GME3: AGCO Fine-ds Geolocation Issues, Perplexity Peril & Grok and Roll

In this week’s edition of the GME3, we’re taking a look at the $30,000 fine levied against NorthStar Gaming by the AGCO, a new copyright suit from the publisher of the Wall Street Journal and the New York Post against the AI startup Perplexity, and X’s newest revenue stream – selling user data to third parties. Read on for more!

Gambling

AGCO Fine-ds Geolocation Issues

The Alcohol and Gaming Commission of Ontario (AGCO) has announced its intention to fine NorthStar Gaming, operators of the popular iGaming platform NorthStarbets.ca, CA$30,000 for failing a geolocation test. 

The violation was discovered earlier this year during a third-party assessment wherein users physically located outside of the province attempted to gain access to Ontario’s gaming platforms. During the evaluation, NorthStar failed to identify the location of one of the devices accurately.

This is important because, in Ontario, iGaming platforms are “geofenced,” meaning that only users currently located in Ontario are allowed to use them. While other provinces, such as Alberta, intend to implement “Ontario-style” regulated iGaming regimes in the future, they have yet to do so. This means that NorthStarbets.ca should not be accessible in any other province, or across the border in the US. In addition to the geolocation issues, NorthStar also repeatedly failed to “provide [AGCO] with data, information, and documents requested in a timely manner as required.”

Dr. Karin Schnarr, CEO and registrar for the AGCO, said via press release. “The AGCO will continue to take all appropriate steps to ensure that regulated gaming sites are operated with integrity and within the province’s legal framework.”

In response to the fine, NorthStar said, “NorthStar Gaming Holdings takes regulatory compliance very seriously. We employ the most advanced technology and third-party vendors to maintain the integrity of our systems. We are investigating this incident with our geolocation compliance vendor to uncover the possible causes of the incident and identify any remedial steps.”

The AGCO has said that it will continue to monitor and work with NorthStar Gaming to ensure compliance with all regulatory requirements going forward.

This incident serves as a reminder of the stringent regulatory expectations in Ontario’s iGaming industry. The AGCO’s actions highlight the importance of maintaining compliance with all aspects of the province’s legal framework. As Ontario continues to set the standard for regulated iGaming in Canada, compliance will remain key for operators looking to succeed in this evolving market.

Media

Perplexity Peril

Dow Jones & Co., the publisher of the Wall Street Journal, and the New York Post have launched a lawsuit against Perplexity, an AI startup that describes itself as an “AI-powered Swiss Army Knife for information discovery and curiosity” for copyright infringement.

The suit goes into more detail on exactly what Perplexity is being accused of:

“The startup claims to provide its users with accurate and up-to-date news in a platform that, in Perplexity’s own words, allows users to ‘Skip the Links’ to original publishers’ websites. Perplexity attempts to accomplish this by engaging in a massive amount of illegal copying of publishers’ copyrighted works and diverting customers and critical revenues away from those copyright holders. This suit is brought by news publishers who seek redress for Perplexity’s brazen scheme to compete for readers while simultaneously freeriding on the valuable content the publishers produce.”

The lawsuit continues to claim that Dow Jones and the Post sent a cease and desist letter to Perplexity in July 2024 outlining the issues raised by Perplexity’s unauthorized use of the Plaintiffs’ copyrighted works and offering to discuss a licensing deal. Perplexity never responded to the letter. Last week, the New York Times also sent a cease-and-desist letter for similar reasons. 

The suit seeks to stop Perplexity from continuing in this pattern of behaviour, as well as seeking damages “up to and including $150,000 for each infringement, actual damages, and Perplexity’s profits, for each infringement including each unauthorized digital copy or other content derived from Dow Jones’s and NYP Holdings’ copyrighted works.” Contrast this with other AI companies, like OpenAI, who entered into an agreement with News Corp earlier this year where they agreed to pay licensing fees potentially worth more than $250 million over the next five years.

Robert Thomson, CEO of News Corp, stated “Perplexity is not the only AI company abusing intellectual property and it is not the only AI company that we will pursue with vigour and rigour. We have made clear that we would rather woo than sue, but, for the sake of our journalists, our writers and our company, we must challenge the content kleptocracy.”

As the case against Perplexity unfolds, it highlights the challenges publishers face in protecting their content in an increasingly AI-driven world. With companies like Dow Jones and the New York Post taking a stand, the outcome could set a precedent for how AI companies handle copyrighted material—and whether licensing agreements, like the one OpenAI secured, become the norm.

Entertainment

Grok and Roll

X (formerly Twitter) will update its privacy policy on November 15, 2024, to allow third-party companies to use user data for training artificial intelligence (AI) models. This data includes posts, likes, bookmarks, and reposts. X’s decision to share this data has sparked concerns over user privacy and data security. The updated policy introduces a section called “third-party collaborators,” which permits data sharing for AI model training, but the specific opt-out mechanism is not fully defined yet. 

X was already utilizing user data to train their own generative AI software, Grok, which, after an investigation by European regulators, resulted in X agreeing to stop collecting user data from that region for those purposes.

This move reflects a broader trend in the tech industry, where companies like Reddit (who reportedly closed a similar deal with Google worth $60 million per year) have also monetized user data for AI development. By licensing user data to external entities, X could generate new revenue streams, particularly in light of its recent struggles with advertising. However, this raises ethical questions about data transparency and user consent, as many users might not be fully aware of how their data is being used.

While these changes offer potential benefits for AI development and X’s revenue, users are encouraged to review their privacy settings and stay informed about how their data may be used by third parties.