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It's not that the cheating stayed with IBM: Ray Dalio hired David Ferrucci out of Watson to try to make an AI for Bridgewater. The pitch was to make it a very accurate people assesor, but in practice the goal was to tell you who agreed the most with Ray Dalio. The team spent years of their lives taking Bridgewater's money, building basically linear regression on questionnaires, and calling it advanced AI on interviews. It's all documented in The Fund.
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I don’t understand why IBM never tried to make amends and reclaim their former credibility somehow.

Do IBM decison makers intentionally want to have that hang over the whole firm and be the butt of jokes?

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It’s impressive to have the first major AI platform and then completely bungle it.
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Eh, Watson was a classic open domain QA system originally, no deep learning or much of what we think of in an "AI platform" today. It was one of a bunch of such systems that were built in that early 2000s period. They all failed because the approach fundamentally didn't work very well.

Here's a write up of some relevant history if you're curious https://liweinlp.com/1465

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