(NEW YORK) — Uber and Lyft agreed Thursday to pay a combined $328 million for withholding money from drivers.
Uber agreed to pay $290 million and Lyft $38 million in what New York Attorney General Letitia James called the largest wage-theft settlement her office has ever secured.
The money will be distributed to cheated drivers who will get back pay along with mandatory paid sick leave and other benefits. Eligible drivers can file a claim to receive the money owed.
From 2014 to 2017, Uber deducted sales taxes and Black Car Fund fees from drivers’ payments when those taxes and fees should have been paid by passengers, the attorney general’s office said.
Uber misrepresented the deductions made to drivers’ pay in their terms of service, telling drivers that Uber would only deduct its commission from the drivers’ fare, and that drivers were “entitled to charge [the passenger] for any tolls, taxes or fees incurred,” though no method to do this was ever provided via the Uber Driver app.
Lyft used a similar method to shortchange drivers from 2015 to 2017, deducting an 11.4% “administrative charge” from drivers’ payments in New York equal to the amount of sales tax and Black Car Fund fees that should have been paid by riders.
Uber and Lyft also failed to provide drivers with paid sick leave available to employees under New York City and New York State law.
“For years, Uber and Lyft systemically cheated their drivers out of hundreds of millions of dollars in pay and benefits while they worked long hours in challenging conditions,” James said in a statement. “These drivers overwhelmingly come from immigrant communities and rely on these jobs to provide for their families. This settlement will ensure they finally get what they have rightfully earned and are owed under the law.”
In addition to paying a total of $328 million in back pay to former drivers, Uber and Lyft agreed to an “earnings floor,” guaranteeing drivers across the state are paid a minimum rate. Drivers outside of New York City will receive a minimum of $26 per hour. Drivers operating in New York City already receive minimum driver pay under regulations established by the Taxi & Limousine Commission in 2019.
Uber and Lyft drivers will now also receive guaranteed paid sick leave. Drivers will earn one hour of sick pay for every 30 hours worked, up to a maximum of 56 hours per year.
(NEW YORK) — With less than one month until Thanksgiving and the start of the winter holiday season, Americans are already eyeing grocery prices to gauge how much their festive gatherings are going to cost this year.
Experts are encouraging consumers to start making shopping plans early for the holiday feast with a budget in mind, especially with inflation still putting the pinch on wallets at check out.
“It is still sticker shock — this year over last year prices are up about 2.4%, but that’s on top of the 11.4% from the year before that,” Phil Lempert, CEO of SupermarketGuru, told ABC News’ Good Morning America.
This year, major retailers are adjusting their game plans amid inflation in order to keep a traditional turkey dinner more affordable.
Target announced Wednesday that it will be serving up a Thanksgiving meal basket to feed four for under $25, including a turkey at less than $1 per pound, an assortment of sides and desserts under $5.
Starting Wednesday, customers can shop the Target Thanksgiving meal both online and in store that includes must-have staples: a 10-pound Good & Gather Premium Basted Young Turkey (Frozen); 5 pounds of Good & Gather Russet Potatoes; 14.5-ounces Good & Gather Cut Green Beans; Campbell’s Cream of Mushroom Soup; Ocean Spray Jellied Cranberry Sauce; Stove Top Turkey Stuffing Mix; and Heinz HomeStyle Roasted Turkey Gravy.
For shoppers who plan to host a larger feast, Target suggests doubling this list to serve eight guests.
John Furner, president and CEO of Walmart U.S. — the largest retailer in the country — joined Good Morning America last month and, in an ABC News Exclusive, revealed Walmart’s new plan to make Thanksgiving more affordable.
“Last Thanksgiving we decided we were going to sell a Thanksgiving meal at the same price as 2021,” Furner said of the strategy they implemented across other major holidays. “This year, finally, we are able to have the Thanksgiving basket that the prices are coming down versus a year ago — we are really proud to say that the price of a Thanksgiving meal is going to come down.”
This year, the Thanksgiving basket from Walmart includes ingredients to make a meal for up to 10 people, which Furner said will “sell for around $2 less than last year” at just over $70.
Furner added that the move comes on the heels of consumer feedback: “92% of our customers tell us they are concerned about food inflation.”
Inflation is up 3.7% from a year ago and, according to Moody’s Analytics, American households are spending $235 more per month on the same goods and services than they spent a year ago.
Staple items such as ham and potatoes will cost more this year, up 6.9% and 2.7% respectively. Egg prices are back down by 28.8% from last year, now costing $2.07 on average.
“Last year, bird flu caused panic with over 60 million birds having to be cold now, so far it’s only hit about 180,000 birds,” Lempert said. “It could be that turkey is gonna be less expensive this year than in previous years.”
Turkey is now $1.27 per pound, down 22% since the same time last year, thanks in part to a decrease in avian flu that previously sent prices soaring, and thus, has helped produce more turkeys.
As Americans have seen shifts in supply chains, changes in consumer habits and other financial impacts that came out of the pandemic, Furner said “it’s been an interesting couple years — from last year, when inflation really started things like food and consumables picked up and we see more people eating at home.”
“Whether it’s food or getting ready for guest, people are buying early,” Furner also said.
Starting Nov. 1, the holiday food basket at Walmart will be offered at the lower price through Dec. 26. There will be two purchasing options: one with ingredients for customers who want to cook from scratch, and one for customers that like more convenient, ready-to-bake options.
“Walmart’s Thanksgiving meal includes customers’ favorites and fixings including many national brands, from turkey (for under $1/lb.!) and ham to stuffing and pumpkin pie,” a Walmart press release stated.
The holiday meal baskets are available for online order, pickup and delivery, as well as in-store.
Other retailers including Aldi have announced savings up to 50% on a list of 70 Thanksgiving items, including gravy, potatoes and pumpkin pies.
According to experts, one way to help maximize your dollar is to shop early for things that won’t spoil and opting for generic over name brand products.
“Shop early. Make sure you have that shopping list and look at the circulars,” Lempert said of the upcoming “price war.”
“You’re going to see Kroger, Albertson’s, Shop Right — just about everybody else wanting to get our money,” he added.
(NEW YORK) — Jurors will soon begin deliberating in the trial of FTX founder Sam Bankman-Fried, nearly a year after the cryptocurrency trading platform’s collapse, as federal prosecutors are accusing him of orchestrating one of the largest financial frauds in U.S. history.
Bankman-Fried, 31, faces seven counts of fraud, conspiracy and money laundering centered on his alleged use of customer deposits on FTX — once valued at $32 billion — to cover losses at his privately controlled hedge fund, Alameda Research, as well as to buy lavish real estate and make political donations.
The defense has characterized Bankman-Fried as a math geek who was naïve and didn’t set out to defraud anyone, while the prosecution laid out the case that this was an elaborate and intentional fraud.
Bankman-Fried has pleaded not guilty to all counts. If convicted, he could face a sentence of up to 110 years in prison.
With closing statements slated to begin on Wednesday, here’s a look back at key moments of the trial:
Bankman-Fried takes the stand
The last witness to take the stand was Bankman-Fried himself, testifying in his own defense across three days.
Judge Lewis Kaplan allowed certain questions about the involvement of lawyers in FTX policies but declined to give defense attorneys the wide berth they were seeking to show Bankman-Fried acted in good faith because he relied on the advice of FTX lawyers.
During his testimony on Oct. 27, Bankman-Fried recognized that “a lot of people got hurt” due to the collapse of FTX. He said he “made a number of small mistakes and a number of big mistakes” — but denied intentional wrongdoing.
“There were significant oversights,” he said.
On cross-examination, prosecutors portrayed Bankman-Fried as a hypocrite out for good publicity. He testified on Oct. 31 he was unaware that Alameda Research employees were spending $8 billion of FTX customer funds. No one was fired as a result, he said, suggesting it would not be unusual for him not to know which of his employees spent the money.
Alameda CEO reveals wrongdoings to employees in secret recording played in court
Caroline Ellison, the former CEO of Alameda Research and Bankman-Fried’s former girlfriend, was one of the government’s star witnesses.
On Oct. 12, prosecutors played portions of a secretly made recording of a November 2022 all-hands Alameda employee meeting during which Ellison revealed the firm had been siphoning billions of dollars in FTX customer funds and was on the verge of collapse.
“I mean, the basic story here is that starting last year, Alameda was kind of borrowing a bunch of money via open-term loans and used that to make various illiquid investments,” Ellison is heard saying. “Then with crypto being down, the crash, the — like, credit crunch this year, most of Alameda’s loans got called. And in order to, like, meet those loan recalls, we ended up like borrowing a bunch of funds on FTX, which led to FTX having a shortfall in user funds.”
An Alameda employee secretly recorded the Hong Kong meeting and passed the recording to a colleague, Christian Drappi, who testified at trial that he submitted the audio files to federal prosecutors after consulting with an attorney.
When asked by a staff member whose idea it was to make up Alameda’s losses with FTX customer money, Ellison replied, “Um, Sam, I guess.”
Ellison says Sam Bankman-Fried didn’t think rules applied to him
Ellison testified that Bankman-Fried believed in utilitarianism and thought rules against lying or stealing inhibited his ability to maximize the greatest benefit for the most people.
“He didn’t think rules like don’t lie or don’t steal fit into that framework,” Ellison testified on Oct. 11.
Ellison said Bankman-Fried cautioned her against putting anything in writing, once telling her “anything we put on Slack should be something we’re comfortable seeing in The New York Times.”
Ellison previously pleaded guilty to fraud charges and, during her testimony, said she confessed her wrongdoing to the FBI to get a plea deal.
Ellison details $100 million bribe to China
While on the stand on Oct. 11, Ellison described a “large bribe” Alameda paid to Chinese government officials in November 2021 “to get some of our trading accounts unlocked.” Alameda had two trading accounts worth about $1 billion on exchanges based in China which were both frozen in 2021 as part of a Chinese government investigation into money laundering.
It was a substantial amount of Alameda’s trading capital at the time, and Ellison said Bankman-Fried “said that we should send the cryptocurrency transfers” — equaling about $100 million.
Prosecutors use Bankman-Fried’s GMA interview against him
After his cryptocurrency exchange FTX collapsed, Bankman-Fried tried to explain himself to ABC’s George Stephanopoulos on Good Morning America. Federal prosecutors used that interview against him during the trial.
The interview was played for the jury on Oct. 19, after FTX’s former general counsel, Can Sun, testified he “never” would have approved lending FTX customer money to Alameda.
“Never approved anything like that, and I would never have done it either,” Sun said. “No, absolutely not.”
The jury then saw an excerpt of Stephanopoulos’ interview in which he asked Bankman-Fried, “If Alameda is borrowing the money that belongs to FTX depositors, that’s a bright red line, isn’t it?”
In response, Bankman-Fried said, “There existed a borrow-lending facility on FTX and I think that’s probably covered, I don’t remember exactly where, but somewhere in the terms of service.”
“But they’d have to approve of that,” Stephanopoulos countered. “They’re saying they didn’t approve of it here — they’re saying you approved of it.”
After the excerpt concluded, prosecutor Danielle Sassoon turned back to Sun and asked, “Was the borrow-lend facility a potential justification that you had discussed with the defendant on Nov. 7, 2022?”
“Yes,” Sun said.
“And what had you said to the defendant about that?” Sassoon asked.
“It was not supported by the facts,” Sun said.
When asked what was Bankman-Fried’s response, Sun said, “He acknowledged it.”
Ellison testifies SBF wanted to cultivate ‘eccentric’ image
Bankman-Fried’s disheveled image — from his hair to his clothing — often came up during the trial. Ellison testified on Oct. 11 that FTX’s founder was “trying to cultivate an image of himself as sort of a very smart, competent, somewhat eccentric founder” to attract the attention of certain financial media, such as Michael Lewis, whose new book Going Infinite: The Rise and Fall of a New Tycoon chronicles the collapse of FTX.
When the prosecution showed photos of Sam dressed slobbily, Ellison testified it was part of the image he wanted: “He said he thought his hair had been very valuable. He said ever since [his job at trading firm] Jane Street, he thought he had gotten higher bonuses because of his hair and that it was an important part of FTX’s narrative and image.”
While on the stand on Oct. 27, Bankman-Fried denied his image was calculated to draw attention to himself, but that the T-shirts, shorts and unruly hair were because he was “kind of busy and lazy.” He said he became a media personality by “accident.”
FTX co-founder admits to committing crimes
FTX co-founder Gary Wang — another government witness — admitted to committing crimes during his testimony.
“Did you commit financial crimes while working at FTX?” assistant U.S. Attorney Nicholas Roos asked Wang on Oct. 6.
“Yes,” Wang answered, adding he committed wire fraud, securities fraud and commodities fraud with other people, including Bankdman-Fried.
Wang agreed to testify as part of an agreement with prosecutors. He previously pleaded guilty to fraud charges.
Lavish lifestyle in the Bahamas was focus of prosecution
Prosecutors have been exploring the unusual living arrangements and the luxurious lifestyle Bankman-Fried had while living with nine other employees at a $35 million apartment in the Bahamas. Government witness Adam Yedidia, who worked as a developer at FTX, testified at the start of the trial that Alameda paid for the apartment.
The defense tried to downplay the prosecution’s characterization of lavish spending, making Yedidia testify that Bankman-Fried drove a Toyota Corolla, did not own a yacht and slept on a beanbag chair in the Bahamas.
(WASHINGTON) — Two senators are asking U.S. regulators to address “unfair” practices in airlines’ frequent flyer programs.
In a letter sent Monday night, Dick Durbin, D-Ill., and Roger Marshall, R-Kan., asked the Department of Transportation and the Consumer Financial Protection Bureau to help “protect consumers against unfair and deceptive practices in airlines’ frequent flyer and loyalty programs.” The programs encourage customer loyalty with a system where they can accumulate points that they can then redeem for travel with the airline or other rewards.
“While these programs may have originated to incentivize and reward true ‘frequent flyers,’ they have evolved to include co-branded credit cards and now often significantly or exclusively focus on dollars spent using these co-branded credit cards,” Durbin and Marshall wrote in the letter they sent to the agencies.
The letter cited reports that “airlines are engaged in unfair, abusive, and deceptive practices with respect to these loyalty programs.”
Durbin and Marshall’s letter said the airlines can make changes to their loyalty programs without notifying the consumer; that there’s a disparity between the value of points at purchase and at redemption; and that the charge for transferring points is so steep that consumers ultimately lose the value of the points in the transaction.
An industry analyst predicted that the airlines will push back on the lawmakers’ letter.
“I expect the airlines are going to fight this aggressively and paint a picture of doom,” Henry Harteveldt said. “There’s going to be some drama around this, that’s for sure.”
“Airlines have been changing the value of their loyalty program credits for decades,” Harteveldt said. “This is not new. And airlines have constantly been changing the benefits people receive and don’t receive.”
The senators on Monday also asked how the DOT and CFPB are planning to address the airlines’ practices and if they have the regulatory authority needed to protect consumers.
A DOT spokesperson confirmed that the department received the letter and plans to respond to the senators directly. A CFPB spokesperson said they received the letter and are reviewing it.
Harteveldt, the analyst, said the letter brought up valid points.
“I do think there is some merit to what they want to explore in this,” he said. “Do airlines provide enough transparency into their programs? Are they truthful enough with consumers when enticing them to sign up for the loyalty programs?”
Earlier this year, Durbin and Marshall introduced legislation to increase competition in the credit card market and bring down swipe fees.
The airlines have spoken out against that bill, saying it would devastate rewards programs.
(WASHINGTON) — The Federal Reserve left interest rates unchanged on Wednesday, despite stubborn inflation that has resisted the central bank’s fight to cool price increases.
The move allows previous rate increases to take greater hold of the economy and grants the central bank time to assess whether another hike will be necessary.
Inflation stands well below its peak last year of over 9%, but progress has stalled in recent months and price growth remains more than a percentage point higher than the central bank’s target rate.
Speaking in Washington D.C. on Wednesday, Fed Chair Jerome Powell said the central bank drew closer to its inflation goal over the past year, opting to hold rates steady as it weighs the steps necessary to bring inflation down to normal levels.
“Inflation has been coming down but it’s still running well above our 2% target,” Powell said. “Given how far we have come, along with the uncertainties and risks we face, the committee is proceeding carefully.”
Once bemoaned as a source of recession worries, the U.S. economy has become a wellspring of good news: blistering growth, robust hiring and consumers opening their wallets for everything from concert tickets to bar tabs.
The strong performance complicates the fight to dial back inflation, posing a quandary for the Fed.
Since last year, the Fed has raised its benchmark interest rate at the fastest pace in more than two decades, seeking to slash price hikes by slowing the economy and reducing consumer demand.
In theory, the economy should eventually falter as it becomes more expensive for businesses and consumers to borrow. But the economy has so far resisted a cooldown.
Gross domestic product data released last week showed that the U.S. economy expanded at a 4.9% annualized rate over three months ending in September. That breakneck pace more than doubled growth over the previous quarter and reinforced other recent indicators of sturdy performance.
A blockbuster jobs report last month exceeded economist expectations by nearly twofold. Consumer spending, which accounts for nearly three-quarters of U.S. economic activity, surged in September, government data showed.
On Wednesday, Fed Chair Jerome Powell noted the unexpectedly strong economic performance in recent months.
“Recent indicators suggest that economic activity has been expanding at a strong pace,” Powell said.
Recent economic growth, however, belies an alarm sounded by one of the most important economic indicators: the 10-year Treasury yield.
A rapid rise in U.S. government bond yields over recent weeks has elevated long-term borrowing costs for consumers seeking mortgage loans and corporations pursuing funds to expand their businesses.
“Higher treasury yields are showing through to higher borrowing costs for households and businesses, and those higher costs are going to weigh on economic activity,” Powell said on Wednesday.
The onset of some financial pain is exemplified by the housing market, where the average interest rate for a 30-year fixed mortgage briefly exceeded 8% on Monday, Mortgage News Daily data shows.
High mortgage rates have dramatically slowed the housing market, since homebuyers have balked at the stiff borrowing costs and home sellers have opted to stay put with mortgages that lock them into comparatively low rates.
Mortgage applications have fallen to their lowest level since 1996, the Mortgage Brokers Association said last month.
The Fed may consider the sharp increase in bond yields as indication that a string of previous rate hikes has begun to make its way through the economy, rendering an additional rate hike unnecessary, at least for now.
But the central bank hinted at its most recent meeting in September that it expects to raise rates one more time this year, according to projections included alongside a statement last month from the Federal Open Market Committee, the Fed’s decision-making body on interest rates.
The benchmark interest rate currently stands at a range 5.25% to 5.5%, as a result of a near-historic series of rate increases.
Powell said the rate hikes have yielded progress in the central bank’s fight against inflation. But, he added, the effort remains far from over.
“The process of getting inflation sustainably down to 2% has a long way to go,” Powell said. “We remain strongly committed.”
(WASHINGTON) — Once bemoaned as a source of recession worries, the U.S. economy has become a wellspring of good news: blistering growth, robust hiring and consumers opening their wallets for everything from concert tickets to bar tabs.
The strong performance complicates the fight to dial back inflation, posing a quandary for the Federal Reserve as it readies to make a decision on Wednesday about whether to impose another rate hike.
Since last year, the Fed has raised its benchmark interest rate at the fastest pace in more than two decades, seeking to slash price hikes by slowing the economy and reducing consumer demand.
In theory, the economy should eventually falter as it becomes more expensive for businesses and consumers to borrow. But the economy has so far resisted a cooldown.
Inflation stands well below its peak last year of over 9%, but progress has stalled in recent months and price growth remains more than a percentage point higher than the central bank’s target rate.
Economists expect the Fed to leave interest rates unchanged on Wednesday, allowing previous rate increases to take greater hold of the economy and granting the central bank time to assess whether another hike will be necessary.
Investors and policymakers will closely scour comments made by Fed Chair Jerome Powell for clues about the central bank’s path over the remainder of the year.
Gross domestic product data released last week showed that the U.S. economy expanded at a 4.9% annualized rate over three months ending in September. That breakneck pace more than doubled growth over the previous quarter and reinforced other recent indicators of sturdy performance.
A blockbuster jobs report last month exceeded economist expectations by nearly twofold. Consumer spending, which accounts for nearly three-quarters of U.S. economic activity, surged in September, government data showed.
Speaking at a luncheon in New York City last month, Fed Chair Jerome Powell noted the unexpectedly strong economic performance in recent months.
“We are attentive to recent data showing the resilience of economic growth and demand for labor,” Powell said, adding that such growth could “put further progress on inflation at risk.”
Recent economic growth, however, belies an alarm sounded by one of the most important economic indicators: the 10-year Treasury yield.
A rapid rise in U.S. government bond yields over recent weeks has elevated long-term borrowing costs for consumers seeking mortgage loans and corporations pursuing funds to expand their businesses.
The onset of some financial pain is exemplified by the housing market, where the average interest rate for a 30-year fixed mortgage briefly exceeded 8% on Monday, Mortgage News Daily data shows.
High mortgage rates have dramatically slowed the housing market, since homebuyers have balked at the stiff borrowing costs and home sellers have opted to stay put with mortgages that lock them into comparatively low rates.
Mortgage applications have fallen to their lowest level since 1996, the Mortgage Brokers Association said last month.
The Fed may consider the sharp increase in bond yields as indication that a string of previous rate hikes has begun to make its way through the economy, rendering an additional rate hike unnecessary, at least for now.
But the central bank hinted at its most recent meeting in September that it expects to raise rates one more time this year, according to projections included alongside a statement last month from the Federal Open Market Committee, the Fed’s decision-making body on interest rates.
The benchmark interest rate currently stands at a range 5.25% to 5.5%, as a result of a near-historic series of rate increases.
The Fed plans to “proceed carefully” with its interest rate policy, Powell said last month, citing a “range of uncertainties.”
Still, he added, the central bank will prioritize its goal of bringing inflation down to normal levels.
(DETROIT) — General Motors has reached a tentative deal with United Auto Workers to end their strike, GM and the union confirmed Monday.
GM joins Stellantis and Ford, which reached deals in the last week.
The tentative agreements, which must be ratified by union members at each of the respective carmakers, could end the strike against the Big 3 that began last month. The at-times contentious work stoppage thrust UAW President Shawn Fain into the national spotlight and drew support from President Joe Biden.
Tentative agreements struck with Ford, Stellantis and GM each called for a roughly 25% raise over four years, as well as significant improvements on pensions and the right to strike plant closures.
In a statement on Monday, the UAW celebrated the tentative deal with GM, calling it a “historic tentative agreement that paves the way for a just transition and wins record economic gains for autoworkers.”
“Like the agreements with Ford and Stellantis, the GM agreement has turned record profits into a record contract,” the union added.
GM CEO Mary Barra, in a separate statement, praised the tentative agreement for striking a balance between the needs of the car company and its employees.
“GM is pleased to have reached a tentative agreement with the UAW that reflects the contributions of the team while enabling us to continue to invest in our future and provide,” Barra said. “We are looking forward to having everyone back to work across all of our operations, delivering great products for our customers, and winning as one team.”
Speaking at the White House on Monday, meanwhile, President Joe Biden hailed the recent contract agreements at the Big 3 as “historic.”
“These agreements ensure the iconic Big 3 can still lead the world in quality and innovation,” said Biden, who visited UAW members on the picket lines in Michigan last month. “Due to the commitment and solidarity of UAW workers willing to exercise their right to collectively bargain, they won a record contract.”
The automakers had expressed reluctance to meet some demands from the union that they considered ambitious, saying such moves would take investment away from a costly shift to electric vehicles. The companies have also cited the need to compete with non-union competitors.
GM, Ford and Stellantis faced pressure to reach a deal as financial losses piled up amid the strike. As of last week, the strike had cost the auto industry an estimated $9.3 billion, according to a report released on Monday by Michigan-based research firm Anderson Economic Group.
In a live-streamed address on Facebook on Sunday, Fain said the recent contract agreements would fuel the UAW’s wider ambitions to organize non-union carmakers, including Tesla, Honda and Toyota.
“One of our biggest goals coming out of this historic contract victory is to organize like we’ve never organized before,” Fain said. “When we return to the bargaining table in 2028, it won’t just be with the Big 3. It will be the Big 5 or Big 6.”
The union, which represents nearly 150,000 autoworkers, launched a work stoppage against the Big 3 carmakers more than a month ago, deploying a “stand-up” strike method to target specific plants and add to the list if a deal wasn’t reached. At the peak of the strike, 46,000 employees refused to work.
The UAW sought ambitious demands such as a 40% pay increase combined over the four-year duration of a new contract, as well as a 32-hour workweek at 40-hour pay. Tentative agreements with Ford and Stellantis appeared to fall short of those terms but delivered significant raises and job security protections.
(WASHINGTON) — President Joe Biden issued a wide-ranging executive order on Monday that aims to safeguard against threats posed by artificial intelligence, ensuring that bad actors do not use the technology to develop devastating weapons or mount supercharged cyberattacks.
The move stakes out a role for the federal government in a nearly half-trillion-dollar industry at the center of fierce competition between some of the nation’s largest companies, including Google and Amazon.
The Biden administration also calls on Congress to pass data privacy legislation, an achievement that has eluded lawmakers for years despite multiple attempts.
The executive order exerts oversight over safety tests that companies use to evaluate conversation bots such as ChatGPT and introduces industry standards like watermarks for identifying AI-fueled products, among other regulations.
The batch of reforms amounts to “the strongest set of actions any government in the world has ever taken on AI safety, security, and trust,” White House deputy chief of staff Bruce Reed said in a statement.
Here’s what’s in the executive order that seeks to rein in AI:
AI companies must conduct safety tests and share the results with the federal government
A key rule established under the executive order demands that AI companies conduct tests of some of their products and share the results with government officials before the new capabilities become available to consumers.
The safety tests undertaken by developers, known as “red teaming,” ensure that new products do not pose a major threat to users or the wider public.
If a safety assessment returns concerning results, the federal government could force a company to either make product improvements or abandon a given initiative.
The new government powers are permitted under the Defense Production Act, a law enacted three-quarters of a century ago that granted the White House a broad role in overseeing industries tied to national security, the Biden administration said.
“These measures will ensure AI systems are safe, secure, and trustworthy before companies make them public,” the White House added.
A new set of standards establishes AI industry norms
The executive order lays out a sprawling set of industry standards in the hope of creating transparent products secure from dangerous outcomes, such as AI-concocted biological material or cyberattacks.
One high-profile new standard would codify the use of watermarks that alert consumers when they encounter a product enabled by AI, which could limit the threat posed by impostor content such as deepfakes.
Another rule would ensure that biotechnology firms take appropriate precautions when using AI to create or manipulate biological material.
The industry guidance will function as suggestions rather than mandates, leaving firms free to set aside the government recommendations.
The federal government will use its leverage as a key funder of scientific research to advocate for compliance on the warning around biological material, the White House said. To bolster the push for watermarks, meanwhile, the White House will require federal agencies to use the markers when deploying AI products.
Still, the executive order risks presenting an ambitious vision for the future of AI but insufficient power to bring about the industry-wide shift, Sarah Kreps, professor of government and director of the Tech Policy Institute at Cornell University, said in a statement.
“The new executive order strikes the right tone by recognizing both the promise and perils of AI,” Kreps said. “What’s missing is an enforcement and implementation mechanism. It’s calling for a lot of action that’s not likely to receive a response.”
Government agencies face strict oversight of their use of AI
The executive order instructs a wide swathe of government agencies to implement changes in their use of AI, elevating federal institutions as examples of practices that the administration ultimately hopes will be adopted by the private sector.
Federal benefits programs and contractors, for instance, will take steps to ensure that AI does not worsen racial bias in their activities, the White House said. Similarly, the Department of Justice will establish rules around how best to investigate AI-related Civil Rights abuses.
Meanwhile, the Department of Energy as well as the Department of Homeland Security will take steps to address the threat that AI poses for critical infrastructure.
Robert Weissman, the president of Washington D.C.-based consumer advocacy group Public Citizen, commended the executive order while acknowledging its limitations.
“Today’s executive order is a vital step by the Biden administration to begin the long process of regulating rapidly advancing AI technology,” Weissman said. “But it’s only a first step.”
(NEW YORK) — General Motors has reached a tentative deal with United Auto Workers to end their strike, according to two sources familiar with the talks.
GM joins Stellantis and Ford, which reached deals in the last week.
The tentative agreements, which must be ratified by union members at each of the respective carmakers, could end a strike against the Big 3 that began last month. The at-times contentious work stoppage thrust UAW President Shawn Fain into the national spotlight and drew support from President Joe Biden.
Tentative agreements struck with Ford and Stellantis called for a roughly 25% raise over four years as well as significant improvements on pensions and the right to strike plant closures. The details of the deal with GM have yet to be disclosed.
The automakers had expressed reluctance to meet some demands from the union that they considered ambitious, saying such moves would take investment away from a costly shift to electric vehicles. The companies have also cited the need to compete with non-union competitors.
GM, Ford and Stellantis faced pressure to reach a deal as financial losses piled up amid the strike. As of last week, the strike had cost the auto industry an estimated $9.3 billion, according to a report released on Monday by Michigan-based research firm Anderson Economic Group.
In a live-streamed address on Facebook on Sunday, Fain said the recent contract agreements would fuel the UAW’s wider ambitions to organize non-union carmakers, including Tesla, Honda and Toyota.
“One of our biggest goals coming out of this historic contract victory is to organize like we’ve never organized before,” Fain said. “When we return to the bargaining table in 2028, it won’t just be with the Big 3. It will be the Big 5 or Big 6.”
The union, which represents nearly 150,000 autoworkers, launched a work stoppage against the Big 3 carmakers more than a month ago, deploying a “stand-up” strike method to target specific plants and add to the list if a deal wasn’t reached. At the peak of the strike, 46,000 employees refused to work.
The UAW sought ambitious demands such as a 40% pay increase combined over the four-year duration of a new contract, as well as a 32-hour workweek at 40-hour pay. Tentative agreements with Ford and Stellantis appeared to fall short of those terms but delivered significant raises and job security protections.
(NEW YORK) — It was an outlandish concept. Take a Lamborghini Huracan — a low-slung, outrageously fast coupe — and transform it into an “all-terrain super sports car.”
Lamborghinis are built for racetracks, not gravel, sand and mud. The company’s execs, however, had a hunch that enthusiasts would pay up for a limited-edition Huracan that could be driven 12 months a year — including in snow and sleet — without getting stuck, scrapped or towed.
Earlier this year, the Italian automaker started production of the Huracan Sterrato, a $279,000 sports car with serious attitude that can be slung around implausible locales. Every single unit — all 1,499 — is sold out.
“Before people would ask, ‘Who needs an off-roading Huracan?'” Rouven Mohr, chief technical officer of Lamborghini, told ABC News. “I am not surprised by the demand. I was convinced people would love it.”
The Sterrato clearly stands out from its Huracan siblings. It sits 1.7 inches higher compared to a Huracan EVO, has aluminum front underbody protection and comes with custom-engineered Bridgestone tires that are adapted for any road condition or surface. Plus, there’s a rally mode for low-grip scenarios.
Of course, Lamborghini’s definition of “off-roading” is different than Jeep’s or Toyota’s. Sadly, Sterrato drivers cannot crawl over boulders without adding some necessary upgrades. Dune bashing may be challenging, too. But the Sterrato can trample beaches, dominate dirt roads in Joshua Tree National Park and traverse slippery winter roads.
The air intakes on the rear hood and radiators make the Sterrato look as threatening as a modified Ford Bronco.
“There are limitations to the Sterrato,” Andrea Baldi, Automobili Lamborghini Americas CEO, told ABC News. “Sterrato added a lot of practical use, though. Versatility is becoming more and more relevant for super sports cars.”
Porsche, like Lamborghini, joined the red-hot off-roading space with the 911 Dakar. Built specifically for ice, deserts and challenging road conditions, the car’s hydraulic lift system, suspension and Pirelli all-terrain tires raise it a maximum 7.52 inches off the ground — identical to some SUVs.
“Porsche has a history of building rally cars. There is a precedent,” Matt Farah, host of the popular podcast “The Smoking Tire,” told ABC News. “It’s been building rally cars since the 1970s.”
He added, “Demand is strong for the Dakar. All special Porsches are hard to get.”
Tony Quiroga, editor-in-chief of Car and Driver, said cars like the Sterrato and 911 Dakar give owners more flexibility and, more importantly, peace of mind.
“When you drive an exotic car, you’re thinking, “Am I going to scrape it? Am I too close to the curb? It’s heartbreaking when you hear that scrape,” he told ABC News. “These worries are sort of gone by adding just a little bit of ground clearance.”
He went on, “The 911 Dakar and Sterrato are an extension of wanting to drive a sports car year-round. A lot of people are not interested in setting lap times.”
Added Farah: “People who buy expensive cars are worried about taking them to the track. The Sterrato and 911 Dakar can be driven on sand and dirt confidently.”
Enthusiasts have been clamoring for off-roading sports cars. In 2021, German company Singer Vehicle Design transformed a 1990 911 into an off-roading savage that could easily shred pavement or win the Baja 1000. The car, designed in partnership with rally expert Richard Tuthill, was named “All-terrain Competition Study” and commissioned by a client.
Farah, who once converted a 1987 911 Safari into a rally car, got to test the 911 Dakar’s capabilities in the Sahara Desert.
“We drove it on the sand dunes … it was very fun to fling around and do big slides on,” he said.
Now he’s campaigning to get other sports car makers to take a leap of faith and follow in Lamborghini’s and Porsche’s tracks.
“I told the Corvette team they should do an off-roading sports car. They were curious about my ideas,” Farah said. “This is a new genre that has a lot of promise.”
