Politicians in the US are wondering whether China’s TP-Link should be banned, like TikTok. CC-licensed photo by Kārlis Dambrāns on Flickr.
You can sign up to receive each day’s Start Up post by email. You’ll need to click a confirmation link, so no spam.

There’s another post coming this week at the Social Warming Substack on Friday at 0845 UK time. Free signup.

A selection of 9 links for you. Routine. I’m @charlesarthur on Twitter. On Threads: charles_arthur. On Mastodon: https://newsie.social/@charlesarthur. On Bluesky: @charlesarthur.bsky.social. Observations and links welcome.

DeepSeek: everything you need to know right now • Exponential View

Azeem Azhar has been up to his knees and elbows in the whole world of AI for ages: »The math has changed. Google, OpenAI, Meta, and Nvidia have all bet on capital spending being the path forward and huge amounts of it. Cash would buy chips. Lots of chips. This was going to provide the moat, the source of advantage.
US model makers have been locked into a single paradigm of building ever-larger, more compute-hungry models. After all, the capital markets were willing to fund outsize spending on GPUs, so why not go for it?
With China’s venture capital market becoming moribund, local players could not access enough capital. Even those that could, such as the Qwen team from Alibaba or the Doubau from ByteDance, export restrictions would hamper access to compute.
Steven Sinofsky put it aptly when he observed that the history of computing is one of innovation followed by a scale-up, eventually disrupted by a “scale-out” approach—when bigger and faster methods are replaced by smaller, more numerous alternatives.
According to Steven,
China faced an AI situation not unlike Cisco did in its early years. Many point to the Nvidia embargo as the cause, but the details don’t really matter. The point is they had different constraints: more engineers than data centers to train in. Inevitably, they would develop a different kind of solution.
One thing for certain is that all firms will look at model development practices with an emphasis on driving efficiencies. As I wrote about OpenAI’s o3 in December:
Early versions are often expensive, but we can assume that the performance we get at $3,500 will cost us substantially less, perhaps a dollar or two, within no more than a couple of years.
The cost of GPT4 quality results has declined by more than 99% in the last two years. GPT-4 launched in March 2023 at $36 per million tokens. Today, China’s DeepSeek offers similar performance for $0.14, or 250 times cheaper.
But what does this mean for who?«

This is a much more detailed look at what DeepSeek can do than you may expect. But there’s a lot to be found in it.
unique link to this extract

U.S. stocks sink amid fears over DeepSeek and Chinese AI advancements • The New York Times

Jason Karaian and Joe Rennison: »On Monday, the S&P 500 index fell nearly 2% and the tech-heavy Nasdaq dropped more than 3%. Nvidia was hit hard, plunging over 17% and losing hundreds of billions of dollars in market value. Falling tech stocks also dented market indexes in Europe and Japan.
Excitement over the prospects for A.I. had helped send technology stocks soaring over the past year, but concerns have been rising, too. Investors have become increasingly worried that the small cohort of tech companies that drove the broader market’s gains won’t live up to the lofty expectations that their sky-high prices suggest.
The pain was concentrated at companies at the forefront of the A.I. boom, including the multitrillion-dollar behemoths that drove the largest back-to-back annual gains for U.S. markets since the 1990s. Alphabet and Microsoft fell, and in addition to Nvidia, other chipmakers like Arm, Broadcom and Micron, and semiconductor equipment specialists like ASML slid.
DeepSeek could be the start of a new phase in how investors think about A.I., said Steve Sosnick, chief strategist at Interactive Brokers. He called it a “big slap in the face” for investors that could reset the way they calculate risk.
The Chinese company unveiled its new system last month but grabbed the tech world’s attention late last week with a research paper detailing how it built the technology. That “serves as a reminder that competition in the global A.I. arena is intensifying, and Nvidia may not be in the pole position forever,” Charu Chanana, chief investment strategist at Saxo Bank, wrote in a research note.«

Doesn’t take long for Wall Street to join the dots on this stuff, does it. Whose stock didn’t fall? Apple’s. You could say: because it isn’t reliant on Nvidia or other AI cloud models; it can use on-device AI. Or: Wall Street thinks Apple isn’t in the AI game yet.
unique link to this extract

The potential impact of 25% tariffs on Canadian GDP • The Lens

Stephanie Kelton: »The world has awakened to the power of Deepseek, the rival to OpenAI’s Model o1 that has tech stocks reeling. I played around with Deepseek for a couple of hours yesterday, and I talked with a number of friends who are already using it to do some pretty advanced coding and problem solving.
Early this morning, Apollo’s Torsten Slok shared a new report from the Bank of Canada. He highlighted a simulation the Bank ran to assess the potential impact on Canada if the US imposes a 25% tariffs on all exports into the United States. The results show that Canadian GDP would decline by a whopping 6%.
I wondered whether Deepseek would come up with a similar estimate. So I asked it: “create a model and run a simulation to show the impact on Canadian GDP if the US imposes 25% tariff on all exports from Canada to the US”.«

This is very interesting and impressive, particularly because it shows every single step of its “reasoning” – and she was explicit about requiring a model so she could prod it.
unique link to this extract

US‘s wind and solar will generate more power than coal in 2024 • Ars Technica

John Timmer: »In the first 11 months of 2024, the US saw its electrical use grow by 2.8%, or roughly 100 Terawatt-hours. While there’s typically year-to-year variation in use due to weather-driven demand, the US’s consumption has largely been flat since the early 2000s. There are plenty of reasons to expect increased demand, including the growth of data centers and the electrification of heating and transit, but so far, there’s been no clear sign of it in the data.
As a result, the rapid growth of renewables has largely displaced fossil fuel generation—specifically coal—rather than meeting increased demand. Despite the rise in demand, however, the long-term decline in coal has continued in 2024, with generation via coal down by nearly 5%. This will mean that this is the first year that wind and solar will combine to outproduce coal. Collectively, they’ll account for roughly 17% of the US’s energy production, while coal will only provide about 15%.
The boost in wind and solar production has also been larger than the increase in generation from natural gas, which remains the single largest source of power on the grid, generating nearly 44% of the electricity used in the US.«

Trump won’t be able to reverse the abandonment of coal; it’s like commanding water to run uphill. But the nuclear plants, are needed urgently.
unique link to this extract

Automation in retail is even worse than you thought • The Nation

Ann Larson: »From self-checkout machines to payment by app, technology is rapidly changing the way we buy groceries. Progressive members of Congress are sounding the alarm: Representative Rashida Tlaib of Michigan and 13 colleagues wrote to the CEO of the supermarket behemoth Kroger in November about electronic price tags (often called electronic shelf labels or ESLs). These digital displays allow companies to change prices automatically from a mobile app. Tlaib warned that this so-called “dynamic pricing” permits retailers to adjust prices based on their whims.
Just as Uber raises prices during storms or rush hour, retailers like Kroger use ESLs to adjust prices based on factors like time of day or the weather. Supermarkets could conceivably mine a shopper’s personal data to set prices as high as possible. “My concern is that these tools will be abused in the pursuit of profit, surging prices on essential goods in areas with fewer and fewer grocery stores,” Tlaib wrote.
In August, Senators Elizabeth Warren and Bob Casey wrote to Kroger raising similar concerns about price gouging. Noting that the company has already implemented the technology in hundreds of stores across the county, they warned that “ESLs may help Kroger extract maximum profits from consumers at a time when…high grocery prices are a leading concern among Americans who are concerned about inflation.”
Warren and Casey also voiced concern about Kroger’s partnership with Microsoft to install facial-recognition technology in stores, which could be used to identify individual customers: When a shopper approaches the shelf, she would see a price calibrated specifically for her. The next shopper might pay a different amount based on their profile. Retailers could use shopper data to charge higher prices to those who can afford to pay more, but since stores do not have to disclose who is making pricing decisions or why, the senators worry that shoppers on a budget are particularly vulnerable. “It is outrageous that, as families continue to struggle to pay to put food on the table, grocery giants like Kroger continue to roll out surge pricing and other corporate profiteering schemes,” they wrote.
It’s unclear whether Kroger will respond to the lawmakers. The company ignored a prior letter from Representative Tlaib and previously dismissed concerns about ESLs, saying that the negative effects of the technology have been exaggerated.«

If only lawmakers could pass laws that might, you know, stop such abuse of facial recognition and ESLs. Wouldn’t that be a thing?
unique link to this extract

Intel: the Gordian Knot • Digits to Dollars

Jay Goldberg: »A takeover of Intel has become a Gordian knot. The big problem is funding the company’s fabs, which will will require tens of billions of dollars and years to get back on track. Few companies, and no private equity funds, really want to deal with that large of a funding need and time horizon. On the other hand, the US government has given Intel a lot of money, and so simply shutting down the fabs is deeply problematic. No one wants the fabs, but the company cannot be sold without them.
In theory, the new administration could give a buyer approval to shut the fabs, but if someone has enough political capital for that purpose, why not use that political capital to get some direct government support? In speaking with investors, our impression is that the Street assumes that the only way to save Intel is for the government to intervene. We maintain that this is not a hard requirement, but recognize that this is now the common perception of the situation. There are of course rumors that a certain highly-connected, deeply troubling, tech mogul has a plan to buy the company. And from the very narrow perspective of saving the US’s semis manufacturing capacity that may be what it takes.
We are increasingly convinced that the only way for Intel to survive is for someone to buy them and remove the board. Unfortunately for the company, and the semis industry, that path looks very challenging.«

Every day that goes past brings Intel closer to its crisis point. It can’t go on being in distress forever. The question is, what is its salvation – if any? Just because you haven’t thought about Intel for a bit doesn’t mean it hasn’t been getting deeper into trouble.
unique link to this extract

After TikTok, your home WiFi may be the US’s next Chinese tech ban target • CNBC

Kevin Williams: »While the TikTok ban has lawmakers scurrying and chatter about Chinese influence over U.S. tech at a fever pitch, another danger is lurking. One of Amazon’s top-selling router brands, TP-Link, has been under scrutiny by regulators as posing a threat to American infrastructure. Experts worry that China could exploit the routers to launch attacks on critical infrastructure or steal sensitive information.
Rep. Raja Krishnamoorthi (Democrat-IL) and Rep. John Moolenaar (Republican-MI) sent a letter to the U.S. Department of Commerce last summer, touching off a flurry of investigations and calls for a ban. The letter, which the Wall Street Journal first reported, flagged “unusual vulnerabilities” and required compliance with PRC law as disconcerting. “When combined with the PRC government’s everyday use of SOHO [small office/home office] routers like TP-Link to perpetrate extensive cyberattacks in the United States, it becomes significantly alarming,” the letter stated.
But so far, no action has been taken, and Krishnamoorthi is concerned.
“I am not aware of any plans to get them out,” Krishnamoorthi said. He pointed to the government’s “rip and replace” plan with Huawei network equipment as a precedent that could be followed. The government mandated in 2020 that companies rid themselves of Huawei equipment, which was deemed to pose a national security threat. Efforts to remove the equipment are still ongoing.  
According to data he cited, TP-Link has a 65% share of the U.S. router market, and its success has followed a similar playbook used by China with other technology: make a lot more than they need, export the surplus to undercut the competition, and use the technology to backdoor access or to disrupt.
…The routers were among brands in the market linked to hacks on European officials and the Typhoon Volt attacks.«

Among brands. Though they don’t have a great record for security.
unique link to this extract

Elon Musk email to X staff: ‘we’re barely breaking even’ • The Verge

Richard Lawler: »Ever since Elon Musk closed his deal to buy Twitter he’s claimed the company, now called X, is in “a very dire situation from a revenue standpoint.”
Now, the Wall Street Journal reports that banks are preparing a coordinated move to sell off some of the $13bn in debt they loaned Musk to finance the deal. It mentions an email sent to employees this month, also confirmed by The Verge, where the Chief Twit said, “…we’ve witnessed the power of X in shaping national conversations and outcomes,” but also claimed, “Our user growth is stagnant, revenue is unimpressive, and we’re barely breaking even.”
Part of the reason Bank of America, Barclays, and Morgan Stanley are holding so much of the debt is from trying to avoid selling at a loss after economic conditions changed, and Musk had an extended court battle attempting to get out of the deal. While equity investors have reportedly slashed the value of their stakes by as much as 78 %, the Journal reports, “banks hope to sell senior debt at 90-95 cents on the dollar, while retaining more junior holdings.”«

If Musk really bought it thinking it was going to be a massive moneymaking enterprise.. he may have mistaken it for Facebook, which Twitter did not resemble in the slightest. News is not profitable, and Twitter is in many ways more like a news product than anything.
unique link to this extract

What really happens to your phone when it’s stolen • The Times

Dipesh Gadher and Harry Yorke: »he UK’s most senior police officer has accused tech giants including Apple and Google of “enabling” a phone theft epidemic that gangsters have turned into a “global criminal business”.
Sir Mark Rowley, the Metropolitan Police commissioner, disclosed that about a third of all activity by organised crime groups in London now revolves around stolen smartphones and other thefts. “They are making a fortune out of this,” he told The Sunday Times. “The organised crime business model is enabled by the reusability and resaleability of stolen phones.”
Rowley said the tech companies had allowed the trade in second-hand phones to proliferate by failing to introduce sufficient security measures to permanently disable devices. “I’m sure it’s inadvertent, but it’s enabling the criminal business models, which are leading to tens of millions of pounds being made out of this,” he said.«

The article describes how phones are stolen – out of people’s hands, from shops, from delivery vans – for organised crime gangs. Later, It continues:
»Rowley is now calling on the tech companies to introduce two short-term solutions that he argues will have a swift and “big effect” on the criminal trade.
Initially, he wants Apple and Google to automatically prevent stolen phones from being able to reconnect to cloud services, which he says would have a “suppressive effect” because it “disables so much of the use of the phone”.
He is calling on manufacturers to make each handset’s unique 15-digit international mobile equipment identity (IMEI) number more accessible so that victims can easily report a theft, and buyers and police are able to check swiftly whether a device has been stolen.
In the longer term, he would like to see manufacturers, including Samsung, introduce the equivalent of a kill switch, which when flipped remotely would “digitally destroy” a stolen phone and prevent it from being reused anywhere in the world. Industry experts, however, believe such a drastic move could be problematic, because many phones that are reported missing or stolen are in fact later found by their owners.«

Who seriously records their IMEI while they have their phone? (It’s in Settings – About on an iPhone.) The problem is that phones are being stolen while unlocked, so they can be wiped and repurposed. Apple and Google have locked down phones so you can’t do much if they’re locked. The IMEI idea isn’t a bad one, but hard to implement.
unique link to this extract

• Why do social networks drive us a little mad?
• Why does angry content seem to dominate what we see?
• How much of a role do algorithms play in affecting what we see and do online?
• What can we do about it?
• Did Facebook have any inkling of what was coming in Myanmar in 2016? Read Social Warming, my latest book, and find answers – and more.

Errata, corrigenda and ai no corrida: none notified