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Speaker 1: Kilda. I'm Chelsea Daniels and this is the Front Page,

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Speaker 1: a daily podcast presented by the New Zealand Herald. Silicon

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Speaker 1: Valley has been rattled by a low cost Chinese AI,

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Speaker 1: with the startup claiming their deep Seek technology can emulate

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Speaker 1: the performance of chat GPT at a fraction of the cost.

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Speaker 1: It's launched, shook share markets and spawned allegations from Open

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Speaker 1: Ai that their Chinese rivals used its work and models

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Speaker 1: to make their own artificial intelligence.

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Speaker 2: This is all.

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Speaker 1: Happening as the new US administration appoints an AI and

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Speaker 1: crypto star so the online currency can thrive.

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Speaker 2: So what is the.

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Speaker 1: Future of AI? And will we be buying all of

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Speaker 1: our coffees in crypto sooner rather than later? Today on

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Speaker 1: the Front Page, science and tech journalist Peter Griffin is

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Speaker 1: with us to run through the latest advancements and shake

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Speaker 1: ups in the tech space. First off, Peter, when we

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Speaker 1: talk about AI, how would you explain what it actually

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Speaker 1: is to someone who may have no idea?

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Speaker 3: AI is a feel that's been around for many decades,

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Speaker 3: and I've been writing about it my entire career twenty

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Speaker 3: five years or so. It's developed and become more powerful

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Speaker 3: as a result of the computing power that can be

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Speaker 3: applied to it. So you know, there are various forms

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Speaker 3: of AI that are sort of domain specific. We've seen,

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Speaker 3: for instance, computer vision. If you go into a supermarket,

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Speaker 3: now a camera can identify your face potentially, and that's

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Speaker 3: been used for security. There are all sorts of different

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Speaker 3: types of AI, but the one that is really current

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Speaker 3: and attracting a lot of attention and investment and hype

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Speaker 3: is of AI, and that is all around language using

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Speaker 3: sophisticated computer models and processing power to process vast amounts

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Speaker 3: of information and then to serve you intelligent answers based

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Speaker 3: on that processing and that training off the model that

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Speaker 3: has been done with literally everything that's out there on

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Speaker 3: the internet. So think about things like chat, GPT, clawed

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Speaker 3: from Anthropic mid Journey, which is creating images based on

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Speaker 3: text and puts. That's the one that has captured the

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Speaker 3: imagination of billions of people around the world right at

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Speaker 3: the moment.

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Speaker 1: Can you give us an idea of who the big

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Speaker 1: players are in the AI spaces, particularly in the American sense.

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Speaker 1: I'm thinking Open AI, Nvidia, the two that have become

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Speaker 1: kind of household names at this point.

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Speaker 3: Hey, yeah. When open ai released chat gpt in November

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Speaker 3: twenty twenty two, that was a game changer in terms

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Speaker 3: of being able to use a chatbot and get really

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Speaker 3: high quality, intelligent answers. And that went from everything from

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Speaker 3: just asking it for recipes for food that you're interested

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Speaker 3: in putting some ingredients, get some recipes all the way

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Speaker 3: through to computer coders were able to use chatchept to

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Speaker 3: basically create computer applications from scratch without having to do

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Speaker 3: very much manual program and you just tell chatchpt what

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Speaker 3: you want in terms of a software application and it

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Speaker 3: will do a pretty good job of trying to come

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Speaker 3: up with that. So open ai not a listed company,

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Speaker 3: private company, but has attracted billions of dollars of investment,

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Speaker 3: including from Microsoft, and the technology underpinning chat chept is

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Speaker 3: now used for Microsoft Copilot service, which has rolled out

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Speaker 3: to one hundreds of millions of computers as well. Other

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Speaker 3: than that, you've got Meta, which is the owner of

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Speaker 3: Facebook and Instagram. They have an open source AI effort

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Speaker 3: called Lamma. So open source means that rather than it

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Speaker 3: being proprietary and them holding onto everything and keeping it

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Speaker 3: close to their chest, they're basically giving away the source

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Speaker 3: code to their language model, so anyone can use it.

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Speaker 3: So that's a different approach, but it's not an uncommon

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Speaker 3: approach in the history of software development. You've got other

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Speaker 3: players like Amazon and Anthropic, You've got the French company Mistral,

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Speaker 3: and then you've got all these Chinese companies which we

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Speaker 3: don't know very much about. Deepseeker is the one that

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Speaker 3: has popped onto the radar just in the last couple

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Speaker 3: of weeks, but there is a whole ecosystem of companies

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Speaker 3: in China working on this as well.

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Speaker 2: Deep Seeker also said it only took two months and

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Speaker 2: less than six million dollars chump change to develop the model,

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Speaker 2: which is again much cheaper than other companies like Meta

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Speaker 2: aka Facebook have spent on their AI models, So it's

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Speaker 2: cheaper to make, cheaper to use. Generally, there is just

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Speaker 2: a kind of beautiful irony to AI companies just being

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Speaker 2: completely undercut by this, considering that the entire business model

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Speaker 2: of AI is to undercut people. You've been hearing NonStop

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Speaker 2: from aibros about how people's jobs are going to be

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Speaker 2: redund and people to be replaced by AI, and then,

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Speaker 2: as Twitter user at Techborg beautifully put it, I can't

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Speaker 2: believe chat GPT lost its job to.

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Speaker 1: AI, so Chinese AI that deep Seek one that dropped recently.

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Speaker 1: The most notable part of that, I guess, is that

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Speaker 1: the researchers claim that they were able to train their

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Speaker 1: AI for around six million dollars US right, which is

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Speaker 1: a fraction of what it costs to generate open AI.

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Speaker 1: How significant is the arrival of deep Seek.

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Speaker 4: It is very significant, and this is reflected in what

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Speaker 4: we've seen in the markets. The market to spook about this,

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Speaker 4: particularly around stocks like in Video, which have really accumulated

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Speaker 4: one hundreds of billions of dollars worth of value on

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Speaker 4: the back of selling. In Video's case, the AI chips,

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Speaker 4: the high performance chips that are used for AI workloads.

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Speaker 4: Other companies that are running AI services have taken a

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Speaker 4: hit as well, because if what deep seek is claiming

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Speaker 4: is true, you know, this company is able to do

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Speaker 4: what those companies do at a fraction of the cost,

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Speaker 4: and you know, so that completely undermines the business model

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Speaker 4: potentially off those companies. There's a lot of caveat around this.

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Speaker 4: While deep Seek is a company producing open source models,

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Speaker 4: it means that experts can look at those models, look

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Speaker 4: through the source code benchmark the performance against others, and

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Speaker 4: that's been done in recent weeks, and you know a

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Speaker 4: lot of experts are saying, you know, this is legitimate.

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Speaker 4: What there is a question mark over is the exact

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Speaker 4: circumstances they use to build and train that model. They

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Speaker 4: claim they did it for as little as six million dollars.

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Speaker 4: Is that the only cost. There's accusations that they have

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Speaker 4: basically distilled all of the data from other models. Open

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Speaker 4: ai is investigating at the moment the potential that deep

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Speaker 4: Seek actually took all of the data out of open

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Speaker 4: ai and used it to train its model. So data

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Speaker 4: is still to wash out. There's not a lot of

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Speaker 4: transparency often around Chinese companies and how they operate, and

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Speaker 4: you've got the looming presence of the Chinese Communist Party

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Speaker 4: in the background. There's geopolitical issues here, there's competitive tensions,

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Speaker 4: so a lot of this has still to wash out.

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Speaker 4: But it looks as though, according to the experts, that

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Speaker 4: this is a more efficient way of doing AI and

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Speaker 4: that fundamentally changes everything, and I think in a good

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Speaker 4: way as well. Because AI has been too expensive through

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Speaker 4: energy intensive, we need breakthroughs to make it more accessible

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Speaker 4: to more people.

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Speaker 1: Yeah, I've seen some commentary around how the US has

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Speaker 1: invested significantly in the tech sector of the last two

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Speaker 1: decades in particular, yet China continues to outshine those US creations.

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Speaker 1: I mean, just look at how TikTok overtook all US

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Speaker 1: social media platforms and basically reinvented the game. There have

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Speaker 1: we been sold alive? Do you think by the US

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Speaker 1: given the receipts we're getting perceived receipts I suppose about

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Speaker 1: how much China is pumping into it rather than the US.

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Speaker 4: Look, I don't think it should be any surprise that

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Speaker 4: China has massive capability in tech. You know, it was

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Speaker 4: prioritized by the government. We have a communist party there

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Speaker 4: that fues five year plans that says we want to

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Speaker 4: buy twenty thirty b the world leader and AI. It

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Speaker 4: has the freedom to do that, and every aspect of

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Speaker 4: the economy and society jump into line and follow that.

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Speaker 4: So we saw well over a decade ago the rise

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Speaker 4: of Ali Baba and ten cents. You know, these Chinese

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Speaker 4: tech giants, they sort of hit a rough patch with

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Speaker 4: the Communist party as they got too powerful. People like

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Speaker 4: Jackiyan the equivalent really of Elon Muskin in China got

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Speaker 4: too big for his boots and was sort of his

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Speaker 4: operations were curtailed a bit by the Chinese government, So

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Speaker 4: that the government there is happy for tech to thrive

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Speaker 4: and flourish long as they have a visibility into everything

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Speaker 4: and apps like we Chat. They love the development of

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Speaker 4: that because they can see every interaction, every financial transaction,

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Speaker 4: every social media message that goes across that network. So

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Speaker 4: they love tech as long as they have control it

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Speaker 4: and it serves their purposes. So there's a booming industry there.

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Speaker 4: It hasn't been so visible to us except when a

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Speaker 4: company like tektok pops up. But what we've seen with

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Speaker 4: some of their tech giants like TikTok and Huawei is

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Speaker 4: when they get big enough to go international, there's this

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Speaker 4: tension around whether they are a national security risk to

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Speaker 4: Western governments, and that's why we've seen Huawei basically banned

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Speaker 4: from use in countries like New Zealand, Australia and the US,

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Speaker 4: and we've seen the span of Tektok as well.

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Speaker 1: Donald Trump announced a five hundred billion dollar AI infrastructure

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Speaker 1: program called Stargate prior to this change coming out is

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Speaker 1: deep seak going to impact that potentially.

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Speaker 4: I mean, if this is born out, you know where

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Speaker 4: this leads to. And I think the more interesting thing

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Speaker 4: is what comes next because you know, all of the

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Speaker 4: companies are pouring over a deep Seat to see how

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Speaker 4: they did it. You Meta reportedly has set up a

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Speaker 4: war room to get their top engineers to look at this.

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Speaker 4: So then you know there will be reverse engineering if

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Speaker 4: Deep Seat undertaken by these engineers, and hopefully they will

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Speaker 4: create much more efficient models based on that. But if

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Speaker 4: you look at the investment last week up to five

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Speaker 4: hundred billion dollars underwritten by soft Bank, Oracle and Open

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Speaker 4: Ai involved. So Donald Trump was very proud about that,

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Speaker 4: but will that investment actually stack up? Will it actually happen? Now,

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Speaker 4: if these innovations actually flow through to American companies, we

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Speaker 4: could see that POTENTI being done for a fraction of

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Speaker 4: the cost. And that's where you know, I maintain it's

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Speaker 4: a really good thing because we've been on this sort

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Speaker 4: of scary trajectory with AI where there's this race to

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Speaker 4: build data centers and to build nuclear modular reactors to

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Speaker 4: power those data centers. Because all of these CEOs of

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Speaker 4: these tech companies are looking at each other and going,

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Speaker 4: if we're going to win this race, we need to

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Speaker 4: have more and more capacity, more and more data, more chips,

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Speaker 4: and they're spending up big on that. If you don't

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Speaker 4: have to do that, that is a good thing. It

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Speaker 4: means that there's less energy required, which is more sustainable.

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Speaker 4: So hopefully you know a few companies outside of China,

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Speaker 4: because let's face it, government departments, big US companies, New

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Speaker 4: Zealand companies are not going to rely on Chinese developed

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Speaker 4: large language models. So hopefully this innovation will flow through

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Speaker 4: to the Western world that they will incorporate it in

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Speaker 4: and we will get much more efficient models that we're

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Speaker 4: going to use every day, which costs a lot less

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Speaker 4: because at the moment, something like Copilot, which is Microsoft

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Speaker 4: Smart Assistance that you can use in Microsoft Word and Excel.

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Speaker 4: Now that costs between thirty and forty dollars a month

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Speaker 4: for one subscription for one person. It's eye wateringly expensive.

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Speaker 4: If that can be reduced to three or four dollars

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Speaker 4: a month, now that's good for everyone.

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Speaker 1: Moving on to crypto. It's the world's worst kept secret.

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Speaker 1: I suppose that Trump has been championing it. Recently, Trump

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Speaker 1: media announced plans to invest up to two hundred and

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Speaker 1: fifty million dollars US into investment accounts and bitcoin and

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Speaker 1: similar cryptocurrencies or crypto related securities. How does Trump's vested

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Speaker 1: interest in something affect the way the rest of the

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Speaker 1: market reacts to it.

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Speaker 4: Well, first of all, it's a huge comfort of interest.

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Speaker 4: You know, both he and his wife Millennia launched mean

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Speaker 4: coins in the lead up to the inauguration, which massively

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Speaker 4: spiked and value, and that's really dangerous territory because you know,

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Speaker 4: they could collapse in values. So he could have supporters

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Speaker 4: of Donald Trump who they jump on board that bandwagon

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Speaker 4: and then end up losing a lot of money. He

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Speaker 4: looks to profit significantly if the value of these coins

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Speaker 4: go up, which they have, So that's a huge conflict

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Speaker 4: of interest. But you know, in terms of his philosophy

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Speaker 4: and his approach to crypto, it's very much influenced by

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Speaker 4: the PayPal mafia that now surround him, and some of

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Speaker 4: them are people like Elon Musk, David Sax who's his crypto,

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Speaker 4: so are Peter feel who actually is a New Zealand

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Speaker 4: citizen but the founder of talent Heer and one of

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Speaker 4: the co founders of PayPal. A lot of these people

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Speaker 4: sort of have a libertarian bent, so they really like cryptocurrencies,

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Speaker 4: and they've been talking extensively to Donald Trump, influencing as

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Speaker 4: thinking about it. But because they've been influential, and he

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Speaker 4: is talking about low regulation of crypto and even having

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Speaker 4: a strategic reserve for the US actually buying buying coin

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Speaker 4: or seizing that bitcoin that has been taken from criminals

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Speaker 4: and building a strategic reserve out of that. That is

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Speaker 4: what has led to in the last part of twenty

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Speaker 4: twenty four, the massive spike in crypto fancis, particularly Bitcoin.

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Speaker 4: It's why the market is point at the moment people

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Speaker 4: are talking about this becoming finally potentially a means of

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Speaker 4: exchange where people are using it to buy and sell

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Speaker 4: things rather than just hoarding it as an investment. All

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Speaker 4: of that really is on the fact of this sort

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Speaker 4: of crypto friendly environment that Trump is creating.

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Speaker 2: Coin the other day, do you intend to continue selling

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Speaker 2: products that benefit yourself personally while you're president?

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Speaker 3: Well, I don't know if it benefited.

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Speaker 4: I don't know where it is, I don't know much

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Speaker 4: about it other than I launched it. I heard it

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Speaker 4: was very successful.

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Speaker 3: I haven't checked it.

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Speaker 4: Where is it today? Thank you made a lot of money, sir?

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Speaker 3: How much million dollars? It seems like the last several

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Speaker 3: days several billion.

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Speaker 4: That's peanuts for these guys.

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Speaker 1: Well, he faced criticism for launching that crypto meme coin

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Speaker 1: on the eve of his inauguration. Is he able to

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Speaker 1: do something like that because the space is so unregulated, Like,

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Speaker 1: you can't manipulate the share market, can you in the

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Speaker 1: same way, it seems that you can do with crypto?

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Speaker 4: Right. Well, you know, there's much more scope for things

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Speaker 4: like insider trading, technical manipulation, all those sorts of things

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Speaker 4: in a largely unregulated world of crypto. And we've seen

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Speaker 4: that many many times where these coins have been set

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Speaker 4: up and pumped up, hyped up by influencers and celebrities.

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Speaker 4: And then there's the inevitable so called drug pool where

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Speaker 4: once the price goes up, the founders are the people

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Speaker 4: who own a big chunk of the coins, and second

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Speaker 4: they can pull their money out. The job is done

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Speaker 4: for them. They've made their money and they don't care

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Speaker 4: about anyone else, and usually the pricing collapses, confidence is lost.

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Speaker 4: That's the thing about crypto. It's all based on confidence

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Speaker 4: in these coins, and that goes for Bitcoin as well,

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Speaker 4: and it's very sentiment driven, so it's very volatile. At

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Speaker 4: the moment, sentiment is very positive around crypto, but it's

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Speaker 4: a little bit like deep Seat. You know, a new

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Speaker 4: coin could come in that's much more efficient, that runs

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Speaker 4: better applications, and suddenly the crowd will shift to that

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Speaker 4: one and the old ones are not looking so good.

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Speaker 4: So everyone needs to be really worry about about getting

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Speaker 4: into crypto. But underpenning it is technology called blockchain technology,

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Speaker 4: which employs things like smart contracts which allow for a

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Speaker 4: much more efficient way off exchanging things digitally, and we

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Speaker 4: haven't seen that take off in a big way yet.

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Speaker 4: So hopefully, aside from all the speculation and investment that

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Speaker 4: is happening in crypto, we will see this year a

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Speaker 4: bit of an uptick in development of those technologies. And

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Speaker 4: New Zealand has just announced that this year it will

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Speaker 4: create a sandboxer regulatory sandbox to allow innovators to experiment

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Speaker 4: with AI and blockchain and financial services in a safe way.

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Speaker 4: So it's an opportunity for us to look at where

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Speaker 4: the value is in crypto and blockchain and actually do

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Speaker 4: it responsibly.

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Speaker 1: So you mentioned the PayPal mafia, and we know that

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Speaker 1: Donald Trump is appointed former PayPal executive. You mentioned David

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Speaker 1: Sachs as the White House AI and Crypto SAR. The

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Speaker 1: move came after Bitcoin sword above one hundred thousand dollars

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Speaker 1: US for the first time. How significant do you think

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Speaker 1: this move is.

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Speaker 4: Yeah, well, it's David Sacks and Elon Musk and others

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Speaker 4: who are very much in driver. So, Sir, Donald Trump

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Speaker 4: doesn't know anything fundamentally about cryptocurrency. He started turning up

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Speaker 4: at conferences when he was on the campaign trail, crypto

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Speaker 4: conferences literally he was speaking at because the people who

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Speaker 4: are advocates for this technology were funding his campaign and

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Speaker 4: he felt obliged to do that. And he has an

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Speaker 4: obligation now to repay all of those billionaires who helped

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Speaker 4: him on his campaign, literally funded his campaign and use

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Speaker 4: their networks to spread support for him. So the payback

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Speaker 4: now is a low regulation environment that allows them to

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Speaker 4: move fast, make lots of money. And that has been

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Speaker 4: the sort of the story of Silicon Valley over the

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Speaker 4: last twenty years. It was starting to return actually under

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Speaker 4: the last Trump administration. That's where we started to see

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Speaker 4: that the first big cases from the Department of Justice

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Speaker 4: against Google and Amazon and Meta and Microsoft. It really

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Speaker 4: accelerated under the Biden administration. Now we face the prospect

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Speaker 4: of a lot of that being undone and going back

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Speaker 4: to a sort of more of a lass a fair environment.

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Speaker 4: He's already overturned Present Biden's executive order on AI, so

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Speaker 4: that's a really good indication. The SEC the Security and

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Speaker 4: Exchange Commission, was a very hardline on crypto under Biden.

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Speaker 4: So we'll see that dismantled as well as part of

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Speaker 4: Trump's move to weed out the deep state and all

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Speaker 4: the people who think differently from him and his coterie

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Speaker 4: of tef bros. So I think we'll see just a

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Speaker 4: much lower regulatory environment. And some would say at the

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Speaker 4: moment that's what America needs to let its innovators move

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Speaker 4: quickly and be unencumbered by red tape. But we've sort

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Speaker 4: of seen the downside of that, which is this massive

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Speaker 4: inequality that it's created with a lot more power and

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Speaker 4: money concentrated into the hands of people like Elon musk All.

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Speaker 5: We're here across all levels of government to ensure New

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Speaker 5: Zealand takes a strategic, coherent approach to AI. I have

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Speaker 5: established a cross party AI Caucus to support this and

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Speaker 5: have tasked my officials to scope work on AI roadmap

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Speaker 5: and risk management based guidance for business a by digitizing

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Speaker 5: government portfolio. I have similarly tasked officials to advance work

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Speaker 5: to support safe AI uptake at innovation in the public

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Speaker 5: service to make it more efficient and responsive to the

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Speaker 5: needs of New Zealanders.

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Speaker 1: These changes to AI and crypto overseas, how do you

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Speaker 1: think it will affect New Zealand innovators?

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Speaker 5: Is it a positive thing?

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Speaker 1: And should the government do more to regulate both of

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Speaker 1: those sectors as a result.

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Speaker 4: I think it's an opportunity for New Zealand. But we're

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Speaker 4: at a bit of a fork in the road and

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Speaker 4: this really came to light last week where the government

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Speaker 4: laid out its tide for how it wants to reorganize

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Speaker 4: our science and innovation sector. It's dis establishing Callahan Innovation

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Speaker 4: after twelve years, so there's a lot of change going

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Speaker 4: on at once to create a new scientific institution that

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Speaker 4: will focus on artificial intelligence, on quantum computing, and on

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Speaker 4: synthetic biology so basically gene editing technologies. These are areas

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Speaker 4: that we have sort of missed the boat on. Other

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Speaker 4: countries like Australia have gone bag on AI and Quantum

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Speaker 4: put a lot of money into them over the last

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Speaker 4: twenty years, so they're a much better place to use

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Speaker 4: these technologies for economic development and to answer some of

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Speaker 4: the big problems that they have. But you know, we

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Speaker 4: do have an opportunity, particularly if the barrier to using

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Speaker 4: these technologies balls, particularly around AI, we have the opportunity

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Speaker 4: to use models like deep seek to come up with

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Speaker 4: applications that help our businesses become really competitive and sell

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Speaker 4: things to the rest of the world. So our edge

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Speaker 4: is that we can do things cheaply. If you look

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Speaker 4: at Peter Beck and rocket Lab, you know they were

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Speaker 4: never going to be able to compete with SpaceX or NASA.

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Speaker 4: They found a way to do things much more cheap

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Speaker 4: and that's what attracted attention from the rest of the world.

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Speaker 4: You know, low cost launches to the lower Earth's orbits.

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Speaker 4: So that's got to be our mindset. How do we

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Speaker 4: take all of these tools and open source tools are

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Speaker 4: great because they're basically free. We can take these tools,

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Speaker 4: build on top of them and create something off value

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Speaker 4: and that goes for blockchain and crypto technologies as well,

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Speaker 4: but we just don't really have that much capability. We've

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Speaker 4: really hollowed out our science sector. We've got some great

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Speaker 4: business people, but these are areas that to have an edge,

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Speaker 4: you really have to have people, talent, expertise, and it's

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Speaker 4: been a one way street really, people leaving rather than

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Speaker 4: coming here in the last couple of years anyway, since COVID.

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Speaker 4: We need smart people to be here and to develop

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Speaker 4: stuff here.

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Speaker 1: Thanks for joining us, Peter, Thanks Chelsea. That's it for

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Speaker 1: this episode of the Front Page. You can read more

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Speaker 1: about today's stories and extensive news coverage at enzadhrald dot

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Speaker 1: co dot MZ. The Front Page is produced by Ethan

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Speaker 1: Sills and Richard Martin, who is also a sound engineer.

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Speaker 1: I'm Chelsea Daniels. Subscribe to The Front Page on iHeartRadio

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Speaker 1: or wherever you get your podcasts, and tune in on

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Speaker 1: Monday for another look behind the headlines.