National

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

Gaming

Axios Gaming

Sony plans to release a new handheld later this year that will play games streamed from the PlayStation 5, a partial return to portable gaming after a decade away.

Why it matters: The device, codenamed Project Q, will further test the potential of cloud-based gaming, just as it'll test whether Sony can rediscover its footing in a market where it struggled.

Details: PlayStation chief Jim Ryan introduced the device during an hour-long showcase of upcoming PlayStation games, saying it will support streaming over Wi-Fi.

The device, which resembles a phone screen slotted between halves of a PS5 controller, has an 8-inch screen.

Yes, but: Sony's last foray into portable gaming, the powerful PlayStation Vita, failed to outsell the weaker Nintendo 3DS, and the handheld gaming market has gone on to be dominated by mobile games and Nintendo's hybrid Switch console.

A streaming-only handheld device from Sony is a big risk.

Most of the PlayStation showcase focused on game reveals. The biggest ones:

Destiny-maker Bungie, bought by Sony last year, confirmed that it is making a new version of Marathon, the shooter it released for the Mac in 1994. Slated for PS5, Xbox and PC, it'll focus on player-vs-player and won't have a single player campaign.

Konami is remaking the classic PlayStation 2-era military espionage game Metal Gear Solid 3: Snake Eater. It revives a franchise Konami has largely left alone since series creator Hideo Kojima's acrimonious split with the publisher in 2015.

Sony-owned Haven Studios showed a cinematic, non-gameplay trailer to reveal Fairgame$, a competitive heist game about robbing the ultra-rich.

Co-creators of indie hit Night in the Woods are making a new game called Revenant Hill.

Early PS4 multiplayer game Helldivers is getting a sequel for PS5 and PC.

Artful indie studio Giant Squid (Abzu, The Pathless) is making Sword of the Sea, a game that includes surfing across sand dunes.

SquareEnix is developing a multiplayer shooter called Foamstars that appears to be like Nintendo's popular paint-shooter Splatoon, but with foam.

Be smart: Many of the games announced by Sony today are for 2024 and beyond. 

Sony's main PlayStation Studios game release for this year appears to be Spider-Man 2, which closed the event with a new trailer.

Several of Sony's announced projects, including Bungie's Marathon, Haven's Fairgame$ and Firesprite's Concord are focused on multiplayer, a category where Sony has said it needs to improve. 

Sign up for the Axios Gaming newsletter here.

PlayStation to release a new streaming handheld Project Q

It was announced during a showcase filled with multiplayer game reveals and a Metal Gear return.

Screenshot: Sony Interactive Entertainment, via YouTube.

Video games

Crypto

Axios Crypto

A lab-made opioid makes its way as chemical components from China to a shop in Latin America, where it's made into fentanyl, packaged and trafficked into the U.S. — a drug move that crypto can track.

Why it matters: Criminals use crypto as a means to operate — but that also means that law enforcement can leverage blockchain analysis to stop them.

Driving the news: A report by blockchain analysis firm Chainalysis traced the flows of fentanyl described by a Drug Enforcement Administration intelligence report, using crypto transactions involving suspected chemical shop addresses.

Zoom in: "We weren't mapping out the whole ecosystem," Eric Jardine, cybercrimes research lead at Chainalysis, told Axios. "It was a look at the way in which crypto can facilitate the trade in these chemicals."

Indeed, crypto research firm Elliptic on Tuesday put out its own investigative report showing that the vast majority of chemical shops accept payment in bitcoin and tether.

Details: China was identified by the DEA as the primary source of fentanyl and fentanyl-related substances ultimately trafficked into the U.S. in 2019, with Mexican transnational criminal organizations producing the synthetic opioids before smuggling them across the U.S.-Mexico border.

The cryptocurrency addresses linked to known China-based chemical shops, as well as others that Chainalysis identified, received some $38 million in crypto from Jan. 2018 to April 2023, according to the firm's report.

Meanwhile, fentanyl is also sold on darknet markets that ban those synthetic opioids for fear of attracting the attention of U.S. law enforcement. Some vendors use the street names of the products like "China White" to circumvent scrutiny.

The big picture: Deaths by drug overdose in the U.S. have climbed in recent years, with those involving synthetic opioids like fentanyl rising in-step.

Fentanyl is involved in more deaths of Americans under 50 than any other cause of death. Meanwhile, states are wrestling with the crisis — candy-colored versions were recently spotted in Ohio.

The bottom line: Proper blockchain analysis can enable law enforcement to monitor fentanyl sales, identify criminals, and provide crucial evidence to prosecutors, Chainalysis wrote. Ultimately, crypto could play a positive role in reducing drug trafficking into the U.S.

Crypto could be tool in fight against drug trafficking

Criminals use crypto as a means to operate — that means blockchain analysis can be leveraged to stop them.

Illustration of a pill casting a shadow, with the pill made from dotted lines as if it were invisible. 

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

The sprawling Swedish video game company The Embracer Group is reeling following its announcement that a "transformative" partnership that's been negotiated for months fell apart Tuesday night. 

Driving the news: Embracer said the collapse of the mega-deal, the partner of which still has not been revealed, was unexpected. Embracer said it had a verbal commitment in October and described negotiations as "taking far longer than expected."

Shares of Embracer Group were down more than 40% this morning.

Details: "All documentation was finalized and ready to go as of yesterday," Embracer CEO Lars Wingefors told investors Wednesday morning. "We asked for the execution of the agreement before our Q4 announcement. However late last night we received a negative outcome from the counterparty."

Compounding the bad news, the company lowered its earnings forecast for the next year, citing game delays, from a range of $965 million - $1.3 billion down to $655 million - $840 million.

Catch up fast: Embracer has been a voracious purchaser of games, game studios and intellectual property, making more than 20 acquisition deals last year, valued at over $1 billion, according to a Drake Star report.

Embracer's portfolio includes rights to "The Lord of the Rings" and both the characters and studios tied to the Tomb Raider franchise.

The company also accepted a $1 billion investment from the Saudi-government-funded Savvy Games Group last year.

What they're saying: "It's been a rough night," Wingefors said in a livestream today.

Asked if the negative outcome was the last word on the partnership, Wingefors said the message Embracer got from the would-be partner was that the deal "made perfect sense, so it was other decisions impacting them than the agreement itself."

$2 billion partnership deal falls through for Embracer Group

The Swedish owner of Tomb Raider, Lord of the Rings, sees stock plummet 40%.

Video game screenshot of zombies on a beach

The Embracer Group's Dead Island 2, which sold more than 2 million copies since its April launch. Image: Embracer Group.

Axios AI+

Change in 2023 Axios Harris 100 reputation scores among select tech companies

Data: Axios Harris poll; Chart: Alice Feng/Axios

Large tech companies crowd both ends of the rankings in this year's Axios Harris Poll 100 brand reputation survey, with those that provide tangible products and useful services clustered near the top and those that trade in social-media messages banished to the bottom. 

What's happening: Worries over the rise of AI, on top of long-building distrust of social media providers, have pushed the public toward these extremes. 

75% of surveyed American adults said they are concerned about deep fakes and other generative AI content.

The highest-scoring tech companies are Samsung, Amazon and Apple, all in the retail and hardware game. 

TikTok, Meta, and Twitter are locked in a race with Fox, the Trump Organization and failed crypto exchange FTX for the worst reputation among the top 100 brands.

Winners: The tech companies with the highest Reputational Quotient, or RQ®, scores, were Samsung (81), Amazon (80.7) and Apple (80.6), which retained their 2022 position. Sony (79.8), Microsoft (79.7), and LG (78.8) also  landed in the top 20. 

Millennials ranked Google highest, though the company ranked only 35th overall.

JP Morgan Chase beat out Apple and Paypal to receive the highest data privacy protection score.

Made in the U.S.A. brands soared in 2023, with third-ranked John Deere leaning into “high-tech field management technologies, such as a robotic-based fertilizer system and a new electric excavator,” per Harris, to harvest a better reputation.

Losers: No social media platform ranked higher than 94th.  

Tiktok, with an RQ of 61, ranked 94th, followed by Facebook (Meta) in 97th and Twitter in 98th. All received lower RQ scores in 2023 compared to 2022. 

Meta was the company least trusted by women (only 21% gave the company a top trust rating), and the second-least trusted by Gen Z (16%), ahead of only the Trump Organization. 

Yes, but: Meta is now the best performing stock of the year — more than doubling in value since January — suggesting that investors are more cheered by cost-cutting measures than worried about the company's reputation. 

Between the lines: Elon Musk’s chaotic takeover of Twitter hurt the social platform, and showed Tesla stakeholders weaknesses in Musk's manic leadership style. 

Tesla's reputation dropped 50 places from 12th in 2022 to 62nd place this year. No other company dropped more than 22 places. 

Meanwhile, a generational split is leaving TikTok exposed, despite its large user base — paving the way for more bans on the service. 

The generational split over Tiktok's reputation is the biggest of any of the companies on the Axios Harris 100 list.

Boomers, who occupy roughly half the seats in Congress, gave TikTok a RQ score of just 41, compared to 68.7 for Gen Z / Millennials. 

Even the Gen Z and Millennial respondents who make up TikTok's user core rank the company only 87th.

Layoffs are priced in as a cost of American business life and left firms with lo lasting reputation damage.

No big tech company engaged in mass layoffs in recent months took a reputation hit traceable to the job cuts, and most maintained their RQ scores. 

Ryan's thought bubble: People can see and somehow sense more tangible benefits from the Apples and Amazons and Samsungs.

They employ more people because they make and sell things.

You can see and hold those things so you process them differently from digital media.

In most cases, you paid them money for what they offer, instead of paying in data (though sometimes it's both).

They're less often drawn into the political controversies that divide social media users, whereas the big social platforms stoke those arguments to inflate engagement and boost profits. 

Ina's thought bubble: Social media companies are likely always going to have a tougher task than hardware makers and retailers for all the reason Ryan lists.

However, that doesn't mean the actions taken by companies in either group can't have a big impact on how they perform relative to their history and their peers.

It wasn't that long ago (think pre-Cambridge Analytica) that Facebook and Twitter were held in much higher esteem.

I'll be interested to see how companies such as OpenAI fare in future surveys.

Go deeper: Full results and poll methodology

long-building distrust of social media providers

Axios Harris 100: Americans still trust tech firms that deal in goods

But social media firms have continued a long reputational dive.

Axios-Harris Poll 100

Big Tech

Closer

Axios Closer

Elon Musk appears to be readying a new project to enter the AI arena against Microsoft and OpenAI. 

Why it matters: His plans could involve harnessing together technology from at least two of his companies — Tesla and Twitter — "to some degree," according to Musk.   

Driving the news: "I think there should be a significant third horse in the race here," Musk said Tuesday during a WSJ event, referring to Microsoft's partnership with OpenAI and Google's DeepMind. 

"I don't want to jump the gun here on announcements, but OpenAI has a relationship with Microsoft that seems to work very well ... so it's possible that X.AI and Twitter and Tesla would have something similar."

State of play: Musk registered X.AI Corp. as an AI startup last month — around the time he also merged Twitter Inc. into X Corp.

One of his main ambitions for Twitter has been to transform it into an "everything app," which he's teased online as simply "X."

Flashback: Musk's interest and ambitions in AI date back to at least 2011 when he was an early investor in DeepMind, a London startup at the time, the New York Times notes.

A few years later, he and then Y Combinator president Sam Altman founded OpenAI as a nonprofit. 

The intrigue: As Microsoft and OpenAI's partnership has grown more prolific, Musk has grown more protective of Twitter's data and more vocal about the dangers of AI. 

What they're saying: "AI will usher in an age of abundance, assuming that we're in a benign AI scenario," Musk said on Tuesday.

At the same time, Musk repeated his fear that there's a "not zero chance" of AI going "Terminator."

The big picture: Musk said AI will change the way the human race operates "a lot" in the future.

"Anything where intelligence can be applied — even modest intelligence — will be automated ... 10, 20 years from now."

Be smart: Musk has been on an extensive media tour this year, as two of his most high-profile companies come under pressure. 

Among the platforms he's sat down with are the BBC, Fox News, HBO and CNBC.

What to watch: Musk believes the key to competing in AI is having talented people, a lot of expensive computing power and access to data.

He also warned about the dangers that AI will play in upcoming elections — stressing that having more paid subscribers on social media platforms could cut down on AI manipulation.

When asked to rank the U.S. and China on their respective AI prowess, Musk said that the U.S. has "the most advanced AI."

AI industry leaders are practically begging the government to regulate them

Elon Musk teases new AI project

Musk's vision for his everything app may be tied closely to his ambitions on AI.

Photo illustration of Elon Musk stylized as a comic book character

Illustration: Sarah Grillo/Axios. Photo: Patrick Pleul/Pool via Getty Images

Elon Musk

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

Codebook

Axios Codebook

The first U.S. national cyber director is returning to Paladin Capital Group as a strategic adviser, the venture capital firm first shared with Axios. 

The big picture: Chris Inglis stepped down from his White House position in February. His new gig at Paladin, a VC firm focused on cyber and advanced technologies, marks the first of what could be several private sector gigs for Inglis during what he's calling his "nominal retirement." 

Since leaving the government, Inglis — who spent nearly three decades at the National Security Agency — has also joined an advisory committee at the Cybersecurity and Infrastructure Security Agency, and he's looking at teaching part time at the U.S. Naval Academy and the U.S. Air Force Academy. 

Inglis told Axios he's also eyeing positions on a corporate board and roles tied to new technological research. 

What they're saying: "When I was at the White House, and as when I was at the National Security Agency, it was a singular focus and a somewhat unitary obligation," Inglis told Axios. "I got up in the morning, and I ran to that daylight — I did that all day, every day, sometimes seven days a week." 

"Now that I'm back in the private sector, I can spread my time across multiple things, and I intend to do that," he added.

The intrigue: Inglis was Paladin's managing director before taking the national cyber director gig in 2021. 

Now, he's returned as a member of Paladin's strategic advisory group, which is made up of former government officials, former lawmakers and industry titans who help Paladin's investment team find new deals and fine-tune its investment strategy. 

"It's a real pleasure to come back, especially at this moment in time, where I am all the more convinced that what they do lies at the intersection of the various threads of how we're going to actually chart and deliver our cyber future," Inglis said.

Details: Members of Paladin's advisory group meet at least quarterly, Inglis said, but advisers are also in conversations throughout the week with Paladin's team to weigh in on broad strategy questions about various topics, like the realistic use cases for AI and what we know about quantum computing.

Other members of the group include former Rep. Jim Langevin (D-R.I.), a leading cyber policymaker until he left Congress last year, and Ciaran Martin, former CEO of the U.K.'s National Cyber Security Centre. 

Between the lines: Much of Inglis' retirement plans touch on the same goals he's had throughout his government career: bridging the gap between the public and private sector.

One of the last projects Inglis worked on — the Biden administration's national cybersecurity strategy — leaned hard into encouraging public-private partnerships and technological innovation.

During his two-year stint at the White House, Inglis' office regularly hosted forums with the private sector on a variety of topics, such as health care cybersecurity and electric vehicle security.

"I like to describe the portfolio that I'm taking on as a horizontal portfolio," Inglis said. "Not that I'll be prone to lying on the sofa somewhere, but that [it's] broader more than it is deep and sharp."

Yes, but: Just because Inglis holds an advisory position in the public sector, don't expect him to be pulling too much weight in public debates or policymaking. 

In his private sector work, Inglis said he's now both "legal and honor bound to not make use of any prior access to advantage any company that I might be associated with." 

But Inglis noted that he's still pushing for Kemba Walden, his former principal deputy and the current acting national cyber director, to get his old White House job.

Sign up for Axios’ cybersecurity newsletter Codebook here

Exclusive: First national cyber director eyes life after the White House

Chris Inglis was the first-ever U.S. national cyber director.

Photo illustration of Chris Inglis set among graphic lines and shapes

Photo illustration: Annelise Capossela/Axios; Photo: Executive Office of the President of the United States

Cybersecurity

Microsoft used its Build developer conference on Tuesday to announcing it is bringing an AI-assisted "copilot" directly into its Windows operating system.

The big picture: Microsoft has already announced plans to put OpenAI's technology into nearly every major product in its portfolio — including its Bing search engine, Edge web browser, and Office apps such as Word, Excel and Powerpoint. It also offers a number of cloud-based AI services through Azure.

"I think over the coming years, this will become an expectation for how all software works," CTO Kevin Scott said in a statement. 

Details: The Windows version of the copilot will help users change settings and access other operating system features as well as put the Bing copilot in its own panel, which users can choose to keep in a persistent side panel so it is always available.

Microsoft said it will begin making a preview of Windows Copilot available, starting in June.

Microsoft also used the event to announce:

It is adopting the same plug-in system for Bing as OpenAI is using for ChatGPT, making it easier for developers to work with the AI-powered search chatbot. Microsoft also announced new partners for the Bing Chatbot, including Instacart, Kayak, Klarna, Redfin and Zillow.

Azure will offer a new service that uses AI to help moderate comments on social media. Microsoft has already been using the system with Bing and GitHub.

Microsoft adds an AI copilot to Windows

The new feature will let users tell a chatbot to make things happen on their own computers.

A screenshot of the new Windows Copilot. Image: Microsoft

Microsoft

Automation and AI

Pro Rata

Axios Pro Rata

Meta has agreed to sell Giphy, a platform of sharable animated images and microvideos, to Shutterstock for around $53 million in cash.

Why it matters: This is the first time Meta has been forced by antitrust regulators to sell an asset.

Backstory: Meta, then still known as Facebook, paid around $400 million to buy Giphy in 2020. At the time we suggested the deal might run into antitrust scrutiny, which it ultimately did in the U.K.

Shutterstock's deal is expected to close next month, and Meta entered into an API agreement so that Giphy's content can continue to appear on its platform.

The bottom line: Shutterstock got a three-alarm fire sale price, both due to the regulatory mandate and the fact that Giphy's business has been in prolonged limbo while the situation played itself out.  

Meta will sell Giphy to Shutterstock, after antitrust ruling

It's the first time Meta has been forced to sell an asset.

Illustration of Meta’s logo wrapped around a gavel.

Facebook

Media

Amazon on Tuesday debuted a higher-end model of its Fire tablet line as it looks to move beyond its niche in the ultra-low end of the market.

Why it matters: Amazon is the No. 2 player in the U.S. tablet market, but most of its sales have come in the sub-$100 segment.

Details: Amazon's $229 Fire Max 11 is said to be 50% faster than Amazon's current fastest tablet.

It features an aluminum casing, an 8-core MediaTek processor and a 2000-by-1200 pixel, 11-inch display and offers an optional stylus and magnetically attaching keyboard case.

Amazon is now taking pre-orders, with devices shipping next month.

The new tablet puts Amazon in closer competition with Apple's iPad line, which starts at $329.

Between the lines: Although Amazon's tablet business has largely focused at the low end, devices VP Kevin Keith says that more people have been going for its bigger-screen models in recent years, with sales of its 10-inch model doubling over the past couple of years.

Amazon has also expanded its line of Kindle e-readers in recent months  with the addition of the larger-screen Kindle Scribe, which also supports handwriting via a stylus.

The Scribe is getting the latest in a series of free software updates, Keith said, noting that sales and customer feedback for the device have been great and that the Kindle business overall "is continuing to grow." 

Amazon eyes iPad turf with higher-end Fire tablet

The $229 Fire Max 11 arrives as Amazon has seen sales of larger-screen models rise.

A picture of Amazon's Fire 11 Max tablet, with keyboard case attached, on a kitchen table

Amazon

In adding generative AI tools to Photoshop, Adobe isn't advancing the state of the art in terms of deepfakes — but it is putting the ability to make convincing fakes into far more hands.

Why it matters: Concerns are running high that the technology to alter images in deceptive ways is advancing far faster than the ability of humans or machines to detect such fakes.

On Monday, for example, a fake image of the Pentagon — showing an explosion that never took place — was shared on Twitter, reportedly even causing a brief financial market dip before it was clearly shown to be fake.

The fake image gained extra attention because it came from a "verified" account that had Bloomberg in the name, falsely suggesting the image came from Bloomberg News.

Driving the news: Adobe announced Tuesday it is bringing generative AI into Photoshop with a new "generative fill" tool that can be used to add or remove objects, change backgrounds and more. Such changes can range from subtle to dramatic and have a wide range of uses, including expanding creativity and saving time for professional artists.

Users can prompt the AI tool by typing in a different kind of background they wish to see, or telling it to remove unwanted objects or add elements not present in the original image.

The new tool can also be used to extend an image beyond its boundaries, with generative AI helping fill in the wider canvas, using what's already in the image to extrapolate new "uncropped" content. 

How it works: In a demo, Adobe showed Axios how the new tool could be used to change a photo of a corgi on a walk to include a puddle-covered sidewalk, or to show the dog chasing bubbles. 

In another, the software took directions to change a closeup of a single crocus into a field of the flowers in front of a snowy mountain backdrop.

Each generative AI element is added as a new layer, and the changes can be reversed later as desired.

Adobe's new Photoshop tools make fakery even easier

The photo editing tool's AI enhancements will spread the power to create — and to deceive.

Wednesday's technology stories