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Jul 15, 2023

Who Is Liable for A.I. Creations?

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Tools like ChatGPT could open a new line of questions around tech products and harmful content.

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By Ephrat Livni, Sarah Kessler and Ravi Mattu

A string of challenges to Section 230 — the law that shields online platforms from liability for user-generated content — have failed over the last several weeks. Most recently, the Supreme Court declined on Tuesday to review a suit about exploitative content on Reddit. But the debate over what responsibility tech companies have for harmful content is far from settled — and generative artificial intelligence tools like the ChatGPT chatbot could open a new line of questions.

Does Section 230 apply to generative A.I.? The law's 1996 drafters told DealBook that it does not. "We set out to protect hosting," said Senator Ron Wyden, Democrat of Oregon. Platforms are immune only to suits about material created by others, not their own work. "If you are partly complicit in content creation, you don't get the shield," agreed Chris Cox, a former Republican representative from California. But they admit that these distinctions, which once seemed simple, are already becoming more difficult to make.

What about A.I. search engines? Typically, search engines are considered vehicles for information rather than content creators, and search companies have benefited from Section 230 protection. Chatbots generate content, and they are most likely beyond protection. But tech giants like Microsoft and Google are integrating chat and search, complicating matters. "If some search engines start to look more like chat output, the lines will be blurred," Wyden said.

A deadly recipe? Generative A.I. tools have already been used to make intentionally harmful content. And hallucinations — the falsehoods that generative A.I. tools create (like court cases that never existed) — are a significant problem. If a user prompts an A.I. for cocktail instructions and it offers a poisonous concoction, the algorithm operator's liability is obvious, said Eric Goldman, a law professor at Santa Clara University and a Section 230 expert.

But most situations won't be that clear-cut, and that poses a risk, Goldman said. He fears that anger over immunity for social media platforms threatens nuanced debate about the next generation of tech development.

"The blossoming of A.I. comes at one of the most precarious times amid a maturing tech backlash," Goldman said. "We need some kind of immunity for people who make the tools," he added. "Without it, we’re never going to see the full potential of A.I." — Ephrat Livni

Elon Musk receives a hero's welcome in China. The Tesla chief was hailed on Chinese social media as a "global idol" during his visit this week to the country, where he met with government ministers and visited the Tesla's Shanghai factory. Musk reportedly also had kind words for his hosts: Government readouts of his meetings with Beijing ministers said he had described the U.S. and Chinese economies as "conjoined twins" and opposed political efforts to decouple them.

Billy Joel is movin’ out (of Madison Square Garden). The singer announced this week that he will finish a 10-year stay at Madison Square Garden in July 2024. The series of more than 100 shows crossed its $200 million threshold in March. James Dolan, the C.E.O of the Garden's parent company, said the run had "made history" for both the venue and the music industry. Or, perhaps more simply: Joel was a big shot.

"Ketatations" in the workplace. Some executives have embraced the anesthetic ketamine to improve professional performance or foster team bonding. "We put them on yoga mats in the room, we have a prescription from a doctor, and we have a 45-minute experience together," Kaia Roman, who has led "ketatations" (ketamine + meditation) since the pandemic, told Bloomberg. Others prefer a more aggressive way to relax: Mark Zuckerberg recently completed "the Murph Challenge," which consists of a mile run, 100 pull-ups, 200 push-ups, 300 squats and another mile run — all while wearing a 20-pound vest. He said he had done it in 40 minutes.

General inflation slowed for the 10th straight month in April, but many companies are still raising prices. Why? Some economists blame "greedflation," "excuseflation" or a "price-price spiral," whereby businesses use inflationary events like the pandemic, the Ukraine war and soaring energy prices as an excuse to make big price increases that more than cover their higher costs. The idea is that customers are more accepting of price increases when they know inflation is historically high, so companies are taking the opportunity to raise prices as much as they can. But not everyone is convinced, and some point to a host of other postpandemic economic trends as the real culprit. Here are two views.

Greedflation is to blame. Despite expectations that net profit margins would decline this year, they have increased at the average company in the S&P 500, according to data from FactSet.

"What we see in many cases is that volumes are going down, while prices are going up and profit margins are going up," said Isabella Weber, a professor at the University of Massachusetts Amherst, who pioneered the theory.

She pointed to Starbucks as an extreme example of what she calls "sellers’ inflation." In 2020, when the pandemic shut down demand for coffee shops, basic supply-and-demand laws suggested that Starbucks would lower the price of coffee to entice people back to its stores. Instead, Weber said, "prices actually were going up."

Last month, the Federal Reserve Bank of Kansas City said corporate profits had contributed to inflation in 2021, though their contribution fell in 2022, which is consistent with what happened in previous economic recoveries.

Greedflation is not to blame. Customers who benefited from stimulus checks, low interest rates, investment gains and other factors were in a good financial position coming out of the pandemic. Their willingness to spend more is what's mostly fueling inflation, some analysts say.

"It seems to me that many telling the profit story forget that households have to actually spend money for the story to hold," David Beckworth, a senior research fellow at the right-leaning Mercatus Center at George Mason University and a former economist for the Treasury Department, told The Times this week. "And once you look at the huge surge in spending, it becomes inescapable to me where the causality lies."

In any case, conditions for greedflation could be waning. Supply chain disruptions and other inflationary pressures are easing, making it harder for companies to blame inflation elsewhere for raising prices. "Some firms are claiming ‘general inflation pressures’ as being behind their price increases," said Paul Donovan, the chief economist at UBS, "but that is far less convincing, and consumers are less willing to accept it."

Weber warns, however, that another inflation-causing crisis could pop up at any time, and "firms have now learned this playbook."

"Ted Lasso," the saccharine story of an apparently clueless American who is appointed to run a British soccer team, ended this week. And while Lasso's journey from barely knowing the rules to turning a group of misfits into a top team is not particularly realistic, management experts say some of his coaching strategies really are.

DealBook has picked out four management lessons from the fictional coach from Kansas that might apply to the real world. Warning: They contain spoilers.

The outsider sees things that others do not. Lasso is initially portrayed as a naïve bumpkin with little understanding of the sport, his team or the country he's living in. But that is the foundation of his success, said Allyson Stewart-Allen, C.E.O. of International Marketing Partners and an expert on cross-cultural management. "He brings a lack of self-consciousness in wanting to ask questions others might think are facile," she told DealBook, adding that her American clients who are expanding in Europe do exactly what Lasso does. "Ask lots of questions, be open to new ideas, and experiment."

Culture trumps strategy. Any team that is on the same wavelength is obviously more likely to thrive, a view famously championed by management thinkers like Peter Drucker. Lasso's first task was to understand the culture of the organization he has taken over and then mold it in his image. Once he achieved this, he shifted to identifying the strengths and weaknesses of his players and coaches, and figuring out how to motivate them. That should be the goal of every good manager.

Serious strategic change takes time. Most executives, especially those who run public companies, are under immense pressure to deliver quickly. Sometimes that's justified, but sometimes boards can be too quick to change a C.E.O. without providing the necessary support. Lasso had three years with little real threat of being fired. That gave him time to understand the game (by the final episode, he had learned what the offside rule is), the culture of the club and how to make it all work. It was only midway through his last season that he discovered his sporting vision — "total football" — that he used to turn his team of losers into winners.

"Meaning matters more than means," Bruce Feiler, the author of "The Search: Finding Meaningful Work in a Post-Career World," told CNBC this week. Younger workers increasingly put a priority on work-life balance and personal fulfillment over money in their careers. On the show, Lasso himself best embodied that trait by walking away from the job after finishing second rather than sticking around and trying to win it all again. Even though he finally cracked the sport, he returned to Kansas to be closer to his family. "He shows vulnerability," Stewart-Allen said. "He cries. He has panic attacks. He's not perfect, and he doesn't try to hide that. I think that is very realistic and endearing and builds empathy with people."

Last week, we wrote about a recent Pew survey that found almost half of Americans do not use all of their paid time off, and we asked you for your thoughts. A lot of you cited the same reasons as respondents to the survey for not using all of your time — banking time to use in an emergency, fearing that taking vacation will make you vulnerable during a layoff or worrying that work will accumulate to stressful levels while you’re away. We also heard from many readers who do use all of their paid time off. Here are a few of your reasons:

Quilvio wrote that he is in his early 20s, younger than most of his co-workers, and that "generationally, we have different mind-set around P.T.O. and work." He added, "I think as long as I’m getting the work done, the days (and hours) I work aren't as important."

Another reader, who asked not to be named, wrote that she used to work at a prestigious New York City law firm where most senior attorneys did not take all of their paid vacation days. Talking with them about their weekend leisure activities, she realized why: "It dawned on me (silly woman) — they have WIVES AND SERVANTS who do all the nonwork work for them! So they have time and energy to unwind on both evenings AND weekends. They are not making calls to set up doctor appointments for their kids (or, likely, for themselves either), they are not making dinner after work every night, they do not attend P.T.A. meetings, they are not burdened with the zillion daily decisions and tasks of keeping a household going."

Stephanie, a director at a hospital, said she granted whatever time her employees needed. "It's a retention tool," she wrote. "We have a high-performing team. If I take care of my managers, they take care of their staff. The staff then are better able to care for their patients."

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Ephrat Livni reports from Washington on the intersection of business and policy for DealBook. Previously, she was a senior reporter at Quartz, covering law and politics, and has practiced law in the public and private sectors. @el72champs

Sarah Kessler is a senior staff editor for DealBook and the author of "Gigged," a book about workers in the gig economy. @sarahfkessler

Ravi Mattu is the managing editor of DealBook, based in London. He joined The New York Times in 2022 from the Financial Times, where he held a number of senior roles in Hong Kong and London. @ravmattu

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