Catching up on some end-of-summer AI news.| newsletter.complex-machinery.com
Welcome to Complex Machinery, a newsletter about the intersection of AI and risk. It occasionally dips into related matters like complexity, business models, emerging tech, and marketplaces. (While the newsletter covers AI, there are no technical deep-dives. This is higher-level, AI's-impact-on-business-and-society material.) If you're looking for more details, read on. If someone pointed you to this site and you just want to subscribe, you can do that right here. (Be sure to click on the con...| newsletter.complex-machinery.com
(Photo by Thomas J. O'Halloran, via U.S. News & World Report and Wikimedia Commons)What can Wall Street history teach us about AI? Friends, longtime readers, and the occasional conference-goer have heard me ramble about this before. I'm also working on a much deeper exploration of the topic. But for now, I figured I would pull my thoughts into one place for easy reference. That's what you're reading today. This issue is a simultaneous release with O'Reilly Radar. For those who read the articl...| Complex Machinery
(Photo byAnthony Maw onUnsplash)Fun fact: a few years ago, I ran a test issue of a newsletter called These Broken Machines. It was a short, punchy rundown of recent AI-related goofs. I enjoyed the writing process, but ultimately decided against continuing it for two reasons: For one, I didn't want "dunking on AI nonsense" to be my beat. There's plenty of that to go around. I'll steal a friend's line and describe it as people who make their entire personality about hating on things. You've see...| Complex Machinery
(Image source: imgflip) Name your price I need to start by talking about the stock market. This will be relevant in a moment. Hear me out. At its core, the stock market is a simple place. Everything that happens is some twist on the old "buy low, sell high" idea. To do this, you try to suss out where share prices will go: For some groups, it's about picking single stocks. This can be as loose as throwing darts while blindfolded, or as rigorous as thoroughly researching the company in question...| Complex Machinery
(Photo byAdam Sherez onUnsplash)Given all the summer holidays, and the summer travel that goes with, here's a shorter-than-usual newsletter. Just three quick segments. Quite a rerun Remember Watson? IBM pumped serious cash into that venture – I think an initial outlay of a billion dollars to build it, plus another few billion on some health care projects – then pushed very hard to make it A Thing™. Kind of a risky move as far as product development goes. But if you have deep pockets, yo...| Complex Machinery
(Photo by Simon Kadula on Unsplash)As promised, I'm finally getting around to the Builder.AI debacle. I held off last time in part because I ran out of space, but also to review additional coverage. And while doing something unrelated, I stumbled across some other material which really framed the whole thing nicely. I'll start with that latter bit: Tim Harford, Financial Times columnist and author of The Undercover Economist, hosts a podcast called Cautionary Tales. A recent two-parter covere...| Complex Machinery
(Photo byLee Thomas onUnsplash)AI has given the world a lot to talk about over the past couple of weeks. Here's a summary of what I've explored thus far, laid out in four loosely-connected segments. (This would have been six segments, but I ran out of room. I'll cover the other two topics – one of which is the Builder.AI kerfluffle – next time around.) Just one more spin of the wheel There's a long-running joke in software dev circles, in which someone proudly spends two days automating a...| Complex Machinery
(Photo by Kenny Eliason on Unsplash)I was going to write about something else for this issue. I even told someone what I was planning, but I tempted fate by adding "I may just scrap that and write about whatever happens to be next week's AI disasterpiece." That disasterpiece soon reared its ugly head. Which means I will now write about said disasterpiece. – The Chicago Sun-Times recently made a name for itself because of genAI. Their problem wasn't so much having published a generated artic...| Complex Machinery
(Photo byAndres Siimon onUnsplash)Relationships are difficult. Business or personal, platonic or romantic, they all have the potential to be messy, delicate matters. Because, people. You'd think that our relationships with machines would be easier to navigate. There's only one set of emotions in the picture. Only one sentient being, even. It turns out that our relationships with bots are a lot more complicated for that very reason: on the one side, we have humans who project all of our weird ...| Complex Machinery
(Photo byNick Fewings onUnsplash)It's been a slow news week for AI, because a lot of … other things are going on in the world. Or maybe I'm just knee-deep in another writing project (more on that later) so I've missed the more exciting headlines. Either way, I've had the mental space to reflect on the last couple of years of genAI. When I compare it to other waves of tech excitement, two opposing ideas come to mind: We've seen this movie before. Oh wait, this reboot of New Tech Thing has ch...| Complex Machinery
(Photo byChris Yang onUnsplash) (This one turned out much longer than I'd expected. The first half is a summary of where agentic AI is today. If you're in a hurry for the "how does it get better?" insights, you can skip straight to the "Bot lanes and middlemen" segment.) I've been meaning to write about agentic AI since the term first landed late last year. AI Stuff™ kept happening, though, so I kept pushing it off. Today I figured I should get this out before the agentic hype wave collapse...| Complex Machinery
(Photo byAlvan Nee onUnsplash) Sometimes I sketch out a segment, and then shelve it to make room for more pressing news. Eventually something comes along to return that topic to the forefront. Today's newsletter is one of those cases. Try to not see it as reheated leftovers. It's more like a fine wine that I've been saving for the right occasion. (Side note: my phone initially autocowrong'd "reheated" as "regretted." Make of that what you will.) That occasion is The Verge's Elizabeth Lopatto ...| Complex Machinery
(Photo byAna Municio onUnsplash)The arrogance of ignorance Earlier this year, Apple's AI system took some well-deserved flak for mis-summarizing news headlines – making the summaries appear to have come from the news outlets in question, no less. For its next act, Apple Intelligence will group and sort your app notifications: [The iOS 18.4 developer beta] adds a new “Priority Notifications” feature, powered by Apple Intelligence. The addition aims to help users manage their notification...| Complex Machinery
(Photo byCristian Palmer onUnsplash) Mum's the word Every model – from predictive ML/AI and genAI, to linear regression and GARCH time series modeling – is subject to model error. That's a fancy term for "um yeh that was the wrong answer." It's not an isolated annoyance, either. Since model outputs feed into downstream processes and decisions, model error can be a source of companywide risk. The most common form of model error is when the output is factually incorrect: "our classifier sai...| Complex Machinery
(Photo byScott Rodgerson onUnsplash) Last time I promised more thoughts on the cost of AI going to zero. Consider this your four-act play on the subject. I actually outlined most of this material months ago, but parked it because I kept running out of space in the newsletter. Then DeepSeek made the topic timely again by releasing its "R1" AI model as a free, open-source download. That explains the first three acts. The fourth act was inspired by a sharp-eyed subscriber. They saw my note about...| Complex Machinery
(Photo byBradyn Trollip onUnsplash)Picking up where the previous issue left off ... Playing the what-if game Try this if you're looking for a fun mental exercise: Map out a sequence – a recipe, a chemical reaction, a business process, whatever. Imagine altering it – stretch or shrink the time scales. Reorder the steps. Modify inputs and outputs. Remove some inputs altogether. Take a step back to see what changes as a result. Does it keep working? Or veer off in a new direction? Does it fa...| Complex Machinery
(Source: Google Finance)More questions than answers Details on the recently-unveiled "Stargate" AI investment project are sparse. What we know thus far boils down to: Stargate represents $500B of money, spent over four years, destined for AI projects in America. This private investment includes at least $100M from SoftBank. You may remember SoftBank as having bankrolled gems such as Greensill Capital (NB: accused of fraud), WeWork (no fraud but still raised a few eyebrows), and WireCard (accu...| Complex Machinery
(Photo by Jiyeon Park on Unsplash)The time-travelling salesman problem I've mentioned before that AI companies face a favorable risk/reward tradeoff: they push most of the downside exposure to buyers or the public, while keeping the upside gain for themselves. Just about anything they create will pay off! Emphasis on "just about." Last week Apple re-learned that lesson when it pared back its AI-generated notification summaries in iOS. They dethroned recent champion Google AI Overview, of Glue...| Complex Machinery
(Photo byBen Wicks onUnsplash) I had plans for today's newsletter. Not exactly "big" plans, but "different" plans. I had a lot of things I was going to write about. And then Faceb– sorry, Meta did A Thing™. So now I have to write about that Thing™. As much as I want to thank FaceMeta for giving me something to write about, I … also wish they'd given me a better topic? Is that too much to ask? These are not the chatbots you're looking for In the previous newsletter'sIn Other News secti...| Complex Machinery
(Photo byPaul Morley onUnsplash)People and machines A Character AI incident has put genAI companions back in the news. One of their bots allegedly told a teen to commit acts of violence against their parents. This is not to be confused with a different Character AI bot telling a journalist, who was posing as a teen, how to murder someone and hide the evidence. Both of these add to the list of AI Chatbot Companions Gone Wrong, which includes people developing very strong, often worrisome relat...| Complex Machinery
(Photo by Claudio Schwarz on Unsplash) One fun part of writing is when you get an idea for a piece, then it starts to sound eerily familiar, and then you unearth a detailed outline you wrote three years ago. (The lesson to all you writers out there: Finish. Your. Damned. Drafts.) My most recent such experience started with an article on warehouse robots by Peter Eavis. I've thought a lot about workplace automation over the years – everything from where AI is a good or bad fit, to how we nee...| Complex Machinery
(Photo bySebastian Huxley onUnsplash) (Photo by Sebastian Huxley on Unsplash) When a half-answer raises more questions I've noted elsewhere that emerging tech is all about the technology in the short term, while policy and law dominate in the long term. When the initial excitement wears off, the technology has to find a way to fit into a world that preexists it – a world that was not built with it in mind. The wave of genAI chatbots has led me to consider that messy phase in the middle, bet...| Complex Machinery
(Photo bybenjamin lehman onUnsplash) What follows is the segment – more like "short novel," really – that would have pushed the previous newsletter well over the word limit. My decision to postpone turned out well: it gave me a chance to point readers to someone else's work. You'll see what I mean in a moment. — Flawed data is an underappreciated risk in AI systems. Even with the fanciest modeling techniques at your disposal, a small error that worms its way into the training data can t...| Complex Machinery
(Photo byriis riiiis onUnsplash)On Bluesky I mentioned that this issue might include a cat pic. So here you go. ChatGeocities? A while back I realized that spreadsheets are underappreciated tools – they put analytic power in the hands of people who don't know how to write code. I've drawn similar conclusions about the rise of LLMs. From Dall-E and Midjourney, to ChatGPT and Copilot, you can get all the AI you want without knowing a thing about backpropagation and feature selection. That eas...| Complex Machinery
(Photo byMarcus Reubenstein onUnsplash) Let's change the subject I've seen reports that Copilot, Microsoft's AI chatbot, refuses to answer questions about the upcoming US presidential election. This Bluesky post from Andy Baio includes a screencap of the bot's generic response: I know elections are important to talk about, and I wish we could, but there's a lot of nuanced information that l'm not equipped to handle right now. It's best that I step aside on this one and suggest that you visit ...| Complex Machinery
(Photo byAlmos Bechtold onUnsplash)Magic act 1: Making money appear (Kiosks lead the way) Last time, I wrote about how the humble self-service kiosk serves as a guide to AI-based automation. Shortly thereafter I stumbled across a 2018 piece in The Atlantic, about the ways buildings changed to accommodate self-service machines like ATMs. I started to wonder about the impact AI will have on physical spaces, device interfaces, and digital UI/UX. I made a mental note to write about that in this i...| Complex Machinery
(Photo credit: Wikimedia Commons.)The robots can have it (Many thanks to Vicky H for riffing with me on this segment.) Salesforce is fully embracing the idea of AI as a way to replace human workers. It's hardly a surprise, given that Salesforce [checks notes] wants to make money from selling AI tools. They're playing right into the desires of their target market – overly-hopeful execs who dream of swapping FTE headcount with cheap bots. I'm not completely sold on this vision. Nor am I compl...| Complex Machinery
(Photo byKateryna Kamenieva onUnsplash)Crime Rules Every AI Around Me (With apologies to Wu-Tang Clan.) The search for meaningful AI use cases continues to be a game of chance. Recent weeks have offered mixed results: British retailer Marks & Spencer using it in a shopper's guide. (Pretty good.) Writing code. (Maybe. There are other considerations here. I'll come back to this in a future newsletter.) Autonomous vehicles. (Also a maybe, as there are still people involved behind the scenes.) Ge...| Complex Machinery
(Photo byKelly Common onUnsplash)Those are pumpkin spice Oreos in the header image. That will make sense later. AI: What is it good for? In a recent game of CSI: Drafts Folder I tried to sort out the context and recipient of a half-written e-mail. Aside from a one-sentence intro, there was just this excerpt from a Penny Arcade writeup: First, [temporarily losing my internet access] reminds me of when my uncle showed me a couple web pages and I didn't really know what I was looking at. The onl...| Complex Machinery
More lessons from the CrowdStrike incident, Main Street's view of AI, and what Worldcom's 2002 collapse might tell us about AI.| newsletter.complex-machinery.com
Welcome to Complex Machinery, a newsletter about the intersection of AI and risk. It occasionally dips into related matters like complexity, business models, emerging tech, and marketplaces. (While the newsletter covers AI, there are no technical deep-dives. This is higher-level, AI's-impact-on-business-and-society material.) If you're looking for more details, read on. If someone pointed you to this site and you just want to subscribe, you can do that right here. (Be sure to click on the con...| newsletter.complex-machinery.com
Machines conquered Wall Street, then learned to play a mean game of poker.| newsletter.complex-machinery.com