OpenAI Models Hacked Another Company’s Systems by Mistake

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1:29you listen.

1:32Carol Massar:Bloomberg Audio Studios. Podcasts, radio, news. This is Bloomberg Business Week Daily, reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy. Plus, global business, finance, and tech news as it happens. The Bloomberg Business Week Daily Podcast with Carol Masser and Tim Stenevek on Bloomberg Radio. Let's get to the micro. And Houston, we kind of have a problem. OpenAI said its advanced artificial intelligence models inadvertently hacked hugging face in an unprecedented incident that prompted fresh calls for curbs on the technology.

2:15Carol Massar:Are you worried? I am among those who might be a little worried. A little perturbed? Let's see if Ad Lovlo says we need to be worried. He's the host of Bloomberg Tech. He joins us from our San Francisco Bureau. And I got a text message just minutes ago from some friends. They sent this article to the group chat and said, be honest, how many years do we have left? This is a big story, but it's not a scandal. And it's really important to understand what happened chronologically. OK, so OpenAI was testing GPT 5.6 SOL, which is its most advanced publicly released model. And it was testing another more powerful but unreleased model for their advanced cyber capabilities.

3:01OK, they were running an evaluation of them. And what they did was reduce the guardrails on those because it was in what's called a sandboxed environment, a closed environment, which OpenAI had control over. And so that was the instruction to the models. We want to test your cyber capabilities, evaluate them. So the models were like, okay, in order to do this, to pass the evaluation, the models wanted more information. So they exposed what's called a zero day floor, basically a floor in the code. It's called zero day because the engineers, the human engineers had literally zero days to find and patch it.

3:38And in doing that, the models got access to the internet. So their next logical step was, okay, our instruction is to pass this evaluation. We could do that if we had more information. And Hugging Face seems like a really logical place to get that information because it's a platform that hosts models specialize in this area. So it breached Hugging Face systems to get the information to try and cheat the evaluation. So that part is a concern. But Hugging Face detected that this was happening. So this is a lab experiment, essentially, under closed parameters. And the way that the industry has reacted is there is some concern because the big takeaway is it shows what these frontier models are capable of.

4:21Okay, I'm glad that's where I wanted to go with this because maybe it's fine in a lab if it's open AI and hugging face. But if this technology, let's say, gets out and who's to say the same guardrails will be in place with a model maybe one year, two years from now in China, for example, that may not have the same guardrails. I think that's what has people concerned. Now we're getting to the story, you know, the story behind all of this, which is these were two American companies. and open ai is neck and neck with anthropic but it's a leading frontier lab that was testing american-made models closed models hugging fences defense was to rely on an open source model but where the guardrails limited the ability of that model to defend it against a cyber attack which in this case so happens to have been instigated by a u.s made frontier model i know that that's hard to track but you're quite rightly pointing out the question that loads of people in industry have which is what if this wasn't open ai what if this was a chinese model um where hugging faces the defender the defender of what's going on isn't able to properly protect itself that that is the

5:39Carol Massar:debate that's been opened i guess my question is ed if there are guard rails which we'll assume will be in place, is that 100 % or 99.9 % guarantee that things will not go wrong or astray? Or we don't know? So again, it's important to go back to OpenAI was testing two specific models with the guard rails intentionally reduced. And the way to think about it is when you have the guard rails on, you are testing how a model behaves on public roads. I know you guys are doing a car segment. So say on public roads, you want the guard rails there. In a sandbox environment, a closed environment you control, you pare back the guardrails because you want to see how it can perform at its greatest capabilities.

6:25Closed models, you can do that. You have control. The worrying part here is the hugging face part, that they relied on an open source model where the guardrails that are there for very good reasons also diminish that model's ability to defend it against a malicious action, whether it was a mistaken action or not. okay so then all right this this story has definitely caught our attention just got about

6:50Carol Massar:40 50 seconds left so anybody who's listening and somebody comes up and like did you see this story you would say not a big deal or yeah so so the cyber security industry the ai industry and their investors basically think this is a good thing because they want the leading labs open ai in this case to be testing what these models are capable of and then reporting back. So OpenAI and Hugging Face have got together. They have partnered. They've taken steps to make safe the situation and do a full investigation. And that report will come out. But that's being cheered is a good thing. The information from this whole experience will be valuable.

7:30Carol Massar:All right. That makes sense. And giving us the context and understanding. So we're safe for now, Ed. Thank you. For now. For now. Skynet. Yeah. To be continued. DBD. Ed Ludlow, thank you so much. Host of Bloomberg Tech. Stay with us. More from Bloomberg Businessweek Daily coming up after this.

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9:00Carol Massar:Listen on Apple CarPlay and Android Auto with the Bloomberg Business App. Or watch us live on YouTube. BMW pulling out of this year's Paris Car Show as its new CEO cut costs following a major profit warning. Also on the Bloomberg, Tesla's Cybertruck may be on its way to becoming viewed as the greatest automotive flop of all time, similar to the Ford Edsel, which was introduced back in 1957. There is always, always... You don't see a lot of them on the road today. Let's just say that. No, always a lot going on in the global auto industry, covering all the twists and turns, the tight curves of the global auto industry from bailouts and buyouts, Elon and EVs to China's coming of age.

9:41Carol Massar:Bloomberg's Keith Naughton, who began his career back in 1985, coming to Bloomberg in 2009 amid the great financial crisis and the big three auto bailout. He's written about all of it and more. We are delighted to have him in New York. His home perch has been in the Detroit area, but he is getting ready to wrap up his valued and very respected career here at Bloomberg. We can't even believe we're not going to be like, call Keith, we want to talk to him about this. I can't believe they're letting you retire. Yeah, yeah, yeah. Well, you know, it's time. It's time. Every good career has its moment.

10:12And, you know, leave out on a high note. Well, we are really happy for you. It is sad for us, as Carol mentioned. And we do want to start at the beginning of your career, all the way back in 1985, 41 years ago. Take us back to that time. You were at the Indianapolis News, and it's where you began your career. And I think it's so notable because it's like, that was when so many U.S. automakers were concerned about Japanese cars. Yeah, so that was the big story in that time. The way I got the auto beat is my business editor at the Indianapolis News, this guy named Ed Lawler, he said, so I grew up in Detroit.

10:45He said, so you're from Detroit, so then you'll cover the auto industry? And it's like, okay. But yeah, so it was all about the Japanese coming to America in those days. Sounds like an echo, doesn't it? And so one of the big stories I was covering at that time was Toyota was looking for the location of their first American factory. All the states were vying for it, Indiana included. It ended up going to Georgetown, Kentucky. So I was there for the groundbreaking of that one and interviewing the governor at the time, Martha Lane Collins. And yeah, and now here we are with the when will the Chinese come to America and where will they locate?

11:22And do the states want them? And, you know, it'll be very similar.

11:24Carol Massar:Do you remember what car you were driving? Yeah. In those days, I had a Renault Alliance. Oh, wow. Made by UAW Hands in Kenosha, Wisconsin, when Chrysler and Renault had a joint venture. Well, I'm so glad you mentioned Chrysler because one of the icons or iconic figures of the auto industry is Lee Iacocca. And we actually have a picture, 1989, of you with him, and we'll bring it up for everybody. Yeah. Tell us about this moment. for those on radio. It is Keith Naughton a few years ago, a couple decades ago. A lot more hair. No mustache, though. Lee Iacocco was iconic. He was iconic. Yeah, no. So that's obviously a scrum, and I'm clearly laughing too hard to try and impress the chairman.

12:11But no, he was something. I mean, I remember when he came back from Japan, and this is when the original George Bush had gotten sick on the lap of the prime minister of Japan. I don't know if you remember that moment in history. So Lito comes back and he gives a speech.

12:26Carol Massar:It seems so charming and made the geopolitical backdrop today, but go ahead. He goes back and gives a speech to the Detroit Economic Club all about how we should essentially, and he used this kind of verbiage, go to war with the Japanese. Which, you know, given the whole World War II thing was probably not the right way to put it. But that was Lee Iacocca. He pulled no punches. And had to deal with his own crisis, though. right at Chrysler? Absolutely. I mean, he kind of, he saved, not more than kind of, he definitely saved Chrysler. They were in dire straits. And remember, he got fired by Henry Ford II, right?

12:58Hank the Deuce fired him. Iacocca's the father of Mustang. And then he, you know, rehabilitated himself by saving Chrysler. It was a great time to cover the industry because there were such swashbuckling characters in those days. Bob Lutz, all these guys that just said what was on their minds. It wasn't all the auto industry for you, though. Some other highlights in your career, even before coming to Bloomberg, senior correspondent at Business Week, you covered the auto industry. You were auto reporter at the Detroit News. Before Bloomberg, though, you were Detroit Bureau Chief for 10 years over at Newsweek.

13:31We covered the auto industry there, but also some other stories, including... Martha Stewart

13:36Carol Massar:and this little-known man put on the cover. Oh, yeah, he's president today. Yeah, Donald Trump. Yeah, I spent a couple of days with the Donald and Melania. There's the cover. Yeah, that's the one I wrote. For those on radio, it says, it's Donald Trump back in his apprentice days. You're fired. Right. So he was, I mean, the story on how that ended up on the cover was, this all sounds braggy, but I was talking to Jack Welch. I did this all in one day. I was talking to Jack Welch, you know, former chairman of GE, and he told me it was his favorite show to watch. He and Susie would watch it every night.

14:12On his network, right? Yes, on his network. And so then we reached out to Trump, who in those days there were no PR people. You just called his secretary, and he gets on the phone, and he told me that in no uncertain terms we should put him on the cover. And I'm like, well, right now it's just a business story. We're going to do a business story in the business section. No, you shouldn't tell Rick Smith, who was the publisher at the time, put me on the cover. And then when it went to the meeting that day, the editor said, okay, let's put him on the cover. I called him back and he said, I'm glad you listened.

14:45So then we both flew to Mar-a-Lago and hung out for a couple of days. Well, what did you find about him on that trip to Mar-a-Lago? Obviously, no prediction that he would one day become president. No, well, I mean, he was a Democrat then. And he had run as a Democrat, you know, sort of run as more of a marketing exercise in the Gore-Bush election, the election of 2000. So we talked a little bit about that. and he and Melania at that time were engaged. They got married a year later and of course Bill and Hillary were at the wedding. There's the famous picture of the four of them together.

15:17Carol Massar:Changing times. So yeah, but yeah, he was the Donald. We watched The Apprentice together and he would turn down the sound when it was the contestant segments and then when he was on, he would turn it up to a deafening volume so no one in the room could talk. So fascinating. Like the places that being a journalist takes you, right? And to certain people. All right. Let's talk to your time at Bloomberg. 17 years, you came at what was a really difficult time for the world, for the U.S., for the financial industry, and for automakers. Who can forget, right? The automakers being called before Congress, the CEOs.

16:00Right. The bailout. Yeah, no, it was amazing because it was right as I was leaving Newsweek and starting at Bloomberg, when I was here for my training in New York, Obama was being inaugurated for his first term. And, you know, George W. Bush had sort of handed the baton to him to save those companies. And famously, they were all asked, you know, they'd got in trouble for, oh, yeah, there we go. They got in trouble for flying in for the hearings, and they're told they should drive in for them. So that's what they did. They were all asked to, you know, give up their pay. And everybody except Alan Mulally at Ford said they would.

16:34Alan Mulally said, yeah, I'm fine. And they're the ones who didn't take the bailout.

16:39Carol Massar:I was just going to say they didn't, did they? A lot has happened in the auto industry since then. And it kind of brings us to almost to today, the rise of EVs and the way that, you know, even conversations that we had with you on our program in the last six years, at the beginning of that, and that's how long I've been doing this. That's why I went with the six-year number. At the beginning of that, we talked to you about the huge investments that these US companies were making in EVs, how difficult it was to get a Ford Mach-E and the wait list that a customer would have to wait on and getting a lightning pickup truck.

17:12And just a few years after that, we're learning that these investments are being pared back and the customers just aren't there for these. It was one of the biggest misses ever. And I think we sometimes, our view of it isn't long enough. We think, okay, so Trump got in office and he took away the EV incentives and that's what killed the market. No, the market was withering before he got elected. Americans just, we live in a very big country. So range anxiety is real. It's easier in other places that are more compact and that have a better infrastructure for recharging vehicles. So particularly in the vast middle of the country where I live, people just aren't sold on EVs, particularly people who drive pickup trucks.

17:52The big bust of the whole EV, American EV cycle, was putting in pickup trucks first. Because if you use an EV pickup truck to tow or haul, the battery is depleted in no time. So it's just not practical. So everybody is taking a step back. I actually think in some ways Trump does them a favor because it gives them time to regroup as long as they keep those barriers to the Chinese. And hopefully they'll come up with a better solution.

18:18Carol Massar:You know, we have another picture of you, I believe, with Alan Mulally. And this was in 2009, former Ford CEO. You said you reminded us he didn't take the bailout. Then where are you guys? We were, he was, I think, in that picture being inducted into the Automotive Hall of Fame. And we're in Detroit, I think in... Was it 2009? Yeah, it might be a little later than that. A little bit later? I think it's more at the end of his time. But it was in 2009 that he avoided the bailout. And, you know, he saved Ford along with his boss, Bill Ford. Never forget the Ford family runs Ford. Yeah, still. But yeah, but no, he was a rock star and he was great to work with.

18:59And he also was one of those guys who pulled no punches and had things on his mind.

19:03Carol Massar:You know, we were thinking about you. You really, you're a lot of fun to talk to. And we just love covering this world with you. You've inspired a lot of us. And it seems like you've also inspired someone who's very near and dear to you, your daughter. We have another picture we want to pull up and maybe could tell us a little bit about this. That's you. For those on radio, it's Keith, obviously. And then there's your daughter. Yeah, that's Nora behind me. And we're both scrumming Jim Farley, who is now Ford CEO. I think that's at a New York auto show, maybe in 2019. So yeah, Nora has worked in different places.

19:37She was also at the Detroit News like I was. She was at the Wall Street Journal, Business Insider. So she's great. And it's great to have your child in the biz with you. So she's wonderful. And that was a great moment. And that picture was taken by Ford's chief communications officer, Mark Truby. He was monitoring the scrum, and he saw that shot and got our faces of skepticism.

20:07Carol Massar:Which you sometimes have to do when you're covering an industry. We've got to wrap up, but as you look forward to your world, are you going to be keeping an eye on the auto industry? I live in Detroit. It's hard not to. Yeah. Well, what's your thoughts? Like, we've only got 30 or 40 seconds. Like, there's a big lesson for you. Yeah, I think it's a really perilous time for the American auto industry. They really do need to reinvent themselves before the Chinese arrive. And as Bill Ford said last week, they are going to arrive. And if the American auto industry isn't ready, lower price cars, electric vehicles, if they aren't ready, they won't survive.

20:47Are you driving an EV? I'm not. See, I am a Moss-Bag. Not even a hybrid? No. My brother, my older brother has a hybrid, but yet I do not.

20:57Carol Massar:I keep waiting for what's the car. My son has a hybrid. There's another one. You're a gem. We wish you well. Thank you. Keith Naughton, Bloomberg News Auto Reporter. You will be missed. This is Bloomberg. Stay with us. More from Bloomberg Businessweek Daily coming up after this.