Voices in AI – Episode 74: A Conversation with Dr. Kai-Fu Lee

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About this Episode

Episode 74 of Voices in AI features host Byron Reese and Dr. Kai-Fu Lee discussing the potential of AI to disrupt job markets, the comparison of AI research and implementation in the U.S. and China, as well as other facets of Dr. Lee’s book “AI Superpowers”. Dr. Kai-Fu Lee, previously president of Google China, is now the CEO of Sinovation Ventures.
Visit www.VoicesinAI.com to listen to this one-hour podcast or read the full transcript.

Transcript Excerpt

Byron Reese: This is Voices in AI, brought to you by GigaOmI’m Byron Reese. Today I am so excited my guest is Dr. Kai-Fu Lee. He is, of course, an AI expert. He is the CEO of Sinovation Ventures. He is the former President of Google China. And he is the author of a fantastic new book called “AI Superpowers.” Welcome to the show, Dr. Lee. 
Kai-Fu Lee: Thank you Byron.
I love to begin by saying, AI is one of those things that can mean so many things. And so, for the purpose of this conversation, what are we talking about when we talk about AI?
We’re talking about the advances in machine learning… in particular Deep Learning and related technologies as it applies to artificial narrow intelligence, with a lot of opportunities for implementation, application and value extraction. We’re not talking about artificial general intelligence, which I think is still a long way out.
So, confining ourselves to narrow intelligence, if someone were to ask you worldwide, not even getting into all the political issues, what is the state of the art right now? How would you describe where we are as a planet with narrow artificial intelligence?
I think we’re at the point of readiness for application. I think the greatest opportunity is application of what’s already known. If we look around us, we see very few of the companies, enterprises and industries using AI when they all really should be. Internet companies use AI a lot, but it’s really just beginning to enter financial, manufacturing, retail, hospitals, healthcare, schools, education and so on. It should impact everything, and it has not.
So, I think what’s been invented and how it gets applied/implemented/monetized… value creation, that is a very clear 100% certain opportunity we should embrace. Now, there can be more innovations, inventions, breakthroughs… but even without those I think we’ve got so much on our hands that’s not yet been fully valued and implemented into industry.
Listen to this one-hour episode or read the full transcript at www.VoicesinAI.com
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Byron explores issues around artificial intelligence and conscious computers in his new book The Fourth Age: Smart Robots, Conscious Computers, and the Future of Humanity.

Apple News censorship reminds us how fleeting digital content is

Apple is reportedly preventing the use of its Apple News service in mainland China — lending more credence to the idea that giving the company too much control over how news publishers reach their audience could have terrible consequences.
Pay4Bugs chief executive Larry Salibra said in a blog post that Apple News refused to fetch new articles, or show items that had already been downloaded to his device, when he took a trip from Hong Kong to mainland China last week. The issue seems to occur when someone uses a Chinese wireless network, which suggests that Apple is (or was) censoring portions of the service to appease the Chinese government.
Salibra showed that the censorship occurs regardless of whether someone allows Apple to collect information about their location, and isn’t tied to the device’s IP address. (Apple didn’t respond to Gigaom’s request for comment.) It happens as soon as the device connects to a Chinese wireless carrier, so unless someone is using their phone in airplane mode, there’s no good way to avoid the censorship.
This might not seem like a big deal; Apple News hasn’t officially debuted anywhere outside the United States, and the Chinese government’s efforts to control the information that enters mainland China aren’t exactly secret. But Apple’s ability to stop someone from reading an article already on their device, as Salibra notes, raises some serious questions about relying on Apple News. (The company has since disabled the entire Apple News service for anyone attempting to use it in China.)
“[Apple is] censoring news content that I downloaded and stored on my device purchased in the USA, before I even enter China just because my phone happens to connect to a Chinese signal floating over the border,” Salibra said in a Reddit post. He added that this is “much different than having your server blocked by the Great Firewall or not enabling a feature for customers” in certain countries.
People tend to get upset when something is taken from their devices, whether it’s Apple News censoring a free service or Amazon pulling “1984” from Kindles. These actions serve as reminders that regardless of what we think about digital media, be it an online article or an e-book, we don’t really “own” anything. It can all be taken away at a moment’s notice — and there’s nothing we can do about it.
When companies demonstrate their willingness to pull those digital products, either because they’re afraid of losing access to their second-most valuable market or because the item shouldn’t have been listed in its marketplace to begin with, those fears rise to the forefront. Apple just reminded the world how fleeting digital content can be, especially when it’s distributed via third parties.
Given Apple’s fight to show that the future of media is digital — sorry, I mean is apps”– that probably isn’t the lesson it ought to be teaching right now. Although, it should be concerning to see how far Apple may be willing to go to appease the government in one of its most lucrative markets.

Considering the security implications of CloudFlare’s partnership with Baidu

Earlier this year, Citizen Lab revealed an attack tool that redirected Internet traffic in mainland China to take down websites like GitHub or GreatFire. The tool was dubbed “the Great Cannon” because it appears to share locations with “the Great Firewall” that separates mainland China from the global Internet.
The Great Cannon was the first thing I thought about when news recently broke about CloudFlare’s partnership with Baidu. Both companies were touting their ability to reduce page loading times and make websites available to more people inside China, but nothing was said about how the tool might provide even more fodder for the Chinese government to load into its Great Cannon.
Matthew Prince, co-founder and chief executive of CloudFlare, was quick to address my concerns. “When we see attacks [like those caused by the Great Cannon] those are actually fairly easy attacks to stop,” he said. “Often, much larger and more destructive attacks come from using infected machines and botnets.”
The Great Cannon, in other words, isn’t the scariest thing out there. Prince added that CloudFlare’s partnership with Baidu might actually make it easier to defend Western sites from attack.
“I’m really excited that we’ll be better able to keep traffic inside China,” he told me. “Before, it was much harder to sinkhole traffic” coming from infected machines in the country. CloudFlare previously had to “largely overbuild” a West Coast facility to handle that traffic.
Others have taken a more pessimistic view of the partnership. FireEye’s chief security strategist, Richard Bejtlich, wrote an article for Motherboard about the problems Western companies might face because of the virtual joint venture. He argued that Baidu had enabled the Great Cannon with one of its tools; that sharing CloudFlare’s intellectual property could allow it to be undermined; and that Baidu or the Chinese government might just copy the company’s tech.
Prince dismissed the blog post as fear-mongering. Much of CloudFlare’s tech is already open-sourced, he said, and many companies could probably build a copycat by using the tools it has shared to its GitHub page. CloudFlare’s real value is said to come from the network it uses to thwart attacks and the data it gathers from the “more than 2 million web properties” with which it works.
“When US-China partnerships fail,” he said, “It’s often because some security guru and his lawyers say ‘We can’t trust you with anything.'” CloudFlare is said to have passed on many potential Chinese partners because it couldn’t trust them; sharing intellectual property is one way for CloudFlare to show that trust. He also said there’s “no evidence” Baidu was complicit with the Great Cannon.
Still, he said he hadn’t considered how speeding up Internet connections in China might indirectly assist the Chinese government. While things might not be as gloom as Bejtlich portrays them in his article, they might also not be as sunny as CloudFlare is depicting them. There’s a giant question mark here, and that’s unsettling, given just how problematic China’s Great Cannon might be.

Strange bedfellows: Amazon sets up shop on Alibaba site

Amazon.com has opened an online presence on rival Alibaba’s Tmall superstore, according to Reuters and other outlets citing an Alibaba spokesman.

[company]Amazon[/company] and [company]Alibaba[/company] are both prodigious online retailers and rivals and both are eying the other’s turf. Earlier this week Aliyun, Alibaba’s online services arm, opened a cloud data center in Silicon Valley, its first presence in the U.S. Aliyun is seen as a competitor to cloud giant Amazon Web Services.

I’ve reached out to both Alibaba and Amazon for further comment and will update this story as needed.

Other western companies, including Costco, Burberry and Zara parent company Inditex, have also set up shop on Tmall, which runs the ecommerce sites and provides the associated payment-processing operations.

Amazon.com offers its own ecommerce site in China, but Alibaba is the 800-pound gorilla there and it makes sense for Amazon to set up shop on Alibaba’s Tmall if it wants to sell more stuff to Chinese citizens.  Long live co-opetition I guess.

A sneak peek at Xiaomi’s Android-based Mi TV

Chinese smart phone maker Xiaomi may be getting ready to sell some of its wares in the U.S., but its smart TV devices likely won’t be part of that U.S. line-up any time soon: Xiaomi VP of International Hugo Barra told me on the sidelines of a press event in San Francisco Thursday that Xiaomi’s TV set is heavily customized for the Chinese market, thanks in part to content licensing agreements, and the company isn’t looking to strike similar deals in the U.S.. The same goes for Xiaomi’s Mi Box mini, a streaming device that the company introduced last month.

However, never say never: Xiaomi revealed last year that it plans to invest $1 billion in online video content, which could eventually pave the way to target Chinese expats, or even wider audiences, outside of China as well. With that in mind, it’s worth taking a closer look at Xiaomi’s Mi TV, the company’s 47-inch smart TV, which was on display at the press event as well.

Xiaomi Mi TV

Mi TV is based on Android, but it doesn’t look at all like the Android TVs Google is currently introducing with manufacturers like Sony and Sharp. Instead, Xiaomi has custom-built its own user interface, which boasts access to TV, movie and game content as well as an app store and access to user-generated local and cloud content.

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At the center of the experience is definitely Xiaomi’s movie and TV content, which the company is licensing from China’s ICN TV. “Essentially, you get a Netflix-style subscription for free,” Barra told me.

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Barra stressed that all of the content available through Mi TV is licensed, and said that it’s possible to offer free content in part because licensing costs in China are a lot lower.

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Mi TV also offers access to Android games, which can be played with an external game pad.

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Mi TV users can also access Xiaomi’s Mi Cloud service, which offers personal media backup and synching across devices. That way, they are able to view photos and videos taken on Xiaomi smartphones on their TVs.

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Xiaomi President Bin Lin said Thursday that Mi Cloud already stores 30 billion photos. Over time, the company wants to extend the cloud functionality to connect all kinds of devices through the company’s IoT platform.

Xiaomi is looking to bring everything but its phones to the U.S.

Chinese smart phone maker Xiaomi isn’t ready just yet to sell its phones in the U.S., but the company wants to start selling some of its other products to Americans soon. Xiaomi’s Hugo Barra, vice president of international for the copmany, announced at a press event in San Francisco Thursday that it plans to launch its e-commerce website in the U.S. and other international markets soon to start selling accessories like its fitness band, power banks and other accessories.

Xiaomi's website, as it will be available to U.S. users soon.

Xiaomi’s website, as it will be available to U.S. users soon.

“We intend to launch here in the us in a few months,” Barra said. “It will not include any phones or tablets,” he said, adding that localization of its MIUI Android platform is “incredibly difficult.” Xiaomi introduced a set of headsets and a TV streaming box at a press event in China last month. However, Barra told me that the TV devices likely won’t be available in the U.S. because of content rights and other regionalization issues.

Xiaomi is currently selling its phones in eight Asian territories, and is about to start selling phones in Brazil soon. Company executives said Thursday that they sold 61.1 million phones in 2014, which represented a 227 percent growth over 2013. It generated revenue of 74.3 billion RMB (close to $12 billion), which represented a 135 percent growth over 2013. Xiaomi’s MIUI flavor of Android is being used by over 100 million people worldwide.

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Xiaomi president Lin Bin said Thursday that a lot of the company’s success in its Asian markets has to do with its direct interaction with its users, which include an active online forum as well as direct face-to-face interaction. In 2014, Xiaomi had 665 fan gatherings in China alone, he said.

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Barra added that this kind of interaction also extends to the development of MIUI itself. Xiaomi has been shipping new updates to its MIUI Android system every week for 224 weeks straight, and Barra said that many of the system’s new features have been suggested by fans. Some of the unique features highlighted by Barra include an easier way to edit the phone’s home screen, a white list for Android app notifications and a beautification feature that automatically makes your selfie look better.

But the coolest feature may actually be one that deals with one of the most annoying parts of calling big companies. Xiaomi has mapped out the phone trees of the automatic voice systems of many Chinese companies, and presents the options to do common tasks right within the dialer. Want to speak with a representative? Then just press a button — and your Xiaomi phone will automatically dial the right sequence of numbers to get you there.

This post was updated throughout with additional information at 1:06pm.

Qualcomm to pay $975M to China in antitrust settlement

Qualcomm chips and intellectual property are increasingly found in smartphones around the world, but there’s been a cloud of uncertainty hanging over the San Diego silicon firm for the past 14 months: Namely, the chance that China would boot the company out of the country or severely hamper it because of issues with a 2008 Chinese anti-trust law.

Qualcomm announced Monday that it had reached an agreement with China’s National Development and Reform Commission. As Reuters reported earlier, citing China’s state-run securities trade paper, the deal includes a 6 billion RMB fine (approximately $975 million) and Qualcomm has agreed to change its licensing practices, including a promise that it will license its “essential” 3G and 4G patents separately from its other intellectual property, at what looks like a lower rate than before. Qualcomm’s summary of the key terms is below:

  • Qualcomm will offer licenses to its current 3G and 4G essential Chinese patents separately from licenses to its other patents and it will provide patent lists during the negotiation process. If Qualcomm seeks a cross license from a Chinese licensee as part of such offer, it will negotiate with the licensee in good faith and provide fair consideration for such rights.

  • For licenses of Qualcomm’s 3G and 4G essential Chinese patents for branded devices sold for use in China, Qualcomm will charge royalties of 5% for 3G devices (including multimode 3G/4G devices) and 3.5% for 4G devices (including 3-mode LTE-TDD devices) that do not implement CDMA or WCDMA, in each case using a royalty base of 65% of the net selling price of the device.

  • Qualcomm will give its existing licensees an opportunity to elect to take the new terms for sales of branded devices for use in China as of January 1, 2015.

  • Qualcomm will not condition the sale of baseband chips on the chip customer signing a license agreement with terms that the NDRC found to be unreasonable or on the chip customer not challenging unreasonable terms in its license agreement. However, this does not require Qualcomm to sell chips to any entity that is not a Qualcomm licensee, and does not apply to a chip customer that refuses to report its sales of licensed devices as required by its patent license agreement.

China is a key market for Qualcomm — nearly half of its profits come from the country, thanks to its large smartphone manufacturing industry as well as its huge smartphone market. Given that Qualcomm’s revenue last year was nearly $27 billion, the fine won’t cripple the company, but CEO Steve Mollenkopf has warned that the settlement would have a tempering effect on the company’s fiscal 2015 outlook.

The NDRC’s main allegation was that Qualcomm had a “monopoly” on modems for cell phones, particularly those using the CDMA standard, and had “abused its dominant position,” presumably by overcharging on licensing fees. Qualcomm, in defense, has alleged that Chinese licensees selling devices with Qualcomm chips have not accurately reported sales figures — meaning that it’s hard to accurately collect licensing fees.

It’s important for Qualcomm to continue to strengthen its business ties with Shenzen’s smartphone industry, or manufacturers could turn to improving 3G and 4G chips from companies like MediaTek and Samsung.

In December, President Barack Obama discussed the 2008 anti-trust law with his Chinese counterpart, Xi Jinping. A national security spokesman said that Obama had “concerns” about China’s use of its anti-trust policy to limit royalty fees from foreign countries, turning this business issue into a matter of foreign policy.

Report: China wants backdoors in imported tech, but only its own

Western companies are doing big business in China, but storm clouds lie on the horizon. According to a New York Times report, new banking security rules approved in the People’s Republic at the end of 2014 require those selling hardware and software to Chinese banks to install backdoors for the benefit of Chinese security services.

The rules also state that companies must “turn over secret source code [and] submit to invasive audits.” While seriously problematic for many firms, this element isn’t particularly surprising.

In the wake of Edward Snowden’s NSA revelations and the U.S.’s indictment of Chinese army officials for industrial espionage, China’s authorities have repeatedly implied that U.S. products are themselves a threat to national security, because they track users and/or may contain NSA backdoors. Reports in May 2014 suggested that China was considering banning banks from using [company]IBM[/company] servers.

On the consumer side, [company]Apple[/company] for one has already reportedly agreed to let China’s security services screen its products to ensure their safety. However, many firms may find this demand impossible to meet, due to intellectual property and security concerns.

Of course, the U.S. is also pushing companies dealing in communications devices and services to install backdoors for its own intelligence and law enforcement purposes. Both administrations – and that of the U.K. — want firms such as Apple to hand over a key to users’ private communications, even though the companies have recently been moving to a more secure end-to-end encryption model where they don’t hold any keys. This is effectively a backdoor demand, though authorities generally prefer to call it “lawful intercept.”

Draft Chinese anti-terrorism laws are pushing for the same thing. This is one of the many problems with official policies that undermine genuinely strong encryption. Particularly in a globalized trade context where your nation’s companies want to make money in foreign markets, it’s a bit hopeful to think backdoor privileges can be reserved only for your own security apparatus.

However, the Times piece talked about China’s new banking regulations forcing equipment makers to build in “ports” for official monitoring purposes. This is where things get really complicated: the rules may require companies to create special versions of their products for China, and U.S. tech firms and the Chamber of Commerce are reportedly anxious that the move may be protectionist in nature.

MPAA sues China’s Xunlei for copyright infringement

The Motion Picture Association of America (MPAA) has sued Chinese file sharing operator Xunlei for copyright infringement, according to the Hollywood Reporter. The lawsuit, which was filed in China, comes after Hollywood struck a deal with Xunlei last year that forced the service to filter infringing content. The studios contend that Xunlei never followed through on the deal, which apparently included requirements to block pirate sites, terminate repeat offenders and run any content licensing agreement by the MPAA for approval, according to Torrentfreak.

Where the clean energy money flowed last year

New investments in clean energy — from project financing to government funding to VC — rebounded in 2014 to $310 billion invested globally, just shy of the annual global record for clean energy investments in 2011, according to a new report from Bloomberg New Energy Finance. That is 16 percent growth from the amount of funding that went into clean energy in 2013. The founder of Bloomberg New Energy finance, Michael Liebreich, who is also chairman of the advisory board for Bloomberg New Energy Finance, said that while BNEF was predicting a bounce back in 2014, the annual figures “exceeded our expectations.”

The $310 billion includes a lot of things, like investments in new big clean energy projects — say, a new solar or wind farm or a battery bank — funding into rooftop solar projects, government funding in clean energy R&D, money into corporate R&D (from GE, for example), new investments in the public markets (like an IPO, or Tesla’s convertible issues), and equity investments into developing technology from venture capitalists and private equity investors. Silicon Valley makes up a very tiny fraction of this overall investing.

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It was the big clean energy projects (asset financing) that grabbed most of the money ($171 billion). Solar panel farms in China and the U.S., and offshore wind farms in Europe received the lions share of these funds.

Solar was single biggest contributor to the clean energy funding, says the report, delivering almost half of the total, the sector’s highest contribution to date. In addition, there were seven European billion-dollar offshore wind projects financed, including ones in the U.K., the Netherlands and Germany.

Tesla owners take a ride in the new Tesla "D" model electric sedan at the Hawthorne Airport on October 09, 2014 in Hawthorne, California.

Tesla owners take a ride in the new Tesla “D” model electric sedan at the Hawthorne Airport on October 09, 2014 in Hawthorne, California.

China, in particular, was responsible for 29 percent of the world’s total clean energy investments, and the country drew in $89.5 billion for clean energy last year. China’s investment in solar made up the majority of that. U.S. solar investments were high, too.

While early stage VC investing continues to be important for developing future clean energy companies (the next-generation of Tesla’s and SolarCity’s of the world), VC and private equity investments in clean energy remained a small portion of the overall funding, at $4.8 billion for the year. That figure was up 16 percent from the year earlier, but far below the $12.3 billion record in 2008.