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Facebook, Gibson Dunn sanction order is light on dollars, heavy on message

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Facebook, Gibson Dunn sanction order is light on dollars, heavy on message

To Facebook parent Meta Platforms Inc (META.O) and its lawyers at Gibson, Dunn & Crutcher, $925,000 isn’t a whole lot of money.

You might even say that a million bucks, give or take, is nothing more than “loose change” to a company whose annual earnings topped $115 billion last year and to a law firm that reportedly grosses more than $2 billion annually.

“Loose change,” in fact, is how US District Judge Vince Chhabria of San Francisco described the $925,000 sanction he levied against Meta and Gibson Dunn on Thursday in a class action accusing the social media company of harvesting and sharing users’ personal data without their knowledge or consent. Chhabria, as you’ve probably heard, ordered Facebook and its lawyers to pay that sum to plaintiffs’ lawyers as recompense for their bad-faith litigation tactics.

Even in the context of just this case, which Facebook agreed late last year to settle for $725 million, a $925,000 sanction – which is less than half of the $2 million requested by plaintiffs’ lawyers — hardly rates an asterisk.

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But money wasn’t the point of Chhabria’s order.

The judge wanted to make an example of Facebook and its law firm to draw attention to what he considers to be a frequent problem in big cases: corporations and their lawyers using delay and obfuscation to wear down plaintiffs’ lawyers on the other side.

Chhabria’s message comes through most clearly near the end of the opinion, after the judge expended pages and pages detailing the many ways in which Facebook contested discovery requests from lead plaintiffs’ lawyers at Keller Rohrback and Bleichmar Fonti & Auld.

“Does anyone really think that Facebook was planning on taking this case to trial?” the judge wrote. “Or was Facebook, with the assistance of its lawyers, executing a different play from the playbook: resist discovery as long as possible, make things increasingly difficult and expensive and frustrating for the opposition, and hope that would drive down the case’s settlement value? This is, by far, the most likely explanation for Facebook and Gibson Dunn’s conduct.”

Some context is in order. Discovery in the case was so complex and contentious that the US magistrate judge who oversaw it urged both sides to engage a special master. And as I’ve previously told you during the year-long sanctions saga, after Chhabria first threatened Facebook and Gibson Dunn last February, the law firm has offered rationales and justifications for all of the discovery disputes in case. Gibson Dunn has insisted throughout that although the firm and its client litigated “zealously” as plaintiffs fished for a viable theory, they never violated a discovery order or failed to abide by instructions from the magistrate and special master. (It’s also worth pointing out that discovery had not yet closed when the two sides announced their settlement last year.)

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Chhabria noted those arguments by Facebook and its lawyers, even acknowledging a ruling from the magistrate judge that rejected plaintiffs’ accusations of bad faith litigation to prolong one of many discovery fights. But the judge also stepped back from the minutiae of the battles over particular categories of evidence to look more broadly at Facebook’s litigation strategy.

What he saw, he said, was all too familiar: A big corporation and its high-priced lawyers pushed the outer limits of the discovery process with the goal of forcing plaintiffs’ lawyers to accept a discounted settlement offer just to end the misery of fighting endless discovery disputes.

“This is not to suggest that there necessarily was some back-room meeting at which Facebook and its lawyers said, ‘Ok, here’s the plan, let’s be as unreasonable and obstructionist as possible in the hope that we’ll frustrate the plaintiffs into settling for less than they could get if we were cooperative in discovery,’” Chhabria wrote. “Unfortunately, this approach to litigation is common enough that no such meeting was necessary. Facebook and its lawyers fell into their roles with ease, and then they took things way too far.”

Gibson Dunn and Meta both declined to provide a statement on Chhabria’s order.

Chhabria took pains to emphasize that the problem in this case was not thoughtless or incompetent advocacy. Quite to the contrary. In his view, Facebook and Gibson Dunn’s self-described zealousness was instead “a sustained, concerted, bad-faith effort to throw obstacle after obstacle in front of the plaintiffs—all in an attempt to push the plaintiffs into settling the case for less than they would have gotten otherwise.”

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Chhabria delivered his reprimand on corporate litigation tactics with writing that’s irresistibly quotable, accusing Facebook and Gibson Dunn in the very first sentence of the order of “using delay, misdirection, and frivolous arguments to make litigation unfairly difficult and expensive for their opponents.”

Later in the opinion, in addressing Gibson Dunn’s assertion that class counsel were to blame for discovery delays, the judge offered a seething refutation: “No matter the conduct of the opposing party, counsel cannot twist their words—not to mention the words of the court—in support of frivolous arguments. They cannot resist the disclosure of obviously discoverable information. They cannot ignore potential sources of evidence, only for opposing counsel to learn about those sources at a … deposition near the close of discovery. They cannot treat depositions like fighting matches. And they cannot encourage their client’s obstinance.”

A relatively small monetary sanction is no salve for the sting of language like that – as Chhabria surely knows. If you are a corporate defendant or defense lawyer appearing in his courtroom, consider yourself warned. 

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El Salvador partnership to build $1bn bitcoin mining farm

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El Salvador partnership to build $1bn bitcoin mining farm

A public-private partnership in El Salvador will pump $1 billion into creating one of the world’s largest bitcoin mining farms, the group called Volcano Energy announced on Monday.

The project will start with an initial $250 million, backed by “key Bitcoin industry leaders” in collaboration with renewable energy developers, Volcano Energy said in a statement.

El Salvador’s state “Bitcoin Office” retweeted the news on its Twitter. The presidential office did not immediately respond to a request for comment.

Volcano Energy said the funds would go toward an estimated 241 MW power generation park using solar and wind energy in the northwestern municipality of Metapan, which will eventually power the bitcoin mining farm.

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Bitcoin mining uses high-power computers hooked up to a global network, sucking up massive amounts of electricity in the process. The energy-intensive practice has come under fire from environmentalists who are concerned that it would exacerbate forest loss and climate change.

The announcement comes two years after Salvadoran President Nayib Bukele declared his intention to make bitcoin legal tender.

A Reuters report found adoption among residents has been shaky, while the International Monetary Fund has cautioned against the embrace due to legal risks, fiscal fragility and the speculative market.

Bukele and his bitcoin backers have said the currency can bring jobs, financial inclusion and foreign investment to the country, one of the poorest in the Western Hemisphere.

The El Salvador government will have “a preferred participation equivalent to 23% of the revenues” in the project, Volcano Energy said, with private investors holding 27%.

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The remaining 50% will be reinvested back into infrastructure, the statement said, without clarifying the overall ownership structure.

Tether, a startup operating a cryptocurrency pegged to the U.S. dollar, participated in the initial investment, it confirmed in a separate statement, without specifying the amount contributed. It listed Josue Lopez, who was involved with a $200 million solar energy plant announced last year, as the CEO of Volcano Energy, and Max Keiser, a bitcoin influencer, as its chairman.

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Chinese quants redouble AI bets amid ChatGPT frenzy

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Chinese quants redouble AI bets amid ChatGPT frenzy

Chinese quant hedge fund managers are rushing to explore ChatGPT-style tools, embracing the emerging AI technology that has sparked a global frenzy since the release of the widely popular Microsoft-backed OpenAI chatbot.

Quants’ focus on advanced artificial intelligence to aid decision-making comes amid a tough investment environment, as China’s post-COVID recovery wanes and competition rises in the country’s 20 trillion yuan ($3 trillion) private fund industry.

“ChatGPT is an epoch-making application … It can draw conclusions from a complicated network of relationships with numerous dimensions in ways human brains cannot,” said Steve Chen, partner of Shanghai-based MX Capital.

“Exploring its ability is now our main focus.”

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His hedge fund already uses ChatGPT to better understand a company’s fundamentals and avoid value traps, project earnings power, and identify investment opportunities and risks.

ChatGPT, trained using a huge amount of data, can write poems, compose music, draw paintings, and generate other strikingly humanlike responses based on user prompts.

A ChatGPT-like tool boosts quants’ ability to process text-related data, said Feng Ji, chairman of Baiont Capital.

“We were also inspired by ChatGPT to build large models using trading data, instead of text,” Feng said.

Feng’s hedge fund, backed by former Google China chief and AI veteran Kai-Fu Lee, has invested heavily in hardware to enhance computing power required for model-training.

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High-Flyer, among China’s biggest quant funds, has hailed advanced AI as the “greatest innovation of our times”.

In April, High-Flyer announced the setup of a research unit to explore disruptive AI technologies.

MACHINE VS MAN
Last week, Beijing-based asset manager Zhishan Investment said it would deploy AI robot “Cybertron” across all products and use it to help reshape its investment methodology.

Baiont Capital’s Feng is more ambitious, seeking to let robots take full control of the investment process – from data analysis and prediction, to decision-making and execution.

Feng’s Nanjing-based company uses high-frequency trading strategies and recruits only computer scientists, not Wall Street traders.

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Robots do a much better job than humans in forecasting share moves over the next hour as “machine learning is designed to make such predictions”, Feng said.

While ChatGPT-like tools have stirred excitement, the race to develop and adopt powerful AI services has also fuelled anxiety about privacy, safety and job security.

Regulators are looking for ways to tackle the impact of generative AI technology. In China, where technology giants such as Alibaba (9988.HK), Sensetime (0020.HK), and Baidu (9888.HK) have ramped up AI bets, regulators unveiled draft measures in April giving them greater oversight of the technology.

Larry Cao, senior director of research at CFA Institute, cautioned the technology could put at stake jobs of bankers and fund managers working in areas where data is easily accessible.

“If you’re an analyst just telling people the story that everybody is telling other folks, what’s your value-add? I can just ask ChatGPT, right?” said Cao, editor of a newly published handbook on how to apply AI and Big Data in investments.

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“The threat is real, but it’s not tomorrow.”

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WhatsApp users will soon be able to link existing account on Android to iPad

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WhatsApp users will soon be able to link existing account on Android to iPad

WhatsApp is working on a new feature that will add compatibility with search iPad as a companion device, a portal that closely monitors the messaging app reported.

In the previous feature, the Meta-owned service has allowed users to link an additional iOS device to an existing WhatsApp account. With this feature, users are able to link up to 4 devices to their accounts at a time, while maintaining the same level of privacy and security.

The future update will add compatibility with search iPad as a new linked device.

As you can see in this screenshot, search iPad is finally recognized as a linked device. This means you will be able to link WhatsApp for iPad to your existing account in the future. It’s important to note that WhatsApp for iPad is still in development and not yet available to beta testers,” reads WaBetaInfo blog.

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The ability to link an iPad as a companion device on WhatsApp for Android is under development and it will be released to beta testers in a future update of the app.

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