Going into a long holiday weekend here in the U.S. so I'm keeping this week's analysis short and sweet!
Two recent breaches, Clorox and Sony are notable for their glaring lack of governance. Sony has been infamously breached before and this most recent ransomware attack makes it the second breach in four months. Clorox was hit a few months back, so it's not exactly late breaking, but the bigger surprise is that an IT attack is having operational impacts great enough to generate losses this quarter. While nearly every large company will likely fall victim to a cyber attack at some point, what makes these two incidents noteworthy is the lack of preparation and administrative leadership. Being prepared and competently led won't prevent you from being hacked, but it should prevent reoccurring breaches and mitigate the losses in the event of a breach.
In some sense, this isn't surprising given that only 12% of the S&P 500 have a cyber expert on their board (according to a survey done by VC firm Night Dragon). Maybe most enterprises don't need an expert on the board, but you would think they would at least have someone with a technology background to turn to, who may understand the language, metrics and dynamics of cybersecurity. Here too, the report finds less than satisfying results with only 31% of companies having someone with technology expertise.
That is particularly shocking given how much of the rush to the next wave (Metaverse, Web3, quantum computing, AI, etc.) often feels like it comes from the top down. Perhaps the reason for such misunderstanding of technologies that do seem to have some genuine uses, despite the hype, is the lack of technical expertise in governance. We will see whether the corporate world turns over and the next generation of leaders look any different than the last.
If one thing is for sure, it's that technology manages to press on despite it all. LLM rival to OpenAI, Anthropic recently raised a large amount of money from Amazon, and looks to be courting Google soon after. With Microsoft betting on OpenAI and now Amazon lining up with Anthropic, Google and Apple are yet to pick an ally. Both tech companies have large internal investments in AI, but with as the field of potential partners dwindles they may be left with the lesser competitors or get short the whole market by betting on open source.
In addition to announcing a huge new fundraise, Anthropic released a paper on decomposition of LLMs. Interpretability of neural networks is challenging because there is no causality in their decision making, if you can even call it decision making. The output is a function of the data it is provided, but now we are getting a way to group together features that appear to generalize across models, approximating to something like reasoning.
The big leap in AI capabilities have not gone unnoticed by U.S. intelligence, as both the NSA and CIA made major AI announcements this past week. CIA is building its own AI tool available to the 18 agencies in the intelligence community. The tool will be used to surface original sources from a vast data collection apparatus, but it's not clear whether the model being used is open source, commercial or internally developed. The United States' leading signals intelligence agency, meanwhile, unveiled the NSA's AI Security Center. The center will focus on bringing together industry, national labs, defense, intelligence and allies to work on AI security problems.
One area of international cooperation that hasn't gone particularly smoothly over the past few years is the American/British/Australian (known by the awkward AUKUS acronym) joint nuclear submarine program. The UK announced that British/American defense contractor BAE Systems had won the bid for a $4B nuclear submarine program. The submarines won't be delivered until the end of the decade, and current U.S. nuclear submarines, already behind schedule, will be sold to Australia as well.
Finally, here's a fun story from Southeast Asia about money laundering arrests in Singapore. Facts are unclear right now, but the suspicion is that the ten non-citizens were arrested at the behest of China, an allegation that the Singaporean Monetary Authority denied. Regardless of a connection, China is cracking down on capital flight and the growing rift between the United States and China will continue to put Singapore in an awkward, but important position.