AI

Playing in the sandbox

For an increasing number of regulators, researchers, and tech developers, the word “sandbox” is just as likely to evoke rulemaking and compliance as it is to conjure images of children digging, playing, and building. 

That’s thanks to...regulatory sandboxes, which allow organizations to develop and test new technologies in a low-stakes, monitored environment before rolling them out to the general public. Supporters say sandboxes can rein in potentially harmful technologies without kneecapping progress.

Regulatory sandboxes originated in financial services, but there’s growing interest in using them to police artificial intelligence—an urgent task as AI expands its reach but remains largely unregulated. 

But, but, but: Even for all of its promise, experts told us the approach should be viewed not as a silver bullet for AI regulation, but as a potential step in the right direction. 

• Rashida Richardson, an AI researcher and visiting scholar at Rutgers Law School, is generally critical of AI regulatory sandboxes but said, “It’s worth testing out ideas like this, because there is not going to be any universal model to AI regulation.” 

In practice

The European Union proposed AI legislation that would establish regulatory sandboxes to help the EU achieve its aim of responsible AI innovation. But it will likely take years for the EU’s proposal to become law. 

Meredith Broussard, an NYU professor and AI researcher, and Cathy O’Neil, an author and mathematician, told us they’re building an AI sandbox prototype in the US, but regulators are not yet in the picture. 

For now: The world’s only AI-specific regulatory sandbox is in Norway. It rolled out this March, and provides a window into how the approach can work in practice.

A trip to Oslo

Generally, the goal of Norway’s AI regulatory sandbox is to facilitate compliance with some of the trickier provisions of the EU’s Global Data Protection Regulation (GDPR). 

• “There’s a lot of uncertainty on how to interpret the rules into practical solutions. The regulation is there and there's also quite a bit of general guidance, but people are asking for examples.” Kari Laumann, who runs Norway’s AI sandbox project, told us. 

Norway received 25 applications for just four spots in its sandbox, and the participants were selected because they face common GDPR compliance issues, such as applying principles like transparency, fairness, and data minimization to AI. Norway will use these four to set precedents it can apply to other companies.  

Big picture: Broussard and O’Neil’s project will likely differ from Norway’s approach, but O’Neil said the overall point is the same: to arrive at more concrete guidance around the rules that govern algorithms. 

Click here to read more about how companies, regulators, and researchers are looking to regulatory sandboxes to rein in AI. 

GAMING

Checking in with the courts

Apple and Epic’s three-week trial came to a close on Monday. Here’s what you missed if you were busy wiping out Tomato Town.

Rewind: The dispute started in August 2020 when Epic Games, creator of Fortnite, tried to circumvent Apple’s App Store rules by using its own in-game payment system. In response, Apple axed Fortnite from the App Store.

He said, she said

Epic claimed Apple constitutes a monopoly, as it's the lone distributor of its apps to billions of iPhones worldwide. And Epic CEO Tim Sweeney testified that Apple was “making more profit from selling developer apps in the App Store than developers,” due to the 30% commission it takes from developer profits. 

Apple CEO Tim Cook said it maintains its tight control over management of the App Store to preserve consumer safety and trust. Apple says it’s just one digital storefront in a sea of ’em, similar to Microsoft’s Xbox Marketplace or Sony’s Playstation Store, where Epic is free to offer Fortnite. 

• Apple’s iOS only accounted for 7% of Fortnite’s total revenue from March 2018 to July 2020, and 10.2% of all Fortnite gamers.

Looking ahead: An Epic victory royale (hah) would upend the way Apple governs its App Store, giving third party developers more freedom and profits in the way they manage in-app purchases. A decision isn’t expected for at least a few months. 

SPONSORED BY ORACLE NETSUITE

Can’t Figure Out What Makes a Good CFO?

If you asked us, we’d say the essential CFO skills are 1) living in Connecticut 2) using terms like “risk-adjusted basis” with confidence and 3) owning a fountain pen, probably? 

But...we’re not the experts. This ebook, though, is written by one—Jack McCollough, a recognized thought leader and founder of the CFO Leadership Council. It’s packed with insights like sardines in a can. 

In McCollough’s humble opinion, rockstar CFOs’ paths to CFO-hood are unique, but they have certain abilities in common, like: 

• Building an elite team that aligns with your goals 
• Networking with boards and other CFOs 
• Performing cross-functionally while managing regular tasks 

That’s not all, though, folks. Check out McCollough’s ebook for even more CFO insights. 

DRONES

Backyard banana airdrops

Flytrex has received a regulatory waiver to make drone deliveries to thousands of households in Fayetteville, NC. With this authorization, the Israeli startup will be allowed to fly its aircraft over relatively populated areas.

• For what it’s worth: Fayetteville has a population of roughly 210,000. 

Victory lap?

Flytrex says the FAA’s decision paves the way for “the largest-scale backyard drone deliveries of goods known to date.” If we’re talking about non-medical goods, then this is likely true. 

The company’s drones fly at 32 mph and 230 ft. high in the sky. When they get close to backyards, Flytrex’s dropoff point of choice, the drones decelerate and release the package via wire. In Fayetteville, Flytrex will deliver food, drinks, and other items from Walmart and other retailers. 

Bottom line: When it comes to drones and the laboratories of democracy, North Carolina is first in flight yet again (although Virginia and North Dakota are not far behind). At the national level, the FAA is gradually taking steps to enable commercial drone delivery, which include authorizations for night flight and operations conducted over people. 

+ While we’re here: We interviewed Flytrex CEO Yariv Bash a couple months ago. 

BITS & BYTES

Stat: The two stars of “Charlie Bit My Finger” are now 15 and 17. Also, they just auctioned off the moment as an NFT for $761,00 and may soon pull the video down from YouTube for good. 

Quote: “Crypto is having a lot of volatility and more interesting storylines.”—James Kardatzke, CEO of Quiver Quantitative, to the FT

• According to the alternative data site, r/Cryptocurrency chatter has edged out that of r/WallStreetBets in May.

Read: A Waymo exec writes in CNBC about why the industry shouldn’t be saying “self-driving.” 

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WEIB

• Tesla is testing lidar sensors, Bloomberg reports. Though Elon Musk has famously dismissed lidar as too expensive and a “fool’s errand,” perhaps his AV team is discovering that the technology has an important role to play in the perception stack. 
• Ren Zhengfei, Huawei’s founder-CEO, says the company should circumvent US sanctions by pivoting to software, Reuters reports. 
• Microsoft CEO Satya Nadella teased the next generation of Windows and said it is coming “very soon.” 
• Ray Dalio says he prefers bitcoin over bonds. 
• Google struck a multi-year deal to develop healthcare algorithms for hospital chain HCA, which serves 2,000 locations across 21 states.

TECH THROWBACK

Twenty-five years ago, the Palm Pilot was introduced—and the world of handheld devices would never be the same again. This iteration of the personal data assistant (PDA) was about the size of a deck of cards, and it ran on software from Palm Inc. and a Motorola microprocessor. Buying one would set you back about $400. 

TRIVIA

Amazon just closed its purchase of MGM, its second-biggest acquisition ever. How well do you know the Everything Store’s past purchases? 

Take the quiz here.

ICYMI

Catch up on the top Emerging Tech Brew stories from the past few editions: 

• Mayo Clinic AI could help diagnose early-stage heart failure
• Ford’s plan for the all-electric F-150 Lightning
• Remote robot operation: taking Spot for a spin