Silicon Valley Will Savor the Pentagon’s New AI InitiativeFeb12

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Silicon Valley Will Savor the Pentagon’s New AI Initiative

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Silicon Valley Will Savor the Pentagon’s New AI Initiative → 

Yesterday, President Trump signed an executive order meant to spur the development and regulation of artificial intelligence. While the language was relatively tame, the primary purpose of this legislation is likely to free up more capital for Department of Defense contracts, as the order comes amidst a new shift in the Pentagon’s machine learning strategy, as well as a new report that lays out the Chinese military’s especially aggressive approach toward AI. Some believe Silicon Valley is increasingly hesitant to step up to the plate for military contracts, that simply is not the case.

More than a dozen countries have launched AI strategies in recent years, including China, France, Canada, and South Korea. Their plans include items like new research programs, AI-enhanced public services, and smarter weaponry. The US joined that list Monday when President Trump signed an executive order creating a program called the American AI Initiative which orders the federal government to direct funds, programs, and data toward AI research and commercialization.

One element of the Trump administration plan would open some stocks of government data to academics and companies doing AI research. Tech companies such as Google parent Alphabet have plenty of data logging consumer habits stashed inside their data centers; but in other areas, such as health care, they struggle to amass the data needed to fuel AI projects.

While all of that is great news for the future of American automation and data technologies across many civilian industries, military applications remain the most vested interest for many in the US government, given both Russia and China’s explicit military ambitions in AI. It is likely no coincidence that this executive order comes just as the Department of Defense (DoD) is set to unveil a new artificial intelligence strategy, which will be its first ever. The strategy will emphasize the creation and tailoring of tools for specific commands and service branches, allowing them to move into AI operations sooner rather than later. The DoD has already accelerated efforts to embrace A.I., shifting $75 million of its annual budget to a new office that will develop these technologies.

Both of these developments come right on the back of a new report by the Center for a New American Security, which states that the Chinese military is already exporting some such technology, it seems. Chinese officials generally expect drones and military robotics to feature ever more extensive AI and autonomous capabilities in the future, and the country’s weapons manufacturers already are selling armed drones with significant amounts of combat autonomy.

While China and Russia, both much more authoritarian than the US, can use strongman tactics to push their country’s companies in the direction of technologies they’d like to see them develop, the US usually takes a much more voluntarist route by offering federal contracts through the DoD.

It’s not that the US has ever had a shortage of companies lining up for those big federal contracts; Apple is currently one of a consortium of companies and universities developing “stretchable” electronic sensors to monitor troops and ships, Amazon provides servers, storage, databases, software, and analytics to the CIA through the cloud, and Dell licenses software to ICE. Even an AI bot designed to play poker by researchers at Carnegie-Mellon University was able to snatch $10 million from the Pentagon for a two-year contract.

But some have tried to throw cold water on big tech’s military ambitions by highlighting less successful attempts to bring military projects into Silicon Valley. In 2017, for instance, Google began work on Project Maven, a Pentagon program that provides artificial intelligence software for drone warfare. Last year, though, almost 4,000 rank and file employees opposed to the company’s involvement signed a petition calling on the company to cancel the contract. While Google apologized for their involvement and agreed not to renew its contract with the DoD past March of this year, Project Maven is still ongoing, and the company decided to contract microworkers through a crowdsourcing gig company outfit called “Figure Eight” to help finish the buildout.

But going forward, disputes between the Pentagon and Silicon Valley may be solved with better communication. To try and bridge the gap, CNAS is spearheading a new effort — known as the Project on Artificial Intelligence and International Stability — to create more dialogue between policymakers, the developers of AI platforms and national security experts working outside of government. Additionally, the DoD is drafting a set of ethical principles and is reaching out to academia and ethicists to help.

Even without these new bridge-building efforts, the example of Google’s semi-successful employee opposition to Project Maven is more likely an outlier as opposed to the rule. Last November, two events in the D.C. area this week hosted by the Pentagon and the broader intelligence community drew more than 300 private sector participants, vying to help developing AI-driven security applications. That same week, Microsoft was awarded a $480 million contract to develop an augmented reality system for the DoD.

The reality is that executives will be willing to put profit first and foremost when they are aware that, if a contract doesn’t go to them, there is always a competitor lined up right behind them to take on the project. And now that the Trump administration is pushing more R&D toward AI, Pentagon checks are only getting fatter, and should provide a new wave of profitability for one of big tech’s most cutting edge disruptions.

THEME ALERT

MRP launched Long Defense as a theme on November 27, 2013. Since then, the iShares US Aerospace & Defense ETF (ITA) has risen 94.54%, outperforming the S&P 500’s 49.41% gain over the same period. Additionally, MRP launched Long Robotics & Automation as a theme on July 20, 2017. Since launching the theme, the Robo Global Robotics & Automation ETF (ROBO) has returned 2.27% versus an S&P 500 gain of 9.52%.

We’ve also summarized the following articles related to this topic in the Technology section of today’s report.

AI

• Trump’s Plan to Keep America First in AI
• Algorithmic Warfare: AI Project to Link Military, Silicon Valley
• China’s military is rushing to use artificial intelligence
• Russian fighter pilots are going to start flying with scary AI wingmen

Defense (ITA) vs S&P 500 (SPY)

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Robotics & Automation (ROBO) vs S&P 500 (SPY)

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Defense (ITA) vs Robotics & Automation (ROBO) vs S&P 500 (SPY)

Construction & Real Estate

Housing

America Isn’t Building Enough New Housing

During the last boom, buyers, lenders, and builders were swept up in speculation, and prices soared even as a flood of new homes came onto the market. That unsustainable combination doesn’t exist today. “A crash is just not something that I see in the cards, even at the local level,” says Greg McBride, chief financial analyst for Bankrate.com.

Rather than heading for another bust, we’re still feeling the effects of the last one. Aggressive homebuilders were wiped out, and the survivors are cautious about working on spec. Smaller builders that rely on borrowing can’t supercharge construction, even if they want to, because their bankers are afraid of making loans. Even after a gradual rebound from its nadir in early 2009, the rate of starts on erecting single-family residences remains below the level of the early 1960s, when the U.S. population was less than 60 percent of what it is today.

Instead of an oversupply of homes, there aren’t enough being built. That’s propping up prices at levels that exclude many Americans from ownership. “We are underhoused,” says Aaron Terrazas, a senior economist for Zillow Group Inc.

The shortage is being aggravated by low unemployment, which is making it hard to hire workers. Not-in-my-backyard zoning rules are exacerbating the issue of an already small pool of construction-ready lots, and developers claim regulation is driving up costs. B

Services

Cannabis

Pot Earnings, U.S. Bank Hearing to Set Tone

Canada’s two biggest cannabis companies report earnings this week, giving us the first glimpse — however murky — of what recreational sales look like.

Aurora Cannabis Inc. reports fiscal 2018 earnings post-market on Monday and Canopy Growth Corp. reports Thursday after the close, followed by an analyst call on Friday. These earnings won’t tell us much about what normalized legal sales will look like, as there were plenty of headwinds in the final quarter of 2018 that will undoubtedly impact results.

However, they will help investors “gain a window into how the overall Canadian adult-use market is progressing, as well as the relative ability for LPs to execute and gain market share early on,” Eight Capital analyst Graeme Kreindler wrote in a note last week. Kreindler expects significant quarter-over-quarter growth in revenue, offset by higher costs and no meaningful cash flow or earnings before interest, taxes, depreciation and amortization.

In terms of results, we already have some clarity from Aurora, which said last month that it expects to report revenue of C$50 million ($38 million) to C$55 million for the quarter ended Dec. 31, up 327 percent from the same period a year ago. Canopy hasn’t provided advanced guidance but the pot producer is expected to report revenue of C$82.3 million and an adjusted loss per share of 16 cents, according to the average of analysts’ estimates compiled by Bloomberg, up from C$21.7 million and earnings of 5 cents a year ago. B

Consumper Staples

Prepare to Pay More for Diapers, Clorox and Cat Litter

Makers of household staples from diapers to toilet paper are set to raise prices again this year after already hiking prices in 2018, hoping to offset higher commodity costs and boost profits.

Church & Dwight Co. recently increased prices for about one-third of its products, including Arm & Hammer cat litter and baking soda, and some OxiClean cleaning products. “The good news is that competitors are raising [prices] in those categories as we speak,” Church & Dwight Chief Executive Matthew Farrell said on a conference call last week when the company reported higher quarterly sales and lower profits. The company is now discussing more price increases with retailers, including for personal-care products, Mr. Farrell told analysts Tuesday.

Church & Dwight is one of several consumer-goods companies, including Procter & Gamble Co. , Colgate-Palmolive Co. and Clorox Co. , that have raised prices—or pledged to do so—in response to higher costs of raw materials and transportation, as well as unfavorable foreign-currency swings. As a result, consumers are being asked to pay more for Pampers and Huggies diapers, Bounty and Viva paper towels, Charmin and Scott toilet papers and Arm & Hammer baking soda, among other products. WSJ

Coffee

This “Molecular Coffee” is Brewed Entirely Without Beans

Take the animal out of meat, and you’ve got fake meat. Take the dairy out of milk and you have soy or almond milk. But what happens when you try to take the bean out of the coffee?

Seattle-based startup Atomo has developed a “molecular coffee” that promises to make a better cup without needing to harvest a single coffee bean. The company is touting it as a way to ditch the cream or sugar, since their product is engineered from the ground up to deliver the desirable flavors and aromas of a great cup of coffee.

Atomo CEO Andy Kleitsch and microbiologist Jarret Stopforth are the faces behind Atomo. They believe they’ve identified the 40 or so compounds found in the proteins and oils of coffee that represent the body, mouth feel, aroma, and color of coffee, and built a product made out of naturally derived sustainable ingredients.

The result: “the smoothest coffee you’ve ever had – with a caffeine kick you’d expect,” their peppy Kickstarter page reads. The product itself is not a powder you dissolve in hot water — the team decided to replicate the traditional coffee-making ritual by creating grounds instead.Futurism

Manufacturing & Logistics

3DP

A Wild & Futuristic Motorcycle That Is 3D Printed & Has Airless Tires — Welcome To The Future

The unsung hero of the rEVolution is probably the motorcycle industry. Electric motorcycles (e-motorcycles) have disrupted that industry and left a few complacent motorcycle makers in the dust who are doubling down on gasoline instead of embracing a torquier electric motor.

BigRep already 3D-printed airless motorcycle tires for everyday use. It finally added a proper 3D printed electric motorcycle on top of them. The consulting group claims its NERA E-Motorcycle is the world’s first fully 3D printed e-motorcycle that rides on airless tires. It also sports embedded electronics and forkless steering.

Using BigRep’s PRO FLEX TPU thermoplastic polyurethane filament, the flexible and moldable amalgamation allows a functional integration of components as well as embedding technology within its structure.

This is where the various mobility industries can benefit most from 3D printing and additive manufacturing. Making materials lighter and tougher can be enhanced by embedding technology directly into the material. Imagine a front fascia with everything embedded in it, such as turn signals, lights, and electronics. The flipside means changing everything in a modular way, something that usually works well for makers, less for consumers. CT

3DP

UK Startup Shows Off World’s Largest 3D Printed Rocket Engine

We’ve seen 3D printed rockets before, but never on this scale. UK space startup Orbex just showed off its Prime Rocket’s gigantic second stage — the “world’s largest 3D printed rocket engine,” according to a press release. The entire rocket, including the engine, will stand at 56 feet (17 meters) tall — roughly a quarter of the size of SpaceX’s Falcon 9 rocket, for context. In other words, things are heating up in the world of 3D printed spacecraft.

The news comes weeks after U.S.-based startup Relativity Space signed a contract with the U.S. Air Force to launch their 3D printed rocket from Cape Canaveral in Florida.

Orbex worked with aerospace engineer veterans from organizations including NASA and the European Space Association to build the Stage 2 rocket, which is the part of a multi-stage rocket that pushes a spacecraft into orbit after a launch from Earth.

The startup claims it’s the first time a 3D printed rocket engine was “uniquely manufactured in a single piece without joins.” That means the rocket is up to 30 percent lighter and 20 percent more efficient than other small launchers. No welds or joins also means that the rocket could withstand extreme temperature and pressure fluctuations better. Futurism

Technology

AI

Trump’s Plan to Keep America First in AI

The US leads the world in artificial intelligence technology. Decades of federal research funding, industrial and academic research, and streams of foreign talent have put America at the forefront of the current AI boom. Yet as AI aspirations have sprouted around the globe, the US government has lacked a high-level strategy to guide American investment and prepare for the technology’s effects.

More than a dozen countries have launched AI strategies in recent years, including China, France, Canada, and South Korea. Their plans include items like new research programs, AI-enhanced public services, and smarter weaponry.

The US joined that list Monday, when President Trump signed an executive order creating a program called the American AI Initiative. It doesn’t include new funding or specific AI projects. But it orders the federal government to direct existing funds, programs, and data in support of AI research and commercialization. The new initiative also asks agencies to help US workers adjust to jobs that have been or will be changed by AI, and to consider how the technology may require new regulations. WIRED

AI

Algorithmic Warfare: AI Project to Link Military, Silicon Valley

It was almost a year ago when Google employees made waves from Silicon Valley to Washington, D.C., by signing a letter objecting to the company’s work with the Defense Department’s Project Maven.

The effort — to develop AI systems capable of analyzing reams of full-motion video data collected by drones that would then tip off human analysts when people and events of interest pop up — was viewed by the employees as Google being in the business of war. Eventually, the company chose to not pursue another Project Maven contract.

But the brouhaha may have been mitigated if the Pentagon and Silicon Valley knew how to better communicate, said Paul Scharre, director of the Center for a New American Security’s technology and national security program.

“There’s not a lot of crosstalk and crosspollination between these communities — between policymakers and those in the AI community who are concerned,” said Scharre, who is also the author of the book Army of None: Autonomous Weapons and the Future of War.

To try and bridge the gap, CNAS is spearheading a new effort — known as the Project on Artificial Intelligence and International Stability — to create more dialogue between policymakers, the developers of AI platforms and national security experts working outside of government. The project will focus not only on the use of military applications for AI, but also on how other countries are employing the technology, he said. ND

AI

China’s military is rushing to use artificial intelligence

It’s common to say that China and the US are in an “AI arms race,” as each country races to develop and commercialize deep learning and other AI technologies before the other. A new report from the Center for a New American Security shows that a more literal AI arms race is also under way.

The report says that China is moving quickly to add ever more AI and autonomy to military weapons systems. It confirms that the country’s leaders see emerging technologies, including AI, as a way to catch up with rival nations in the West.

“Chinese officials generally expect drones and military robotics to feature ever more extensive AI and autonomous capabilities in the future. Chinese weapons manufacturers already are selling armed drones with significant amounts of combat autonomy.”

The Pentagon is, of course, also rushing to make use of artificial intelligence, in both non-weapons and weapons systems. This has raised challenges because AI increasingly comes from the private sector, where workers often object to the weaponization of their work. In China, there are fewer barriers to such collaborations.

The report offers some hope that the march of autonomy can be checked, noting that China’s leaders are concerned about the “arms race” rhetoric surrounding the AI rivalry and see a need for international collaboration on the matter of AI arms control. MIT

AI

Russian fighter pilots are going to start flying with scary AI wingmen

Well, it seems Russian military officials don’t want to just stop with that fearsome new hypersonic intercontinental ballistic missile that was tested last month, which we told you about and which Russia claims there’s no defense against. It would appear the country’s military forces have also been testing the feasibility of having AI-powered wingmen fly alongside Russian fighter pilots, executing commands issued by the human pilot an inaugurating a scary new chapter in aerial military combat.

News accounts of Russia’s efforts here are the result of images spotted on social media of a drone called Hunter, an unmanned combat vehicle, along with images of a jet called the Sukhoi Su-57. Of particular interest is that fighter jet’s tail. On the tail you can see the shape of a jet as well as an image that seems to be the “Hunter” drone, along with the image of a lighting bolt.

The Aviationist news site notes that lightning bolt suggests a wireless connection between both planes. The Russian military doesn’t seem to be trying too hard to hide the relationship. Because also, according to The Aviationist, “new pixelated camouflage on the underside of the aircraft mimics the plan view shape of the Hunter remotely piloted aircraft.” BGR