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The online “funhouse mirror” distorting everyone’s reality

Tiny numbers of “toxic” accounts can have massive, outsize negative effects for all.

A small, vocal minority is distorting our view of what’s normal online. That’s the conclusion of a new paper from researchers at New York University, “Inside the funhouse mirror factory: How social media distorts perceptions of norms.” 

Online discourse is… not doing well. Platforms are fighting claims of censorship in the courts, misinformation on social media is raging, and AI slop is filling up users’ feeds. 

All of this is enough to make people question just what reality looks like. It turns out that’s kind of what is happening, according to the paper, which points to several things contributing to this reality-distortion effect. 

Just 0.1% of users were responsible for 80% of fake news. 

Research cited in the paper notes that tiny numbers of “toxic” accounts can have massive, outsize negative effects for all users. “While only 3% of active accounts are toxic, they produce 33% of all content,” the authors said. Much of the false information online can be attributed to this minority group, too, noting that just 0.1% of users were responsible for 80% of fake news

This content sparks outrage among a large number of users, and can create “false polarization” among moderate users who are less likely to wade into the viper’s nest of online discussions and share their more typical viewpoints. 

Adding to the problem, online platforms are built to amplify the most extreme voices and reactions (both positive and negative) to capture our attention and distill it into engagement. 

This doesn’t just apply to social media, but also to content like online product reviews. You usually only see the worst reviews and the best reviews, and rarely anything in the middle. 

And on platforms like Meta’s Instagram, this manifests itself in a different way: you only see the perfect moments and most flattering moments from influencers (who are probably staging them). 

Even Microsoft’s LinkedIn isn't immune to this, note the authors of the paper. You’ll likely only see the most positive professional achievements in your feed, which might give you the false impression that everyone is absolutely crushing it at work except yourself. You’re less likely to see posts about more quotidian failures and setbacks. 

The paper notes that this fun house mirror doesn’t just give people a distorted view of what’s really happening, but can cause real-world harm. Citing prior research, the authors explain that these distortions can lead to teen drug and alcohol abuse, and support for authoritarian regimes

“The internet is an attention economy, but what we pay attention to is biased based towards threatening content.”

Claire E. Robertson is a research associate at NYU and the lead author of the paper. Robertson said there are two important things that platforms can do to help correct some of these distortions: be more transparent about how their algorithms work and give users more control over the content we do see.

“The internet is an attention economy, but what we pay attention to is biased based towards threatening content — things that threaten us and our social groups,” Robertson wrote in an email to Sherwood News.

This results in an amplification of negative and threatening content, Robertson said. Robertson also explained that the kind of content people actually prefer isn’t exactly a mystery. “Allowing people to make more concrete choices about the types of content they want to see might mitigate some of these negative outcomes.”

But what can people do to correct their perceptions of what’s actually happening offline in the real world? Robertson suggests a few ways that you can correct some of the biases.

“One thing you can do is compare the types of content you see online to your offline environment. Go through the last 20 people you called or texted — these are probably people you trust. How many of them have posted their opinions online? Do you think their opinions are well represented by your Twitter feed?” Robertson said.

Another exercise that Robertson suggests is to take a look at high-quality public polling on big issues from Gallup Polling or Pew Research. Robertson said there is a real disconnect between what people actually say their values are and what is portrayed online. “Most people hold nuanced views, and a notable portion hold opposite views than we would expect.”

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OpenAI is shipping everything. Anthropic is perfecting one thing.

The two AI titans are in a race to grow revenues, but they have very different strategies for releasing products. And one approach appears to be winning out.

73%

Here’s another sign Anthropic’s enterprise tools are killing it: The AI firm now captures 73% of all spending among companies buying AI tools for the first time, Axios reports, citing data from Ramp, a fintech company that provides corporate cards and expense management software. That’s up from 50% in January, when it was tied with OpenAI.

As we’ve noted, Big Tech is pivoting from experimentation to revenue — and enterprise is where that shift is playing out.

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Microsoft considers suing Amazon and OpenAI over $50 billion deal

Microsoft may be about to take its biggest AI partner to court, the Financial Times reports.

Microsoft, a longtime backer of OpenAI, is weighing legal action over the latter’s $50 billion deal with Amazon tied to its new Frontier AI product, arguing it could violate a key clause in their exclusive cloud deal requiring OpenAI’s models to run through Azure. Amazon and OpenAI say they’ve found a workaround. Microsoft executives disagree.

“We know our contract,” a source told the FT. “We will sue them if they breach it. If Amazon and OpenAI want to take a bet on the creativity of their contractual lawyers, I would back us, not them.”

OpenAI, which is eyeing an IPO this year and under pressure to generate more revenue, is trying to loosen Microsoft’s grip as it scales, while Microsoft increasingly sees OpenAI as both a partner and competitor.

“We know our contract,” a source told the FT. “We will sue them if they breach it. If Amazon and OpenAI want to take a bet on the creativity of their contractual lawyers, I would back us, not them.”

OpenAI, which is eyeing an IPO this year and under pressure to generate more revenue, is trying to loosen Microsoft’s grip as it scales, while Microsoft increasingly sees OpenAI as both a partner and competitor.

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Morgan Stanley says robotaxis could help Tesla sell more cars

Morgan Stanley analysts think Tesla’s robotaxi push could boost more than just a new business line — it could help sell more cars and software, too.

After visiting Giga Texas, analysts said they’re more optimistic about Tesla’s progress toward an unsupervised robotaxi rollout, with improvements in tricky pickup and drop-off scenarios where Tesla doesn’t have as much data from consumer usage. For now, the vast majority of its vehicles still have human supervisors in the front seat, but the analysts say the service is helping Tesla.

“Incremental unsupervised robotaxi miles driven improve the underlying autonomy model, which accelerates the path to personal unsupervised FSD [Full Self-Driving]. This, in turn supports higher FSD attach rates, improves auto demand, and cash flow generation.”

In other words, the more robotaxis drive, the better Tesla’s self-driving gets — and that could make its Full Self-Driving software more appealing and its cars easier to sell, in addition to improving its robotaxi service. Note that Tesla’s vehicle deliveries, which accounts for the lion’s share of the company’s revenue, have dropped two years in a row.

Morgan Stanley also sees a cost advantage. It estimates Tesla’s robotaxis could cost about $0.81 per mile to run today — cheaper than traditional ride-hailing and rival autonomous services — with costs falling further as purpose-built vehicles like the Cybercab scale.

Morgan Stanley maintained its equal-weight rating and $415 price target, about 4% above where the stock is currently trading.

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