Hi, and welcome to today's Bay Area Times daily newsletter. If you haven't yet, follow us on Twitter to receive live updates throughout the day: @bayareatimes.

Top stories today: 1) Bing AI Chat exploring ads, 2) Google Brain and Deepmind partnering on new AI, 3) Apple WWDC should bring VR headset, 4) White House to propose tougher rules on $100B+ banks, and 5) Census shows trend towards suburbs, lower-tax regions.

0. Data and calendar

1. Bing AI Chat exploring ads

• With revenue split with publishers: "We’re also exploring placing ads in the chat experience to share the ad revenue with partners whose content contributed to the chat response." - Microsoft

  • Microsoft is testing different things, and ads are only being shown to a few users.

• We expect a lower clickthrough rate (CTR) compared to traditional search. CTR in AI chats should already be lower than in 10-blue-links search, and the user having to click on "Ad" makes it even worse.

  • Long-term, this could threaten search revenue, which would hit Google harder than Microsoft.

2. Google AI and Deepmind are working together on new AI as Bard flops

• The consensus at Google is that OpenAI has a better product than them, so the 2 Alphabet subsidiaries are working together now (as they always should have). - The Information

• Prominent Google engineer resigned to join OpenAI: Jacob Devlin did so in January, as Google scrambled to do a quick Bard launch. We, along with most reviewers, see Bard as much inferior to GPT-3.5, let alone GPT-4.

• Google denies Bard was trained using GPT-4 data. "Bard is not trained on any data from ShareGPT or ChatGPT," said spokesperson Chris Pappas. - The Verge

In related AI news...

• Cuts to AI ethics teams are happening at most tech companies. We generally see AI ethics concerns as very exaggerated, and AI doomer concerns as mildly exaggerated.

• Cerebras open-source LLMs are much inferior to LLaMA, GPT.

• Vinod Khosla interview: on being 1st investor in OpenAI, freeing humanity from work.

3. Apple's WWDC to take place June 5-9; VR/MR headset announcement is expected

• Usually, their announcement contains hints of the event, and those semicircles look to us like lenses of a VR headset. - Apple

  • Officially, this event is software-focused, not hardware. "Free for all developers, WWDC23 will spotlight the latest iOS, iPadOS, macOS, watchOS, and tvOS advancements."

  • Fully online, with 1 in-person day at Apple Park.

4. White House to propose tougher rules on $100B+ banks

• Options being studied: tougher capital and liquidity requirements, stronger annual stress tests. - WSJ

  • Focus on $100B - $250B asset banks, given 2018 legislation decreased the threshold of the toughest Fed rules from $250B to $50B in assets.

  • Fed can pass new rules by itself, without Congressional approval, for banks with $100B+ in assets.

FDIC wants larger banks to pay the bill

• Recent losses are $23B and counting... "The Federal Deposit Insurance Corp., facing almost $23 billion in costs from recent bank failures, is considering steering a larger-than-usual portion of that burden to the nation’s biggest banks, according to people with knowledge of the matter." - WSJ

5. Census data shows continued trend toward suburbs, lower-tax regions

People are leaving cities like San Francisco and NYC

And moving to cities in Florida and other low-tax states

Still, the Bay Area remains the center of tech

• All the AI companies are there. OpenAI, Anthropic, Google, Replit -- and Microsoft is just 2 hours north.

• Many exciting biotech companies are there too, especially those working in aging and longevity. On this note, Replacing Aging by Jean Hébert is a highly recommended book -- it argues why we need to focus on artificial organ generation, not drugs, to solve aging.

6. Metaverse home prices are down 80-90%, as tech companies defocus on the industry

• Metaverse -> Mehtaverse: the WSJ examines how tech companies are shrinking their metaverse focus. We are bearish on the sector, as there is little consumer demand for NFTs or fully-virtual reality. On the other hand, mixed reality (MR) and augmented reality (AR) could revitalize the industry. - WSJ

7. Ramp 4x's ARR to ~$400M, just 3 years since launch

Ramp's user growth has a similar hockey stick graph

Fintechs provide better software, but big banks still dominate

• Yes, fintechs like Brex and Ramp are growing, but large enterprises still want to bank with the big banks, even with their higher fees and worse customer service. JPMorgan, for example, the largest bank in the U.S., had $129B in revenue and $3.7T in total assets in 2022. No fintech comes even close (Block is the largest in revenue, at $18B). - Techcrunch, Ramp

• We expect fintechs to dominate in 1 generation. People growing up today won't tolerate bad software. So the incumbents either catch up, tech-wise, or they will get swallowed up by the Ramps of the world.

8. Other headlines

Tech

• Google's new ad transparency center allows for search of other brands' historical ads.

• Nonprescription naxolone (anti-opioid overdose drug) finally approved by the FDA.

• Netflix testing expanding gaming to televisions.

• Hampton is a $8,500-per-year club for CEOs and founders.

• Wordle: a look at how the NYT is maintaining and launching new games.

• Mastodon: interview with CEO Eugen Rochko.

Business

• Disney made sweetheart deal with its district board before DeSantis took over.

• EA to lay off 6% of staff, around 780 employees.

• Texas Tribune to keep publishing after staff crowdfunds $300K.

Crypto

• Gemini to launch an international derivatives exchange.

• OKX to return $157M in frozen FTX/Alameda assets.

• SBF paying for his legal fees using $10M donation to his dad.

• Novogratz: AI should worry regulators, not crypto.

• USDT's market cap reaches $80B while USDC drops to $33B.

• Gensler claims existing laws regulate crypto: "they're called the securities regulation."

World

• Russia arrests WSJ journalist for alleged espionage.

• Saudis to join China-led security block that includes Russia and India.

• Taiwan President lands in the U.S., McCarthy meeting still uncertain.

• Turkey to approve Finland to NATO on Thu, Sweden vote TBD.

Washington

• Poll: 57% think criminal charges should disqualify, Trump 46% x Biden 48%.

• DeSantis' differences with Trump: tougher on crime, would have fired Fauci.

• Dominion rejects settlement with Murdoch's Fox.

• Trump Manhattan grand jury to break until end of April.

• Trump plans attack on Mexican cartels if elected, similar to Vivek's idea.

• Rand Paul opposes TikTok ban on free speech grounds.

• After Nashville shooting, GOP rejects calls for more anti-gun legislation.

• Does liberalism cause mental illness?

9. Interesting tweets, memes, and images

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