Category: Business

• Winning the AI race has long been a goal of Apple's. 
• The company brought in Google's AI chief John Giannandrea to lead their AI efforts back in 2018.
• But cultural clashes and insufficient computing resources set Apple's ambitions back.

Apple might seem like a laggard in the AI race right now, but it wasn't for lack of trying.

The Cupertino-based tech giant aimed to dominate the field when it recruited Google's AI chief, John Giannandrea, back in 2018.

Giannandrea's team, however, brought to the table as it was beset by cultural clashes and insufficient computing resources, The Wall Street Journal reported on Wednesday, citing people familiar with the matter.

According to the outlet, Giannandrea was brought in to lead the iPhone maker's AI strategy and improve the company's digital assistant, Siri.

The Scottish software engineer spent eight years at the search giant, where he led Google's machine intelligence, research, and search teams, before joining Apple.

But Giannandrea's team, which was largely made up of ex-Googlers and staff from Apple's startup acquisitions, had a tough time fitting in with the rest of the company.

Cultural clashes fuelled internal tensions

Even though Apple placed a huge emphasis on setting and meeting tight deadlines, Giannandrea's staff tended to emulate Google's approach of having loosely defined deadlines. And that culture clash made it difficult for other Apple engineers to work with Giannandrea's team, per The Journal.

In fact, some teams ended up ignoring Giannandrea entirely and went ahead with their own AI projects.

Former Apple employees told The Journal that the company's software chief, Craig Federighi, directed his staff to develop their own AI capabilities in image and video recognition.

Insufficient AI chips limited Apple's efforts

It also didn't help that Apple didn't manage to buy enough AI processors.

The chips, which are highly coveted by tech companies trying to establish themselves in the field, are critical for training AI models.

The shortage of computing resources ended up limiting Apple's AI efforts, with Giannandrea's team turning to external cloud services like Google to train their models, per The Journal.

Representatives for Apple didn't immediately respond to a request for comment from BI sent outside regular business hours.

Apple's travails with AI underscore the immense challenges faced by tech giants trying to become dominant players in the field.

For one, great AI talent is scarce and hard to come by. This has turned recruitment into a zero-sum game, with tech giants brazenly poaching staff from one another with eye-watering pay packages.

Back in March, The Information reported that Meta CEO Mark Zuckerberg was trying to recruit AI researchers from Google's DeepMind with personally written emails.

Even if money isn't an issue, tech companies still have to contend with the ongoing supply shortages for AI processors made by chip giants like Nvidia.

The mad dash for chips has been a huge boon for Nvidia's stock price, which has gained by more than 3,300% in the past five years.

On Wednesday, Nvidia's market capitalization soared above $3 trillion, pushing it past Apple to become the second most valuable company in the world.

For now, it seems that Apple will be trying to win the AI race with a different strategy — by partnering with Sam Altman's OpenAI.

Apple is set to announce its partnership with the ChatGPT maker during its annual Worldwide Developers Conference in June, per Bloomberg. The company is also expected to unveil its AI offerings, which could include an overhaul of Siri.

• Apollo's Scott Kleinman warned of a "dry spell" for investors as deals from a friendlier era unwind.
• Managers must adjust financial projections from deals done in the zero-interest rate era.
• Investors want their money back, but managers often don't want to sell at a perceived discount.

A leading private equity executive just warned that investors are in for a "pretty dry spell for a few years."

"I'm here to tell you everything is not going to be OK," Scott Kleinman, the co-president of Apollo Global Management, said at a session during Berlin's SuperReturn International conference on Wednesday.

Managers have to adjust their financial projections for deals struck in the looser world of zero interest rates, when financing was cheap and consumers spent more.

"It's going to be a little bit tougher for private equity firms to see the types of returns they were looking for, versus in years past," Kleinman told Bloomberg Television on the conference's sidelines.

Some fund managers have to think creatively about how they wind down these deals, since the public markets have been touch-and-go for initial public offerings and potential private buyers have higher debt costs than a few years ago.

Private equity firms can't hold their investments forever. Their fund agreements typically limit their involvement to about 10 years, from fundraising to purchasing to selling, although it's become more common for investors to agree to extend the fund's life.

Investors don't want their money tied up for long, since they can't reinvest it. Across every stage of investing, from venture capital's startups to private equity's late-stage companies, investors are clamoring to get their money back. But managers don't want to sell at what they think is a discount to what the investment is worth.

"Eventually, sponsors are just going to have to accept that the valuation environment is lower and start selling companies," Kleinman said.

Apollo, long known for distressed investing, will be ready to invest: It had $65 billion of dry powder on hand at the end of the first quarter. The firm manages more than $670 billion overall.

• A retired UK colonel and a war historian are sounding the alarm on Britain's tank production.
• They warned against relying on advanced weapons too costly to scale up, a mistake Nazi Germany made.
• Their chief concern is with the Challenger-3 tank program, which is set to produce 148 vehicles.

A retired British Army colonel and a World War II historian are urging UK authorities to recalibrate weapons production, saying Britain is too fixated on building world-class military tech that it can't scale up.

This was the same problem that partially brought Nazi Germany to its knees, wrote Hamish de Bretton-Gordon and James Holland in a commentary published on Wednesday by The Telegraph.

"It would appear we are doomed to repeat the mistake Nazi Germany made in the Second World War — relying on sophisticated weaponry that is too expensive for mass production and will never produce decisive battlefield results," wrote the pair.

Holland is a World War II historian, and de Bretton-Gordon led several commands in his 23-year military career, including NATO's Rapid Reaction CBRN Battalion and the UK's Joint Chemical, Biological, Radiological, and Nuclear Regiment. Before he retired, de Bretton-Gordon was an assistant director in intelligence services.

Not enough tanks

One of the pair's major concerns is the Challenger-3 program, which aims to supply the UK with its latest, best-in-class tank fitted with a powerful 120mm smooth-bore gun.

But the UK is only planning to field 148 of them, and de Bretton-Gordon and Holland said that's far too few to fill the country's defense needs.

They recalled how Nazi Germany had obsessed over the quality of its tanks, chiefly the King Tiger, but meanwhile only managed to produce less than 500 of them. The tank most heavily produced by Germany at the time was the Panzer IV, but even so, Hitler's industrial complex built 8,500 vehicles at maximum.

Holland and de Bretton-Gordon contrasted that to the US producing more than 50,000 Sherman tanks and the Soviet Union building up to 84,000 T-34s.

In total, Nazi Germany built just under 50,000 tanks during the war, while the US built over 100,000. The Soviet Union built nearly 120,000 tanks.

The sheer numbers made a difference in World War II, and they'll make a difference now, de Bretton-Gordon and Holland wrote.

"The old adage of 'mass matters' is as relevant in the battle for the Donbas today as it was for the battles of Kursk, a few kilometers to the east in 1943," they wrote.

The UK's current main battle tank is the Challenger-2, with an estimated inventory of 227 vehicles. However, a UK Defense Committee report in March 2023 said that only about 157 are available for operations in a 30-day notice.

Western tanks such as the Challenger 2 and Leopard 2 might win against their adversaries in a one-on-one fight, but the Ukraine war is showing that they aren't making enough of a difference because Kyiv lacks the mass to push through Russian lines, the war experts wrote.

As the pair put it: "One leopard is no match for a pack of hyenas."

Advanced technology can still turn the tide of battle, but it must be a given that the enemy cannot counter the threat, they added.

Both called on UK authorities to "wake up," writing:

Whoever leads the country next needs an urgent Defence Review. Two massive aircraft carriers and 150 tanks are no deterrence to the likes of Russia or China. And it is these countries which we need to design our deterrence around, not some imaginary enemy that suits single service rivalries. Ten billion pounds spent on tanks rather than carriers would give us the conventional deterrence so lacking at the moment, for instance.

Notably, de Bretton-Gordon was also once a commander of the 1st Royal Tank Regiment.

Russia's mass-production game

In June 2023, de Bretton-Gordon praised British armor for its quality in his commentary on the war in Ukraine. He said that Kyiv's battle doctrine allowed it to effectively use tanks supplied by the UK against Russia's low-morale conscripted forces.

"As a former tank commander, I know the Challenger 2 vastly outmatches what's left of Russia's armor," de Bretton-Gordon wrote.

While de Bretton-Gordon continues to laud the capabilities of British tanks, the optimism and global conversation regarding Ukraine has shifted as Russia puts its economy on a war footing.

Moscow quickly expanded its defense manufacturing complex and recruitment drives to fuel mass reinforcements in Ukraine, prompting worries that it could sustain its heavy losses for several years.

Ukraine, meanwhile, is desperately trying to fill its ranks with more men and had a significant tranche of US aid delayed in Congress for months. While the flow of military equipment has resumed, Kyiv's need for manpower is still great.

• Russia's economy is "definitely and strongly overheated," said Sberbank CEO Herman Gref.
• Gref said it's "impossible" to exceed the current production capacity, which is at 84%.
• Russia's sanctions-hit economy grew 3.6% GDP last year, driven by wartime activities.

Russia's economy appears to have an intensifying issue following more than two years of war with Ukraine: It's overheating.

Herman Gref, the CEO of Sberbank — Russia's largest bank by assets value — said the country's economy is "definitely and strongly overheated," TASS state news agency reported on Tuesday.

Gref, who was speaking in parliament, said production capacity was at a historically high level of 84%. He added it's simply "impossible" to cross this production capacity threshold and produce even more.

At first glance, Russia's economy appears unusually resilient despite the West's sweeping sanctions. It posted 3.6% GDP growth last year.

However, reports from Russia suggest the country's economy is primarily driven by wartime activities that generate demand for military goods and services, subsidies that steady the economy, and sharp policy-making.

Rosy GDP figures alone are not a good measure of economic performance during wartime since weapons and munitions don't better the quality of life for Russians or contribute to future economic growth, Sergei Guriev, a former chief economist at the European Bank for Reconstruction and Development, said in January.

Gref was speaking in the context of Russia's central bank's tight policy. Its key interest rate at 16%. He said the central bank is pursuing a rational policy and that the economy must weather the current high-interest rate cycle, even though it is "unpleasant."

"There is no other way. We know approximately when rates were not raised for political reasons, and then how it ended," he said, referencing Turkey. The Turkish central bank has hiked interest rates all the way up to 50% to deal with persistent runaway inflation.

Gref's concerns echo those of Elvira Nabiullina, Russia's top central banker, who issued a warning in December that the country's economy was at risk of overheating.

Russia's labor crisis

Russia's inflation is in part due to a labor crisis. Its war in Ukraine is siphoning manpower away from its economy.

Russia's unemployment rate hit a record low 2.6% in April, while real wages jumped nearly 13% in March from a year ago due to an ongoing labor crunch, official data shows.

The manpower crunch has gotten so bad that the Russian military is now offering sign-on bonuses and salaries that are so competitive that even the country's lucrative oil and gas industry isn't keeping up.

This, in turn, contributes to price hikes. Russia's inflation rate stood at 8.17% from May 28 to June 3 — up from 8.07% a week earlier.

Russia's central bank is slated to announce its next interest rate decision on Friday.

• Five Below's sales were hurt due to overstock of Squishmallows and price-sensitive customers.
• Inflation has made customers prioritize food and drink items, said Five Below CEO.
• Low-cost retailers say they're seeing a slowdown in discretionary spending.

Five Below said its sales were hurt this quarter because it bought far more Squishmallows than its customers wanted.

The popular soft toys went viral in the years after their 2017 launch, becoming "Gen Z's Beanie Babies," Business Insider reported in 2020.

On Wednesday, Five Below cut its forecasts for the year because of price-sensitive customers who are prioritizing buying food, candy, and drinks over Squishmallows. Outdated inventory, like older Squishmallows, is also hurting Five Below, chief executive officer Joel Anderson said in an earnings call on Wednesday.

"The quarter solidified that consumers are feeling the impact of multiple years of inflation across many key categories, such as food, fuel, and rent, and are therefore far more deliberate with their discretionary dollars," Anderson said.

Shares of the retailer were down nearly 4% at closing time and have fallen 38% year-to-date.

Just months earlier, Squishmallows looked like a good bet for Five Below, which lists 40 items from the brand on its website. The product was on Five Below's list of "strong performers" for 2023, Anderson said on a March earnings call.

However, a rise in cost of living around the US is hitting Five Below, like other low-cost retailers who are seeing a slowdown in non-essential spending.

A rise in expenses means that Americans are saving less — the personal savings rate slumped to 3.2% in March, according to government data, down from 5.2% a year ago.

Over the last month, McDonald's, Burger King and Wendy's all announced meals at or under $5 to win back penny-pinching customers.

• Vladimir Putin says he thinks Donald Trump's felony conviction was politically motivated.
• Putin said Trump's rivals were "simply using the judicial system in an internal political struggle."
• A Trump campaign spokesperson said that Putin "knows a second Biden term means a weaker America."

Former President Donald Trump's conviction in his Manhattan hush money criminal trial was due to his rivals' political machinations, Russian leader Vladimir Putin said on Wednesday.

"It is obvious all over the world that the prosecution of Trump, especially in court on charges that were formed on the basis of events that happened years ago, without direct proof, is simply using the judicial system in an internal political struggle," Putin told reporters at the annual St. Petersburg International Economic Forum, per Reuters.

"They are burning themselves from the inside, their state, their political system," he said.

Trump was found guilty on 34 counts of falsifying business records related to a hush-money payment to porn star Stormy Daniels on May 30. The conviction made Trump the first former US president to become a felon.

But getting convicted might have become a blessing in disguise for The presumptive GOP presidential nominee. Trump's campaign said on Monday that they raised $53 million within a day of his guilty verdict.

"This shows that people of the United States have no trust in the justice system, which makes such decisions. On the contrary, they believe that these decisions were made for political reasons," Putin said on Wednesday, referencing the surge in donations to Trump's campaign, per the state-run Russian news agency TASS.

When asked about Putin's remarks, a spokesperson for the Trump campaign referenced the Russian leader's earlier expressed preference for a second Biden term.

"There's one candidate who Putin has endorsed— Crooked Joe Biden— because he knows a second Biden term means a weaker America," the spokesperson said in a statement to BI.  

In February, Putin told Russian state media that Biden was his preferred candidate because he's "more experienced, more predictable."

"But we will work with any US leader whom the American people trust," he added.

Trump was quick to capitalize on Putin's remarks then, saying that it was actually "a great compliment" because it showed how he was a threat to Russia's interests.

"He doesn't want to have me. He wants Biden because he's going to be given everything he wants, including Ukraine," Trump said at a rally in South Carolina in February.

To be sure, Biden has stridently opposed Russia's war in Ukraine. Besides galvanizing US allies to support Ukraine, the Biden administration has sent around $51 billion in military assistance since the war began in February 2022.

On the other hand, Trump has been eager to flaunt his admiration and relationship with Putin. The former president once praised Putin's justification for invading Ukraine as a "genius" and "wonderful" move.

"As Putin said, 'You're the most vicious president ever. There's never been a president that did this to me.' And yet, I got along with him. Isn't that nice," Trump said in July.

• Vladimir Putin floated sending long-range weapons around the world to those who want to strike the West.
• He made the threat on Wednesday as he spoke to journalists in St. Petersburg.
• It was a response to Ukraine's allies allowing it to strike Russian soil with their weapons.

Russian leader Vladimir Putin said on Wednesday he could send long-range weapons to "regions around the world" wanting to strike Western targets after the US and its allies authorized Ukrainian strikes with their arms on Russian soil.

Speaking to international journalists in St. Petersburg, Putin said the new firing agreement between Kyiv and major North Atlantic Treaty Organization members indicated the alliance's "direct involvement in the war against the Russian Federation."

Moscow reserves "the right to act the same way," he added.

"If they consider it possible to supply such weapons to the combat zone to launch strikes on our territory and create problems for us, why don't we have the right to supply weapons of the same class to some regions of the world where they can be used to launch strikes on sensitive facilities of the countries that do it to Russia?" he said.

Putin said this response could be "asymmetric" but did not say which organizations or governments could receive such weapons from the Kremlin.

He claimed without evidence that Western nations supplying long-range arms to Ukraine were also deploying personnel to direct and aim munitions fired by said weapons. The US has said it doesn't keep track of specific targets hit by Ukraine.

"We're just not in a position on a day-to-day basis of knowing exactly what the Ukrainians are firing at what," said White House national security spokesman John Kirby on Wednesday. "It's certainly at a tactical level."

Putin's comments came just days after Washington and Berlin reversed their long-standing policies and allowed Kyiv to launch strikes with American and German weapons. Other major allies supplying Ukraine, including the UK and France, had already authorized such strikes.

But President Joe Biden has only permitted Ukraine to fire on military targets in Russian regions bordering the northeastern region of Kharkiv.

Russian forces early last month launched a renewed assault on Kharkiv, and Ukraine has said that it knew the Kremlin was massing gear and troops in nearby Belgorod but couldn't do anything about it due to targeting restrictions.

Apart from the area restrictions, the US has also prohibited Ukraine from launching ATACMS missiles on Russian soil.

According to the Kiel Institute for the World Economy, Europe and the US have supplied more than 95% of all military aid to Ukraine since the war began.

The US sent Ukraine about $47 billion in military aid between February 2022 and February 2024, per the Kiel Institute.

A new package initially delayed by Congress this year contained about $25 billion more in equipment and another $17 billion in other funding for other military purposes, per a tally by the Center for Strategic & International Studies.

• Amangiri Resort in Utah is offering permanent residences for the first time.
• The resort, known for hosting celebrities, is building 12 permanent residences.
• The lots alone cost anywhere from $5 million to $12.5 million, The Wall Street Journal reported.

The secluded, luxury resort in the Utah desert frequented by A-listers isn't just for opulent getaways anymore — now it can be your home too.

Amangiri, a resort hotel in southern Utah near the Arizona border, is offering permanent residences for the first time in its 15-year history, according to a new report in The Wall Street Journal.

The five-star resort sits on 900 acres of desert and has 34 guest suites, each with their own private terraces and king-size beds, starting at $4,200 per night. Guest can also stay in tented pavilions at the hotel's Camp Sarika or in a four-bedroom guest home located on the property.

Amangiri's ultra-wealthy clientele has been reported to include Kim Kardashian, Kanye West, Kylie Jenner, Ivanka Trump, Brad Pitt, Angelina Jolie, Miley Cyrus, and Ariana Grande, among many others.

Now 12 permanent residences are being built on the resort, with the lots alone going for $5 million up to $12.5 million, the Journal reported.

"Residences have always been part of the vision for the resort," Robert Hee, the CEO of Canyon Equity LLC, the resort's developer, told the outlet. "It's been a matter of evolving the concept to where we are satisfied." 

One of the properties that has a buyer lined up is already being built.

Owners of the permanent residences will have special access to the resort and spa, as well as access to an adventure host, a chef, and a butler.

The resort has several dining options, including the main restaurant that serves Southwest-inspired cuisines, an open-air lounge, and private dinners that guests can have set up in a secluded spot in the desert.

Amangiri also has 12 miles of hiking trails, and guests can go rock climbing, off-roading, and boating on Arizona's Lake Powell, which is located a short drive from the resort. The resort also offers guests tours of Utah's national parks, either by land or by air, including Zion and Bryce Canyon National Parks.

Aman Resorts, the company that owns Amangiri, also has residences in places like New York, Greece, and Bali, and plans to open more in Miami, Beverly Hills, and Mexico, among others, according to their website.

Do you work at or have you stayed at Amangiri, or another Aman property? Contact this reporter at kvlamis@businessinsider.com or through secure-messaging app Signal at 708-476-8802.

• Former President Donald Trump is a convicted felon after the recent verdict in the hush-money trial.
• That makes possession of a firearm a federal crime.
• Trump's New York license to carry a concealed weapon was already suspended last year, CNN reported.

Former President Donald Trump's New York license to carry a weapon is likely about to be revoked by the New York Police Department, CNN reported.

A senior police official told CNN that the NYPD is preparing to strip away the former president's license following his recent conviction in the hush-money trial. On May 30, a Manhattan jury found Trump guilty of 34 felony counts related to payments made to Stormy Daniels.

Trump's felon status makes possession of a firearm a federal crime.

A spokesperson for the NYPD did not immediately comment on the CNN story.

Multiple law enforcement sources told CNN that Trump had a concealed carry license from the NYPD for more than a decade.

However, the license was suspended last year on April 1, 2023, after a New York grand jury voted to indict the former president, the senior police official told CNN.

The official told the outlet that Trump had a license to carry three pistols. Two of them were turned in to the police department on March 31, 2023, while the third gun "was lawfully moved to Florida," the source told CNN.

Trump's recent conviction could put him in violation of state and federal laws if he still possesses the third weapon.

The senior police official told CNN that NYPD's Legal Bureau is conducting an investigation "that will likely lead to revocation of his license."

New York state law allows individuals to challenge a license revocation within 90 days of receiving the notice.

A spokesperson for Trump did not respond to a request for comment.

• Jessica Chastain has listed her New York City apartment built in 1885 for $7.45 million.
• The home was once owned by Leonard Bernstein, who wrote the music of "West Side Story" there.
• It features four bedrooms, five fireplaces, and Tiffany Studio stained-glass windows.

A historic apartment with celebrity ties has been listed for sale in New York City.

Jessica Chastain, the actor known for her roles in "Scenes From a Marriage" and "The Help," has listed her 3,200-square-foot property in midtown for $7.45 million.

The four-bedroom space has five fireplaces, a kitchen with a rolling ladder, Tiffany Studio stained-glass windows, and more luxury amenities. Here's a look inside.

The New York City apartment being sold by Jessica Chastain is in midtown.

It's located in The Osborne, a Renaissance-style apartment building designed by architect James Edward Ware and constructed between 1883 and 1885.

Today, the space has an opulent entryway with marble floors and seating, hand-tiled walls, and extravagantly engraved ceilings that transport you to another era of the city.

Chastain's specific apartment measures nearly 3,200 square feet.

Sotheby's International Realty describes the space as the "meticulously renovated crown jewel" of the complex.

Previous residents included composer Adam Guettel, musician Bobby Short, and conductor Leonard Bernstein, who wrote the music of "West Side Story" in the apartment.

Chastain purchased the property in 2015 for $5.1 million, according to Architectural Digest.

There are five wood-burning fireplaces inside, including one in the apartment's library.

The property listed by Cathy Taub and Ellen Kapit of Sotheby's Downtown Manhattan brokerage is in a prime spot.

Carnegie Hall is across the street, Central Park is one block away, and the shops of Columbus Circle are also within walking distance.

The kitchen is especially impressive.

With ceilings that reach nearly 14 feet and chic white cabinets, the space looks like it was made to be featured in a magazine.

The cooking area also has a blue island with seating, a rolling ladder, and a grand chandelier.

But if you want to eat in a more formal setting, the apartment features an impressive dining room.

Like other rooms in the apartment, the dining area has a chandelier and opulent furniture.

But its most unique features include yet another fireplace and cushy window seating across the room.

You'd never run out of closet space in the apartment's main bedroom.

In addition to its massive bed, corner fireplace, and bright lighting, the bedroom also has multiple mirrored closets.

It's the perfect space not only to store all of your clothes but also to try on outfits.

The connected bathroom has a shower, two sinks, and a vanity.

The all-white space also has tiled floors, a walk-in shower, and a private toilet.

A major highlight of the apartment is the assortment of fun wallpapers.

Many of the fabric wallpapers are the work of fashion and interior designer Ralph Lauren.

One of the grandest spaces in the apartment is the living room.

The area has massive windows lined with mahogany paneling that provide natural lighting, a carved doorway, and oak parquet floors.

The stained-glass windows are the work of designer Louis Comfort Tiffany.

Sotheby's International Realty says the windows featured in Chastain's apartment were the artist's first decorating job.

Of course, he later became the lead designer of his family's business, Tiffany & Co.

So, who will be the next owner of the luxurious apartment?

If the apartment's history continues, maybe another wealthy member of the arts industry will purchase the space. Chastain's friend Taylor Swift, perhaps?

However, according to AD, Chastain is leaving the property in favor of one with more space for her family.