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Anti-AI sentiment initially had been easy for technology’s biggest players to ignore. Calls for bans on data centers or a coordinated slowdown of the technology’s march so society can grapple with its dangers didn’t gain much traction in the early boom years.
That’s changing.
New York recently banned new large data center projects for a year. Some American cities have enacted similar freezes. In South Korea, workers went on a partial strike over Hyundai Motors’ plan to potentially bring humanoid robots into its factories—a first for the global auto industry.
While those moves aren’t holding AI back on a grand scale, they pose a more immediate challenge than any placard-waving street protest or even violent threats to prominent AI figures that have been increasing lately.
In the short term, more data-center bans like New York’s—or like the one Maine only failed to enact due to a gubernatorial veto—might push developers to places seen as less politically risky.
Perhaps more concerning for the industry, though, a spread of moratoria could add a constraint to an already scarce market for data-center sites that have adequate access to power, water and other resources.
And that would be a real problem. It would sting for companies banking on the completion of data centers in jurisdictions where pauses are in place. But it would also raise the cost of leasing what limited data-center space remains.
Costs are already going up across the computing supply chain because of surging demand for memory. That has caused tech companies to increase capital-spending plans to levels that would have been unthinkable until recently. More cost pressures could cause companies to pull back on some projects.
Strikes and other forms of labor unrest are also a real and increasingly immediate challenge.
Meta Platforms provides perhaps the largest and most acute example of this so far. Company-employee tensions frayed following Meta’s full-on embrace of AI. Meta laid off thousands of people this year, a move it said was necessary to keep funding its AI ambitions. One measure of employee sentiment fell to its lowest level ever.
Then some former employees sued. Meta, they claimed, was using AI to target workers with disabilities or who were on parental or medical leave.
Sure, it is difficult to quantify the impact of those developments. But a restive workforce is at minimum a significant distraction for Mark Zuckerberg. The Meta chief has deftly translated AI into better ad sales, but needs to go much further with the technology to justify huge spending on it.
Social and political pushback against AI is likely to escalate in step with how effective the technology is at replacing human labor. How much the computing power behind it affects people’s lives and the environment will also contribute.
The impact is becoming more tangible by the day for both businesses and their investors.
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Chinese Models Wow Investors—and Scare U.S. Officials
The tech world is weighing the impact of new AI model releases from Chinese companies including Alibaba and Moonshot AI that appear to perform on par with the most advanced in the West. Alibaba’s New York-listed shares rose more than 4% Monday following news of its new model. Moonshot, a startup, is being valued at $31.5 billion in an ongoing funding round. The Chinese models are causing trepidation at leading U.S. AI developers Anthropic and OpenAI, as well as among U.S. officials. The U.S. is considering steps to slow the pace of China’s AI development further after years of tightening export controls on AI chips.
The Number
Apple’s market capitalization during Friday trading, when it briefly overtook Nvidia to become the world’s most valuable company.
What the Humans Are Saying
AI in Charts
Big contracts have been a big feature of the AI boom. And Oracle is perhaps the poster child of the AI contract boom.
Oracle has contracts worth hundreds of billions of dollars to provide cloud-computing services to OpenAI and other AI developers. Those deals have boosted its “remaining performance obligations” to absurd levels—more than $600 billion as of its last quarterly report.
That may sound like great news. But contracts don’t guarantee future revenue. And there are not-too-distant examples of companies renegotiating or extending contracts in times of market stress, when their customers don’t need as much of the things they make.
Investors are increasingly attuned to such risks. Oracle’s shares have fallen by about 37% this year, despite the company’s position at the red-hot heart of the AI boom.
AI in the Wild
AI pets. Robots playing soccer. Earbuds that transcribe conversations. China put some of its most promising AI tech on show at the ninth edition of the country’s flagship annual AI conference, which ended on Monday. The display comes at a sensitive time for China’s AI ambitions, as domestic AI model-makers are gaining ground and robotic technology is developing quickly despite U.S. attempts to contain it.
Other Highlights From the Week in AI
AI chip startup Etched is in talks for a fundraising round that would value it at $20 billion. The company is one of many developing chips that make AI calculations more efficient.SpaceX is in talks with the Pentagon to provide it with AI computing power. The move is part of SpaceX’s bid to grow its cloud-computing business, which already includes billions of dollars of leases to Google and Anthropic.Meta is making its own cloud-computing push, and is planning to hire away a top Amazon executive to help lead it. Dave Brown, formerly a top lieutenant of Amazon chief Andy Jassy, is expected to join Meta in the coming weeks.
About Us
WSJ AI & Business is a weekly look at AI’s transformation of the business world. This newsletter was curated and edited by Asa Fitch. Reach him at [email protected] (if you’re reading this in your inbox, you can just hit reply). Got a tip for us? Here’s how to submit.