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

Codebook

Axios Codebook

A ransomware campaign exploiting VMware servers around the world sent security personnel into a fury over the weekend. 

Driving the news: Reports started to surface late last week detailing a "global ransomware hacking attack," as Reuters described it, targeting a years-old vulnerability in VMware's popular ESXi machines. 

Ransomware gangs appear to be targeting a vulnerability that VMware patched two years ago — limiting the potential impact to only those who missed that system update.

French and Italian officials, among others, issued alerts late last week and over the weekend warning about an active ransomware campaign targeting unpatched servers. 

Why it matters: Roughly 2,400 VMware ESXi servers have been hit with the ransomware worldwide, according to BleepingComputer. 

The largest number of affected servers is in France, followed by the U.S. and Germany, per Reuters.

VMware says it has more than 400,000 customers, and it has cited figures saying analysts believe that 80% of virtualized workloads run on VMware technology. 

What they're saying: A spokesperson at the Cybersecurity and Infrastructure Security Agency told Axios the agency is working "to assess the impacts of these reported incidents and providing assistance where needed." 

A VMware spokesperson said the ransomware attacks appear to be targeting "end-of-general-support or significantly out-of-date products by leveraging known vulnerabilities previously addressed and disclosed in VMware security advisories." 

Between the lines: Now is the time for companies to assess whether they use this specific VMware product — and if so, to immediately patch their systems, Avi Sinai, vice president of research and development at Israeli cloud security firm Perimeter 81, told Axios.

"Hundreds of vulnerabilities are found every day. If you have time to patch your servers, then you're good." Sinai said. "If not ... you must patch as soon as possible. Otherwise, even junior hackers can find a way to hack your system and then ask for ransom." 

The intrigue: VMware's ESXi servers allow people to host virtualized, cloud-based computers on physical devices, giving them access to multiple operating systems via one server.

While moving to the cloud has been hailed as a surefire way to protect organizations, the current ransomware attack is an example of the security downfalls if administrators don't know how to properly patch or manage their cloud networks, Sinai added. 

Be smart: Each organization running cloud computing security infrastructure should establish a regular patching schedule to avoid a similar exploitation of years-old, already resolved security vulnerabilities.

Sign up for Axios’ cybersecurity newsletter Codebook here.

What to know about the VMware server attacks

U.S., Italian, French and other government officials are monitoring the situation.

Illustration of top down view of opened laptops in a grid pattern.

Cybersecurity

It's not just regulators and lawmakers struggling to make sense of cybersecurity concerns about TikTok — even your Codebook author can't figure out which are overhyped and which are valid. 

What's happening: It's now been about a month since I purchased a burner phone solely for TikTok. 

I've loved the app since 2019, when dancing to the Home Depot theme song was its biggest trend. From travel and meal-prepping tips to cat videos to absurd Gen Z trends, it's just a fun place to be.

I got the burner phone idea from veteran tech journalist Kara Swisher, who did the same thing nearly three years ago.

I always thought those hollering about TikTok's potential for abuse were either out of touch or overzealous China hawks. But TikTok parent company ByteDance's admission last year that it had tracked the location of U.S. journalists convinced me to rethink my use. 

Why it matters: TikTok reached 1 billion monthly active users in just five years, far more quickly than most U.S. social media apps, adding more urgency to U.S. officials' attempts to regulate the app.

And Pew Research estimates that about a quarter of U.S. adults under the age of 30 now get their news on TikTok. 

The big picture: TikTok comes with a unique set of regulatory considerations because of its China-based parent company. 

Companies in China are under different rules than U.S. ones and can be compelled to turn over user data without much recourse.

FBI director Christopher Wray said during a public event in December that the bureau is concerned the Chinese government could manipulate the TikTok algorithm, and "if they want to, to use it for influence operations."

TikTok has also reportedly censored videos that mention Tibetan independence, the Uyghur genocide and other videos. (A TikTok spokesperson attributed these reports to user violations of other content moderation policies and said anti-Chinese government arguments are still prominent on the app.) 

The other side: However, since I got my burner phone, several security experts have told me in private conversations that I probably overreacted. 

Keeping TikTok on my phone isn't much different from having any other mobile app with questionable practices on my phone, they argue. 

A prime example is Twitter: The platform has temporarily suspended some journalists who report negatively about the company, and some have expressed concern about Elon Musk having access to DMs. 

A TikTok spokesperson also told Axios that U.S. user data is currently accessible only by Oracle Cloud and the TikTok U.S. data security team, which will soon be spun out into its own subsidiary. 

State of play: Navigating TikTok's cybersecurity concerns hasn't been easy for anyone involved — even security officials. 

For three years, the federal government has been struggling to figure out whether security concerns about TikTok make it too dangerous to operate in the country — or if there's a way to protect U.S. user data.

Meanwhile, several states, universities and lawmakers have already jumped ahead and banned its use. 

Former Cybersecurity and Infrastructure Security Agency assistant director for cybersecurity Bryan Ware told Axios his own kids use the app. "My kids — oh, my god — would they revolt or change their citizenship to Canada [if TikTok got banned]," said Ware, the current CEO of LookingGlass Cyber Solutions.

Though he'd "personally like to see us not using TikTok." 

Reality check: If the Chinese government wants to spy on the U.S., it doesn't need TikTok to do so. 

Chinese state-sponsored hackers exploited flaws in Microsoft Exchange servers, affecting 30,000 U.S. organizations, just two years ago. 

The recent news cycle around the Chinese surveillance balloon drifting across U.S. airspace is just the latest example. 

Between the lines: The average TikToker (e.g., my 16-year-old sister) probably doesn't need to run out and get a burner phone — but journalists, human rights activists and political dissidents have different considerations. 

The bottom line: I'll probably keep my burner phone for now. 

If anything, having to power up a separate phone to watch short videos has helped me become more mindful of my usage, and that's always a good thing. 

Trying to find a safe way to TikTok

It's now been about a month since I purchased a burner phone solely for TikTok.

Animated illustration of text-in-progress ellipsis made up of periods stylized like the TikTok logo. 

Smaller firms fear limiting net liability law will hobble them

These companies say they'll have a harder time adapting to that change than tech's giants.

Illustration of a Newton's cradle of hanging cursor hands with one swinging toward the rest

Cda 230

Media Trends

Axios Media Trends

The rapid rise of generative AI tools like ChatGPT could displace dozens of media companies if they don't move quickly to adapt to a new internet reality. 

Why it matters: Facebook's many pivots pushed media outlets to move their focus away from social media and toward search — but now experts predict another major disruption for publishers relying on search traffic.

"It's an undoing of the robotic behavior with which we were already committing journalism, because it's questionable whether writing about National Donut Day really served anybody," said S. Mitra Kalita, a former CNN executive who has co-founded two new local media companies, Epicenter NYC and URL Media. 

"In some ways, the work we were doing towards optimizing for SEO and trending content was robotic. Arguably, we were using what was trending on Twitter and Google to create the news agenda. What happened was a sameness across the internet."

Driving the news: BuzzFeed last week said it is using OpenAI's publicly available software, which is similar to the popular generative text site ChatGPT, to automatically publish quizzes, beginning this month. 

"To be clear, we see the breakthroughs in AI opening up a new era of creativity that will allow humans to harness creativity in new ways with endless opportunities and applications for good," the company's CEO, Jonah Peretti, said in a memo to staffers.  

BuzzFeed doesn't plan to use AI to write journalistic articles, which seems to be a line that most publishers aren't eager to cross. 

But figuring out the right balance when using AI won't be easy, as was made obvious by CNET's AI mea culpa last month. 

The CEO of Dotdash Meredith, a rival to CNET's parent Red Ventures, told Axios last month that the firm "will never have an article written by a machine," but it has already begun to bake AI into many of its workflows, like sourcing images.

Be smart: The past few years gave rise to a slew of successful digital media companies that focused on monetizing search traffic, while social media-reliant publishers struggled to adapt.

But the content that has done well on search, such as evergreen articles that help people answer questions or provide recommendations, is poised to be challenged by artificial intelligence. 

"The most immediate impact of AI is probably that it becomes an efficiency tool," said Brian Morrissey, former president and editor-in-chief of Digiday and author of a Substack newsletter on media called The Rebooting.

The big picture: Decades of constant pivots at the hands of Big Tech firms had media executives losing sight of which audiences they aimed to serve to begin with, Kalita noted. 

ABC chief legal correspondent and media entrepreneur Dan Abrams said his media industry news site Mediaite began seeing record engagement once it started to push away from social media and search distribution. 

The thinking has changed from "find the SEO angle" or "find the Facebook angle" to "find the Mediaite angle, and a large, loyal audience has followed," Abrams said. 

Around 16% of the site's pageviews in 2022 came from homepage traffic, Abrams said. 

What's next: As search-based content becomes more commoditized, media brands will need to pivot towards serving specific audiences, rather than the masses. 

"You're going to have to get even more specialized as a publisher," Morrissey said. 

Bottom line: "Trying to compete on efficiency with robots never works, they always win," Morrissey said. 

Media braces for the robot era

Illustration of an internet search bar on fire.

ChatGPT

Axios Gaming

Hogwarts Legacy, the new video game stemming from author J.K. Rowling’s “Harry Potter" fiction, is launching this week to big sales and big controversy.

Why it matters: The game, which lets players create their own wizard and go through magic school, has become a flashpoint for reviewers and fans regarding what to do about work associated with Rowling. 

The Potter author has been accused of transphobia — she denies it — since 2018, when she “liked” a tweet that said that trans women are “men in dresses” (per Politico, she said it was for research purposes). Among her many comments on gender since then, she has mocked the idea that the phrase “people who menstruate” could refer to anything other than women. 

Amid calls for boycotts of Hogwarts Legacy, the game has still managed to top key PC and console bestseller lists weeks before its release, indicating high pre-order demand. 

Driving the news: In a deviation from standard pre-release coverage, many outlets are putting caveats in their Hogwarts Legacy reviews, while others are sidestepping the game entirely. (Access to the game, so far, is controlled by Warner Bros., which like any other publisher, chooses which outlets to send review copies to.) 

IGN, the most popular video game media site in North America, ran a rave, but included a sidebar labeled “concerning J.K. Rowling” that states inconclusively: “As critics, our job is to answer the question of whether or not we find Hogwarts Legacy to be fun to play and why; whether it’s ethical to play is a separate but still very important question.”

British gaming outlet RockPaperShotgun is counter-programming with a series of articles about magic-based games with a “special emphasis on magic games made by trans developers.”

A Canadian outlet, TheGamer, is among those that won’t review Hogwarts Legacy. The publication also won’t create online guides for the game, a greater source of revenue, editor-in-chief Stacey Henley tells Axios. “This is not because of any issue with royalties or monetary support for J.K. Rowling, but because we feel the continued popularity of Harry Potter only provides her with a larger platform and further legitimizes her views, which we in turn feel are harmful to trans people.”

Between the lines: Rowling may profit from Hogwarts Legacy, but she didn’t write it. It was developed by Warner Bros.-owned Avalanche Software.

The game’s official FAQ notes that J.K. Rowling is not involved in the creation of the game," but critics have said its popularity would still benefit Rowling.

One actor for the game has said he is “really sorry to anyone hurt” by his inclusion in the game, joining actors for the Potter movies who have distanced themselves from Rowling and overtly supported trans rights. 

Meanwhile, some fans have sworn off buying the game due to what the Washington Post recently described as “the pain and difficulty in being a Harry Potter fan of late.”

What they're saying: The game’s actual creators have largely avoided explicitly addressing the Rowling issue, though there have been hints.

News that the game will let players make trans characters by decoupling body and voice selections from gendered terms in the users’ character creation process has been viewed as a subtle repudiation of Rowling.

Warner Bros.’ management has steered even more clear. Asked about possible boycotts in August, the company’s head of gaming, David Haddad, told Axios: “We're going to stay very focused on the game that we built and the great job that the Avalanche studio has done.” He added: “We want everybody that loves this world and loves these stories and loves these characters.” 

In December, Rowling acknowledged calls for boycotts of Hogwarts Legacy after GameSpot writer Jessie Earl called support of the game “harmful.”

Rowling quote-tweeted the claim, calling it “purethink” and snarked that people who disagree with her should burn down libraries.

GameSpot has since published an essay by Earl about Rowling’s views and the game. It has not yet published a review of the game.

Sign up for the Axios Gaming newsletter here.

Hogwarts Legacy game launch becomes referendum on J.K. Rowling

Some outlets refuse to review the game, others include caveats.

Video game screenshot of a student wizard holding a magic wand

Hogwarts Legacy. Screenshot: Avalanche Software

Video games

Login

Axios Login

Google announced several efforts to power search and other products using generative AI systems, including Bard, a conversational system conceptually similar to ChatGPT.

Between the lines: Google has long been working on such systems but faces pressure to show it is making progress amid all the attention on OpenAI's popular ChatGPT and similar projects.

Details: Google is laying out three AI-related projects as part of a blog post from CEO Sundar Pichai.

Bard, the conversational assistant based on Google's LaMDA large language model, is starting limited external testing.

The company is offering a preview of how it soon plans to integrate LaMDA into search results, including using the system to help offer a narrative response to queries that don't have one clear answer.

Google says it is developing APIs that will let others plug into its large language models, starting with LaMDA itself.

The big picture: ChatGPT and its brethren have been the talk of the tech industry in recent months. Microsoft has upped its investment in OpenAI and said it plans to incorporate generative AI throughout its products.

Such systems are also seen as a potentially existential threat to the traditional search business, which generates the bulk of Google's revenue.

Yes, but: Generative AI systems like ChatGPT continue to have huge weaknesses. They can't distinguish fact from fiction, tend to make things up and can't tell you where they got their information.

Google details Bard, its ChatGPT rival

The company is under pressure to show it hasn't fallen behind in AI.

A sample of how LaMDA results will start showing up in Google Search.

A sample of how LaMDA results will start showing up in Google Search. Image: Google

Google

Crypto

Axios Crypto

The largest crypto exchange in the world is temporarily suspending U.S. dollar withdrawals and deposits starting on Feb. 8, the company confirmed to Axios. 

Why it matters: Dollars are the global reserve currency.

Context: According to a Binance spokesperson, dollar bank transfers are used by 0.01% of its monthly active users. 

Impacted customers are getting direct notifications of the change.

Details: Transfers in other national currencies still work, as do credit, debit cards and of course making deposits and withdrawals using stablecoins. 

Zoom out: In late January, Binance announced trouble in a number of countries with U.S. dollar transactions. 

U.S.-based Banks have been pulling back on their exposure to the crypto industry, including Signature and Metropolitan.

Signature's new policy on only supporting high-value transactions has directly impacted the exchange.

Quick take: All signs right now suggest that this is a logistical issue, not a solvency issue. 

Binance to temporarily suspend U.S. dollar bank transfers

All signs right now suggest that this is a logistical issue, not a solvency issue.

Photo Illustration: Omar Marques/SOPA Images/LightRocket via Getty Images

Cryptocurrencies

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

Latent Technology, a U.K.-based startup that’s building AI-based tech for developing video games, has raised $2.1 million in pre-seed funding led by Root Ventures and Spark Capital, with Bitkraft also participating.

Why it matters: So-called "generative AI" technology is taking the tech world by storm with the promise of change how everything from the written word to art is created. 

The intrigue: Latent's tech aims to make it possible for game makers to skip manually animating every possible body motion and angle (each step, each turn of the body, etc.). This current process is painstaking and takes countless hours. 

"It’s not truly interactive – that means if you were to throw a rock in a game at a character, that character wouldn’t react to that rock unless there was an animation designed specifically for it," co-founder and CEO Jorge del Val Santos tells Axios. 

Instead: Latent's tech uses machine learning (specifically, reinforcement learning) trained on motion capture data to enable video game characters to react to virtual anything that happens in a game. 

It's a bit like telling OpenAI's ChatGPT to write a paragraph about a specific topic in a specific style — you're creating the prompt but not the writing.  

"What we will do is use actual data recorded from humans...The character will be able to extrapolate from the data," explains del Val Santos.

The big picture: "AI is nothing new in games, of course. Even early games, like Atari’s Pong, had computer-controlled opponents to challenge the player," Andreessen Horowitz's James Gwertzman and Jack Soslow write in a blog post. "What’s different now is the amount of computing power available... it’s possible to build large neural networks that can identify patterns and representations in highly complex domains." 

They add: "When talking to game developers who are experimenting with integrating Generative AI into their production pipeline, the greatest excitement is over the dramatic reduction in time and cost." 

Yes, but: While this tech could eventually become widely used, there will always be some preference for other techniques. 

"In all generative AI, for any kind of application, there will always be a tradeoff between creative control and speed of creation and immersion," says del Val Santos. 

"In some experiences, in some kinds of games, the developers want total control… there is no way around that." 

Backstory: Root Ventures' Kane Hsieh and Spark Capital's Nabeel Hyatt met del val Santos during last year's Game Developers Conference, where he gave a talk on this method of animating video game characters.

As Hsieh tells it, the two investors were intrigued by the presentation and followed up with del val Santos, eventually convincing him to leave Embark Studios to start a company. 

What's next: Del Val Santos says the company expects to release a demo in collaboration with a gaming company in 18 to 24 months.  

Latent Technology raises $2.1M to bring generative AI to video games

The company will employ reinforcement learning in game develoment.

Illustration of an old video game joystick over a collage of rectangles and circles. 

Artificial intelligence

Change in new large office leases, by industry

Tech has been toppled as the leader in leasing large offices.

Why it matters: The pullback comes as the roller-coaster tech industry downsizes after a decade-long boom.

Driving the news: The finance and insurance industry ousted tech last year for the lion's share of the largest 100 office leases in the U.S., per a new report from CBRE, a commercial real estate firm, first shared with Axios.

Finance and insurance companies claimed a quarter of the largest 100 leases by square footage, up from 12 in 2021.

Tech companies accounted for 17 of the largest 100 leases, down from 36 in 2021.

Between the lines: Finance and insurance companies generally have higher office attendance rates than tech, which was quick to embrace remote work, CBRE surveys show.

In 2022, as layoffs swept tech companies, many firms abandoned their big office spaces — either by downsizing or moving primarily to a remote-work model.

What they're saying: The wide range of industries that signed top leases last year reflects a commitment “to remain in great locations and provide office environments that employees want to work in,” Julie Whelan, global head of occupier thought leadership at CBRE, tells Axios.

Tech’s grip on largest office leases loosens

The pullback comes as the roller-coaster tech industry downsizes after a decade-long boom.