Good morning, and welcome to Tech News Now, TheStreet's daily tech rundown.
In today's edition, we're covering Tesla's fall down the ranks of the S&P 500, Apple's war with Epic Games and the wall of big tech regulation that is coming into force today through the European Union's Digital Markets Act (DMA).
Tickers we're watching today: (AAPL) , (TSLA) , (GOOG) .
Don't Miss: A Microsoft engineer yesterday published a public letter to Microsoft's board and to the Federal Trade Commission, outlining his concerns over Microsoft's decision to release its AI image-generation tools to the public without proper safeguards. He repeatedly urged the company to temporarily take down the technology, saying that the viral, explicit deepfakes of Taylor Swift, which were made using Microsoft's tools, were "not unexpected."
Related: Microsoft engineer says company asked him to delete an alarming discovery
Tesla loses its crown
Tesla's stock has been struggling a bit lately.
Down nearly 30% for the year, shares of the electric vehicle giant retreated again yesterday as Morgan Stanley's Adam Jonas — a longtime Tesla bull — cut his price target by $25 to $320 per share.
Jonas also highlighted the possibility for Tesla to lose money this year.
“We believe Tesla has significant attributes to be valued as an [artificial-intelligence] beneficiary, but the company must see a stabilization in the negative earnings revisions within the auto business first,” Jonas wrote. "If there was ever a time for Tesla to potentially post a GAAP EBIT, it may be this year.”
Jonas doesn't expect Tesla to start getting credit for its work in AI until its auto business stabilizes, a process he thinks "may take a few more quarters to see through."
The recent stock slide has pushed down Tesla's market cap to $564 billion, meaning the company is no longer among the 10 most valuable stocks in the S&P 500. The index is led by Microsoft (MSFT) and Apple, both of which boast market caps at or near $3 trillion.
Amazon (AMZN) , Alphabet (GOOG) , Meta (META) and Berkshire Hathaway (BRK.B) are among the companies that are currently filling that gap between the top spot and Tesla.
Related: Top analyst revamps Tesla price target, sees potential profit surprise
Apple vs Epic Games
In the latest chapter of the ongoing saga of Apple versus Epic Games, the tech giant, less than a month after approving it, on Wednesday terminated Epic's developer account.
Epic planned to use the account to bring an Epic Games store to IOS in the EU under the allowances made by the EU's Digital Markets Act (DMA,) which goes into force today.
In its decision to terminate the account, Apple cited a post on X by Epic CEO Tim Sweeney in which Sweeney was critical of Apple's App Store practices.
"In terminating Epic’s developer account, Apple is taking out one of the largest potential competitors to the Apple App Store. They are undermining our ability to be a viable competitor and they are showing other developers what happens when you try to compete with Apple or are critical of their unfair practices," Epic said in a blog post.
The European Commission is looking into the move under the DMA, according to Reuters.
"We are also evaluating whether Apple's actions raise doubts on their compliance with the DSA (Digital Services Act) and the P2B (Platform to Business Regulation), given the links between the developer programme membership and the App Store as designated VLOP (very large online platform)," a spokesperson said.
Apple maintained that it was exercising its rights with the move.
Related: Building trust in AI: Watermarking is only one piece of the puzzle
Speaking of the Digital Markets Act ...
As of today, the EU's DMA is now enforceable.
Under the Act, the six gatekeepers that were designated by the EU in September — Alphabet, Amazon, Apple, ByteDance, Meta and Microsoft — must now comply with all the obligations laid out by the DMA.
In a broad sense, the intention of the DMA, according to the European Commission, is to prevent these "gatekeepers from imposing unfair conditions on businesses and end users" to ensure "the openness of important digital services."
A key part of the Act involves the allowance of third-party apps and app stores, the measure that allowed Epic Games to attempt its IOS Epig Games store in the first place.
Read more of the Act's obligations for gatekeepers here.
If a designated gatekeeper is not compliant — starting today — with the obligations laid out in the Act, that company will face fines of 10% of global revenue, a number that would double for repeat offenders.
Apple posted $383 billion in revenue in 2023; a 10% slice is close to $40 billion.
Google made a bunch of changes over the past few months to get into compliance with the DMA, among them, changing its search results and allowing for easy switching of search browsers on Androids.
Related: How Google is fighting back against an onslaught of fake content
The AI Corner: AI in science
A new paper — by Anthropologist Dr. Lisa Messeri and neuroscientist Dr. Molly Crockett — aims to break down the ways in which AI ought to be used in scientific research.
Though the paper acknowledges that AI can be used to increase scientific output, the researchers argue that such an approach would decrease human understanding.
"But proposed AI solutions can also exploit our cognitive limitations, making us vulnerable to illusions of understanding in which we believe we understand more about the world than we actually do," the paper reads. "Proliferation of AI tools in science risks introducing a phase of scientific enquiry in which we produce more but understand less."
Read the paper here.
"So much of the discourse around AI pushes this message of inevitability: that AI is here, it is not going away, it's inevitable that this is going to bring us to a bright future and solve all our problems. That message is coming from people who stand to make a lot of money from AI," Crockett told Ars Technica. "We just need to be really careful that these tools serve us. We're not saying that they can't. We're just adamant that we need to educate ourselves in the ways that AI introduces epistemic risk to the production of scientific knowledge."
Read a Q&A with the researchers here.
Contact Ian with tips and AI stories via email, ian.krietzberg@thearenagroup.net, or Signal 732-804-1223.
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