The Morning Risk Report

Sponsored by

Good morning. If your company uses AI to produce content, make decisions, or influence the lives of others, it’s likely you will be liable for whatever it does—especially when it makes a mistake.

This also applies to big tech companies rolling out chat-based AIs to the public, including Google and Microsoft, as well as well-funded startups like Anthropic and OpenAI.

• What’s the issue? The legal logic is straightforward. Section 230 of the Communications Decency Act of 1996 has long protected internet platforms from being held liable for the things we say on them. (In short, if you say something defamatory about your neighbor on Facebook, they can sue you, but not Meta.) But Section 230 doesn’t cover speech that a company’s AI generates, says Graham Ryan, a litigator at Jones Walker who will soon be publishing a paper in the Harvard Journal of Law and Technology on the topic.
  
   
• But what does the Supreme Court think? Among the most compelling indications that companies won’t be protected by current law is Supreme Court Justice Neil Gorsuch’s early 2023 statement on the subject. In discussing a Section 230 case before the court, he said: “Artificial intelligence generates poetry. It generates polemics today that would be content that goes beyond picking, choosing, analyzing or digesting content. And that is not protected.”
  
   
• Congress is unlikely to help. Normally, when companies perceive a gap in existing laws, they lobby Congress for a fix. But lately, Congress has been keen to strip away some of the protections Section 230 already offers, by specifying that companies can only have Section 230 protection if they play by certain rules. Congress’s current mood is the opposite of what companies that make and use AI want.

Biden is unlikely to reimpose oil sanctions on Venezuela.

The Biden administration is leaning away from reimposing sanctions on Venezuela’s oil industry despite President Nicolás Maduro’s moves to bar leading opposition candidates from the country’s July elections, said people familiar with the matter.

U.S. officials are concerned that reverting to Trump-era sanctions that accelerated the decline of Venezuela’s oil production would raise the price of gas at U.S. pumps and prompt more migration from Venezuela as President Biden campaigns for re-election in November. Restricting Western oil companies would tighten global energy supplies and open the way for Chinese investment in Venezuela, they say.

Huawei bounces back from U.S. sanctions as profit doubles.

China’s Huawei Technologies said its net profit more than doubled last year, marking a stunning comeback for the company years after U.S. export controls cut it off from advanced technology.

The tech giant on Friday said profit rose to 87 billion yuan, or $12 billion. It is the largest jump in profit for the company since it started reporting comparable figures in 2006. Revenue rose to $99 billion.

The climate scientist fossil-fuel companies can’t stand.

Robert Howarth is getting under the skin of the oil-and-gas industry. The gray-haired climate scientist says he doesn’t care.

Howarth, a methane researcher at Cornell University, said in a recent study that exports of liquefied natural gas from the U.S. were so bad for the climate that ending the use of LNG should be a global priority. The research influenced President Biden’s decision in January to pause new approvals of LNG exports.

The turn of events riled executives throughout the fracking industry—especially at Pittsburgh-based EQT, the country’s largest natural-gas producer.

• Some of the world’s most ubiquitous consumer companies are going to unusual lengths to try to succeed in Nigeria, enticed by the jaw-dropping potential of Africa’s largest economy and most populous nation.
  
   
• Republican state lawmakers trying to deter migrants from illegally entering the U.S. by making it tougher for them to find work keep hitting the same roadblock: business owners.
  
   
• Today’s markets love nothing more than a growth narrative and, with wealth management, banks finally have one. The risk is that they all crowd in at the same time.
  
   
• Hillary Clinton and U.S. election officials said they are concerned disinformation generated and spread by artificial intelligence could threaten the 2024 presidential election.
  
   
• It only takes a $7,000 debt to end up trapped in China. Beijing hasn’t attempted to address one of the big risks facing foreigners working in China: the chance they might not be allowed to leave.

AT&T reset 7.6 million customers’ passcodes after data breach.

AT&T said it reset the passcodes of about 7.6 million account holders whose personal information was leaked on the dark web after a data breach.

The affected data set, which includes information from more than 65 million former account holders, was leaked onto the dark web about two weeks ago but appears to have come from 2019 or earlier, the company said. It includes personal information such as names and Social Security numbers. The source of the security breach isn’t yet known, AT&T said.

Life after FTX: Bankman-Fried’s employees struggle to move on.

A few weeks after FTX collapsed, Natalie Tien started crying in a New York City grocery store.

She was still in disbelief that the phenomenally successful crypto exchange where she had worked, often putting in 16-hour days, had imploded overnight. Its team of young, idealistic employees in the Bahamas had scattered. Her old boss, Sam Bankman-Fried, was facing a criminal investigation. Much of her net worth—at least $500,000 in FTX shares and various cryptocurrencies—had evaporated.

Former FTX employees have felt a mix of emotions about Bankman-Fried’s odyssey from crypto hero to federal prisoner. Some sympathized with the former FTX chief executive. Others, angry at the harm he caused, said he deserved to be punished.

• Pressure is building on Israeli Prime Minister Benjamin Netanyahu over tough decisions that could strain his coalition and threaten his grip over management of Israel’s nearly six-month-long war with Hamas in Gaza.
  
   
• Former President Donald Trump is tantalizingly close to tapping a multibillion-dollar windfall that could help pay his legal bills and give a much-needed cash injection to his presidential campaign.
  
   
• The Senate plans to rework the recently passed House proposal to force a sale or ban of TikTok in the U.S., with ideas already circulating on Capitol Hill. But some lawmakers worry that overly broad changes could delay or derail the effort.
  
   
• Turkey’s main opposition party kept control of the country’s largest cities and rose to power in others while clinching a surprise victory in local elections that represent a rebuke to President Recep Tayyip Erdogan, reflecting discontent with the country’s turbulent economy