How video games are reshaping tech, culture, politics and the way we interact with each other.

Gaming

How companies like Amazon, Google and Facebook are shaping our world.

Big Tech

How false information is seeping into our daily interactions.

Misinformation

What to know about the next generation network that will revolutionize the way we live and work.

All about the treasure trove of data collected at every turn.

Data privacy

Who's watching you and what they're seeing.

Surveillance

The latest developments in the robot revolution.

Automation and AI

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

National

Axios Capital

Davos has discovered biodiversity — which means it has discovered frogs.

Why it matters: Counting frogs is a great way to judge the health of a forest. So the accounting firm EY has created a challenge to develop an AI-based frog-counting tool.

The team with the greatest accuracy will win $10,000.

What they're saying: "Currently, species distribution models for frogs are poor for a variety of reasons," says EY spokesperson Konstantinos Makrygiannis. "With the challenge, we are aiming to improve the existing process."

1 fun thing: Using AI to count frogs

An accounting firm launches a contest to develop an AI-based frog-counting tool.

Illustration of a frog surrounded by a burst of star shapes filled with international currencies

Deep Dive - Davos 2022

Ominous forecasts about the impact of climate change serve as the backdrop for the world — led by U.S. lawmakers and companies — to debate big action on the problem, which could upend energy systems and our way of life.

Energy & Environment

Axios Login

Frayed supply chains and U.S.-China tensions were on the minds of many tech executives in Davos for the World Economic Forum this week.

Why it matters: Nearly every tech company is dealing with the one-two whammy of a global semiconductor shortage combined with COVID-related disruptions in China and elsewhere.

Long supply chains have always been somewhat vulnerable to disruptions, but the pandemic caused multiple failures, changing the calculus for many in tech.

China-U.S. tensions also appear likely to permanently change the equation.

"There's now a recognition that long supply chains aren't resilient enough," the University of Cambridge's Jagjit Singh Srai, who previously spent 17 years running manufacturing and supply chain operations for Unilever, told Axios during a shuttle ride in Davos.

The big picture: All companies are feeling the heat to greater and lesser degrees. Even Apple, which has been able to better withstand past shocks, says the constraints will dent revenue this quarter on the order of $4 billion to $8 billion.

There are countries that one can't obtain goods from and routes that are now blocked. "That's driving the change," said Singh Srai.

Apple, for example, is considering shifting additional manufacturing out of China to other locations, including India and Vietnam, per Barron's.

Justin Hotard, who runs the unit that builds supercomputers at Hewlett Packard Enterprise, said his unit is affected just like other segments of the tech. "Ultimately, the parts are all the same," he told Axios in an interview in Davos.

Still unclear is just how significantly the tech industry will change to address the current capacity issues combined with U.S.-China tensions. The big question, Hotard said, is whether it will move to "a segregated, more localized supply chain."

Yes, but: Fixing the problem is more complicated than a company just setting up more of its own factories.

"You might regionalize, but if your company's suppliers are still global, you really haven't changed," Singh Srai said.

Between the lines: The notion of economies of scale, which have long dictated how companies evaluate what setup makes the most sense for manufacturing, appears to be changing. In the past, bigger was always better.

That often meant locating factories where there was cheap labor, which often produced marginal cost benefit. The gains were linked to currencies and labor costs, not to performance, but the human cost could be huge when those factors shifted.

Factories are often located not in urban centers but in modest towns where the factory is the major employer and driver of the rest of the economy.

"The factory is the heart of the town. If you take the factory out, there is a lot of devastation," said Singh Srai.

Go deeper: Davos crowd sees power and perils of data

CEOs fret over frayed supply chains

"There's now a recognition that long supply chains aren't resilient enough."

Illustration of a supply ship surrounded by rectangles made of international currency. 

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

Axios Cities

Eerily realistic androids may be showing up at a party or publicity event near you, if a British firm called Engineered Arts has its way.

What it is: A line of robots called Ameca is available for rent, to impress your guests with what its maker says is a "huge library of preprogrammed actions, speech and songs."

While it can't walk, Ameca "can automatically maintain eye contact with passersby and react to those around them in unbelievably convincing ways," says Engineered Arts.

The robot can also be programmed with "5 minutes of specially-made content built in by our experts: sell your brand, tell jokes or give a presentation."

What went viral: This video of Ameca's facial expressions wowed the internet — particularly when the robot pushed away the hand of a seemingly intrusive researcher.

Where it stands: The robots are sold and rented out for entertainment and education, according to The Verge. "They’re used by academics for research; by marketing teams for publicity stunts; and placed in museums, airports, and malls to welcome visitors." 

Ameca "can run on autopilot, reacting to passersby with preset banter," per The Verge. "Or they can be controlled remotely, with unseen handlers responding to queries from the crowd."

What's next: The Verge called these robots "heralds of the future," saying, "As technology improves and androids become more realistic, the question of how we relate to such machines is going to become more pressing."

Editor's note: This story was originally published on May 24. 

Humanoid robots for rent

An android that can sing and tell jokes is available for rent.

Ameca, a humsnoid robot, greets a Bavarian official.

Ameca interacts with Markus Söder, Minister President of Bavaria, at an event in Nuremberg. Photo by Daniel Karmann/picture alliance via Getty Images

Robotics

Axios Gaming

Members of six U.S. armed forces are competing in a Halo Infinite tournament in San Antonio this weekend in a novel and federally sanctioned esports event.

Why it matters: It’s the brainchild of an Air Force captain, Oliver Parsons, who believes gaming can help morale and assist members of the military who might be struggling mentally or socially. 

The event is being produced by Rally Cry, an organization that coordinates esports efforts that are intended to have a social good aspect.

Between the lines: Parsons says he personally felt the benefits of gaming in 2016, while stationed in a frigid part of North Dakota.

“I began struggling with mental health, depression, anxiety and seasonal affective disorder,” he said. “Me and my wife kind of turned to video games as an escape.”

But he recognized that escapism could exacerbate his depression. He noticed he felt better when he was connecting with other gamers through multiplayer matches. He wanted to build on that.

Parsons soon got a two-star general’s permission to start an Air Force Gaming group and organized a 200-team Call of Duty tournament with airmen in 2020. He says his organization, which also involves the newly formed Space Force, now has 25,000 members, and is part of the Air Force’s Morale, Wellness and Recreation program.  

Some members of the Air Force Gaming group may be wrestling with the stresses of warfare, Parsons says, but for many, the help they need is just to deal with the ordinary grind of work.

“Even if you love your job, if you work 90 hours a week, that grind is going to get to you. This community provides a way to disconnect but still stay connected.”

Popular games for Air Force Gaming include Halo, Call of Duty and regular old Dungeons & Dragons.

Sign up for the new Axios Gaming newsletter here.

Members of 6 U.S. armed forces to compete in esports event

It's a novel and federally sanctioned esports event.

Members of the Air Force Gaming team. Photo Air Force Gaming

Video games

Nintendo game designers struggled for years to make a Nintendo Switch sequel to the company’s best-selling game of all time, 2006’s Wii Sports, before finally releasing one in April.

Why it matters: Game design is a tough process, even on a project that seems like the ultimate no-brainer.

That's on display in a new Q&A published by Nintendo about the making of Nintendo Switch Sports.

Details: The game began development some time after the Switch’s 2017 launch. But design dead ends required an eventual “fresh start” to the project.

Nintendo’s designers were stumped about how to distinguish their new game from Wii Sports (and its 2009 sequel Wii Sports Resort), which was iconic for letting players swing a Wii controller to play simplified versions of tennis, bowling and more.

They experimented with controls that didn’t involve motion. 

They brainstormed about making the player-characters robots. 

What they’re saying: “By the time we acknowledged we’d pursued the wrong direction, years had already passed,” Yoshikazu Yamashita, a director on the new game and the old Wii Sports titles said in the Q&A.

Their solution was to pursue simplicity, to design a motion-controlled game playable by anyone age 5 to 95. They’d make another Wii Sports, basically, circling back to the original intent.

Yes, but that wasn’t the end of their problems: Creating motion controls that worked as players expected was tough despite the Switch’s technological superiority over the Wii.

Wii controllers were big wands that most people held the same way. The small size of the Switch’s detachable controllers made it harder for Nintendo’s designers to predict how players held them and how, in turn, the system should interpret their gestures.

The developers used machine learning and other techniques to optimize the accuracy of the controls.

The eventual result is a game that plays quite well on Switch. 

Between the lines: Nintendo is in many ways the most secretive company in gaming, but it occasionally offers impressively deep analysis of the development of its games.

That tradition began in 2006 with the launch of Iwata Asks, a series of detailed, mirthful interviews with groups of Nintendo game designers conducted by company president Satoru Iwata until his death in 2015.

In them, Nintendo creators speak of the challenges of making new Mario and Zelda games and the like — and of trying to produce the near-magical quality Nintendo’s games are known for.

Last July, Nintendo began a similar series with a new, anonymous interviewer. 

The bottom line: Interviews about game design humanize the process and help explain why so many games take years to make, get delayed or just don’t pan out despite the effort poured into them. 

Nintendo describes its struggle to develop Nintendo Switch Sports

That's on display in a new Q&A published by Nintendo.

Nintendo Switch Sports. Screenshot: Nintendo

Nintendo

Axios Pro Rata

The U.S. Securities and Exchange Commission on Friday confirmed that it is investigating Elon Musk's early April disclosure of an ownership stake in Twitter, which came ahead of his agreement to acquire the company. 

Driving the news: At is issue is the question of why Musk seemingly disclosed his 9.2% position in Twitter after he was legally required to do so, and if that disclosure was still faulty.

Timing: Those who buy 5% or more of a publicly traded company must legally disclose that ownership within 10 days of acquisition. Musk, however, says he reached the threshold on March 14, but didn't disclose until 21 days later on April 4.

Form type: The SEC also wants to know why Musk filed a "13G" form, which is meant for passive investors, rather than a "13D" form that would be for activist investors (including those with interest in making a takeover offer).

It's important to note that the SEC's letter came on the same day as Musk's disclosure, which is before he offered to buy Twitter outright.

Background: Musk and the SEC have tussled before, over his false claim about having "funding secured" to take Tesla private, but that mostly resulted in a slap on the wrist, which Musk remains sore over. 

Were the SEC to find that Musk again violated the law around his Twitter disclosure, it could seek harsher penalties.

Other developments: Musk this week disclosed that he plans to front all $33.5 billion of equity he committed to the deal, as he allowed a $12.5 billion margin loan to lapse (thus boosting Tesla stock). No word yet on if he's secured additional investment partners, although talks appear to be ongoing with Jack Dorsey and others.

Speaking of Dorsey, he left Twitter's board on Wednesday, following the company's annual shareholder meeting. That had been expected, as he'd signaled those intentions upon stepping down as CEO last fall.

Fellow director Egon Durban, a partner with private equity firm Silver Lake, resigned from Twitter board on Wednesday after shareholders voted against his nomination. But Twitter's board on Friday said it had decided against accepting Durban's resignation.

Final numbers: Twitter stock opened trading on Friday at $39.57 per share, a 27% discount to Musk's takeover price.

SEC investigating Elon Musk's Twitter disclosures

At issue are when Musk disclosed his ownership stake, and how he did it.

Photo illustration by Chesnot/Getty Images

Twitter

Axios Crypto

The no-loss lottery, PoolTogether, launched a sale of NFTs yesterday to raise money for its legal defense in New York state against a class action suit brought by a crypto-critic software engineer.

Why it matters: It aims to test the question of whether or not creators can make something, release it on a blockchain and really claim not to control it anymore.

 What's going on: The complainant, Joseph Kent — a former staffer of the presidential campaign of Elizabeth Warren — bought tickets in the PoolTogether lottery in order to have standing to sue its creators, Compound (a lending platform and business partner) and investors for running what he contends is an illegal lottery. His suit was filed in January in New York State. 

In his complaint, Kent's attorneys write that he "is gravely concerned that the cryptocurrency ecosystem — which requires the use of enormous amounts of electricity — is accelerating climate change and allowing people to evade financial regulations and scam consumers."

He's asking for double attorneys fees and for everyone who put money into it to get double their money back.

Kent claims that while PoolTogether has turned control of the protocol over to holders of its POOL token, in truth, PoolTogether's creators and its investors have enough POOL to control it anyway. 

How it works: PoolTogether is a savings game that works sort of like a lottery, except everyone can get the money they put in back out at any time. Everyone's deposits are used in DeFi protocols to earn interest, which serves as the lottery's winnings.

In other words, users give up the interest on their own money for a chance to win the interest on everyone's money.  

It is currently awarding $7,180 in prizes each day, across various pools. 

The website, it should be noted, is a way to access the protocol on Ethereum and Polygon (a sidechain of Ethereum), but if it went down, PoolTogether would still be accessible. 

Similarly, if PoolTogether, Inc. shut down, PoolTogether would keep running.

Zooming out: PoolTogether, Inc., doesn't make returns or profits off of the PoolTogether protocol. The actual game is in control of holders of the POOL token.

DeFi companies, like PoolTogether, Inc., have a different business model. They make a thing, make a governance token to control it, release the thing, distribute the token but then keep a portion of the token for themselves.

The theory here is that if the thing becomes popular enough, the value of the token will increase making all their work worthwhile. 

This model is running into snags pragmatically, but it has worked well for some projects. 

The POOL token launched in early 2021 at about $26. These days its trading around $1. 

In a subsequent filing in the case, Kent's attorneys, Charles Gerstein and Jamie Crooks, speak to the way DeFi protocols just don't work the way normal people understand businesses working:

"The Defendants here either built the protocol, operate the protocol, collect the money, distribute the tickets, or are general partners in this shared enterprise. If none of them are liable, who would be? Defendants’ only answer is: no one. That cannot be right."

Yes, but: Kent does raise a question that has always plagued DeFi — are claims of decentralization at all real? Governance tokens are usually distributed heavily to investors and founders, with another large portion going to users.

That said, lots of the users just sell them. It wouldn't be hard for deep-pocketed investors to hoover them up.

It also wouldn't be hard for them to hide how much they actually control. 

Our thought bubble: PoolTogether really is about making saving money fun. Real gamblers love DeFi, but PoolTogether is not their pick. 

That said, as Kent notes, there are similar products to PoolTogether in the market that offer better insurance against loss of principal. 

What they're saying: In their response to his complaint, PoolTogether's attorneys at Paul Hastings write, "Plaintiff has admittedly attempted to manufacture standing by voluntarily inflicting 'injury' on himself by depositing cryptocurrency into the savings protocol, which he does not dispute he can withdraw."

By his own account, Kent has about $12 at risk in PoolTogether (though he spent almost $400 in gas fees to make those deposits).

What we're watching: PoolTogether, Inc. has argued that Kent already agreed to binding arbitration when he used its website. 

The bottom line:  As of this writing, sales of PoolTogether's NFTs of a purple bird named "Pooly" have raised 192.4 ETH ($347,000) toward its 769 ETH goal.

Blockchain lottery sells NFTs for legal defense in suit that cuts to the core of DeFi

The suit raises a question that has always plagued DeFi — are claims of decentralization at all real?

Illustration of a gavel emerging from a shadow

Cryptocurrencies

"Data is the new oil" has long been a popular idea in tech. This year's Davos event grappled with the double-edged nature of that saying.

Why it matters: With autonomous cars, satellites and ubiquitous sensors capturing ever more of what happens in our world, data accumulation will only keep accelerating. While these stockpiles can help society, their risks keep growing too.

The big picture: On the positive side of the ledger, emerging technologies have the power to track global warming and provide visual evidence to counter dangerous misinformation. 

Blockchain advocates point to a world in which people have the nuanced ability to share only specific and necessary elements of data.

For example, today, a bar verifying your age checks your driver's license — and gets to see a raft of your personal info. A blockchain-based ID system could limit that to just sharing your photo and age.

"These new technologies allow you to only convey those facts, and preserve your data," Decentraland cofounder Esteban Ordano told me at Davos. 

Yes, but: More data means more opportunities for governments to spy on their own citizens.

To do their jobs, autonomous cars must capture images of everything in their path. That will potentially make vast new libraries of information available to  authoritarian governments and overzealous law enforcement authorities.

As U.S. states criminalize abortion, prosecutors could turn to tech data hoarders for evidence such as the purchase of a pregnancy test online, fertility information from a period-tracking app or location data placing a user near a health clinic.

At Davos, human rights groups called for a moratorium on the sale and use of spyware, such as NSO group's Pegasus.

Access Now executive director Brett Solomon told Axios that spyware is only the "pointy end" of a much bigger surveillance-industry spear: "The surveillance sector is a massive multi-billion-dollar market which is currently under- regulated and has insufficient controls within it." 

The rise of biometrics — such as face recognition and eye-scanning — makes the problem "much worse," he added.

Between the lines: Creators and operators of data-gathering tech are beginning to accept that they need to take responsibility for their immensely powerful tools.

"This idea has got to die that we are a neutral platform," Will Marshall, CEO of satellite imagery company Planet, told Axios. 

Marshall is a firm believer that some technologies have an intrinsic bent toward good and others toward harm. Either way, he says, it's the responsibility of product developers to recognize, interrogate and minimize the potential for misuse.

Be smart: Much of the personal data is being collected without the explicit permission of the people the data identifies. And data you share with one purpose in mind can easily be used for a different one you might not want — or that could harm you.

What's next: All this data is being used to train machine-learning algorithms that form the foundations for AI systems making decisions on humans' behalf.

Davos crowd sees power and perils of data

There was a growing sense at the annual conclave that the creators of data-producing tools need to take responsibility.

Illustration of the famous Davos sign as binary code

Data

A top Federal Reserve official gave a stark warning to House lawmakers on Thursday: Move too slow in issuing a central bank digital currency and the dollar's global dominance could eventually be in jeopardy. 

Why it matters: The U.S. so far remains largely on the sidelines amid a global race for countries to roll out their own digital cash, which could reshape the way millions of people use money. 

What she's saying: "We shouldn't take the dollar's global status as the dominant payment currency for granted," Lael Brainard, the Fed's vice chair, said at a congressional hearing on central bank digital currencies (CBDCs).

"If major foreign jurisdictions move to the issuance of their own digital currencies, it's important to think about whether the United States would continue to have the same kind of dominance without also issuing."

"I would hate for Congress to decide five years from now: 'You, Federal Reserve, you need to catch up. China's out there. The [European Central Bank] is out there.'"

Where it stands: The Fed just wrapped a public comment period on its highly-anticipated report laying out the pros and cons of developing its own CBDC. This came amid the explosion in popularity of stablecoins, which aim to tie their value to a fiat currency (like the U.S. dollar).

The debate over whether America needs its own digital currency — issued and backed by the U.S. government, much like dollar bills — was reignited in recent weeks after the high-profile blowup of privately-issued stablecoin TerraUSD.

Brainard told lawmakers a U.S. digital dollar could co-exist and complement stablecoins. (Stablecoin issuer Circle said in a comment letter to the Fed that their coin essentially does what a potential CBDC would do, so there's no need for both.)

The intrigue: The hearing was Brainard's first congressional appearance in her capacity as Fed vice chair. While the Fed is split on the need for a CBDC, Brainard has emerged as someone who sees a case for one.

"The Fed today was far more bullish on a CBDC than we have heard before," says Josh Lipsky, director at the Atlantic Council’s GeoEconomics Center, a think tank that tracks CBDC pilots and launches around the world.

What to watch: Brainard said that the Fed won't move ahead on issuing a CBDC without "support by the executive branch and by Congress," which would "ideally take the form" of legislation.

But a big sticking point among Republicans at the hearing was whether Brainard views legislators' blessing as simply "ideal" — or as a clear requirement. 

Top Fed official warns about U.S. falling behind in digital dollar race

"I would hate for Congress to decide five years from now: 'You, Federal Reserve, you need to catch up.'"

Fed vice chair Lael Brainard testifies before Congress

Federal Reserve vice chair Lael Brainard during a Senate confirmation hearing earlier this year. (Photo: Al Drago/Bloomberg via Getty Images)

Stock market

Policymaking

President Biden has made the COVID-19 crisis and a post-Trump return to national unity and traditional democratic ideals his top priorities. From vaccinations to stimulus to schools, Biden is seeking bipartisan compromise while showing a willingness to use executive authority and bare Democratic majorities in the U.S. House and Senate to implement his policies. Republican leaders are navigating deep party divisions over if and how to move beyond former President Trump.

Politics & Policy

There is a weird disconnect out there in venture capital land, particularly in crypto. Gigantic funds get announced every week, and yet startups are being told to look for ways to extend their runways and tighten belts.

Why it matters: Money in crypto VC funds is like a runway for the whole industry.

Let's imagine that this bear market is really different than the prior ones and reflects the fact that there's no product-market fit for crypto out there. Without VC funds, startups would just wind down.

With billions committed, though, VCs can simply fund more time for startups and pay to launch a zillion new ones. With enough money, eventually, something will stick.

Situational awareness: Despite their well-resourced benefactors, crypto startups tell Axios that they are expecting leaner days ahead.

Zooming out: Just this week we've learned about Andreessen Horowitz raising a new $4.5 billion crypto fund and Standard Crypto closing a $500 million fund.

The Axios Pro team has found nine different crypto funds with more than a billion dollars in them (two at a16z).

The number of billion-dollar funds going into 2018's bear market? Zero.

Crypto startups brace for a long bear

Despite their well-resourced benefactors, crypto startups tell Axios that they are expecting leaner days ahead.

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