1 big thing: AI's dual role in the future of cyber

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2. Florida, South Dakota turn down cyber grants

3. Catch up quick

4. 1 fun thing

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Happy Friday! Peter here once more before Sam returns to these shores. Thanks for joining me while I do my best to keep Codebook humming along. It's honestly been a lot of fun.

🤖 It's also been a dizzying week of AI analysis, and there's more below waiting for you. 

Today's newsletter is 1,321 words, a 5-minute read.

Have a great weekend! Sam will be back in your inbox next week. 

Thanks to Scott Rosenberg for editing and Khalid Adad for copy editing this newsletter.

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Codebook

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Decode key cybersecurity news and insights. With Sam Sabin.

Axios Codebook

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1 big thing: 2023’s packed calendar

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2. Microsoft’s FTC mistake

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3. NetEase wants more

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4. Need to know

5. It's Paper Mario's turn

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Congrats today to the newly launched Axios Cleveland and Axios San Antonio as our lineup of amazing local newsletters continues to expand.

Today’s edition: 1,238 words, a 4.5-minute read.

🎁 Like the newsletter? Refer Axios Gaming to your friends to spread the word and get free stuff in the process. Follow the link here to begin.

Thank you to Peter Allen Clark for editing and Kathie Bozanich for copy editing this newsletter.

I ask: Do you like the dungeons because you solve puzzles or fight enemies?

Gaming

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Keep up with the multi-billion dollar video gaming universe, from the hottest games to the most interesting studios and players, by Stephen Totilo.

Axios Gaming

1 big thing: Romance scammers turn up the heat

Illustration of sweet hearts candy with a skull and crossbones, "Byte Me", "$weet Pea", "Gold Digger", "Be Mine" and "Love You" written on them.

2. Cyber leaders say orgs underestimate threats

4. 1 fun thing 

Happy Tuesday! I’m Axios tech editor Peter Allen Clark. I’ll be filling in for Sam this week while she takes a much-deserved vacation. I will do my best to live up to the high bar she has set regarding cyber insights, analysis and emoji usage. 

🏝 Sam wrote today's top story before she set off ... but don't worry, it's still relevant for your Valentine's Day celebrations (💔).

📬 Have thoughts, feedback or scoops to share while Sam's away? codebook@axios.com. 

Today's newsletter is 1,122 words, a 4.5-minute read. 

1 big thing: Small businesses face a growing wave of cyber threats

2. A day in the cybercrime life

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Happy Tuesday! It's Peter here in the driver's seat while Sam takes a well-deserved break. 

I hope everyone is enjoying the (gradually) warming weather and the house plants that are itching to grow 🌱☀️.

📬 Have thoughts, feedback or scoops to share while Sam's away? codebook@axios.com.

Axios is hosting a reception on April 26 at the RSA Conference in San Francisco spotlighting what's next for cybersecurity policy and tech platform accountability amid mounting cybersecurity threats, cyberattacks and sophisticated hacking techniques. Interested in attending? Request an invite here.

Today's newsletter is 1,110 words, a 4.5-minute read.

Sam will be back on Friday for all your cyber needs!

Players detest chatty video game characters, but here comes AI

1 big thing: Players detest chatter overload, but here comes AI

2. Sony's new handheld

3. Embracer loses grip on deal

5. The week ahead

6. I played... Humanity

Ahoy! It's Peter Allen Clark here filling in for Stephen. Yes, today's edition is light on Zelda news, but please know it's all I'm thinking about playing.

Today's newsletter is 1,547 words — a 6-minute read.

Thank you to Scott Rosenberg for editing and James Gilzow for copy editing this newsletter.

It sounds like you should probably not play The Lord of the Rings: Gollum.

National

Players have increasingly bristled over talkative characters, just as studios are betting on buzzy AI tech to add even more dialogue to games.

Driving the news: Developers of Forspoken, one of 2023’s earliest big releases for PlayStation 5, updated the game this week to adjust how chatty the main character, Fey, and her magical companion can get.

The action-adventure game is partly known for its quippy banter, both in storytelling cutscenes and amid gameplay.

Tuesday’s patch notes say that the tweak “adjusted the frequency and content of the banter between Frey and Cuff.”

The big picture: The Forspoken changes follow growing irritation among some players over the quantity of dialogue. As game content has boomed, so has the number of spoken lines in a typical triple-A release.

Last year’s Dying Light 2 was lampooned for boasting about its completion time of 500+ hours, and likewise caught flak for touting “350,000 words, 40,000 lines of dialogue.”

2022’s Horizon Forbidden West and God of War Ragnarök have also been dinged in coverage for extensive chatter.

“As I traversed through Horizon Forbidden West’s beautiful post-post-apocalyptic America as Aloy, I was bombarded with her constant soliloquy on where to go and what to see,” Jordan Sutlive wrote for Polygon.

Redfall, Dead Island 2 and Atomic Heart are other recent games that have made players pine for the days of silent protagonists.

Between the lines: It’s not only the sheer amount of dialogue that has drawn criticism, but also modern usage in game design and its tone.

“Unfortunately, I think a lot of folks have confused ‘a funny character’ with ‘a character who doesn't take their own situation, no matter how perilous or interesting it is, seriously,’” Austin Walker, IP director at game studio Possibility Space and former editor in chief of Vice’s Waypoint, wrote in a blog post about the recent explosion of irreverent, Marvel-esque dialogue writing in games.

Meanwhile, dialogue has been increasingly employed to aid the player — whether the player wants that aid or not. Multiple outlets have informed players you cannot disable God of War Ragnarök’s verbose puzzle hints.

The intrigue: Player irritation is mounting just as studios are experimenting with ways to use AI to give more characters even more to say.

Assassin’s Creed developer Ubisoft unveiled its generative AI Ghostwriter tool in March during the Game Developer Conference. It’s designed to let a writer come up with a character and situation, then generate numerous lines that character might say.

Meanwhile, the use of AI to voice characters is already being hyped by some tech companies as a way to ease the addition of dialogue to games.

Reality check: Forspoken’s recent tweak follows a bumpy release.

The game faced a round of viral tweets mocking its dialogue before catching middling reviews for its flat story and repetitive gameplay.

Even before the most recent update, Forspoken had a slider in its settings to let players adjust the volume of banter.

Yes, but: Both voice acting and writing can be fraught professions in gaming.

Actors can face uphill battles in fighting for compensation, while writers often face development crunch.

What’s next: If you’re turned off by the chitchat, enjoy Link’s stoicism in Tears of the Kingdom and prepare yourself for the next epic RPG: September’s Starfield.

Meanwhile, Forspoken’s In Tanta We Trust DLC comes out Friday.

Sign up for the Axios Gaming newsletter here.

Forspoken, God of War Ragnorök and Horizon Forbidden West have been called out for verbose characters.

Video games

Players have increasingly bristled over talkative characters, just as studios are betting on buzzy AI tech to add even more dialogue to games.Driving the news: Developers of Forspoken, one of 2023’s earliest big releases for PlayStation 5, <a class="gtmContentClick" data-vars-link-text="updated the game" data-vars-click-url="https://support.square-enix-games.com/s/article/000001578?language=en_GB&amp;game=forspoken" data-vars-content-id="00153bd9-131b-4349-be2f-9a742786db73" data-vars-headline="Players detest chatty video game characters, but here comes AI" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://support.square-enix-games.com/s/article/000001578?language=en_GB&amp;game=forspoken" target="_blank">updated the game</a> this week to adjust how chatty the main character, Fey, and her magical companion can get.

From the Valley to D.C., Big Tech players like Facebook, Google and Amazon are under more scrutiny than ever as new technology develops and privacy and antitrust concerns grow in lockstep with companies’ ambitions.

Technology

The fire caused by a battery can be much more difficult to extinguish than a normal fire.Local, state and federal lawmakers have introduced a flurry of attempts to regulate lithium-ion batteries, following a spate of fires.

Why it matters: Rechargeable lithium-ion batteries are the workhorse power source today for digital devices, and they're increasingly providing a backbone for the climate-inspired electrification of everything.

The big picture: In the past, batteries used in laptops or smartphones raised the most concern for fire risk. As their reliability has increased, fires started by the larger batteries used in vehicles and mobility devices such as scooters and e-bikes have captured public attention.

Driving the news: New York City Mayor Eric Adams signed a package of bills last week meant to further regulate lithium-ion batteries, promote safe usage and advocate for further federal actions. The batteries are believed to have caused 33 fires in 2023 in NYC so far, resulting in the deaths of three people. 

New York state Rep. Jeffrey Dinowitz introduced a bill in the state house last month to ban the sale and manufacturing of batteries that do not meet minimum safety standards.

Meanwhile, U.S. Rep. Ritchie Torres (D-N.Y.) introduced the Setting Consumer Standards for Lithium-Ion Batteries Act in Congress earlier this month. It tasks the federal Consumer Product Safety Commission (CPSC) with establishing "a final consumer product safety standard for rechargeable lithium-ion batteries used in personal mobility devices.”

“Lithium ion batteries have become an increasingly common cause of fires, and nowhere more so than in New York City,” Torres told Axios. “The growth has been exponential and lithium ion battery fires are the easiest to start and the hardest to extinguish.”

New York is far from alone in this problem. Reports of fires believed caused by batteries, from scooters to electric vehicles, have increased nationally and globally.

The last month alone has seen news reports of U.S. battery fires in California, Louisiana and in Arizona, while videos of batteries exploding have  gone viral.

Lithium ion batteries pose a fire risk largely because they're increasingly built to carry more power in smaller forms.

Usually, they contain a positively charged cathode and a negatively charged anode, separated by a porous piece of polyethylene which allows liquid electrolyte to flow between the two poles.

Should that piece of plastic fail to separate the poles, due to defect, damage or erosion, the battery can short circuit, igniting or even detonating the electrolyte.

The fire caused by a battery can be much more difficult to extinguish than a normal fire.

By the numbers: EV, e-bike and electric scooter adoption has soared in the U.S. The Light Electric Vehicle Association estimates that the e-bike market is outpacing EV sales.

Subsequently, fires and loss of life from the technology have also risen.

A December release from the CPSC says that “From Jan. 1, 2021 through Nov. 28, 2022, CPSC received reports of at least 208 micromobility fire or overheating incidents from 39 states, resulting in at least 19 fatalities.”

What they’re saying: Low quality products and lack of market regulations have emerged as a key factor in the fires.

“The problem arises when those batteries are poorly designed, poorly manufactured and poorly handled,” Torres said. “And, for me, the scandal is not that the federal government is failing to regulate the safety of lithium ion batteries. The scandal is that the federal government is not even trying.”

"After COVID started, scooter use went dramatically up, especially in places like New York City, for deliveries," Steve Kerber, vice president and executive director of Underwriters Laboratory's Fire Safety Research Institute told CNN this month. "People started to get overcharged for them and turned to manufacturers which happened to have lower quality control with the battery systems. The quality manufacturers are not having issues."

NYFD fire commissioner Laura Kavanagh sent a letter to the CPSC asking it to begin “seizing imported devices at the ports that fail minimum industry standards, levying penalties against manufacturers who fail to inform CPSC of hazards posed by their products, and seeking additional recalls of unsafe products.”

Between the lines: UL Solutions has established battery manufacturing standards for micro-mobility devices, but Rep. Torres points out that compliance is “purely voluntary.”

In December, CPSC sent a letter to over 2,000 manufacturers and importers, calling on them to “review their product lines and ensure they comply with established voluntary safety standards or face possible enforcement action.”

The intrigue: As part of an effort to shore up gaps in supply chains and reduce foreign dependence, the U.S. has launched an all-out push to increase the domestic manufacturing of batteries.

“Experience tells us that a product from the United States has a greater likelihood of complying with safety standards than a product from China,” Torres said.

Editor's note: This story has been corrected to remove a description of the chemistry of battery fires that applies to some but not all varieties of lithium batteries.

Lithium battery fires spark regulation push

Critics contend that federal regulation of lithium ion cells has lagged behind, putting lives in danger.

Illustration of a series of batteries on fire creating an upward bar chart. 

Batteries

Cyber threats to small businesses prompt pleas to report attacks

Lacking resources and expertise to protect themselves, they've become easier targets for bad actors.

Cybersecurity

Protecting critical infrastructure from cyberattacks has become a growing national concern, but small businesses remain vulnerable and attractive to hackers.Why it matters: Small to medium-sized businesses (SMBs) face a rising number of threats — and many keep attacks under wraps.

Generative AI programs like ChatGPT, which can supercharge  fraudsters' efforts to rip taxpayers off, are a new wild card for tax filing season this year.

Driving the news: The IRS' “2023 Dirty Dozen list” of top scams, released last week, includes gambits like made-up pitches about pending large refunds, phishing emails trying to get personal information, and fraudulent advice from social media accounts.

Of note: Every one of these deceptions could get a boost from the verbally skilled new wave of AI, which swindlers — particularly those overseas whose English lacks polish — could use to multiply their productivity.

It's too early to know how widespread this kind of attack will be this April, but experts tell Axios we're in for a scam explosion sooner or later.

Why it matters: Law enforcement has faced an uphill battle when it comes cracking down on internet scams. Meanwhile, the IRS has faced its own staffing crisis amid partisan warfare over its funding.

The Federal Trade Commission said that consumers reported losing $8.8 billion through scams in 2022, over $2 billion more than was reported lost in 2021.

Threat level: While chatbots have been praised for providing useful, creative information around any number of topics, they have also prompted alarm that scammers could use them to compose more believable messages with greater efficiency.

In December, researchers at Check Point Research said they got a “plausible” phishing email after asking ChatGPT to write one.

Meanwhile, Abnormal Security researchers said found that ChatGPT “could be used to significantly increase the overall sophistication of social engineering attacks” when it comes to drafting emails.

What they’re saying: “ChatGPT and other similar generative AI engines allow cybercriminals to easily craft phishing emails on any subject with the click of a mouse, including tax related scams,” Sergey Shykevich, threat intelligence group manager at Check Point Research, told Axios.

“Moreover, ChatGPT allows users to not only generate phishing emails impersonating IRS but also to build scripts for scam phone calls impersonating IRS.”

"Scammers are coming up with new ways all the time to try to steal information from taxpayers," IRS commissioner Danny Werfel said in the “Dirty Dozen” release.

Yes, but: The actual impact of chatbots in tax-related scams will take time to unravel, and the companies developing the quickly evolving tech could impose firmer guardrails to limit its malicious use.

ChatGPT can warn users that certain prompts might violate its content policies or refuse to generate responses at all. Its terms of use says that the chatbot cannot be used “in a way that infringes, misappropriates or violates any person’s rights.”

Between the lines: Scams in the digital age have cast a wide net in order to prey most effectively on those who might not have a great deal of knowledge over technology or financial institutions. These same tactics appear to be emerging in scammers’ use of AI.

“Generative AI is especially powerful for cybercriminals who are non-native English speakers, who prey on U.S. residents that are unfamiliar in the ways IRS operates,” Shykevich says.

The bottom line: “People should be wary and avoid sharing sensitive personal data over the phone, email or social media to avoid getting caught up in these scams,” Werfel’s statement says. “And people should always remember to be wary if a tax deal sounds too good to be true."

The IRS also recommends that people report tax scams to the agency.

Go deeper: Listen to the Axios Today podcast, where host Niala Boodhoo and Peter Allen Clark talk about how AI chatbots may be involved in tax scams.

AI chatbots give tax scammers a boost

Generative AI generates just the kind of material tax scammers can use to bait vulnerable tax filers.

Illustration of a laptop wearing glasses and moustache set disguise. 

Fraud

Generative AI programs like ChatGPT, which can supercharge  fraudsters&#x27; efforts to rip taxpayers off, are a new wild card for <a class="gtmContentClick" data-vars-link-text="tax filing season" data-vars-click-url="https://www.axios.com/2023/01/25/irs-tax-season-2023-refund" data-vars-content-id="464f32fc-6e82-42b4-a0df-dcf7e8b66272" data-vars-headline="AI chatbots give tax scammers a boost" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2023/01/25/irs-tax-season-2023-refund" target="_self">tax filing season</a> this year.Driving the news: The IRS&#x27; <a class="gtmContentClick" data-vars-link-text="“2023 Dirty Dozen list”" data-vars-click-url="https://www.irs.gov/newsroom/irs-wraps-up-2023-dirty-dozen-list-reminds-taxpayers-and-tax-pros-to-be-wary-of-scams-and-schemes-even-after-tax-season" data-vars-content-id="464f32fc-6e82-42b4-a0df-dcf7e8b66272" data-vars-headline="AI chatbots give tax scammers a boost" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.irs.gov/newsroom/irs-wraps-up-2023-dirty-dozen-list-reminds-taxpayers-and-tax-pros-to-be-wary-of-scams-and-schemes-even-after-tax-season" target="_blank">“2023 Dirty Dozen list”</a> of top scams, released last week, includes gambits like made-up pitches about pending large refunds, phishing emails trying to get personal information, and fraudulent advice from social media accounts.

This year's Electronic Entertainment Expo (E3) video game showcase has been cancelled for 2023, according to the Entertainment Software Association and show organizer ReedPop.

Why it matters: An in-person E3 has not been held in since 2019. This year's event, scheduled to take place in early June in Los Angeles, was to mark a return of the conference, once central to the gaming world. 

What they're saying: "This was a difficult decision because of all the effort we and our partners put toward making this event happen, but we had to do what’s right for the industry and what’s right for E3,” Kyle Marsden-Kish, ReedPop's global vice president of gaming, said in a statement. 

“We appreciate and understand that interested companies wouldn’t have playable demos ready and that resourcing challenges made being at E3 this summer an obstacle they couldn’t overcome," Marsden-Kish said. "For those who did commit to E3 2023, we’re sorry we can’t put on the showcase you deserve and that you’ve come to expect from ReedPop’s event experiences.”

A tweet from the E3 account said the cancellation ecompasses “both the digital and physical events.”

Between the lines: Almost exactly a year ago, E3 2022 was cancelled and organizers promised to return this year. However, after all three big console makers declined to attend, an increasing number of high-profile gaming companies followed suit.

The latest big name to bow out came Wednesday, when Assassin's Creed-creator Ubisoft said that it would not be at the show.

The intrigue: Over time, the ability for companies to show off their own products directly to consumers, along with competition from other events, has blunted E3's standing as the premier video game showcase in the U.S. 

Instead of waiting for one big event in the middle of the year, Nintendo, Sony and Microsoft have all leaned into producing their own occasional  streaming showcases.

Meanwhile, Game Awards host Geoff Keighley has positioned his  Summer Games Fest, which is scheduled to take place this year on June 8, as an opportunity for game reveals.

Gaming trade show E3 cancelled for 2023

Streaming and event competition has blunted E3's standing as the premier U.S. video game showcase.

This year&#x27;s Electronic Entertainment Expo (E3) video game showcase <a class="gtmContentClick" data-vars-link-text="has been cancelled for 2023" data-vars-click-url="https://twitter.com/E3/status/1641546610218811393" data-vars-content-id="6fd20a10-70b2-4353-be3d-468cbf861e72" data-vars-headline="Gaming trade show E3 cancelled for 2023" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://twitter.com/E3/status/1641546610218811393" target="_blank">has been cancelled for 2023</a>, according to the Entertainment Software Association and show organizer ReedPop.Why it matters: An in-person E3 has not been held in since 2019. This year&#x27;s event, scheduled to take place in early June in Los Angeles, was to mark a return of the conference, once central to the gaming world.

Peter Allen Clark

Stories

Players detest chatty video game characters, but here comes AI

AI chatbots give tax scammers a boost

Cyber threats to small businesses prompt pleas to report attacks

Lithium battery fires spark regulation push

Gaming trade show E3 cancelled for 2023

Newsletter editions

🤐 Chatterbox characters

🌊 Small-business menace

🤖 AI's uncertain cyber path

💔 Can't buy me love

📅 2023 cheat sheet