UWCISA's 5 Tech Takeaways: Policy, Platforms, and Power Plays

In this week's 5 Tech Takeaways, we look at the ongoing legal battle between Amazon and Perplexity.

A federal appeals court recently granted Perplexity an administrative stay, pausing an injunction that would have blocked its AI shopping agent from operating on Amazon. Amazon says Perplexity's Comet browser accessed customer accounts without authorization. Perplexity argues the lawsuit is really about eliminating a competitor to Amazon's own AI shopping tools.

Does this sound like a standard corporate dispute? Well, it's actually not.

It's another chapter in the long history of powerful incumbents using legal/regulatory means to decide which innovations get to live and which get buried. In an earlier post, I wrote about how a broader view of regulation helps appreciate how market incumbents leverage courts, legislation, and other industry-related chokepoints to potentially throttle innovation from seeing the light of day.

David Sarnoff of RCA is the textbook case. His former friend Edwin Armstrong invented FM radio, a technology so advanced it could have been transmitting data like faxes back in the 1930s. Sarnoff's response wasn't to compete on the merits. Instead, he used RCA's market dominance and patent warfare to bury FM, protecting his AM radio empire and clearing the runway for television. Armstrong spent years fighting RCA in the courts over patent rights and died without ever seeing FM get its fair shot. AT&T played a similar game from an even more powerful position. As a regulated monopoly, they ultimately decided what innovations saw the light of day. In 1934, they blocked the answering machine, not because the technology didn't work, but because they feared that the ability to record conversations would scare off business customers and cannibalize their telephone service offering.

Fast forward to today and the pattern hasn't changed, just the players. Amazon sued Perplexity, and a federal judge drew a distinction that could define the era of AI agents: Comet accessed Amazon accounts with the user's permission, but without Amazon's authorization. By blocking outside AI agents and promoting its own shopping assistant Rufus, Amazon is building a walled garden where it controls the AI, the data, and the advertising revenue.

More broadly, the legal standoff illustrates that innovation is not a purely tech play. When Amazon argues that platform authorization trumps user permission, they are effectively saying that the consumer's choice of tools is secondary to the platform's right to control its ecosystem. It is the decisions made by market makers, and their ability to influence the organs of society, that ultimately determine how innovation unfolds, not the scrappy entrepreneur.

New Federal AI Framework Aims to Override State-Level Rules

The Trump administration has introduced a national artificial intelligence policy framework aimed at creating a unified regulatory approach across the United States. The proposal would establish consistent safety, security, and operational standards for AI technologies, including rules around child protection, data center energy use, and intellectual property rights. A central objective is to stop individual states from creating their own AI regulations, which industry leaders argue would produce a fragmented system that could slow innovation and weaken the United States in its competition with China. The administration now wants Congress to convert the framework into law, though deep partisan divisions could make that difficult. (Source: CNBC)

• National standard push: The administration wants one federal AI framework to replace a patchwork of state laws.
• Balancing innovation and safety: The proposal combines pro-growth goals with guardrails on child safety, energy use, and intellectual property.
• Political hurdles ahead: Even with White House support, turning the framework into law may prove difficult in a divided Congress.

Canadian Legal Tech Firm Clio Fights Off AI Giants and U.S. Pressure

Vancouver-based legal tech company Clio is trying to cement its place as a global AI leader while resisting pressure to move south of the border. CEO Jack Newton sees artificial intelligence as both an enormous opportunity and a growing threat as companies like OpenAI and Anthropic expand deeper into legal workflows. Clio has responded with major acquisitions, including its $1 billion purchase of vLex, and by leaning into what Newton describes as its biggest competitive advantage: proprietary legal data. Despite market volatility and rising investor scrutiny around SaaS businesses in the AI era, Clio has grown into one of Canada’s most valuable private tech firms and continues to expand internationally while keeping its headquarters in British Columbia. (Source: Financial Post)

• AI as both opportunity and threat: Clio is using AI to expand, even as larger AI firms threaten to disrupt its market.
• Data as the moat: The company believes its legal data ecosystem gives it a durable competitive edge.
• A Canadian growth story: Clio is expanding aggressively abroad while deliberately choosing to remain headquartered in Canada.

Amazon vs. Perplexity: Legal Clash Over AI Shopping Agents Intensifies

Image Prompt: Make a photorealisic image of a sprawling city at night seen from above, with some neighborhoods lit by organized grid lighting and others flickering with scattered, mismatched neon signs and unregulated wiring. no people, no animals. Model: Nano Banana 2 via Poe.

A U.S. appeals court has temporarily allowed Perplexity AI to continue running its AI-powered shopping agents on Amazon, pausing an earlier court order that blocked the product. Amazon argues that Perplexity’s tools improperly accessed private customer accounts and masked automated behavior, creating security concerns. Perplexity denies the allegations and says the lawsuit is really an attempt to suppress competition and restrict how consumers use AI tools online. The court’s temporary stay gives Perplexity breathing room while the broader legal dispute continues, and the outcome could shape how AI agents are allowed to interact with major digital platforms in the future. (Source: Reuters)

• A fight over AI platform access: Amazon and Perplexity are battling over whether AI shopping agents can operate on a major marketplace.
• A temporary win for Perplexity: The appeals court pause allows the company to keep its tool active for now.
• Broader implications for AI agents: The case could influence future rules for how autonomous AI tools interact with online services

For more context, see WSJ's article on Amazon's original win against Perplexity. 

OpenAI Unveils Plan for All-in-One AI “Superapp”

OpenAI is planning a desktop “superapp” that would bring together ChatGPT, its Codex coding platform, and a browser into one product. The move marks a shift away from a scattered collection of standalone offerings and toward a more unified user experience, as the company tries to sharpen its product focus and respond to stronger competition from Anthropic. OpenAI says the new app will center on “agentic” capabilities, allowing AI systems to perform tasks more autonomously on behalf of users, from coding to data analysis. The strategy also reflects the company’s growing attention to enterprise customers and productivity use cases. (Source: Wall Street Journal)

• One app, not many: OpenAI is consolidating key products into a single desktop experience.
• Agentic AI takes center stage: The new platform is designed to support more autonomous AI task execution.
• Enterprise pressure is rising: The product shift reflects mounting competition and growing demand from business users.

AI Adoption Surges as Companies Struggle With Governance

A new LexisNexis report finds that generative AI has quickly moved from experimentation to daily use across professional workplaces, but governance and oversight have not kept pace. Many employees are using AI tools without formal approval, and large numbers still lack clear policies or sufficient training. At the same time, professionals say they are increasingly confident in using AI, even as many organizations struggle to explain how internal AI systems work. The report argues that human oversight remains essential and outlines practical steps for leaders to scale AI responsibly, including stronger governance councils, clearer policies, vetted tools, and better validation processes. (Source: LexisNexis)

• Usage is accelerating faster than oversight: AI adoption is growing quickly, but governance structures are lagging behind.
• Human validation still matters: Most professionals believe people should remain actively involved in AI-driven workflows.
• Governance is the scaling challenge: Organizations need clearer rules, training, and controls to expand AI responsibly.

Author: Malik D. CPA, CA, CISA. This post was written with the assistance of an AI language model. 

The AI Battle Heats Up: Research, Regulation, and Disruption + Guidance on How to Install DeepSeek on Your Laptop!

UWCISA Blog · UWCISA Feb 7, 2025: The AI Battle Heats Up - Research, Regulation, and Disruption

How do you use DeepSeek on your laptop? Check out this video!

In this video, David provides step-by-step guidance on installing LM Studio and DeepSeekR1. The full 400GB model likely won’t run on your laptop (it didn’t on mine), so you’ll need a distilled model. This smaller version is more manageable and easier to use. (See the next article for WSJ’s analysis of distillation).

AI Distillation Explained: How Smaller Labs Are Challenging Big Tech

AI distillation is emerging as a major concern for big tech companies, as it allows smaller AI labs to create powerful models at a fraction of the cost. The technique involves using outputs from advanced AI models (like OpenAI’s GPT) to train cheaper, smaller models that perform nearly as well. Chinese AI startup DeepSeek has been accused of distilling OpenAI’s models, potentially reducing the value of OpenAI’s proprietary technology.

• AI Distillation Threatens Big Tech – Smaller AI labs can now replicate powerful AI models cheaply, reducing the competitive advantage of Google, OpenAI, and Meta.
• DeepSeek Accused of Distillation – OpenAI suspects DeepSeek used ChatGPT’s outputs to train its own models.
• Billions vs. Millions – While big tech spends billions, companies like DeepSeek are proving AI can be developed for far less.

Source: WSJ

AI Takes Over Research: OpenAI’s Deep Research Automates Knowledge Work

OpenAI has launched Deep Research, an AI-powered agent designed to automate and streamline research tasks. Built on an optimized version of the o3 model, the tool can independently gather, analyze, and synthesize vast amounts of web data into a structured report within 5 to 30 minutes. Deep Research is particularly beneficial for professionals in finance, science, policy, and engineering, who require in-depth, niche information. The reports include clear citations and reasoning breakdowns, allowing users to verify accuracy. While OpenAI claims that Deep Research hallucinates less than previous models, it still requires human oversight. The tool is currently available only to ChatGPT Pro users ($200/month), with plans to expand access to other tiers. OpenAI's move comes amid growing competition, particularly from Google's Gemini Deep Research and Microsoft's Think Deeper features.

• AI-Powered Research Automation – Deep Research can generate structured research reports independently, reducing hours of work to minutes.
• Targeted at Professionals – Designed for experts in finance, science, and policy who need reliable, high-quality research.
• Limited Access & Cost – Available only to ChatGPT Pro users at $200/month, but OpenAI plans to expand access over time.

Source: ZDNet

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DeepSeek Crackdown: New US Law Could Mean Prison for Users

A newly proposed US law could impose harsh penalties on individuals and businesses using DeepSeek, a Chinese AI chatbot that recently surged in popularity. Introduced by Senator Josh Hawley, the bill aims to block AI technology from China by prohibiting US individuals and companies from engaging with Chinese-developed AI models. The legislation doesn't mention DeepSeek by name, but its release coincided with the app becoming the most popular AI tool in the US, leading to concerns about national security and data privacy. Those violating the law could face up to 20 years in prison or fines of $1 million for individuals and $100 million for businesses. The US Navy and NASA have already banned DeepSeek on government devices, and Texas became the first state to restrict its use.

• Proposed Ban on Chinese AI – A new law aims to block US individuals and businesses from using Chinese-developed AI models like DeepSeek.
• Severe Legal Consequences – Violations could lead to 20 years in prison or fines of up to $100 million for businesses.
• Security & Privacy Concerns – DeepSeek stores data in China, raising fears over surveillance and national security risks.

For the full text of the bill, see here. 

Source: Yahoo Finance

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Musk’s DOGE Is Building an AI Chatbot for the US Government

Elon Musk’s Department of Government Efficiency (DOGE) is developing GSAi, a custom AI chatbot for the US General Services Administration (GSA) as part of President Donald Trump’s AI-first agenda. The chatbot aims to boost productivity for GSA employees by automating tasks like managing government contracts, analyzing procurement data, and drafting memos. The project was initially considering Google’s Gemini, but Musk’s team opted for an in-house AI system instead. DOGE’s broader AI initiatives are focused on cutting government costs, but have sparked controversy, with critics arguing they lack transparency and security reviews. While Musk’s push aligns with Trump’s goal of US AI dominance, some federal employees and civil rights groups worry about the rapid, unchecked adoption of AI in government operations.

• Musk’s Government AI Chatbot – DOGE is building GSAi, an AI assistant for the General Services Administration to streamline government tasks.
• Part of Trump’s AI-First Agenda – The project aligns with Trump’s goal of making the US a global leader in AI and reducing government costs.
• Controversy & Security Concerns – Critics warn about lack of oversight, while employees worry about AI’s impact on government transparency.

Source: Wired

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Is Amazon Overspending? AI Race Heats Up with $100B Investment

Amazon has announced plans to spend $100 billion in capital expenditures in 2025, largely focused on AI infrastructure. This is a significant increase from $83 billion in 2024 and aligns with Amazon’s strategy to compete with AI leaders like OpenAI, Google, and Microsoft. The company is investing heavily in data centers, networking hardware, and AI chips to support AWS cloud AI services. CEO Andy Jassy emphasized that AI represents a "once-in-a-lifetime business opportunity", reassuring investors that this spending will drive long-term growth. However, skepticism is rising in the tech industry following the rapid and low-cost success of Chinese AI startup DeepSeek, which developed a competitive AI model for under $6 million. This has raised questions about whether big tech's massive AI spending is truly necessary.

• Amazon’s $100B AI Investment – The company is making one of its largest-ever AI investments, focusing on cloud infrastructure and AI development.
• Race Against Competitors – Amazon is competing with Google, Microsoft, and OpenAI, all of whom are also spending tens of billions on AI.
• DeepSeek Disrupts AI Economics – The low-cost success of DeepSeek’s AI raises concerns about whether such massive AI investments are sustainable.

Source: CNBC

Author: Malik Datardina, CPA, CA, CISA. Malik works at Auvenir as a Sr. AI Product Manager who is working to transform the engagement experience for accounting firms and their clients. The opinions expressed here do not necessarily represent UWCISA, UW, Auvenir (or its affiliates), CPA Canada or anyone else. This post was written with the assistance of an AI language model. The model provided suggestions and completions to help me write, but the final content and opinions are my own.

From Alexa to Antivenom: How AI is Redefining Technology and Safety

UWCISA Blog · From Alexa To Antivenom: How AI Is Redefining Technology And Safety

Alexa’s Overhaul: Tackling AI Challenges to Build the Future of Voice Assistants

Amazon is redesigning Alexa into an AI-powered "agent" capable of completing more personalized and complex tasks, such as adjusting lighting based on sleep cycles or offering dining recommendations. The overhaul aims to integrate generative AI into Alexa’s architecture, a shift fraught with challenges such as hallucinations (fabricated responses), latency, and reliability. Amazon's in-house Nova AI models and third-party integrations like Anthropic's Claude are central to the effort. However, structural hurdles, like outdated code and disorganized documentation, have delayed progress. Despite setbacks, Amazon aims to release a system that balances safety, accuracy, and scalability, potentially introducing subscription services or revenue-sharing models to monetize its platform. (Source: Ars Technica)

• Generative AI Challenges: Alexa's shift to generative AI introduces reliability and safety concerns, including the need to mitigate hallucinations and ensure quick, accurate responses.
• Development Delays: Organizational issues, outdated code, and thinly spread engineering teams have slowed progress, compounded by layoffs in 2023.
• Monetization Plans: Amazon is exploring subscription services and revenue-sharing models to make Alexa’s generative AI platform profitable.

Protecting Kids from AI Risks: Lessons from a Heartbreaking Case

The tragic death of a 14-year-old boy in Florida has highlighted the risks AI chatbots pose to children. Sewell Garcia formed an emotional and sexualized relationship with a chatbot on Character.AI, a platform allowing users to converse with fictional characters. The incident raises pressing questions about accountability for AI-driven harm. In response, some countries like Europe and Australia are pursuing stricter regulations, while Canada's stalled Online Harms Act offers lessons on protecting children. Proposed safeguards include mandatory risk assessments, data transparency, and age-appropriate design standards, which could prevent similar tragedies and ensure child safety in the AI era. (Source: The Globe and Mail)

• AI Risks to Children: AI chatbots can exploit children’s emotions, creating harmful dependencies that can lead to tragic outcomes.
• Lack of Accountability: Legal and ethical questions remain unresolved regarding who bears responsibility for AI-induced harm.
• Policy Lessons: Regulations, such as Canada’s proposed Online Harms Act, could offer tools to impose safety standards, transparency, and design protections for AI systems used by children.

Google's AI Ambitions: Can Gemini Overtake ChatGPT?

Google CEO Sundar Pichai is positioning Gemini, the company’s AI-powered chatbot, to surpass OpenAI’s ChatGPT in both user adoption and technological capability. Despite a late start, Gemini has gained ground with features like research assistance, podcast generation, and integration across Google’s vast suite of products, including Gmail and Google Drive. However, Gemini trails in popularity, with fewer downloads than ChatGPT and lower subscription retention. To compete, Google offers perks like extra storage with Gemini’s premium plan and is pushing for deeper mobile integration by making it the default assistant on Android devices. Challenges remain, including controversies over AI-generated content and ensuring consumer engagement. (Source: The Wall Street Journal)

• Competitive Push: Google aims for 500 million Gemini users by 2025, leveraging its integration with Android and popular services like Gmail.
• Subscription Strategy: Gemini’s premium plan offers added features like storage, but retention lags behind competitors like OpenAI.
• AI Expansion: Gemini is being incorporated into Google’s core platforms, reshaping search and advertising while targeting professional applications.

US Accelerates AI Development with Focus on Clean Energy and Innovation

In one of his final actions in office, US President Joe Biden signed an executive order to accelerate the development of AI infrastructure, including data centers and clean power facilities. Federal agencies will allocate government sites for private companies to construct AI data centers, with developers required to ensure adequate clean energy generation to avoid increasing consumer electricity costs. This move is part of a broader effort to position the US as a global leader in AI while maintaining environmental standards and addressing national security concerns. The order also mandates a study on the impact of AI data centers on electricity prices. (Source: Euronews)

• AI Infrastructure Growth: Federal agencies will make sites available for private companies to develop AI data centers with clean power requirements.
• Environmental Standards: Developers must ensure clean energy capacity matches data center needs, avoiding higher electricity costs for consumers.
• National Leadership in AI: The order underscores the US’s commitment to staying competitive in AI while balancing environmental and security priorities.

AI-Designed Antivenoms: A New Era in Snake Bite Treatment

Researchers have used artificial intelligence to develop new proteins capable of neutralizing some of the most lethal snake venom toxins. These "de novo" proteins, created through advanced AI models, demonstrated 100% survival rates in lab mice when used against certain toxins, marking a breakthrough in antivenom development. Unlike traditional antivenoms derived from animals, the AI-designed proteins are more stable, cost-effective, and easier to produce. While significant hurdles remain before human applications, such as safety testing and broader venom coverage, this innovation could revolutionize treatment for snake bites and other medical challenges, showcasing AI’s potential in drug design. (Source: Popular Science)

• AI in Medicine: Advanced AI models have enabled the rapid design of synthetic proteins to neutralize snake venom, a step forward in antivenom innovation.
• Advantages Over Traditional Antivenoms: AI-designed proteins are more stable, cost-effective, and less reliant on animal-derived methods, making them accessible for rural areas.
• Future Potential: While still in early stages, de novo proteins could transform treatment for snake bites and pave the way for breakthroughs in other medical fields.

Author: Malik Datardina, CPA, CA, CISA. Malik works at Auvenir as a GRC Strategist who is working to transform the engagement experience for accounting firms and their clients. The opinions expressed here do not necessarily represent UWCISA, UW, Auvenir (or its affiliates), CPA Canada or anyone else. This post was written with the assistance of an AI language model. The model provided suggestions and completions to help me write, but the final content and opinions are my own.

UWCISA's 5 Tech Takeaways: How AI is Shaping Investments, Policies, Legal Battles, and the Future of Work

User 726679350 · UWCISA's 5 Tech Takeaways: How AI is Shaping Investments+Policies+Legal Battles & Future of Work

Amazon Eyes Additional Multi-Billion Dollar Investment in Anthropic

Amazon.com is considering a second multi-billion dollar investment in AI startup Anthropic, maker of Claude.ai, according to a report by Reuters. This follows Amazon’s previous $4 billion investment in Anthropic, seen as a competitor to OpenAI, in 2023. Anthropic relies on Amazon’s cloud infrastructure but has shown a preference for Nvidia-designed chips over Amazon’s own server technology. The growth of Anthropic, co-founded by former OpenAI executives, has attracted significant interest, with Google-parent Alphabet also committing up to $2 billion in funding. This investment is part of Amazon’s broader AI strategy to offer early access to advanced AI capabilities to its cloud customers.

Key Takeaways:

• Amazon is contemplating a new multi-billion dollar investment in AI company Anthropic, following an initial $4 billion investment.
• Anthropic uses Amazon’s cloud but prefers Nvidia chips, indicating differing technology preferences.
• Previous funding includes a major investment from Alphabet, totaling up to $2 billion.

BYOAI: How Workers Are Adopting AI to Tackle Rising Workloads Amidst Policy Gaps

A new report from Wrike reveals that American workers are managing an increased workload, up 31% from last year, by adopting generative AI tools like ChatGPT, Co-Pilot, and Claude to boost productivity. However, only 31% of companies currently have AI guidelines in place, creating a disconnect between workers’ adoption of AI and company policies. Experts recommend that organizations establish comprehensive AI policies, including ethical training, to bridge this gap and support responsible AI usage. As companies catch up, generative AI is increasingly seen as essential for streamlining tasks and filling gaps amid rising workloads.

Key Takeaways:

• U.S. workers report a 31% increase in workload, leading many to adopt generative AI tools for efficiency.
• Companies lag behind, with only 31% having AI policies in place.
• Experts call for structured AI policies and ethical training to responsibly integrate AI into workplaces.

(Source: VentureBeat)

How OpenAI’s Voice and Search Upgrades Pave the Way for Advanced AI Agents

OpenAI has recently launched updates to its platform, including a Realtime API that supports voice features and a ChatGPT-powered search function, laying the groundwork for AI agents—advanced digital assistants capable of handling complex tasks. Two significant challenges remain: enhancing AI’s reasoning abilities and enabling seamless tool use. OpenAI’s latest model includes a “chain of thought” feature to improve reasoning, though experts note it doesn’t yet achieve true human reasoning. OpenAI aims to expand these AI capabilities across fields like law, economics, and accounting, foreseeing transformative applications.

Key Takeaways:

• OpenAI’s recent updates aim to support AI agents that could manage complex tasks using voice features and search capabilities.
• Challenges remain in developing reasoning and external tool-use abilities for AI agents.
• OpenAI plans to adapt these capabilities for fields like law, economics, and accounting to broaden its applications.

(Source: MIT Technology Review)

CanLII Sues AI Chatbot Caseway Over Copyright Concerns in Legal Data Use

The Canadian Legal Information Institute (CanLII) has filed a lawsuit against Caseway AI, a legal research chatbot, claiming copyright infringement and terms-of-service violations due to unauthorized scraping of 3.5 million legal records. CanLII argues that its legal database enhancements, such as hyperlinks and error corrections, are copyrighted. In response, Caseway claims that it did not harm CanLII’s services and that both organizations share a mission to make legal information accessible. This case is part of a larger debate about AI’s use of public data and copyright in the age of generative AI.

Key Takeaways:

• CanLII has sued Caseway AI for scraping its legal database, alleging copyright infringement.
• Caseway argues that it is working toward a shared goal of making legal data accessible.
• This case highlights ongoing copyright and data-use debates related to generative AI.

(Source: CBC News)

Parti Québécois' Push for AI Over Immigration Sparks Debate on Workforce Solutions

In response to Quebec’s labor shortages, the Parti Québécois (PQ) has proposed automation and AI as alternatives to immigrant labor. The plan targets investments in manufacturing, retail, and agriculture, taking inspiration from automation trends in countries like South Korea and Japan. Experts, however, caution that automating critical roles in fields like healthcare and education presents unique challenges and cannot fully replace the need for immigrants. Business representatives also highlight high costs, taxes, and regulatory hurdles as obstacles for small businesses aiming to adopt AI solutions. While automation could play a role in Quebec’s economy, experts conclude that it cannot be a standalone solution to the province’s labor challenges.

Key Takeaways:

• The Parti Québécois proposes automation to address labor shortages, reducing reliance on immigration.
• Experts say essential jobs in healthcare and education are difficult to automate effectively.
• High costs and regulatory hurdles make automation challenging for smaller businesses, indicating a need for balanced workforce solutions.

(Source: CTV News)

Author: Malik Datardina, CPA, CA, CISA. Malik works at Auvenir as a GRC Strategist who is working to transform the engagement experience for accounting firms and their clients. The opinions expressed here do not necessarily represent UWCISA, UW, Auvenir (or its affiliates), CPA Canada or anyone else. This post was written with the assistance of an AI language model. The model provided suggestions and completions to help me write, but the final content and opinions are my own.

Tech Shifts: AI Restructures, Windows Bugs, and Amazon's New Devices

Amazon Unveils Color Kindle and Revamped Devices for Every Reader

Amazon has introduced an exciting new lineup of Kindle devices, including the first-ever color Kindle, the reimagined Kindle Scribe, and the fastest Kindle Paperwhite. The Kindle Colorsoft Signature Edition stands out with its vibrant, paper-like color display, delivering enhanced reading experiences with high contrast and fast performance. The Kindle Scribe offers a unique in-book writing experience and an AI-powered notebook feature for summarizing notes, while the new Kindle Paperwhite boasts 25% faster page turns and a larger display. For budget-conscious readers, the compact entry-level Kindle now comes in a fun "Matcha" color. Additionally, the Kindle Kids versions include new covers and a subscription to Amazon Kids+ to encourage reading among younger audiences.

• First Color Kindle: Kindle Colorsoft Signature Edition introduces rich, paper-like color without sacrificing performance or battery life.
• Kindle Scribe's New Features: Offers in-book writing, AI-powered notetaking, and refined display for a paper-like writing experience.
• Faster Paperwhite and Entry Kindle: The new Kindle Paperwhite has 25% faster page turns, while the entry-level Kindle is compact and affordable with a bright new design.

(Source: Amazon)

Windows 11’s Latest Update: Bugs You Need to Know Before Upgrading

Microsoft's 2024 update for Windows 11, version 24H2, is packed with enhancements like an improved Copilot AI and faster performance, but it's also riddled with bugs. Common issues include a malfunctioning System File Checker that falsely reports corrupted files, cache file deletion problems, and compatibility issues with the Easy Anti-Cheat gaming app, which can trigger the Blue Screen of Death. Other glitches include disappearing mouse pointers in Chromium browsers, internet connection disruptions, broken fingerprint sensors, and issues with clipboard history. These bugs make it advisable for users to delay updating until fixes are available.

• Major Bugs in System Tools: Bugs in System File Checker and cache file deletion hinder maintenance and free space reporting.
• Gaming and Connectivity Issues: Conflicts with Easy Anti-Cheat and internet connection bugs can affect gaming and online work.
• Multiple Interface Glitches: Broken mouse pointers, fingerprint sensor issues, and clipboard history bugs disrupt everyday tasks.

(Source: ZDNet)

Google Restructures AI Development: Gemini Team Merges with DeepMind

Google continues its AI consolidation efforts by moving the team behind its Gemini AI assistant to its DeepMind research division, aiming to accelerate AI development. CEO Sundar Pichai announced this reorganization, which also includes leadership changes, with Prabhakar Raghavan transitioning from leading Google’s search and ads to becoming the company's Chief Technologist. This consolidation comes as Google faces pressure to keep up with competitors like Microsoft and OpenAI in the AI space. Over the past year, Google has unified various AI teams under DeepMind to enhance its Gemini models and stay competitive in generative AI, while also managing antitrust challenges from U.S. regulators.

• AI Consolidation at Google: Google moves Gemini AI to DeepMind, streamlining AI development across its teams.
• Leadership Shift: Prabhakar Raghavan steps into a new role as Chief Technologist, while Nick Fox leads search and ads.
• Pressure from Competition and Regulators: Google faces stiff competition from Microsoft and AI startups, as well as mounting antitrust scrutiny.

(Source: Bloomberg)

Perplexity Launches Integrated Search for Web and Enterprise Files

Perplexity, a search and AI platform, has launched its new Internal Knowledge Search, enabling enterprises to search both internal files and the web in a single platform. This feature allows users to upload key documents, such as Excel sheets and PDFs, to enhance productivity and streamline research by combining internal data with web-based information. Perplexity also introduced Spaces, a collaborative tool for teams to share, organize, and control research data. While similar to other retrieval-augmented generation (RAG) systems, Perplexity's approach focuses on user-uploaded databases. Early users like Nvidia and Dell have already integrated these tools for various tasks, including due diligence and employee support.

• Integrated Search Platform: Perplexity allows enterprises to search both internal documents and web data on a single platform for improved efficiency.
• Team Collaboration with Spaces: Spaces enables teams to share research and customize AI assistant instructions for better control over data access.
• Third-Party Integration: Upcoming integrations with Crunchbase and FactSet will allow businesses to expand their knowledge base with proprietary data.

(Source: VentureBeat)

OpenAI to Remove Non-Profit Control, Sam Altman to Receive Equity

OpenAI, the organization behind ChatGPT, is planning a major restructuring by transforming its core business into a for-profit benefit corporation while removing control from its non-profit board. CEO Sam Altman will receive equity in the new for-profit entity, which could be valued at $150 billion. The move is designed to attract more investors by removing the cap on returns, while maintaining the non-profit's minority stake to oversee AI safety concerns. However, this shift raises questions about whether OpenAI can still prioritize its original mission of developing safe, beneficial AGI. The restructuring comes amid leadership changes, including the departure of CTO Mira Murati and President Greg Brockman taking a leave of absence.

• Restructuring for Profit: OpenAI will become a for-profit benefit corporation, allowing Sam Altman to hold equity and attracting more investors by removing profit caps.
• AI Governance Concerns: Shifting away from non-profit control has sparked concerns about maintaining focus on AI safety and responsible AGI development.
• Leadership Changes: The restructuring coincides with significant leadership shifts, including the exit of CTO Mira Murati and Greg Brockman's leave.

(Source: Reuters)

Author: Malik Datardina, CPA, CA, CISA. Malik works at Auvenir as a GRC Strategist who is working to transform the engagement experience for accounting firms and their clients. The opinions expressed here do not necessarily represent UWCISA, UW, Auvenir (or its affiliates), CPA Canada or anyone else. This post was written with the assistance of an AI language model. The model provided suggestions and completions to help me write, but the final content and opinions are my own

Sorry, Amazon! Facebook beat you to the crypto-punch!

By now many have heard of, Libra, Facebook's foray into the world of cryptocurrency.

According to TechCrunch:

"Libra, which will let you buy things or send money to people with nearly zero fees. You’ll pseudonymously buy or cash out your Libra online or at local exchange points like grocery stores, and spend it using interoperable third-party wallet apps or Facebook’s own Calibra wallet that will be built into WhatsApp, Messenger and its own app."

The head of Libra, David Marcus, went on CNBC to discuss this initiative as well.

The move represents the growing power of Facebook and other IT companies that increasingly dominating the economy.

In fact, this reality was one that was discussed at the CPA Foresight Initiative that were recently held. In my breakout group, dubbed "Tech Titans, I proposed is that there is actually nothing stopping one of these companies from becoming a bank. Circulating this picture to the wider group:



It is quite clear that these tech giants are well capitalized. What stops them from blessed by the grand wizards of Capitalism to become a bank? For example, Rogers has been issued a bank license in Canada to "issue credit cards and other financial products". Although the charter seems limited in scope, if they have enough capital reserves what's to stop the next step of them issuing loan through the magic of fractional reserve banking?

And so here you have it. Facebook is the first of the Tech Titans, also known as it’s Facebook, Apple, Amazon, Netflix and Google (FAANG), to turn embark down the path of financialization. What separates Libra from Bitcoin is that it's a stablecoin, is that it is a "stable coin"; where the value does not fluctuate. Bitcoin, in contrast, is not an actual currency as it is not backed by nothing. Hence the fluctuating value prohibits it from being something that consumers and retailers can keep in their wallets to buy things. As the Libra whitepaper notes:

"Libra is designed to be a stable digital cryptocurrency that will be fully backed by a reserve of real assets — the Libra Reserve — and supported by a competitive network of exchanges buying and selling Libra. That means anyone with Libra has a high degree of assurance they can convert their digital currency into local fiat currency based on an exchange rate, just like exchanging one currency for another when traveling. This approach is similar to how other currencies were introduced in the past: to help instill trust in a new currency and gain widespread adoption during its infancy, it was guaranteed that a country’s notes could be traded in for real assets, such as gold. Instead of backing Libra with gold, though, it will be backed by a collection of low-volatility assets, such as bank deposits and short-term government securities in currencies from stable and reputable central banks."

Arguably, Apple was the first of the FAANG to go down this road with their shiny new credit card, but this was largely incremental innovation as they are leveraging Goldman Sachs and MasterCard for the underlying infrastructure. And it’s a credit card, which is obviously a legacy payment technology.


Facebook, on the other hand, is charting new territory by wrapping its foray into financialization in blockchain technology. However, they too have assembled a coalition of the willing as well:

How will they make money?
As they have advertised, the idea is to help the unbanked and to transfer money across borders at a lower rate. Blockchainthusiasts, such as Don Tapscott, have often pointed to the ability of blockchain to help those that don't have access to the mainstream banking system. The other way they could make money is through the returns they would make on the portfolio of assets

Although Calibra (Facebook's digital wallet to hold Libra) will not be connected to people's Facebook account, there is a treasure trove of data that would come from linking a person's personal data to the audit trail that would come from their Calibra wallet. And given Facebook's track record on privacy, it's not difficult to see why people would be suspicious about Facebook trying to monetize this data. That being said, David Marcus (head of Facebook's Calibra divison) noted on an interview on CNBC that there is a significant effort to get the cryptocurrency up and running.

My bet was on Amazon
As I noted in a previous post, I thought it would be Amazon that would be first to the market with a "stable-coin". My prediction was based that Amazon would have the most to gain by cutting out the credit card companies. The trick though, was how would Amazon get people to load up cash directly into their systems? Amazon would have to make a deal with a retailer, like Starbucks or Walmart, who could not only provide such access to Amazon but could also then get to use that cryptocurrency.

What did I miss?

The FAANG are not as powerful as the banking sector. Both Apple and Facebook have included major financial players in their respective entrance world of financialization. Perhaps that will change over time but for now, it seems they are content to partner with major players within the industry.

Why financialization?
Apple and Facebook may occupy the headlines when it comes to their respective financial plays, but they are not the first in tech to realize there are pots of money to be made from the rentier economy.

Perhaps the biggest illustration of this is how Sony makes 63% of its operating profits from finance with “[l]ife insurance has been its biggest moneymaker over the last decade, earning the company 933 billion yen ($9.07 billion)”. So even Sony - the inventor of the Walkman - is not focused on the production of goods or services but on such rent-seeking activity.

What about regulation? 

How on earth is Facebook going to get away with this without being regulated?

Facebook appears to have bought themselves time by establishing this initiative in Switzerland. The other reality is that it's highly unlikely that this initiative was overlooked by the legal departments at Visa, MasterCard, PayPal, etc. That being said, could regulation be the worst thing for Facebook? I think that they may benefit from it. As I noted in this post, regulation can be a monopolist's best friend:

"In Tim Wu's Master Switch, Theodore Veil also advocated for the concept of a regulated monopoly in the arena of telephones:

"[Theodore] Vail died in 1920 at age 74, shortly after resigning as AT&T's president, but by that time, his life's work was done. The Bell system had uncontested domination of American telephony, and long-distance communication was unified according to his vision. The idea of an open, competitive system had lost out to AT&T's conception of an enlightened, licensed, and regulated monopoly. AT&T would remain in this form until the 1980s, and it would return in not so substantially different form in the 2000s. As historian Milton Mueller writes, Vail had completed the "political and ideological victory of the regulated monopoly paradigm, advanced under the banner of universal service."" [emphasis added]

We all know, including Facebook, that the world of finance is heavily regulated. Consequently, they likely know that the day they will have to comply with numerous regulations is inevitable.

However, could it be that the US Regulators are turning a blind-eye on purpose?

According to CNN, there have been calls from US officials to get Facebook to freeze what they are doing to getting them to attend a hearing. However, there's been no mention of a "cease and desist letter" or actual legislation being passed to reign in Libra.

More importantly, there are advantages the US government could leverage from Facebook's offering. As noted in Paul Vigna's and Michael Casey's Age of Cryptocurrency:

"Things really get interesting when the U.S. government issues a digital dollar. The dollar is already the world’s primary reserve and commercial currency, but this would give it an even bigger edge. That’s because people in countries whose currencies aren’t trusted or who are barred or restricted from buying foreign currencies—think China, Argentina, Russia—could now easily obtain the one currency that has long symbolized international stability. Whereas the international movement of paper dollars can be (somewhat) controlled with physical checks at border crossings and regulation of bank transfers, digital dollars would be far more footloose. They would invade other jurisdictions’ currency zones. If citizens of other countries can easily acquire dollars—by far the most sought-after currency in the world—and use them to buy almost anything, why would they need renminbi or pesos or rubles? In this scenario, other currencies become less sought after, the dollar more powerful. It is the ultimate expression of U.S. hegemony, and, for other governments, undermines their nation-state sovereignty."

In other words, China, China, China.

That is, Facebook's deployment of the cryptocurrency gives the US government plausible deniability that the US is working to undermine the Chinese from a currency perspective. As I noted in this post, I cited the Wall Street Journal in explaining China's concern regarding cryptocurrency.

"Virtual currencies in theory allow holders to bypass China’s traditional banking system to move money outside its capital-controlled borders. That could make it more difficult for Chinese regulators to maintain a tight grip on the yuan."

(I also noted that the US had similar concerns around bitcoin and used DoJ operation Chokepoint as well as IRS rules to curtail the use of bitcoin and other cryptocurrencies. It's not realistic to think that a country will let down it's guard when it comes to capital controls.)

Although the foreign policy aspect may be important, there are real risks for the consumers here. How do the consumers know that their money is safe at Facebook? For example, the FDIC insures deposits of actual banking institutions. Unlike Bitcoin, Facebook can be forced to under audits and other compliance activities. Without such oversight, it's impossible to know whether Facebook is actually keeping enough reserves to back Libra. Take for example Tether, a stablecoin that was allegedly backed by the US Dollar. They initially had to break things off with their auditor. And it seems that they have retained lawyers to provide the necessary assurance over their reserves. However, this article on Forbes traces how Tether seems to be changing its wording around whether Tether is actually fully backed by US fiat currency.

So, we shouldn't be surprised to the FDIC or some other financial regualtor's seal as part of its updated infographic in the near future.

In future post(s), we will look at how bitcoiners are reacting to this as well as what potential opportunities Libra could bring to the audit.

Author: Malik Datardina, CPA, CA, CISA. Malik works at Auvenir as a GRC Strategist that is working to transform the engagement experience for accounting firms and their clients. The opinions expressed here do not necessarily represent UWCISA, UW, Auvenir (or its affiliates), CPA Canada or anyone else

Cryptoassets: Key to making Googlzon a reality?

On one of my consulting gigs in my prior life, I recalled seeing the video called "EPIC 2014". One of my colleagues at the time told me to check it out. It had the "Matrix" feel to it, but for those familiar with recent movies I would say it's a bit closer to Her.

Take a look:



I've intended to write a post for a while on how Googlzon may actually come to fruition. Sure, one of the key messages of the flash-based video is that people are "amusing themselves to death", but to stick to the tech side of things I wanted to reflect on how the payments aspect works in EPIC.

And that's what struck me: it would probably require some type of crypto-asset or blockchain enabled technology that would enable content providers a way to get paid.

Is this really a scenario where blockchain could help?
I've commented on the past about "blockchainthusiasts" overhyping the technology. But this it's time different.

In a previous post, I wrote how Amazon would be the natural patron for a corporate-cryptocurrency:

"So likely a retailer alliance could be something that poses a challenge to banks and their networks. Amazon already has Amazon Coin, but I think that if they teamed up with Walmart you would have something that basically has wide acceptance. And that's when the games will begin. Retailers also have an incentive to cut-out the banks and save those credit card fees. However, for this to have user acceptance the retailers would need to give their consumers a cut."

And also I noted how a cryptocurrency could be the antidote to media's malaise, specifically:

"When I heard the panelist discuss [use of cryptocurrency-technology as a basis for micropayments], I thought this made a lot of sense. Being someone who has given into paywalls, I would most likely have a media budget set aside that would allow me to pay for articles - 10 cents here or 25 cents there - to consume content. This is much better than being on the hook for hundreds of dollars a month for subscriptions you may or may not use."

Enter the Brave Browser and the Basic Attention Token
I recently was reintroduced to Basic Attention Token (BAT).

Check out how it works:

Pretty amazing how EPIC almost predicted the establishment of a system that would require BAT?

It seems like such a small part of the EPIC system that was outlined in the dystopian pic. But it is a key part of such of a Googlzon eco-system as to how people would be paid and it seems like crypto-assets would be the best candidate for the job.

Author: Malik Datardina, CPA, CA, CISA. Malik works at Auvenir as a GRC Strategist that is working to transform the engagement experience for accounting firms and their clients. The opinions expressed here do not necessarily represent UWCISA, UW, Auvenir (or its affiliates), CPA Canada or anyone else

Bitcoin clampdown: Towards a corporate-cryptocurrency?

WSJ reported that the Chinese government was working to shut down Bitcoin exchanges:

"China’s central bank together with other regulators has drafted instructions banning Chinese platforms from providing virtual-currency trading services, according to people familiar with the matter...regulators told at least one of the exchanges that the decision to shutter them has been made, one of the people said. Another said the order may take several months to implement."
China, however, is not the only has such issues with cryptocurrency. The US also has limited the use of Bitcoin by taxing it as a capital gain:

"Capital-gains tax rules could make using bitcoin as a currency a logistical nightmare. It meant that when U.S. citizens filed taxes, they had to account for every single bitcoin acquired, sold, or used for purchases, and the prices and dates at which those transactions happened. If you purchased 0.5 bitcoins at $360 in April 2014 and sold them for $645 on June 9, you’d have to declare that gain as a taxable event in 2015. Fair enough. But did you have to account for swings in the value if you used your bitcoin to purchase a vacation on Expedia or to order a pizza? The IRS’s move seemed to undermine bitcoin’s potential for use as a currency." Vigna, Paul. The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic Order (p. 260). St. Martin's Press. Kindle Edition. 

However, the key regulatory action against Bitcoin came from the FDIC and DOJ:

"bitcoiners would report that agents from the Federal Deposit Insurance Corporation, the body charged with cleaning up failed banks so that insured depositors can be kept whole, were pressuring bank compliance officers not to work with bitcoiners. It’s hard to verify this claim. The FDIC had long communicated its concerns to bankers over supposedly high-risk categories of merchants, and bitcoin businesses were told by bank compliance officers they were included in those groups...

The U.S. Department of Justice, too, sent banks messages that contradicted FinCEN’s accommodating message. In 2013, the DOJ launched an initiative known as Operation Choke Point, in which it investigated banks dealing with merchants in businesses that weren’t necessarily illegal but were considered high fraud risks. Miami-based lawyer Andrew Ittleman, who has become something of an accidental expert on the subject, told us that Operation Choke Point now occupied most of his time and that primarily his clients were legal providers of bitcoin services and medical marijuana, along with a few pornographers and gun dealers. The law was having a chilling effect: banks might not be breaking the law by servicing such businesses, but the risk of an audit from the DOJ was enough to dissuade them from doing so. Ittleman fought hard for his clients, who were denied a vital instrument of financial access, but it was an uphill battle. The matter, he said, should be taken up to the Supreme Court by civil rights activists such as the American Civil Liberties Union." (ibid p. 258-259)

Why are governments so worried about Bitcoin?

The WSJ article cited above gives a clue:

"Beijing’s crackdown on bitcoin is part of a broader effort to root out risks to the country’s financial system. Officials earlier this year circulated a draft of anti-money-laundering rules for bitcoin exchanges, a powerful warning, even though the regulations were never formalized, according to people familiar with the matter...Virtual currencies in theory allow holders to bypass China’s traditional banking system to move money outside its capital-controlled borders. That could make it more difficult for Chinese regulators to maintain a tight grip on the yuan." [Emphasis added]

Cryptocurrency has its roots in the anarchist activists and others who saw Bitcoin as a way to challenge the power of banking sector. Given that Bitcoin had its debut during the Financial Crisis, it may have been reasonable to believe that there would be sufficient groundswell to believe that the cryptocurrency would gain popularity.

However, popularity in the realm of currency and capital is not sufficient to change institutional realities of societies. 

The reality of societies today is that financial institutions, and corporations more broadly, represent institutions that keep the society together. Since they hold the keys of the society, ultimately they will control the change that will proliferate through society. And something that undermines the ability of the society's today to control capital flows is pretty much a national security issue - and can expect a response that reflects that reality. In other words, it was reasonable to expect the Empire to Strike Back as they did. 

Can we ever expect a corporate-sponsored cryptocurrency? 

Given the way power works, the only ones that can really challenge banks' hegemony are other corporations. For example, Walmart teams up with generic drug makers (in competition with expensive brand-name alternatives) to reduce the healthcare benefits they pay to their employees.

One requirement would be to have direct access to customers so they can actually convert their cash into that digital currency. For example, online realtors are dependent on banks and their electronic payment networks to essentially get cash into the system. 

So likely a retailer alliance could be something that poses a challenge to banks and their networks. 

Amazon already has Amazon Coin, but I think that if they teamed up with Walmart you would have something that basically has wide acceptance. And that's when the games will begin.

Retailers also have an incentive to cut-out the banks and save those credit card fees. However, for this to have user acceptance the retailers would need to give their consumers a cut. 

But would this be a true cryptocurrency? 

Such a currency would likely take a permissioned or private blockchain route. Essentially, there will be a need for 'independent verifiers' (instead of miners) that will ensure that the transactions are properly accounted for. This is likely cheaper than using miners which are costly in terms of the energy costs that have to be paid. 

Although I think external auditors could play the role of the independent verifier, these systems can be highly automated and an assurance model can be developed where you have real-time assurance as the source documents would be digital. This is assuming that the cryptographic keys can be relied on for such a purpose and auditors are able to get "effortless" access to such evidence and systems. So it may lead to a renaissance in the audit but may help auditors realize their potential within the field of audit data analytics and more broadly as data scientists. 

This speaks to one of the key aspects of automated audits that I raised in this post. As promised, my plan is to delve deeper on this topic, where we can look at how blockchain can facilitate AI or automated audits. 

Ultimately, banks play a critical role in extending credit which essentially makes them gatekeepers of the consumer economy. However, other companies, largely the tech sector, are hoarding cash:

Courtesy of Business Insider

So the question is whether these non-banks could move into bank territory. For example, Rogers Wireless (cell phone provider) is also a bank. That being said, it likely won't be a revolution but could be something that evolves over time that steadily erodes bank power. However, that would mean that the banks would take this lying down and I don't think that the Empire will go out without a fight.

Author: Malik Datardina, CPA, CA, CISA. Malik works at Auvenir as a GRC Strategist that is working to transform the engagement experience for accounting firms and their clients. The opinions expressed here do not necessarily represent UWCISA, UW, Auvenir (or its affiliates), CPA Canada or anyone else

Cafe X and Amazon Go: Auditing a robot-operated store?

By now you've probably heard of the robot-barista - Cafe X.  If not check out this video from Wired, where David Pierce walks us not only through how the robot will make your latte, but why he thinks it better than the human alternative:



Amazing isn't it?

In a presentation I did last year on how these forces of automation could impact auditing & accounting, I noted it's easier to see how technology disrupts someone other than you.

And so it looks like baristas have met their match.

As Pierce notes in the video, the inconvenience of dealing with imperfect people is something that most people want to avoid in the rat-race we live in: who wants the barista to remake your coffee 11 times as he says? ;) 

The Wired article also notes that Cafe X is 'high-quality at a cheaper price': 

"Surprisingly delicious coffee, starting at $2.25—cheaper than you’d find at Sightglass or even Starbucks. Cafe X’s location in the corner of the Metreon may not entice you out of your daily routine."

Amazon Go: Walkthrough Technology 
Amazon has also wowed the "techthusiasts" out there with their cashier-less store concept:



In the FAQ section, Amazon summarizes how this cashier-less store works:

"Our checkout-free shopping experience is made possible by the same types of technologies used in self-driving cars: computer vision, sensor fusion, and deep learning. Our Just Walk Out Technology automatically detects when products are taken from or returned to the shelves and keeps track of them in a virtual cart. When you’re done shopping, you can just leave the store. Shortly after, we’ll charge your Amazon account and send you a receipt."

Although this has the potential to revolutionize retail, Amazon has experienced some setbacks of late. The store can allegedly only handle 20 people at a time. So there maybe some kinks to work out before this goes mainstream.

Obviously, this could have a massive impact on entry level jobs: most of us who were young a while ago relied on these McJobs for spending money and funding our college/university tuition. They also gave students some practical work experience to help land a career accounting profession ;)

But let's save this discussion for a future post.

How would you audit cashier-less stores, like Cafe X or Amazon Go?

The retail industry has been a manual intensive industry that requires cashiers, stock room personnel and the like. Such a process naturally requires policies and procedures (aka internal controls) that ensure that merchandise makes it from the shelf to the cash register and into the customers possession. And there are those anti-theft mechanisms to prevent shoplifting as well. In the industry, "shrinkage", the amount of merchandise that is stolen, robbed, damaged, etc, is estimated by the National Retail Federation to be 1.38% of sales or $45.2 billion for 2015.

Cafe X and Amazon Go offer a glimpse into how automating traditional businesses can alter these fundamental risks that impact the way we go about conducting our financial audits.

With Cafe X, shrinkage is almost eliminated as there is no humans involved in the production process. Once the kiosk is loaded up with cups, coffee, syrup, sugar, milk, etc. the system is essentially fully automated - no manual intervention by baristas or customers.

Amazon Go, on the other hand, uses a whole lot of automation that is watching and analyze every move of the customers (and employees) throughout the store. Consequently, this would not be the store to steal from! And let's not forget Amazon is experimenting with those drones and are we really sure that they are unarmed?


Given this level of automation of the actual business process and controls, could auditors stick to the tried, tested and true retail audit procedures? Or would this enable a more automated approach?

I was directly involved with the recent test-audit of the blockchain involving loyalty points. One of the realities of auditing such exponential technologies is that it makes controls testing a must. For example, for the financial auditor to rely on the digital signatures there needs to be some testing around the wallets to ensure that the signatures are reliable.

Consequently, testing such automated stores would require either a SOC2 or modified SOC report to meet the needs of such a store. For example, the SOC2 would need to have some way of having comfort of how the stock and inventory gets loaded into the store. Likely the auditor would rely on the automated process which the store uses to replenish stock, but it's that hand off between the delivery person (assuming it's still human) that would be the area there is a risk of shrinkage. For example, how does legitimately damaged inventory get accounted for at that point? Whatever process and controls Amazon/Cafe X put in place would need to be tested from a controls perspective.

For the substantive component, I think that's where things get interesting: enter the "embedded audit module". This concept has been around since at least 1989. The idea is that the auditor installs independent software onto the client's system and then transmits it back to the auditor, who uses it as a basis for conducting the necessary audit procedures and tests. The core idea is that the auditor has full control over such a system and the client cannot tamper with the code.

What would be relatively straightforward would be the data capture-component: sales data, stock data, spoilage, etc. would be uploaded from the automated store right into the auditor's system. But this then requires the additional step of verifying the data to independent source documents (e.g. invoices, purchase orders, etc.). In other words, the audit procedure would still require manual intervention as the auditee would need to send this information back to the auditor to complete their audit.

Where I think the audit innovation would be is exploring how video footage can act as a substitute for physical/direct observation by the auditor. That is, could the auditor install a video camera in the automated store as a part of the EAM that would then act as actual independent audit evidence of the actual sale or purchase? For example, in the Cafe X example the auditor could actually use the footage and the visual software to count the cups sold that day and reconcile that to the sales data transmitted back from the EAM for the day?

Although one can argue such transactions are not material and therefore such procedures are overkill.

However, I think now is the right time to conduct experiments and test audits to see whether we can reinvent the classic audit to meet the technology of today. In a future post, we will explore what this means broadly for jobs and more specifically how this could impact the profession.

Author: Malik Datardina, CPA, CA, CISA. Malik works at Auvenir as a GRC Strategist that is working to transform the engagement experience for accounting firms and their clients. The opinions expressed here do not necessarily represent UWCISA, UW, Auvenir (or its affiliates), CPA Canada or anyone else

Hacking reading: Is there a better way?

Came across Google's latest use of machine-learning: making "e-comic books" more readable.

One of the challenges of reading such fine literature on a mobile device is the small print that is within the bubbles.

Google's solution? Bubble Zoom.

As per Ars Technica:

"Google is tackling this problem the way it seems to be tackling every problem lately: with machine learning. Google has taught its army of computers to detect the speech bubbles in comic books, allowing you to zoom in on them with just a tap. The bubbles lift off the page and get bigger without affecting the underlying image. This lets you see the entire page while still reading the text. Google calls the feature "Bubble Zoom.""

Here are a couple of screenshots that show how it works:

For those that want to try this out on their Android device, you can download some free preview titles on the Google Play store.

Of course the obvious point, as mentioned by Ars Technica above, is that machine learning is being by Google and others to solve such interesting problems. The entire DC and Marvel comic book library has the Bubble Zoom feature enabled, which shows the power of machine learning to essentially reconfigure a massive amount of content.

The other point worth noting is how this technology fundamentally alters the way we consume text.

We have different channels, video, podcasts, and audio-books and can access books digitally but plain old reading has not changed that much. Zoom Bubble attempts to do that by building interactivity into the traditionally static medium of comic books.

To be honest I was surprised when I polled my IT Audit and Innovation class in January 2016 to see really none of them had shifted to e-books. They still rather have the physical copy, highlight and take notes.

That being said, a lot of credit should be given to Amazon for trying to go a long way to make it comfortable to read and enable you to access the content from multiple devices.

I’ve been experimenting with e-reading the Kindle, Samsung Note 4, iPad and iPhone.

The reader of choice depends on how you absorb information. If you want to savor your book and slowly digest, then Kindle is the easiest on the eyes

However, for us reading-for-productivity, i.e. if you are the type of person that needs to highlight and then extract notes, for the purposes presenting, researching, or blogging, then I think the Note 4 or the iPad is best. 

With the Kindle ecosystem, when you highlight the text (regardless of the device) its captured and stored on the cloud and then you can always access your notes there. For example, I highlighted the text below on my mobile device and it appears in the cloud (i.e. by logging into https://kindle.amazon.com/your_highlights): 

“ although GitHub is currently optimized for developers, similar platforms will eventually emerge for lawyers, doctors, publicists and other professionals. The platform has already been extended into enterprise software development with a successful paid business model, and can or soon will be used by governments, non-profits and educational institutions. GitHub charges users a monthly subscription—ranging from $7 to $200—to store programming source code. Andreessen Horowitz, one of the world’s leading venture capital firms, recently invested $100 million in GitHub. It was the VC firm’s largest investment round ever.”

In terms of iPad/iPhone versus Note 4, the Note 4 you can use its stylus to highlight text but you have to take an extra step to select the colour you want (you have 3 colors to choose from). In contrast, with iPad/iPhone you can just pick the colour right from the menu that pop-ups when you select a piece of text. The iPad’s larger form factor is also good for scan-reading. Of course the advantage for me on the Note 4/iPhone is that it’s my mobile device so it eliminates the need to carry around extra device.

One way to improve the readability is to change the background colour to Sepia from white. I have found it to be easier on the eyes.

The ability to move through multiple devices shows the brilliance of Amazon harnessing the power of open, mobile, cloud and seamless connectivity across platforms.

They could have gone the closed approach, i.e. you have to read their e-books off of their device. But by being open it enables the consumer to consume content in a manner that works for us. Microsoft has gone down this road as well with Office. I originally thought this was a bad idea but later recanted.

On a more critical note, as I have blogged before Amazon offers to US customers ONLY the ability to sync their audiobooks (Audible is owned by Amazon)  to their kindle ebooks for certain titles. It would be nice if this feature was also available out of the US.

What I've found to be a productivity hack, is to listen to the audio book on my Audible app at 2-3X speeds while driving around. I've self-diagnosed myself as an audiolearner it does help to learn things and get a good grasp of the topic. Such an approach can also help get the overall context of the material being presented. The Audible app enables you to bookmark, so that is a good way to track what you have to read up later.

Then I go through the Kindle e-book and highlight the parts I want to extract off the cloud. You can do this on the commute in or just waiting in line. The trick here is not to re-read the book but just extract those pieces of texts you wanted to focus on while listening to the audiobook. Moving the bookmarks from the audiobook to the e-books acts like a secondary review ensuring you've extracted all the content that's relevant to your presentation, research, blog post, etc. Alternatively, moving from the audiobook to the e-book may be the way you actually digest the content if you are more of a visual/text oriented learner. I personally need to do this with numbers and dates.

Finally, if you want to move the highlighted text off the cloud, try this to move the content to Evernote.

Although I think there are better ways out there to hack reading, I think the Amazon ecosystem goes a long way to get us there. One day, I hope, they will bring Immersion Reading to the world :)