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How Google makes money from Alphabet’s DeepMind AI research group

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Google’s parent company Alphabet is increasingly commercializing the technology coming out of its artificial intelligence research unit DeepMind, four years after acquiring it.

Earlier this week, Google’s cloud business announced a new service that converts blocks of text into natural-sounding speech, the first product containing DeepMind code that’s for sale. The new Google Cloud Text-to-Speech application programming interface costs $16 for every million characters of text it processes in DeepMind’s artificial male and female voices.

Alphabet operates other AI research groups, but DeepMind has been doing more futuristic work, like teaching computer systems to beat top-ranked players of the Chinese board game Go. DeepMind is one of Alphabet’s so-called Other Bets, but in pushing the technology closer to Google, commercial applications are becoming more real. At Facebook and Microsoft, A.I. research groups churn out technology that find their way into marketable products.

Google, which generates 99 percent of Alphabet’s revenue, has drawn on DeepMind’s software already. In October, the company said its virtual assistant had adopted a DeepMind AI model called WaveNet to speak more like a real person. In 2016, Google said it had drastically decreased the expense of cooling its data centers using DeepMind’s wizardry.

DeepMind has also played a role in personalizing app recommendations in Google’s Play Store on Android devices.

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Grenke considering legal action against short seller who alleged fraud

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LONDON — German financial services provider Grenke said Thursday that it’s considering taking legal action against a short seller that published a damning report on the firm

Fraser Perring of Viceroy Research released a 64-page report on Grenke this week alleging the company of market manipulation, money laundering and fraud. 

“The board of directors and supervisory board continue to regard all these accusations as unfounded,” Grenke said in a statement. “Grenke is currently considering taking legal action against Viceroy Research.”

Grenke said it has convened a task force to deal with the detailed rebuttal of the accusations. It said executives from the company including founder Wolfgang Grenke and Chief Executive Antje Leminsky will comment on the accusations during an investor call on Friday.

BaFin, the German financial regulator, told CNBC it was looking into the allegations of market abuse. The regulator said its probe will look to establish whether Grenke tried to manipulate markets.

Perring on Grenke

“I think it’s a widespread mentality that they do as they want and they aren’t accountable to anyone,” Perring told CNBC’s “Street Signs Europe” on Thursday.

“The reality is, they aren’t disclosing the M&A strategy, which is either for corporate enrichment for directors, or it’s hiding fake cash. Come out and tell us.”

Perring, who admits he has shorted Grenke’s stock, claimed almost 7,000 companies had been scammed across the U.K. and Australia by Grenke.

He added: “The company isn’t a widespread criminal enterprise that I know of yet. But they certainly bank for criminals and scams, and they lend to scammy resellers.”

Asked if he thinks he is acting ethically and legally, Perring said: “We always operate legally … we’re fully accountable.”

“The worst part is the small and medium businesses are being impacted by predatory practices. So, if we don’t make a stand, who will?”

Grenke strongly rejects all the claims in the report. Shares of the firm rose 33% on Thursday after two days of heavy falls following the report’s release. 

Founded by Wolfgang Grenke in 1978, Grenke employs 1,700 employees across 32 locations worldwide. The company, headquartered in the spa town of Baden-Baden in southwestern Germany’s Black Forest, mainly provides banking services to small and medium-sized firms.

Viceroy Research raised the alarm on German electronic-transfer company Wirecard in 2016 with the now famous “Zatarra Report.”

Founded in 2016, Viceroy Research rose to fame in 2017 after it published a report on accounting irregularities at South African retail giant Steinhoff that led to a share collapse.

In November 2018, South Africa’s central bank governor claimed that Viceroy Research had profited “unethically” from its reports, according to Bloomberg. The company’s “About” section on its website doesn’t give much away, describing the firm as “a group of individuals that see the world differently.”

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BlackRock, the world’s largest asset manager, may never be 100% back in the office, CEO Fink says

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Laurence “Larry” Fink, chairman and chief executive officer of BlackRock.

Chris Goodney | Bloomberg | Getty Images

As work from home stretches on, BlackRock CEO Larry Fink said he doesn’t ever foresee all employees returning to the office.

“I don’t believe BlackRock will be ever 100% back in office,” he said Thursday at the Morningstar Investment Conference. “I actually believe maybe 60% or 70%, and maybe that’s a rotation of people. But I don’t believe we’ll ever have a full, you know, cadre of people in office,” he said.

BlackRock is the world’s largest asset manager, with more than $7.4 trillion in assets under management.

“It’s going to be a new workforce. It’s going to be a new paradigm, but I do believe it will be a better paradigm for the firm,” he said.

Companies were forced to send employees home in March in an effort to slow the spread of Covid-19, and Fink called the realization that we can work from home “one of the great humanistic discoveries.”

That said, he was quick to note that some tasks are better performed in the office, and that there are downsides to having many employees working remotely. 

“Cultures were not meant to be done in a remote fashion, and culture is what binds and unifies us as an organization,” he said. “I’m still not sure how well we’re doing on a cultural basis. Operationally, we’ve done fantastic.”

He noted the firm’s heavy investments in technology as aiding work-from-home operations.

“Through technology we’ve been operating really well, really efficiently. But I really am worried about this whole idea of culture. How long can you keep that culture together?” he said.

“I don’t believe we will be the same operational firm we were pre-Covid,” he said, adding that he believes the company will be a “better firm” in the wake of the pandemic.

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U.S. weekly jobless claims total 860,000, vs 875,000 expected

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First-time claims for unemployment insurance beat Wall Street estimates last week as the U.S. economy enters a critical new stage.

Filings totaled 860,000 for the week ended Sept. 12, the Labor Department reported Thursday. Economists surveyed by Dow Jones had expected 875,000, against the previous week’s upwardly revised 893,000.

The number represents a modest downshift in claims, which had hit a peak of 6.9 million in late March as the economy shut down to try to slow the coronavirus pandemic. Since then, the labor market has recovered though millions remain displaced from job closures associated with the virus measures.

The beat on claims had little impact on financial markets, with Wall Street still poised to open sharply lower.

Mohamed El-Erian, chief economic advisor at Allianz, tweeted that the numbers were “at pace below what’s both needed and possible” even though both first-time and continuing claims topped estimates.

Claims had remained above 1 million a week through late August. Earlier in September, the Labor Department changed the way it adjusted for seasonal factors to account better for the influence the virus measures have had on the economy.

The economy faces new challenges now after a summer of strong employment growth. Economists and healthcare professionals worry that a resurgence in Covid-19 cases could stall or reverse the gains the economy has seen in the past several months.

Another piece of good news was a decline in continuing claims, which fell 916,000 to 12.63 million, compared to the 13 million consensus from FactSet.. The four-week moving average for continuing claims dropped by 532,750 to 13.5 million. Continuing claims peaked at 24.9 million in early May.

Economists worry that the end of government assistance to unemployed workers that provided an extra $600 a week on top of what they normally would receive in benefits would exacerbate the problems in the jobs market. However, the pace of claims is continuing to fall, though the total still is considerably above anything the U.S. had seen pre-pandemic.

The total receiving benefits, which runs a week behind the headline claims number, actually edged higher for the week ended Aug. 29, to 29.77 million, according to unadjusted numbers. At the same time, those receiving benefits under the Pandemic Unemployment Assistance program, which is open to those who normally wouldn’t be eligible, fell sharply to 658,737 for the current week, a drop of 209,577.

The claims data accompanied some disappointed numbers in housing, which has been on a tear for much of the summer. Housing starts fell 5.1% due to a slump in multi-family construction. Single-family starts, a far larger part of the housing market, jumped 4.1%.

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