts to protect the privacy of European citizens. It will ensure that AI has a positive effect on European consumers. The EU has almost 500 million citizens, with a purchasing power per citizen that is roughly the same as Canada. That means that this trading block has a lot of power.
The new framework is important to understand because it governs how AI applications will be assessed for risk. AI social credit and monitoring will not be allowed by any means. However, the risk assessment isn’t complete, and has holes for applications that we haven’t yet created.
All in all, this regulation is good as long as it adapts with the technology.
I used to work in the sports industry, and play professional Volleyball. The stories behind how these deals get done are always fascinating.
Real Madrid is at the pinnacle of sport. They sign big name players to big contracts and win big tournaments. It’s what they’ve always done and what they always will do.
This story dives into their strategy to beat competitive clubs in these deals and get the players they want. It’s a fascinating approach that shows how crazy the world of professional sport really is.
Over the last few weeks I’ve been reading quarterly and annual reports to learn about how businesses operate. Something you often see in annual reports is talk about how exchange rates affect their outlook. I didn’t believe them until I read this article. Because the dollar is down and stocks are up, the economy is in a weird place. Stocks are up, but Purchasing Power is down. This is because currency and equity are opposites of each other.
Microsoft - Probably a Monopoly
Small business through enterprise customers
Technologies that unlock value for customers through infrastructure, data, business tools and collaboration
critical products
Office 365, LinkedIn - Professional / business types
GitHub & VS Code, Azure - Developer Ecosystem
Xbox, Surface - Gaming + Consumer
Probably a monoploy because they are vertically integrated and competitive in every layer of the stack except the underlying chip technologies
From consumer products, to the software development stack microsoft owns pretty much everything
FOcus is on building cloud and AI strategy
Security
Victim of several hacks
Security is important to customers decision to purchase or use Microsoft Products.
Misuse of personal data could harm their reputation, and they may not be able to completely protect their services
Privacy Litigation & laws may impede on thMIcrosofts ability to do business. Could also result in fines or law suits
Highlights
Microsoft’s Commercial cloud grew 32% in 2022 to 92 billion dollars
LinkedIn grew 34% in revenue, due to increases in their talent solutions and ads business lines
The companies Top line reveue grew 18% from 2021 to 2022. From 168 billion to 198 billion. 72 billion of net income, with a 17% improvement in gross margins
Microsoft has effective tax rate of 14%
Focus on partnership with OpenAI and building it into many of their services.
AI and cloud are the pillars on which Microsoft is building its business moving forward
Conclusions
Microsoft is diving so deep into AI and because the markets reward the use of the newest technologies with higher multiples. The cloud market is growing at an annual growth rate of about 18%. As more companies build and modify their own models, this rate will increase as most of the cost of AI comes from the computational burden.
The cloud & AI combination is also so critical because of Vendor Lock In. This is when someone chooses a vendor and is “locked in” because of high switching costs. Changing server infrastructure is hard.
Another way Microsoft turbocharged this is with their strategic partnership with OpenAI. On Azure, users can get faster and unlimited use of OpenAI APIs. This means that as the technology develops it will only make more sense to buy Microsoft and stick with it.
Lessons
Just send the email - I’m always making stuff. I’ve realised I struggle to ask for stuff and show it off. Every time I just send the email asking to partner or anything, I get further faster.
People don’t want to add a lot of code to their site. I was building a project and the number one priority of the guy who I worked with was how many lines of code he would have to add. He was happy when I got it from 27 down to 3.