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Welcome to the Tech Meme Ride home for Thursday, February 6, 2025. I'm Brian McCullough today now, researchers say they have trained A cutting edge AI model for checks notes $50. Not $50 million $50. Get ready for the Super bowl of AI ads. Amazon has scheduled an Alexa AI event. And also, why does Amazon fail so hard when it comes to physical retail? Here's what you missed today in the world of tech. Well, if this holds up, then the whole race to commoditization of the intelligence part of the AI stack is happening faster than I imagined. Stanford and University of Washington AI researchers claim they have trained an AI reasoning model S1 distilled from a Gemini 2.0 model for under $50 in cloud compute. So when it comes to model training, $50 million isn't cool. You know what's cool? $50. Quoting Sherwood News Researchers at Stanford and the University of Washington have developed an AI model that could compete with big tech rivals and trained it in 26 minutes for less than $50 in cloud compute credits. In a research paper published last Friday, the new S1 model demonstrated similar performance on tests measuring mathematical problem solving and coding abilities to advanced reasoning models like OpenAI's 01 and Deep Seq's R1. Researchers said that S1 was distilled from Gemini 2.0 flash thinking experimen Experimental one of Google's AI models, and that they used test time scaling or presenting a base model with a data set of questions and giving it more time to think before it answers. While this technique is widely used, researchers attempted to achieve the simplest approach through a process called supervised fine tuning, where the model is explicitly instructed to mimic certain behaviors. End quote and quoting TechCrunch to some, the idea that a few researchers without millions of dollars behind them can still innovate in the AI space is exciting. But S1 raises real questions about the commoditization of AI models. Where's the moat if someone can closely replicate a multimillion dollar model with relative pocket change? S one is based on a small off the shelf AI model from Alibaba owned Chinese AI lab Quen, which is available to download for free. To train S1, the researchers created a data set of just 1,000 carefully curated questions paired with answers to those questions as well as the thinking process behind each answer. From Google's Gemini 2.0 flash thinking experimental after training S1, which took less than 30 minutes using 16 Nvidia H100 GPUs, S1 achieved strong performance on certain AI benchmarks according to the researchers. Nicholas Mugenoff, a Stanford researcher who worked on the project, told TechCrunch he could rent the necessary compute today for about $20. The researchers used a nifty trick to get S1 to double check its work and extend its thinking time. They told it to wait. Adding the word wait during S1's reasoning helped the model arrive at slightly more accurate answers, per the paper. Distillation has shown to be a good method for cheaply recreating an AI model's capabilities, but it doesn't create new AI models vastly better than what's available today, end quote Various sources have seen an internal memo that suggests Google is eliminating its goal of hiring more employees from historically underrepresented groups and is reviewing some DEI programs after President Trump's recent executive orders. Quoting the journal in an email to employees Wednesday, Google said it would no longer set hiring targets to improve representation in its workforce in 2020. Amid calls for racial justice following the police killing of George Floyd, Google set a target of increasing by 30% the proportion of quote, leadership representation of underrepresented groups by 2025. Parent company Alphabet's annual report released Wednesday omitted a sentence stating the company was committed to making div. Diversity, equity and inclusion part of everything we do and to growing a workforce that is representative of the users we serve. That sentence was in its reports from 2021 through 2024, Google said it was evaluating whether to continue releasing annual diversity reports, which it has done since 2014. The evaluation is part of a broader review of DEI related grants, training and initiatives, including those that the email said raise risk or that aren't as impactful as we hoped. Google also said it was reviewing recent court decisions and executive orders by President Trump aimed at curbing DEI in the government and federal contractors. The company is evaluating changes to our programs required to comply, the email said, End quote and quoting the times like other tech giants, Google responded to a DEI backlash bolstered by Mr. Trump's election victory. Meta, which owns Facebook and Instagram, has eliminated many of its diversity teams, while Amazon has begun reviewing its DEI programs. On January 22, Mr. Trump signed an executive order instructing federal contractors to not engage in dei, which he described as illegal discrimination. Through its cloud computing arm, Google provides technology services to the federal government. Google has also started a DEI review that could result in the company's cutting additional programs and initiatives. Ms. Ciccone said in the email the company will carefully evaluate programs, trainings and initiatives and will update them as needed. She said the company will consider whether some of them raise risk or aren't as impactful as we hoped. Google reported last year that 5.7% of its workforce was Black, up from 3.7% in 2020, and 7.5% of its employees were Hispanic or Latin, paired with 5.9% in 2020. End Quote Remember the Super bowl in the late 90s when all the ads were dot com ads? Remember the super bowl of a few years ago, when all the ads were for crypto? So can we expect an AI Super bowl ads bonanza sometime soon? Because sources say OpenAI is expected to air its first TV ad during Super Bowl 59. Media Radar says AI companies spent $332 million on ads in 20, over double their 2023 spend, quoting the Journal Though OpenAI has made minimal investment in advertising thus far, others in the sector haven't shied away from marketing. Companies in the AI industry spent $332 million on ads last year, more than double their 2023 spending level, according to estimates from AdTracker, MediaRadar, Google, Anthropic and Microsoft ran ads during last year's super bowl. End quoting Ad week. A commercial During Super Bowl LVIX, which this year fetched upwards of $8 million for 30 seconds of airtime, would mark the company advertisement moment since its founding in 2015. The move comes after OpenAI appointed its first chief marketing officer, CMO Kate Rouch, in December, signaling a bigger focus on marketing. Rauch was previously the CMO of cryptocurrency firm Coinbase, where she oversaw global marketing and PR. She was behind its 2022 Super bowl ad that grabbed attention for featuring a colored QR code bouncing against a black background. Before that, she spent more than 11 years at Meta. AI will be a theme at this year's Super Bowl. Google Workspace is making its big game debut with a campaign spotlighting its AI tools, while GoDaddy's is also pitching its AI tools in its super bowl ad. Yet previous ad campaigns featuring AI have fallen flat with consumers. For example, in November, Coca Cola received backlash for remaking its classic holiday ad with generative AI, while Google also sparked IRE with its Dear Sydney Olympics ad spotlighting the tech end quote. Putting this on your radar. Amazon has announced an Alexa focused event on February 26th in New York. Sources say the company will preview its long delayed Alexa generative AI revamp, quoting Reuters. Once released, it would mark the most significant upgrade to the product since its initial introduction accelerated a wave of digital assistance more than a decade ago. Amazon on Wednesday sent press invites to an event to be held on February 26th in New York featuring the head of its Device, Devices and Services team, Panos Panay. A spokesperson said the event is Alexa focused, while declining to elaborate. The new generative AI powered Alexa represents at once a huge opportunity for Amazon, which counts more than half a billion Alexa enabled devices in the market and a tremendous risk. Amazon is hoping the revamp, designed to be able to converse with users, can convert some of its hundreds of millions of users into paying customers in an effort to generate a return for the unprofitable business. The AI service will be able to respond to multiple prompts in sequence and company executive have said, even act as an agent on behalf of users by taking actions for them without their direct involvement. That contrasts with the current iteration, which generally handles only a single request at a time. Executives have scheduled a meeting known as the Go no go for February 14th. There they will make a final decision on the street Readiness of Alexa's Generative AI Revamp According to the people and an internal planning document seen by Reuters, Alexa's revamp carries with it all the challenges inherent in now familiar generative AI chatbots from OpenAI, Alphabet and others, including the possibility of fabricated answers known as hallucinations. With access to Alexa available in cars, televisions, thermostats and mobile phones, it could become an essential daily tool for scheduling and even shopping. Initially, Amazon plans to roll out the new Alexa service to a limited number of users and will not charge for it, the people said, though it has considered a five to ten dollar monthly fee. The company will also continue to offer what it is calling Classic Alexa, the version broadly available today for free, one of the people said. Amazon has discontinued adding new offerings to Classic Alexa, end quote. Even if you think it's a bit overhyped, AI is suddenly everywhere from self driving cars to molecular medicine to business efficiency. If it's not in your industry yet, it's coming fast, but AI needs a lot of speed and computing power, so how do you compete without costs spiraling out of control? Time to upgrade to the next generation of the cloud Oracle Cloud Infrastructure, or oci. OCI is a blazing, fast and secure platform for your infrastructure, database, application development, plus all your AI and machine learning workloads. OCI costs 50% less for compute and 80% less for networking, so you're saving a pile of money. Thousands of businesses have already upgraded to oci, including Vodafone, Thomson Reuters and Sunoai. Right now, Oracle is offering to cut your current cloud bill in half if you move to OCI for new US customers with minimum financial commitment. Offer ends March 31st. 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However, it's not clear that banning social media or phones at school is an effective way to address concerns over youth mental health. Students at schools with restrictive phone and social media policies do not have better mental well being than those at schools with more permissive policies, according to a Lancet study out of Europe. A Commerce Committee aide told Politico that because social media platforms already voluntarily require users to be at least 13 years old, the bill does not restrict speech currently available to kids. The panel approved the Kids Off Social Media act, sponsored by the panel's chair, Texas Republican Ted Cruz, and a senior Democrat on the panel, Hawaii's Brian Schatz, by voice vote, clearing the way for consideration by the full Senate. Only Ed Markey, Democrat, Massachusetts, asked to be recorded as a no on the bill. When you've got Ted Cruz and myself in agreement on something, you've pretty much captured the ideological spectrum of the whole Congress, Senator Schatz told POLITICO's Gabby Miller. End quote Interesting. Reuters says that Trump's de minimis cancellation that we've been talking about is likely to hit Shein harder than online dollar store Temu, which has shifted to an Amazon like bulk overseas shipment strategy. Quote Both sites grew exponentially in the US in recent years, helped by the so called de minimis rule, a measure that exempted shipments worth less than $800 from Import D. A June 2023 report estimated the Chinese retailers accounted for more than 30% of all packages shipped to the US each day under the rule. The rule began to come under scrutiny during the Biden administration, prompting both firms to start making preparations to rely less on it. But Temu made changes to its model faster, analysts and sellers told Reuters. Temu is owned by PDD holdings, while Shein is aiming to list in London in the first half of the year, tech analyst Rui Ma said Temu rapidly expanded its semi managed model as part of its groundwork, an Amazon like strategy that sees goods shipped in bulk to overseas warehouses instead of directly to customers within months of first bidding to attract sellers keeping inventory in U.S. warehouses. Last March, about 20% of Temu's U.S. sales were shipped from local sellers rather than directly from China, according to estimates from E Commerce Market Research for a marketplace pulse, two China based Temu sellers told Reuters that by the end of last year, half the products they sold to the US Were sent to warehouses there first. Temu has also been increasing the proportion of goods it sends by sea basso. Rickard, operations director at Siva Logistics Greater China said an increase in Temu ocean freighting more goods in bulk and larger size more valuable goods such as furniture was apparent in the second half of last year, reducing importing under the de minimis threshold. In contrast, Shein remains more reliant on air freight to directly ship the thousands of styles of ultra fast fashion items it pumps out each week, Rickard said, although it has open center in states including Illinois and California as well as a supply chain hub in Seattle. End quote finally today, speaking of commerce versus E Commerce, again it increasingly looks like after years of trying, Amazon just doesn't quite grok physical retail. Amazon has shrunk its Amazon Go store portfolio by around 50% since early 2023 to just 16 stores in four US states as the company continues to stumble in its physical retail efforts, quoting the Journal, the company in 2018 launched the Amazon Go convenience store, where customers can grab a latte, bagel or turkey sandwich and walk out without having to wait in line to pay. Amazon charges them electronically. But with the Amazon Go store in Woodland Hills, California closing this month, the retailer has shrunk its Go portfolio by about half since early 2023 to 16 stores in four states. Instead, Amazon is focusing on licensing its just walk out to other retailers while it focuses its bricks and mortar ambitions on grocery stores. This is hardly Amazon's only misfire in the physical store universe. It has closed dozens of its other branded retail stores in recent years, including bookstores, fashion outlets and its four star locations stocked with best selling items from its website. After a decade long experiment with bricks and mortar stores, Amazon's dominance online has yet to translate into a successful strategy for connecting with shoppers in the real world, retail brokers and landlords said. They keep testing these concepts, thinking one of them is going to connect with the consumer consumer in a big way, said Jeff Edison, chief executive of Phillips Edison and company, A real estate investor that owns grocery anchored shopping centers. But can you think of any examples where they've actually done the bricks and mortar retail? Well, I can't. Amazon Go stores were launched to develop technology that speeds up the buying process while saving on labor costs. They use cameras and sensors to track customer purchases instead of traditional checkout counters. But reducing the number of employees available to help customers and giving priority to credit card payments over cash limits sales and makes the shopping experience more cumbersome, said Nick Eglanian, president of retail advisory firm siteworks Retail. I don't really think they really understand retail, iglanian said. Running warehouses and shipping stuff efficiently is not the same as greeting a customer and saying may I help you? An Amazon spokeswoman said Go store employees greet customers at the door, restock shelves and are available to answer questions. While certain locations work better than others, the company continues to invest in its Go stores, including a recent redesign of its suburban store in Mill Creek, Washington, where it added more items such as made to order pizza pizza. Amazon also opened a new store in Bellevue, Washington last summer. I am out of things to say to you today. Kaput, absolutely out. Talk to you tomorrow.