Weekly Reads - February 6, 2023
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With data center complexity rising cost optimization is becoming critical in order for large tech companies to maintain their attractive margins.
The largest tech companies in the world are seeing rising data center costs due to a shift from non-AI workloads to AI-workloads. Meta in particular has paused many of its data center projects in order to rescope their design to focus more on AI and cost optimization. While details remain limited, it’s assumed that one key focus for Meta has been the use of liquid cooling for its AI servers to reduce maintenance costs and extend the life of its equipment. AI built data centers leverage more GPUs which are much more powerful and expensive than traditional CPUs, while also producing a ton of heat that could be damaging to equipment. It makes sense that Meta is trying to find ways to protect these expensive pieces of equipment to elongate their lifecycle. With AI adoption steadily growing, it’s vital that Meta and the other tech giants optimize their data center costs to protect margins and keep capital spending at rational levels.
Allowing easier foreign investor access to the South Korean market could be a major catalyst in helping prop up the valuations of many high-quality locally traded companies.
South Korea is attempting to lure more foreign investors to its financial markets by easing restrictions that have historically kept foreign investment out of the country. The government is removing its complex registration requirements for foreign investors to trade domestic stocks. The government will allow foreigners to invest in local capital markets with recognized identifications such as passports. These new changes follow the agenda set up by Finance Minister Choo Kyung-ho, who has already made key overhauls to other regulations, including extending the trading hours of the country’s forex market and requiring regulatory filings to be done in English by 2024. These are positive steps in the right direction for a country that has limited the growth of their financial markets through overregulation.
Repealing Section 230 will saddle small social platforms with higher moderation costs potentially limiting startup platforms from being able to compete in the future.
We could be seeing major changes to the most popular social platforms in the world when the Supreme Court hears a landmark case on Section 230 later this month. Section 230 of the Communications Decency Act protects social platforms from lawsuits over harmful user-generated content. If this section were to be repealed or changed, companies like Meta, Alphabet, TikTok, and Reddit may be forced to change their approach to content moderation and overhaul how their platform works. Additionally, without Section 230 in place, these companies will be liable for harmful content on their platform. Many of these companies rely on community moderation to remove harmful content, but with the repeal of Section230 these companies will likely need to hire their own army of content moderators. Meta and Alphabet might be able to absorb these added costs easily, but smaller platforms such as Reddit and Wikipedia almost solely rely on community moderation and wouldn’t be able to be shift moderation models easily. Any change to Section 230 could have indirect consequences that could hurt users and smaller platforms.