Big Tech News from around the Globe

One of the first sectors to feel the AI squeeze is online education. In the US a number of high-profile schools have banned the system and online teaching companies are complaining that ChatGPT is threatening their business models by offering students ready-made answers to their homework assignments. ChatGPT even offers users AI generated poetry (next month, we’re considering getting ChatGPT to write this Newsletter in poetic form for our readers’ enjoyment!)  Some of the largest online tutors, such as the US-based Chegg, have already seen their share values drop.  This comes as Microsoft’s “Godfather of AI”, Geoffry Hinton left the company warning that AI was potentially a danger to society, and other tech leaders call for regulation. Meanwhile, an early investor and critic, Elon Musk, now says he is planning his own AI service, and the Chinese voice-recognition company,  Iflytek Co, has announced that it will be launching its own AI Bot soon.

Want to hail a driverless-taxi? You may have a long wait. Cruise, General Motors’ robotaxi division, lost $56m on $30m in revenue in Q1 this year. These results are fuelling growing concerns around the viability of robotaxi companies, which have struggled to commercialize their solutions in the face of rising costs and regulatory uncertainty. Investors have poured more than $20bn into the space, with 6 companies drawing $1bn plus each, so there is a great deal of venture funding to be lost if the road to commercialization remains blocked (excuse the pun!).

Meanwhile, just to put economic things into perspective, readers will have seen that in the most recent US banking crisis saga, regulators seized and sold First Republic Bank to JP Morgan at the end of the month. Together with the Silicon Reserve Bank and Signature Bank, these 3 banks collectively held $532bn in assets. This amounts to more than the $526bn (adjusted for inflation) held by the 25 banks that collapsed at the peak of the 2008 financial crisis. Now we all know that the USA has lots of small to medium sized banks, and that the US Federal Reserve Bank has imposed some very tight regulations in order to prevent a repeat of previous financial melt downs. So will these latest challenges affect African banks  and African economies which do not (usually) invest in the US banking sector? The answer, we believe is yes and no. Yes because we live in a global economy, where if the US catches a cold we all sneeze to some extent. And no because, at least so far the crisis has been limited to the USA and Switzerland. And because the global financial market is seeing a slow but steady move away from the almighty dollar (see the article above on the SA Chairing of BRICS). If the banking crisis is more or less contained to the USA, expect to see that move away from the US$ speed up considerably in Africa.