Microsoft chief executive Satya Nadella has warned that AI risks becoming a speculative bubble unless its use spreads beyond big tech companies and wealthy economies.
Nadella on Tuesday said that the long-term success of the fast-developing technology would depend on it being used by a broad range of industries as well as on uptake outside of the developed world.
“For this not to be a bubble by definition, it requires that the benefits of this are much more evenly spread,” said Nadella. He noted that a “tell-tale sign of if it’s a bubble” would be if only tech groups were benefiting from the rise of AI, rather than companies in other sectors.
However, Nadella said he was confident that AI would prove to be transformative across industries, such as helping to develop new drugs.
“I’m much more confident that this is a technology that will, in fact, build on the rails of cloud and mobile, diffuse faster, and bend the productivity curve, and bring local surplus and economic growth all around the world,” he said.
Nadella’s comments came as part of a talk with BlackRock chief Larry Fink on the first day of the World Economic Forum annual meeting at Davos, kicking off the first of several speeches by tech executives, including Google DeepMind chief Sir Demis Hassabis, and Anthropic’s Dario Amodei.
A growing body of data from tech companies, including Microsoft, has shown a global divide in AI adoption rates, pointing to productivity benefits and work applications being concentrated in richer developed countries.
Nadella also reiterated his view that the future of AI adoption would not rely on one dominant model provider, which has driven the tech giant’s decision to work with several AI groups, such as Anthropic and xAI, as well as OpenAI.
Microsoft gained an early advantage in AI through its $14bn bet on OpenAI, which gave the software group unique access to the ChatGPT maker’s technology and first claim on its data centre contracts.
But after restructuring its partnership with Sam Altman’s start-up in October, Microsoft has dropped exclusivity over its data centre needs and will lose exclusive access to its research and models in the early 2030s.
Nadella said companies would be able to take advantage of multiple models, including open-source ones or even building their own models using a technique called “distillation” to produce smaller, cheaper versions of powerful models.
“So the [intellectual property] of any application or any firm is, how do you use all these models with context engineering or your data?” Nadella said. “As long as firms can answer that question, they’re gonna be getting ahead.”
The genetic testing company 23andMe — which allows users to spit in a tube and send away the sample for a detailed DNA analysis — is filing for bankruptcy.
The California biotech firm announced in a statement this week that it had entered the federal bankruptcy process with the goal of finding a buyer to address its ongoing money troubles. Co-founder Anne Wojcicki also has stepped down as CEO, and said in a post on X she hopes to purchase the company herself. The board rejected an offer she made earlier this month, according to a press release.
23andMe has faced financial hardship for years, struggling to overcome the fact that many people who went to the website for a one-time DNA test didn't become repeat customers. In November, the company laid off more than 200 employees, or roughly 40% of its staff.
The bankruptcy announcement also comes less than two years after 23andMe suffered a massive data breach affecting 6.9 million customer accounts.
The possibility that the company, once valued at $6 billion after it went public in 2021, could be sold has raised concerns about what would happen to the sensitive information of its more than 15 million users.
In its bankruptcy announcement, 23andMe said the data privacy of its customers would be an "important consideration" in any sale. But federal law does little to secure genetic information given over to a private company, two legal experts on data privacy said.
"Often, if there's so much personal data that a group has, it's maybe in a hospital setting or a research setting and can be governed by more meaningful safeguards," said Suzanne Bernstein, counsel at the nonprofit Electronic Privacy Information Center.
"The scale of how much highly sensitive data 23andMe has is unique," she said.
Is your DNA data protected by law? It depends
For many 23andMe customers, the company holds two sensitive pieces of information: the user-provided saliva sample, and the detailed genetic profile created from it.
In an FAQ about the bankruptcy posted on its website, 23andMe said a new owner would have to abide by "applicable law" governing the use of user data, but data privacy experts say there isn't much on the books.
The Health Insurance Portability and Accountability Act, or HIPAA, applies to health care providers and insurers but not direct-to-consumers companies like 23andMe, according to Anya Prince, a University of Iowa law professor who studies health and genetic privacy. Another law called the Genetic Information Nondiscrimination Act bars employers and health insurance companies from discriminating against people due to genetic information.
"That's pretty much it on the federal level," Prince said.
Some states have adopted their own laws covering genetic privacy. At least 11 U.S. states have enacted laws giving consumers a say in how their genetic data is used, according to an article published by Prince in 2023. Those laws typically let users request that the companies delete their data and require law enforcement agencies to get a warrant or subpoena to access genetic information, Prince said. 23andMe already adheres to both of those policies, she added.
23andMe also says any genetic data it shares with researchers is stripped of identifying information, such as names and birth dates. In its bankruptcy FAQ, the company said it hopes to "secure a partner who shares in its commitment to customer data privacy."
How to protect your data, according to experts
23andMe will remain in operation through the bankruptcy proceedings, and the company says customers can still delete their data and shutter their accounts.
California Attorney General Rob Bonta said in a consumer alert last week that residents should "consider invoking their rights and directing 23andMe to delete their data and destroy any samples of genetic material" the company has.
Bernstein of the Electronic Privacy Information Center said any concerned 23andMe customers should delete their data, request that their saliva sample be destroyed and revoke any permissions they may have given to use their genetic information for research.
"We would recommend taking those actions and advocating to your state and federal representatives to pass strong consumer privacy laws," she added, "as this is just the first example of a company like this with tremendous amounts of sensitive data being bought or sold."
Even before a possible sale goes through, Prince, the law professor, said she wonders how many people know what data 23andMe already shares and with whom. For example, the company has given over anonymized data to the pharmaceutical giant GSK for years to help it develop new drugs.
"Everybody's worried about what a new company can do with the data — and that is a concern — but frankly some of the things that people are worried about, 23andMe already can do or already does," Prince said.
Google acted illegally to maintain a monopoly in online search, a federal judge ruled on Monday, a landmark decision that strikes at the power of tech giants in the modern internet era and that may fundamentally alter the way they do business.
Judge Amit P. Mehta of U.S. District Court for the District of Columbia said in a 277-page ruling that Google had abused a monopoly over the search business. The Justice Department and states had sued Google, accusing it of illegally cementing its dominance, in part, by paying other companies, like Apple and Samsung, billions of dollars a year to have Google automatically handle search queries on their smartphones and web browsers.
“Google is a monopolist, and it has acted as one to maintain its monopoly,” Judge Mehta said in his ruling.
The ruling is a harsh verdict on the rise of giant technology companies that have used their roots in the internet to influence the way we shop, consume information and search online — and indicates a potential limit of Big Tech’s power. It is likely to influence other government antitrust lawsuits against Google, Apple, Amazon and Meta, the owner of Facebook, Instagram and WhatsApp. The last significant antitrust ruling against a tech company targeted Microsoft more than two decades ago.
“This is the most important antitrust case of the century, and it’s the first of a big slate of cases to come down against Big Tech,” said Rebecca Haw Allensworth, a professor at Vanderbilt University’s law school who studies antitrust. “It’s a huge turning point.”
The decision is a major blow to Google, which was built on its search engine and has become so closely associated with online search that its name has become a verb. The ruling could have major ramifications for Google’s success, especially as the company spends heavily to compete in the race over artificial intelligence. Google faces another federal antitrust case over ad technology that is scheduled to go to trial next month.
Monday’s ruling did not include remedies for Google’s behavior. Judge Mehta will now decide that, potentially forcing the company to change the way it runs or to sell off part of its business.
What the Judge Said in His Ruling
“After having carefully considered and weighed the witness testimony and evidence, the court reaches the following conclusion: Google is a monopolist, and it has acted as one to maintain its monopoly.”
Judge Mehta’s ruling capped a yearslong case — U.S. et al. v. Google — that resulted in a 10-week trial last year. The Justice Department and states sued in 2020 over Google’s dominance in online search, which generates billions in profits annually. The Justice Department said Google’s search engine conducted nearly 90 percent of web searches, a number the company disputed.
The company spends billions of dollars annually to be the automatic search engine on browsers like Apple’s Safari and Mozilla’s Firefox. Google paid Apple about $18 billion for being the default in 2021, The New York Times has reported.
“This landmark decision holds Google accountable,” Jonathan Kanter, the top Justice Department antitrust official, said in a statement. “It paves the path for innovation for generations to come and protects access to information for all Americans.”
Kent Walker, Google’s president of global affairs, said the company would appeal the ruling.
“This decision recognizes that Google offers the best search engine, but concludes that we shouldn’t be allowed to make it easily available,” he said. “As this process continues, we will remain focused on making products that people find helpful and easy to use.”
During the trial, Microsoft’s chief executive, Satya Nadella, testified that he was concerned that his competitor’s dominance had created a “Google web” and that its relationship with Apple was “oligopolistic.” If Google continued undeterred, it was likely to become dominant in the race to develop artificial intelligence, he said.
Google’s chief executive, Sundar Pichai, countered in his testimony that Google created a better service for consumers.
Users choose to search on Google because they find it useful, and the company has continued to invest to make it better, the company’s lawyers said.
“Google is winning because it’s better,” John Schmidtlein, Google’s lead courtroom lawyer, said during closing arguments, which were held months later in May.
The government argued that by paying billions of dollars to be the automatic search engine on consumer devices, Google had denied its competitors the opportunity to build the scale required to compete with its search engine. Instead, Google collected more data about consumers that it used to make its search engine better and more dominant.
Judge Mehta sided with the government, saying Google had a monopoly over general online search services. The company’s agreements to be the automatic search engine on devices and web browsers hurt competition, making it harder for rivals to challenge Google’s dominance.
For more than a decade, those agreements “have given Google access to scale that its rivals cannot match,” Judge Mehta wrote.
The government also accused Google of protecting a monopoly over the ads that run inside search results. Government lawyers said Google had raised the price of ads beyond the rates that should exist in a free market, which they argued was a sign of the company’s power. Search ads provide billions of dollars in annual revenue for Google.
Judge Mehta ruled that Google’s monopoly allowed it to inflate the prices for some search ads. That, in turn, gave the company more money to pay for its search engine to get prime placement, he said.
“Unconstrained price increases have fueled Google’s dramatic revenue growth and allowed it to maintain high and remarkably stable operating profits,” he said in the ruling.
Judge Mehta ruled in Google’s favor on some lesser claims. Google offers advertisers many tools, including one that they use to manage advertising on different search engines. State attorneys general argued during the trial that Google had illegally excluded Microsoft’s search engine, Bing, from aspects of those tools. But Judge Mehta ruled against their claim.
Legal scholars expect this decision to influence government antitrust lawsuits against the other tech giants. All of those investigations, conducted by the Federal Trade Commission and the Justice Department, began during the Trump administration and have ramped up under President Biden.
The Justice Department has sued Apple, arguing that the company made it difficult for consumers to ditch the iPhone, and brought the other case against Google. The F.T.C. has separately sued Meta, claiming the company stamped out nascent competitors, and Amazon, accusing it of squeezing sellers on its online marketplace.
With those cases, the government is testing hundred-year-old laws originally used to rein in utility and other monopolistic companies like Standard Oil.
A victory for the government provides credibility for its broader attempt to use antitrust laws to take aim at corporate America, said William Kovacic, a former chairman of the F.T.C.
“It creates momentum that supports their other cases,” he said in an interview in June.
Google has also faced antitrust scrutiny in Europe, where officials charged the company last year with undermining rivals in online advertising.
The last major U.S. court ruling on a tech antitrust case — in the Justice Department’s 1990s lawsuit against Microsoft — cast its own shadow over the Google arguments. Judge Mehta repeatedly pressed lawyers to explain how the specifics of the case against Google could fit into the legal precedents.
The Microsoft antitrust case alleged that the tech giant combined practices like bullying industry partners and leveraging the popularity of its digital platform, from which users typically didn’t switch, to stifle competition.
A District Court judge initially ruled against Microsoft on most counts of possible antitrust violations and ordered a breakup of the company, but an appeals court reversed some of those decisions. President George W. Bush’s administration settled with the company in 2001.
NEW YORK, June 25 (Reuters) - A U.S. judge on Tuesday rejected a $30 billion antitrust settlement in which Visa (V.N), opens new tab and Mastercard (MA.N), opens new tab agreed to limit fees they charge merchants that accept their credit and debit cards.
U.S. District Judge Margo Brodie in Brooklyn said she was not likely to grant final approval to the settlement, and therefore denied the request by a group of merchants, primarily small businesses, for preliminary approval.
Many merchants and trade groups including the National Retail Federation opposed the accord, saying card fees would remain too high, while Visa and Mastercard would retain too much control over card transactions.
The decision could force Visa and Mastercard to negotiate a settlement more favorable to merchants, or go to trial.
Brodie will issue a written opinion explaining her reasoning after giving merchants and the card networks until June 28 to propose redactions.
Visa and Mastercard said they were disappointed with the outcome. Lawyers for merchants that wanted to settle did not immediately respond to requests for comment.
The settlement announced on March 26 was intended to resolve most litigation that began in 2005 over so-called swipe fees, also known as interchange fees, that merchants pay to accept Visa and Mastercard, and which the card networks set.
Those fees, typically 1.5% to 3.5% of each transaction, totaled about $72 billion in 2023 according to the Nilson Report. They generate profits for bank and other card issuers, which funnel many fees into rewards programs that encourage consumers to spend more.
The settlement called for the average swipe fee to fall at least 0.04 percentage point for three years, and stay at least 0.07 percentage point below the current average for five years.
SMALL AND TEMPORARY RELIEF
Visa and Mastercard also agreed to cap rates for five years and remove anti-steering provisions that prevent merchants from steering customers to cheaper cards, while merchants would have gotten more discretion to offer discounts or impose surcharges.
Many merchants objected to rules forbidding them from telling customers why some cards cost more than others, as well as from steering customers to cheaper cards.
Some critics also said the fees lead to higher prices for consumers, who are now sometimes charged less by paying in cash.
Trade groups said the settlement would have given merchants only small and temporary relief, and made it difficult for them to mount future legal challenges.
"It didn't address the problem of Visa, Mastercard and banks forming a cartel to issue credit cards and set fees, such that merchants have to accept all cards or none," Doug Kantor, general counsel of the National Association of Convenience Stores, said in an interview.
"The next step, presumably, is a trial," he added.
Brodie had signaled at a June 13 hearing that she would likely reject the settlement.
Some U.S. senators have promoted legislation, the Credit Card Competition Act, to let merchants use other payment networks to process Visa and Mastercard transactions.
The judge's decision does not affect an earlier $5.6 billion class action swipe fee settlement among Visa, Mastercard and about 12 million merchants.
A federal appeals court in Manhattan upheld that accord in March 2023, seven years after throwing out a $7.25 billion settlement that short-changed some retailers.
The case is In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, U.S. District Court, Eastern District of New York, No 05-md-01720.
Tractor Supply Company, which bills itself as the largest rural lifestyle retailer in the U.S., will eliminate its diversity, equity and inclusion (DEI) roles, withdraw its carbon emissions goals and stop sponsoring Pride events in response to criticism from conservative activists.
The Brentwood, Tenn.-based company announced the series of sweeping changes in a statement shared to social media on Thursday, bringing a weeks-long, right-wing pressure campaign to a close.
“We work hard to live up to our Mission and Values every day and represent the values of the communities and customers we serve,” it said. “We have heard from customers that we have disappointed them. We have taken this feedback to heart.”
Tractor Supply sells farm supplies, animal feed, tools, fencing and clothing — “everything except tractors” — at more than 2,200 stores across 49 states, according to its website. It says its customers are primarily farmers, horse owners, ranchers, tradesmen and suburban and rural homeowners.
The Fortune 500 company has been nationally recognized as an inclusive and diverse workplace, including last year in Bloomberg’s Gender Equality Index and Newsweek’s inaugural list of America’s Greatest Workplaces for Diversity.
But it recently became the target of conservative ire for that very reason, as the latest in a growing series of retailers to face backlash over — and ultimately walk back — its DEI initiatives.
Robby Starbuck, a music video director and Republican who ran unsuccessfully to represent Tennessee's 5th Congressional District in 2022, launched the campaign against Tractor Supply on X (formerly Twitter) earlier this month.
He wrote on June 6 that it was “time to expose Tractor Supply,” which he said was one of conservatives’ most beloved brands but was at odds with their values. He pointed to its DEI hiring practices, in-office Pride Month decorations, climate change activism and “funding sex changes,” among other complaints.
“I take no pleasure in bringing this all to light,” Starbuck added. “I’m a Tennessean who loves to support TN companies but as a proud Tennessean I know these woke priorities don’t align with our state or @TractorSupply’s customer base.”
He urged others to “respectfully” flood Tractor Supply’s corporate offices with calls and emails stating their disapproval and, to the extent possible, start buying products from other stores instead.
Their campaign seems to have worked, with the Financial Times reporting it knocked 5% off the Nasdaq-listed company’s share price in the past month. Tractor Supply reversed course before the end of the month.
“Going forward, we will ensure our activities and giving tie directly to our business,” it said.
The changes are placating one group and losing another
Those changes include: no longer submitting data to the Human Rights Campaign (an LGBTQ advocacy group), withdrawing its carbon emissions goals to focus on land and water conservation efforts, eliminating its DEI roles and retiring its current DEI goals “while still ensuring a respectful environment.”
The company also said it would stop sponsoring “nonbusiness activities” like Pride festivals and voting campaigns, and instead continue its focus on “rural America priorities” such as education, animal welfare and veteran causes.
Its statement on X has gotten more than 71,000 likes and 12,000 comments, many of them from conservative users applauding the company’s decision and calling for the movement to continue.
“We will get rid of DEI one company at a time,” wrote Libs of TikTok, the inflammatory right-wing and anti-LGBTQ account.
Starbuck praised the outcome as a “massive victory for sanity,” and said in an eight-minute video that this is the “first Fortune 300 company in our lifetimes to go backwards on ESG, DEI and all these woke causes and donations, in record speed.”
But that’s not good news for everyone. Many X users expressed their disappointment in the company, even vowing not to shop there anymore and calling on others to do the same.
Several, like Tennessee state Sen. Charlane Oliver, a Democrat, were especially disappointed that the company chose to take this stance during the month of both Pride and Juneteenth.
Groups including the Human Rights Campaign, GLAAD and the National Black Farmers Association were also quick to denounce Tractor Supply’s move.
“Tractor Supply’s embarrassing capitulation to the petty whims of anti-LGBTQ extremists puts the company out of touch with the vast majority of Americans who support their LGBTQ friends, family, and neighbors,” GLAAD President and CEO Sarah Kate Ellis told The Advocate. “It sends an appalling message, during Pride month, to see a rural staple go out of their way to bring harm to their LGBTQ customers and employees.”
A spokesperson for Tractor Supply declined to comment beyond their statement.
Why DEI matters
Shaun Harper, a professor of business at the University of Southern California, says because Tractor Supply stores are primarily located in rural communities, “the case-making for DEI should’ve been differently framed and better customized for those cultural contexts.”
Harper told NPR over email that he knows firsthand how activities like Pride parades are met with opposition in rural communities, like his South Georgia hometown (which has its own Tractor Supply location).
“It therefore doesn’t surprise me at all that ‘disappointed customers’ misunderstood DEI to be only one narrow set of activities that are misaligned with their religious, ideological, and family values,” he wrote.
Frank Dobbin, a Harvard sociology professor who has studied corporate diversity programs for decades, told NPR that the end of DEI programs hurts business in two ways.
“The most important role of DEI programs is that they promise to democratize access to good jobs in the U.S.,” he explains. “Part of it is just, what kind of a society do we want to be? We want to be a society where anyone can succeed — that’s certainly the principle we were founded on.”
Beyond that, he says, a lot of the practices that promote diversity — such as recruiting from HBCUs, implementing mentorship programs and offering management training — are also “just good management” from a business perspective, especially in a tight labor market.
He says it’s a mistake for companies to roll back low-cost efforts aimed at equalizing opportunities for underrepresented groups like Black, Hispanic and LGBTQ+ workers — and to signal so publicly that members of those groups aren’t welcome in their workplace.
“I don’t think it’s inconsequential when a place like Tractor Supply publicly announces that it’s not going to pursue the programs anymore,” Dobbin adds. “I think it’s not good news that companies are so publicly rejecting their own commitments to try to do better.”
Tractor Supply is part of a broader trend
The Tractor Supply saga is an example of a much broader back and forth over corporate DEI initiatives nationwide.
The 2020 police murder of George Floyd and subsequent protests against racial injustice fueled advocates’ calls for companies to do more to hire, retain and promote workers from minority groups.
That led to a nationwide surge in the hiring of chief diversity officers and other positions dedicated to spearheading DEI efforts — and to backlash from DEI’s conservative critics.
“As often happens, there was a counter movement against it,” Dobbin said. “And the conservative activists have been very successful in raising money and in funding think tanks, where the people who come after companies are often located.”
And their boycotts have had some high-profile successes in recent years, from Target scaling back on its LGBTQ+ merchandise this Pride Month to Bud Light’s parent company putting executives on leave after its partnership with a transgender influencer sparked a firestorm last year.
Dobbin says there are also many companies walking back such initiatives with less fanfare, for example, quietly taking “diversity” out of the title of an internship program.
He thinks anti-DEI efforts will continue to see progress, helped in part by the U.S. Supreme Court’s 2023 ruling against affirmative action in higher education. In the long-term, however, Dobbin doesn’t believe “this is the end of progress on promoting diversity in the workforce.”
“We had a moment where the pendulum swung in one direction,” he adds. “It swung back in another direction. Usually we end up somewhere between those two poles.”
The biggest ETF tracking collateralized loan obligations has reached $10 billion in assets, helping Janus Henderson further tighten its grip on the quickly growing niche.
The Janus Henderson AAA CLO exchange-traded fund (ticker JAAA) now commands more than $10 billion in assets, giving it roughly 90% share of the market for top-rated CLO ETFs, according to a Monday press release. Its closest runner-up among the dozen or so CLO funds is the Janus Henderson B-BBB CLO ETF (JBBB), which has amassed about $666 million.
The asset manager has dominated the arena for ETFs holding CLOs, which are bonds backed by leveraged loans that pay floating rates, meaning they generate more income as yields rise. While JAAA is neither the first mover nor the cheapest fund on the market, it’s pretty close to both titles.
It was the second such fund of its kind to launch in October 2020, and offers actively managed exposure to the asset class for 21 basis points. That’s handed Janus Henderson a lead, even with the likes of BlackRock Inc. launching a rival product.
JAAA is also the only CLO ETF that screens as having an institutional use case, such as hedging, according to a Citigroup report published last week. But that dynamic could change in a category that’s estimated to triple in size.
“The CLO category is still in its early innings,” Citi strategists including Drew Pettit wrote. “There is a possibility that more than one product can have an institutional use case, which is common in other credit ETF categories.”
For now, elevated interest rates have been a boon for JAAA, which has nearly doubled in size in the first six months of the year after ending 2023 with about $5.3 billion in assets. The fund has gained about 9% on a total return basis over the past year, compared to roughly 2% for the iShares Core US Aggregate Bond ETF (AGG).
“We believe AAA CLOs are an attractive addition to portfolios due to their diversification benefits, low interest rate volatility, attractive returns and strong credit ratings,” John Kerschner, head of US securitized products at Janus Henderson, said in the release.
An unusual right-to-repair drama is disrupting railroad travel in Poland despite efforts by hackers who helped repair trains that allegedly were designed to stop functioning when serviced by anyone but Newag, the train manufacturer.
Members of an ethical hacking group called Dragon Sector, including Sergiusz Bazański and Michał Kowalczyk, were called upon by a train repair shop, Serwis Pojazdów Szynowych (SPS), to analyze train software in June 2022. SPS was desperate to figure out what was causing “mysterious failures” that shut down several vehicles owned by Polish train operator the Lower Silesian Railway, Polish infrastructure trade publication Rynek Kolejowy reported. At that point, the shortage of trains had already become “a serious problem” for carriers and passengers, as fewer available cars meant shorter trains and reduced rider capacity, Rynek Kolejowy reported.
Dragon Sector spent two months analyzing the software, finding that “the manufacturer’s interference” led to “forced failures and to the fact that the trains did not start,” and concluding that bricking the trains “was a deliberate action on Newag’s part.”
According to Dragon Sector, Newag entered code into the control systems of Impuls trains to stop them from operating if a GPS tracker indicated that the train was parked for several days at an independent repair shop.
The trains “were given the logic that they would not move if they were parked in a specific location in Poland, and these locations were the service hall of SPS and the halls of other similar companies in the industry,” Dragon Sector’s team alleged. “Even one of the SPS halls, which was still under construction, was included.”
The code also allegedly bricked the train if “certain components had been replaced without a manufacturer-approved serial number,” 404 Media reported.
In a statement, Newag denied developing any so-called “workshop-detection” software that caused “intentional failures” and threatened to sue Dragon Sector for slander and for violating hacking laws.
“Hacking IT systems is a violation of many legal provisions and a threat to railway traffic safety,” Newag said, insisting that the hacked trains be removed from use because they now pose alleged safety risks. Newag’s safety claims are still unsubstantiated, 404 Media reported.
“We categorically deny and negate Newag’s uploading of any functionality in vehicle control systems that limits or prevents the proper operation of vehicles, as well as limiting the group of entities that can provide maintenance or repair services,” Newag’s statement said. According to Newag, Dragon Sector’s report shouldn’t be trusted because it was commissioned by one of Newag’s biggest competitors.
Dragon Sector maintains that the evidence supports its conclusions. Bazański posted on Mastodon that “these trains were locking up for arbitrary reasons after being serviced at third-party workshops. The manufacturer argued that this was because of malpractice by these workshops, and that they should be serviced by them instead of third parties.” In some cases, Bazański wrote, Newag “appeared to be able to lock the train remotely.”
Newag has said that “any remote intervention” is “virtually impossible.”
Lawsuit threats fails to silence hackers
Dragon Sector got the trains running after discovering “an undocumented ‘unlock code’ which you could enter from the train driver’s panel which magically fixed the issue,” Dragon Sector’s team told 404 Media.
Newag has maintained that it has never and will never “introduce into the software of our trains any solutions that lead to intentional failures.”
“We do not know who interfered with the train control software, using what methods and what qualifications,” Newag said. “We also notified the Office of Rail Transport about this so that it could decide to withdraw from service the sets subjected to the activities of unknown hackers.”
Dragon Sector and SPS have denied interfering with the train’s control systems.
While Newag has contacted authorities to investigate the hacking, Janusz Cieszyński, Poland’s former minister of digital affairs, posted on X that the evidence appears to weigh against Newag.
“The president of Newag contacted me,” Cieszyński wrote. “He claims that Newag fell victim to cybercriminals and it was not an intentional action by the company. The analysis I saw indicated something else, but for the sake of clarity, I will write about everything.
Newag president Zbigniew Konieczek said that “no evidence was provided that our company intentionally installed the faulty software. In our opinion, the truth may be completely different—that, for example, the competition interfered with the software.”
Konieczek also accused Cieszyński of disseminating “false and highly harmful information about Newag.”
404 Media noted that Newag appeared to be following a common playbook in the right-to-repair world where manufacturers intimidate competitor repair shops with threatened lawsuits and unsubstantiated claims about safety risks of third-party repairs. So far, Dragon Sector does not appear intimidated, posting its success on YouTube and discussing its findings at Poland’s Oh My H@ck conference in Warsaw. The group is also planning “a more detailed presentation” for the 37th Chaos Communication Congress in Hamburg, Germany, at the end of December, The Register reported.
Because of the evidence gathered during their analysis, the Dragon Sector team has doubts about whether Newag will actually follow through with the lawsuit.
“Their defense line is really poor, and they would have no chance defending it,” Kowalczk told 404 Media. “They probably just want to sound scary in the media.”
Six Republican governors are condemning efforts by the United Auto Workers to organize car factories in their states, a flash point as the labor group tries to build on its success last year winning concessions from the Big Three automakers by making inroads in the historically union-averse South.
"We have a responsibility to our constituents to speak up when we see special interests looking to come into our state and threaten our jobs and the values we live by," the governors of Alabama, Georgia, Mississippi, South Carolina, Tennessee and Texas said Tuesday in a joint statement.
The governors spoke out against the UAW a day before 4,300 Volkswagen workers in Chattanooga, Tenn., are set to start voting on whether to join the union. The factory is Volkswagen's North American electric-vehicle assembly hub, where the UAW narrowly lost union votes in 2014 and 2019. Workers at the plant will cast ballots from Wednesday through Friday evening.
Volkswagen has said it respects the workers' right to vote on whether to join the UAW. But the governors who criticized the union drive said "we do not need to pay a third party to tell us who can pick up a box or flip a switch," while also framing the campaign as a move to support President Joe Biden's reelection campaign.
"They're so scared," UAW strategist Chris Brooks wrote on social media in responding to the governors' statement.
The UAW in the fall negotiated record contracts for 150,000 workers at General Motors, Ford and Chrysler-parent Stellantis, while some nonunion factories also subsequently announced pay increases for workers. After leading a six-week strike at the companies, UAW President Shawn Fain last fall vowed to organize nonunion companies across the industry, from foreign automakers with U.S. operations to electric vehicle makers like Tesla.
In November, VW gave workers an 11% pay raise at the Chattanooga plant, but the UAW said VW's pay still lags behind the Detroit automakers. Top assembly plant workers in Chattanooga make $32.40 per hour, VW said.
The UAW pacts with Detroit automakers included 25% pay raises by the time the contracts end in April of 2028. With cost-of-living increases, workers will see about 33% in raises for a top assembly wage of $42 per hour, plus annual profit sharing.
The union is also gaining ground in other Southern states, with a majority of workers at a Mercedes-Benz plant near Tuscaloosa, Alabama, signing cards in support of joining the labor group.
The National Labor Relations Board on Thursday said the Alabama vote would take place from May 13 to May 17 at facilities in Vance and Woodstock. The Mercedes facilities had about 6,100 employees as of the end of 2023. More than 5,000 are calling for the union vote, UAW has said.
In response to the workers' petition, Mercedes-Benz U.S. International stated that it "fully respects our Team Members' choice (on) whether to unionize." The company added that it plans to ensure all workers have a chance to cast their own secret-ballot vote and have access to "the information necessary to make an informed choice" during the election process.
The UAW has accused Mercedes management of anti-union tactics in recent weeks, filing federal labor charges against the company.
NEW YORK, March 28 (Reuters) - Sam Bankman-Fried was sentenced to 25 years in prison by a judge on Thursday for stealing $8 billion from customers of the now-bankrupt FTX cryptocurrency exchange he founded, the last step in the former billionaire wunderkind's dramatic downfall.
U.S. District Judge Lewis Kaplan handed down the sentence at a Manhattan court hearing after rejecting Bankman-Fried's claim that FTX customers did not actually lose money and accusing him of lying during his trial testimony. A jury found Bankman-Fried, 32, guilty on Nov. 2 on seven fraud and conspiracy counts stemming from FTX's 2022 collapse in what prosecutors have called one of the biggest financial frauds in U.S. history.
Kaplan said Bankman-Fried had shown no remorse.
"He knew it was wrong," Kaplan said of Bankman-Fried before handing down the sentence. "He knew it was criminal. He regrets that he made a very bad bet about the likelihood of getting caught. But he is not going to admit a thing, as is his right."
Bankman-Fried stood with his hands clasped before him as Kaplan read the sentence. He was led out of the courtroom by members of the U.S. Marshals Service when the hearing ended.
Bankman-Fried, wearing a beige short-sleeve jail t-shirt, acknowledged during 20 minutes of remarks to the judge that FTX customers had suffered and he offered an apology to his former FTX colleagues.
The sentence marked the culmination of Bankman-Fried's plunge from an ultra-wealthy entrepreneur and major political donor to the biggest trophy to date in a crackdown by U.S. authorities on malfeasance in cryptocurrency markets. Bankman-Fried has vowed to appeal his conviction and sentence.
Kaplan said he had found that FTX customers lost $8 billion, FTX's equity investors lost $1.7 billion, and that lenders to the Alameda Research hedge fund Bankman-Fried founded lost $1.3 billion.
"The defendant's assertion that FTX customers and creditors will be paid in full is misleading, it is logically flawed, it is speculative," Kaplan said. "A thief who takes his loot to Las Vegas and successfully bets the stolen money is not entitled to a discount on the sentence by using his Las Vegas winnings to pay back what he stole."
The judge also said Bankman-Fried lied during his trial testimony when he said he did not know that his hedge fund had spent customer deposits taken from FTX.
Federal prosecutors had sought a prison sentence of 40 to 50 years. Bankman-Fried's defense lawyer Marc Mukasey had argued that a sentence of less than 5-1/4 years would be appropriate.
Addressing the judge, Bankman-Fried said, "Customers have been suffering... I didn't at all mean to minimize that. I also think that's something that was missing from what I've said over the course of this process, and I'm sorry for that."
Referring to his FTX colleagues, Bankman-Fried told the judge, "They put a lot of themselves into it, and I threw that all away. It haunts me every day."
Three of his former close associates testified as prosecution witnesses at trial that he had directed them to use FTX customer funds to plug losses at Alameda Research.
'MASSIVE IN SCALE'
Nicolas Roos, a prosecutor with the U.S. Attorney's office in Manhattan, told the judge, "The criminality here is massive in scale. It was pervasive in all aspects of the business."
During the hearing, Mukasey sought to distance his client from notorious fraudsters like Bernie Madoff.
"Sam was not a ruthless financial serial killer who set out every morning to hurt people," Mukasey said, describing his client as an "awkward math nerd" who worked hard to get customers their money back after FTX's collapse.
"Sam Bankman-Fried doesn't make decisions with malice in his heart," Mukasey added. "He makes decisions with math in his head."
Bankman-Fried testified in his own defense that he made mistakes such as not implementing a risk management team, but denied he intended to defraud anyone or steal customers' money.
His parents, Stanford University law professors Joseph Bankman and Barbara Fried, attended the sentencing.
A Massachusetts Institute of Technology graduate, Bankman-Fried rode a boom in the values of bitcoin and other digital assets to a net worth of $26 billion, according to Forbes magazine, before he turned 30.
Bankman-Fried became known for his mop of unkempt curly hair and commitment to a movement known as effective altruism, which encourages talented young people to focus on earning money and giving it away to worthy causes. He also was one of the biggest contributors to Democratic candidates and political causes ahead of the 2022 U.S. midterm elections.
But prosecutors have said the responsible image he cultivated concealed his years-long embezzlement of customer funds.
Bankman-Fried has been detained at the Metropolitan Detention Center in Brooklyn since August 2023, when Kaplan revoked his bail after finding he likely tampered with witnesses at least twice.
A new lawsuit in the ongoing saga surrounding late Boeing whistleblowerJohn Barnett is spotlighting the deep emotional stress the maverick quality inspector experienced from what he blasted as the planemaker’s campaign to muzzle him from exposing drastic production gaffes. The complaint also spotlights Barnett’s final thoughts as he contemplated taking his own life after locking himself inside his pickup truck overnight during a torrential rainstorm—a testament of righteous rage expressed in an extraordinarily tortured suicide note.
On March 19, Barnett’s estate filed a “wrongful death” action in the United States District Court in South Carolina, Charleston District, seeking damages on behalf of his mother and three surviving brothers. Joining the family’s longstanding counsels Rob Turkewitz and Brian Knowles is legendary litigator David Boies, along with Boris, Schiller managing partner Sigrid McCawley. Since 2017, Turkewitz and Knowles have been pursuing Boeing for allegedly violating the OSHA rules making it unlawful to retaliate against a whistleblower. Following Barnett’s death, the duo continued that regulatory lawsuit on behalf of the Barnett’s estate, and Boies joined the team. The wrongful death civil action states that “John’s PTSD, depression, anxiety and panic attacks, all caused by Boeing’s wrongful conduct, caused him to take his own life, which he would not have done but for being subjected to Boeing’s hostile work environment and its continuing retaliatory conduct.”
Fortune was first to report news of the wrongful death suit, and Boies’ involvement. When asked for comment Boeing told Fortune: “We are saddened by John Barnett’s death and extend our condolences to his family.”
The new complaint contains a copy of the suicide note, and the annexes present the full police report concluding that he died by his own hand. In conversations with Fortune, Turkewitz added further details on his client’s last hours. In the evening of March 8th last year, Barnett left the law offices of Boeing’s outside counsel in Charleston after testifying for two days in the OSHA case. Barnett was giving his account of how Boeing violated its own policies and procedures, and FAA rules, during his seven years as a quality inspector at the North Charleston plant that assembles the 787 Dreamliner. He’d delayed a trip back to his home in Louisiana to finish his deposition the next day, a Saturday. Videos cited in the police report show Barnett leaving the hotel around 8:30 PM, and getting in his Clemson orange, Dodge truck.
When Barnett failed to show by the 10 AM starting time for his final round of testimony, Turkewitz called the Holiday Inn to conduct a “welfare check.” A hotel employee saw Barnett slumped in the front seat of his vehicle. The Charleston police arrived to discover that the Dodge’s door was locked, and summoned a fire department officer who opened it with a “slim jim.” A barefoot Barnett was clutching a silver, Smith and Wesson pistol in his right hand, hair and blood showing at the end of the barrel. His right temple showed an apparent bullet entry wound, and an exit wound appeared in the back of his head.
A hotel employee working outside told the police he’d heard a “pop” just before 9:30 AM, but related that the driving rainstorm, one of the worst in Charleston’s history, muffled the sound. It’s clear from the reports included in the complaint’s annex that Barnett had spent the entire time since 8:30 PM in the truck. That’s a span of almost thirteen hours. Turkewitz added a detail not in the police accounts: Barnett had been running the engine all-night, and by the time the police arrived, the gas tank was empty; it’s also likely that the battery was dead.
Barnett’s tragic suicide note
On the seat next to Barnett’s body lay a message, written on a single page of a red-covered notebook. It was released with the police report in May, but its full contents weren’t widely noted. The sentences and phrases go in all direction, in script ranging from billboard-big to tiny. It seems that Barnett kept rotating the page by quarter turns as he added new thoughts in neat capital letters. Any of the four ways you orient the note, a lot of what he wrote appears upside-down or off to the sides. You need to keep turning the missive to read everything.
Barnett wrote a central section where held one way, you can read half the writing, and the other half’s jottings go in the opposite direction. He adds asides on both borders that run at a 90 degree angle to the middle part. The turmoil in Barnett’s writings reflect the fragmented form. You struggle to assemble the parts the way you’d puzzle over a cubist painting.
The missive comprises 94 words, 11 sentences, and 20 exclamation marks. Half of the middle section reads, “America come together or die!!! Pray that the motherfk…ers who destroyed my life pay!!! I pray that Boeing pays!!! Bury me face down so that Boeing and their lying ass leaders can kiss my ass.”
Navigate 180 degrees, and the following cascades from the middle of the page: “I can’t do this any longer!!! F-k Boeing!!! Family and friends, I love you’ll.” Then the writing spills further downwards concluding, “To my family and friends, I found my purpose! I am at peace! I love you more John/Mitch Barnett aka Swampy Fununcle Mitch.” (“Swampy” was Barnett’s nickname bestowed by his hot rod racing buddies from his time in working at the giant Boeing facility in Everett, Washington; Funcle was short for “Fun Uncle,” the moniker his beloved nieces gave the figure they cherished for his zany humor.)
In one side border, he adds, “The entire system for whistleblower protection is f-k’ed up too!!!” On the opposite fringe comes a touch of dark humor in another single sentence, “And I wasn’t stoned when I wrote this really.”