Microsoft is scaling back or delaying data centre developments in several countries, including Indonesia, the UK, Australia, and in certain US states, as it reassesses strategy.

According to individuals familiar with the matter, ongoing talks and planned builds have been paused in North Dakota, Illinois, Wisconsin, the UK midlands and Jakarta, Indonesia. The pullback comes amid questions about whether expected demand for AI services can support the pace and cost of Microsoft’s global data centre expansion.

Microsoft has acknowledged changing its strategy but declined to provide details about specific projects. “We plan our data centre capacity needs years in advance to ensure we have sufficient infrastructure in the right places,” a Microsoft spokesperson said. “As AI demand continues to grow, and our data centre presence continues to expand, the changes we have made demonstrates the flexibility of our strategy.”

Some of the shelved plans include a site near Chicago, and a proposed lease near Cambridge in the UK for a facility to host Nvidia hardware. Microsoft has also paused work at a site in Mount Pleasant, Wisconsin, where development has already cost US$262 million, according to documents reviewed by Bloomberg.

In Jakarta, parts of a data centre campus have been placed on hold. Elsewhere, Microsoft has walked away from a proposal to acquire more capacity from cloud infrastructure company CoreWeave. CoreWeave’s CEO Michael Intrator confirmed the decision, but did not specify which locations were affected.

In other cases, negotiations have slowed rather than stopped. At a server farm in North Dakota originally earmarked for Microsoft, discussions stalled until an exclusivity clause lapsed. Applied Digital, the data centre operator, has since found other tenants and secured funding to proceed with development.

At Ada Infrastructure’s Docklands site in London, Microsoft was in talks for about leasing 210-megawatt of capacity, but has is holding off on committing. The site is now being shown to other potential tenants, according to sources familiar with the matter.

Microsoft says it remains committed to key projects, which include a US$3.3 billion facility in Wisconsin and the launch of the Indonesia Central cloud region in mid-2025. It has maintained that it will spend roughly US$80 billion on data centre buildouts in its current fiscal year but signalled a shift in its next fiscal year toward equipping existing sites rather than construction of new data centres.

While Microsoft is re-evaluating, other firms are pressing on with large-scale infrastructure. OpenAI, Oracle, and SoftBank have announced joint venture Stargate, which aims to invest up to US$500 billion in AI infrastructure in the US. Stargate’s first phase includes a US$100 billion deployment in Texas, intended to support large-scale AI development.

The contrast in strategy between competing hyperscalers has drawn attention from investors and analysts. TD Cowen reported that Microsoft has abandoned projects amounting to two gigawatts of electricity capacity across the US and Europe. The firm suggested this may indicate a mismatch between expected demand and Microsoft’s existing capacity. Analysts also speculated that OpenAI may be shifting workloads from Microsoft to Oracle.

The change in infrastructure strategy is also being influenced by developments in the technology. Chinese AI firm DeepSeek claims it can deliver competitive AI performance using fewer resources, raising the possibility that future AI systems may require less computing power than originally anticipated.

At the same time, Microsoft’s adjustments may reflect external constraints. In cities like Dublin and Amsterdam, data centre growth has been met with tighter regulation due to concerns over electricity consumption and environmental sustainability. Dublin has limited new grid connections for data centres, while Amsterdam previously paused all new development to address strain on local resources.

Industry observers say hyperscalers are increasingly shifting focus to projects that can deliver results more quickly and cost-effectively. “You may have initially thought one data centre project would be the fastest speed to market, but then you realise that the labour, supply chain and power delivery wasn’t as quick as you thought,” said Ed Socia, director at datacentreHawk. “Then you would have to shift in the short term to focus on other markets.”

CoreWeave’s Michael Intrator said that Microsoft’s retreat appears to be specific to its situation. “It’s pretty localised, and their relationship with OpenAI has just changed,” he said.

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Hitachi Energy has completed a migration to Windows 11 on more than 40,000 desktops in 12 countries. The company used ManagementStudio to help it complete the task, which it began in November 2023 starting with a 500-device pilot. The full migration process began in March 2024, and was scheduled to end in October 2024.

ManagementStudio assessed the company’s assets to be 45,335 devices, with 43,568 devices determined as suitable for upgrade. Out of the 3,034 applications in use, 2,330 were deemed to be compatible with Windows 11 (76%).

Eventually, around 40,600 devices made the upgrade to Windows 11 (89%), and the remaining ineligible devices had to settle for an upgrade to the latest version of Windows 10.

ManagementStudio was also used by Hitachi Energy to support the company’s divestment from ABB in June 2020. The platform helped IT staff manage the exit from the Transition Service Agreements (TSA) with ABB inside three years, ending June 2023. The early exit helped the company avoid additional costs that would have been incurred had the transition been delayed.

Marco Rena, Global Head of End User Computing at Hitachi Energy, said the goal of Windows 11 migration was to “upgrade [Hitachi Energy’s] estate with minimal manual intervention and [avoid] the need to individually test every application. The scope was to undergo a readiness migration to verify application and hardware compatibility. This was achieved using ManagementStudio and integrating it with Intune, Active Directory, Flexera Service and ServiceNow. And, we also integrated ManagementStudio with PowerBI to generate […] reports.”

The timescale of the migration was reportedly faster than average. Hitachi Energy managed to upgrade nearly 10,000 devices in May 2024 alone, using the ManagementStudio platform to automate the migration process, following predefined criteria.

Reasons to and method of upgrade to Windows 11

Rena explained how Hitachi Energy implemented its Windows 11 upgrade using a ‘by exception’ approach. “By requesting pilot users from all areas of the business, Hitachi Energy was able to run the new operating system for a few weeks and catch any application issues that occurred. Once the pilot device was approved, its application portfolio could be considered compatible and used as the basis for confidently selecting more desktops throughout the business.”

The pilot helped ensure a reliable, smooth migration by resolving any issues early on, before the upgrade was rolled out on a larger scale.

As Windows 10 approaches its end-of-support in the Autumn this year, moving PC fleets to supported and secure operating systems will help lower the instances of cybersecurity issues. The March ‘Patch Tuesday’ update from Microsoft contained security updates to address 57 known flaws, including six actively-exploited zero-day vulnerabilities, and six vulnerabilities that were marked as ‘Critical’, each of which was a remote code execution vulnerability.

Given the ubiquity of Microsoft operating systems on enterprise desktops, organisations should be considering their options ahead of the cut-off in a few months. If more time is required for the upgrade to Windows 11, users can pay on a per-seat basis for a further 12 months support from Microsoft.

(Image source: “Old banger” by 70023venus2009 is licensed under CC BY-ND 2.0.)

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According to a person familiar with the matter, Microsoft is working on in-house AI models that could compete with those from industry leaders like its partner, OpenAI.
Microsoft has tested a family of models it calls MAI, which reportedly produced results on a par with state-of-the-art AI models from OpenAI and Anthropic. Redmond is looking at how these models might support products like its Copilot-branded AI assistants, which handle user queries and provide suggestions for tasks like document editing and conference calls.

In addition to MAI, Microsoft is working on reasoning models designed to tackle complex problems and simulate human-like decision-making. OpenAI, Anthropic, and Alphabet are also developing similar models.

Microsoft incorporated OpenAI’s o1 reasoning model into its Copilot products last month. A Microsoft spokesperson stated that the company continues to use a mix of models from OpenAI, Microsoft AI, and open-source sources to support its products.

Reducing dependence on OpenAI

The development of MAI models reflects Microsoft’s broader effort to reduce reliance on OpenAI. It has invested around $13 billion in OpenAI since forming a partnership in 2019, which gave OpenAI access to Microsoft’s Azure cloud platform to power its AI research and development. The partnership between the two companies was renegotiated in January, allowing OpenAI to use cloud services from competitors unless Microsoft claims the business for itself. The updated agreement runs until 2030.

Amy Hood, Microsoft’s Chief Financial Officer, recently spoke about the partnership at a Morgan Stanley conference. “We’re both successful when each of us are successful,” Hood said. “So as you go through that process, I do think everybody’s planning for what happens for a decade, or two decades. And that’s important for both of us to do.”

OpenAI’s role in Microsoft’s products

>Since the partnership began, OpenAI’s models have been integrated into Microsoft products, including Office, GitHub Copilot, and Bing Search. Microsoft’s AI infrastructure is primarily hosted on Azure, and the company also collaborates with OpenAI on AI supercomputing and large language models (LLMs). “We feel great about having leading models from OpenAI, we’re still incredibly proud of that,” Hood previously said. “But we also have other models, including ones we build, to make sure that there’s choice.”

Expanding AI model options

Alongside OpenAI’s models, Microsoft has developed a set of smaller in-house models called Phi, and tested AI models from other providers, including Anthropic, DeepSeek, Meta, and Elon Musk’s xAI, to evaluate their performance in the Copilot framework.

Anthropic’s Claude is known for its focus on safety and alignment with human values. The company has secured significant investment, raising its valuation to $61.5 billion. Google’s Gemini, developed by DeepMind, is a multimodal model capable of processing text, images, audio, and video simultaneously. Google has positioned it as a competitor to OpenAI’s GPT-4, with multiple versions like Gemini Ultra, Pro, and Nano tailored to different use cases.

Meta’s LLaMA series is an open-source model designed to foster transparency and accessibility for developers. Meta’s focus has been on creating conversational AI with natural interactions. xAI’s Grok, integrated into the X platform, focuses on real-time information and conversational AI. It is positioned as a direct competitor to ChatGPT and other conversational models.

Microsoft’s decision to develop its own models reflects the growing demand for diversified AI capabilities. By expanding its model portfolio, the company aims to offer more flexibility and reduce its dependence on a single partner. The development of MAI models positions Microsoft alongside other major players in the AI market, increasing its ability to respond to shifting industry demands and technological advances.

A balanced approach to AI development

Microsoft’s strategy to combine in-house models with external solutions highlights its effort to balance independence with strategic partnerships. OpenAI remains an important partner, but the development of MAI models positions Microsoft to adapt to shifts in the AI market and meet increasing demand for more versatile AI solutions.

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Microsoft recently unveiled its Windows Resiliency Initiative, aiming to step up security, boost reliability, and keep system integrity solid. Essentially, it’s about avoiding mishaps like the CrowdStrike incident earlier this year, while giving users and apps more flexibility without needing admin privileges. Plus, it’s rolling out tighter controls for managing risky apps and drivers, and adding new ways to safeguard personal data through encryption.

At its core, this initiative introduces significant updates to Windows to make life easier for customers. Think faster recovery for Windows-based devices if something like the CrowdStrike scenario happens again. There are also platform improvements that give IT teams more say in what apps and drivers can run, along with moving antivirus processing outside of the kernel space—a smart move for system security.

One of the headline features is Quick Machine Recovery. It’s a new tool designed to let IT admins fix machines remotely, even when hardware is having trouble booting up. The feature builds on enhancements to the Windows Recovery Environment (Windows RE).

“In a future event, hopefully that never happens, we could push out [an update] from Windows Update to this Recovery Environment that says delete this file for everyone,” explained David Weston, Microsoft’s vice president of enterprise and OS security, during an interview with The Verge. It gives Microsoft the ability to quickly address widespread issues by deploying targeted fixes directly to machines, even when traditional methods don’t work.

Since the CrowdStrike hiccup, Weston’s been in constant talks with customers. Clients’ message? “We need better recovery tools, smarter deployment practices from vendors, and a stronger, more resilient Windows.” Weston put it succinctly: “Every one of them is saying I owe my board a response on how this doesn’t happen again.”

Microsoft has responded by tightening the reins on security vendors in its Microsoft Virus Initiative (MVI). Now, vendors need to follow stricter protocols, including better testing, safer update rollouts, and robust monitoring and recovery processes.

A big part of the plan involves shifting antivirus processing outside of the kernel, as CrowdStrike software operated at the kernel level, and therefore had deep system access—enough to trigger those infamous Blue Screens of Death. Moving AV outside the kernel should help prevent similar issues.

“We’re developing a framework that [security vendors] want to use and they’re incentivised to use,” Weston said, hinting at Microsoft’s ongoing work to create a solution that balances technical challenges with vendor needs. A preview of the new framework is set to roll out to security partners in July 2025.

The stakes are high, but Microsoft is confident. “We sort of control physics here,” Weston said. “We can change the memory manager or the driver framework, and we don’t have to abide by the rules that a third-party developer would. That’s why I’m bullish on our ability to execute here.”

Microsoft isn’t stopping there. Coming soon to Windows 11 is Administrator Protection, a handy feature for users who want the security of a standard account but need admin rights for specific tasks. It works by temporarily granting admin privileges for a task once a user authenticates with Windows Hello. When the task is done, the privileges are automatically revoked. “Windows creates a temporary isolated admin token to get the job done,” Weston explained. “This temporary token is immediately destroyed once the task is complete, ensuring that admin privileges do not persist.”

And let’s not forget Microsoft’s ongoing commitment to memory-safe programming languages like Rust. Following guidance from the White House, Microsoft is gradually replacing parts of Windows written in C++ with Rust, further improving the OS’s security foundation.

In short, Microsoft is doubling down on security, resilience, and smarter tools for its customers. With initiatives like these, they’re tackling the challenges head-on and building a safer, more reliable Windows for everyone.

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Last year, the European Commission took a significant step by launching a comprehensive investigation into Microsoft’s practice of integrating its Teams application with the Microsoft 365 and Office 365 suites, targeting the business sector specifically. Microsoft, recognizing the importance of this inquiry, committed to fully cooperating with the Commission and expressed its determination to find solutions that would mitigate any regulatory concerns.

In a notable development reported by Reuters, Microsoft announced its decision to offer its Teams application globally—a chat and video conferencing tool—separately from its Office suite. This strategic move, coming six months after these products were decoupled in Europe, was designed to preemptively address potential EU antitrust penalties.

The strategic response from Microsoft to offer Teams separately

The investigation by the European Commission was triggered by a 2020 complaint from Slack, a Salesforce-owned workspace messaging application. Since its integration into Office 365 in 2017 at no extra cost, and its replacement of Skype for Business, Teams experienced a rapid rise in popularity. This was particularly true for its video conferencing features during the pandemic. Competitors have contended that this bundling strategy unfairly advantages Microsoft. In response to these concerns, Microsoft initiated the separate sale of these products in the EU and Switzerland on October 1 of the preceding year.

In detailing the company’s revised strategy through a blog post, Nanna-Louise Linde, Vice President for European Government Affairs at Microsoft, introduced a new pricing model for unbundled products. This adjustment, offering a reduction of US$2.17 monthly or US$26.02 annually, aims at serving the core enterprise clientele in the EEA and Switzerland more effectively.

Furthermore, Linde clarified that Teams would be accessible as a standalone offering, with a pricing set at US$5.42 per month or US$65.04 annually, catering to new enterprise clients. Those who previously integrated Teams into their suite have the flexibility to maintain their existing setup or transition to a Teams-excluded package.

Reiterating the company’s dedication to transparency and customer satisfaction, a Microsoft spokesperson conveyed the decision to extend the unbundling initiative worldwide. This adaptation, inspired by the European Commission’s feedback, is intended to offer multinational corporations enhanced flexibility in their licensing options across various regions.

Reflecting on Microsoft’s historical adjustments in response to antitrust challenges, particularly the lawsuit from the Justice Department in 1998, analysts like Rishi Jaluria from RBC Capital Markets point out that the current separation of Teams from Office marks a significant, though not unprecedented, shift in strategy. Despite these changes, the integration of Teams into business operations suggests that the immediate impact on the market might be limited.

Data from Sensor Tower indicates a consistent user base for the Teams mobile app, with monthly active users remaining steady at around 19 million in both the fourth quarter of 2023 and the first quarter of 2024. This stability suggests that the unbundling in Europe has not adversely affected the platform’s popularity.

Looking ahead: Licensing flexibility and pricing strategies

With the introduction of new commercial Microsoft 365 and Office 365 suites, excluding Teams for areas beyond the EEA and Switzerland, Microsoft is also presenting a standalone option for enterprise customers. Starting April 1, these offerings allow customers to continue their current licensing arrangements or explore the new, unbundled options. The pricing structure for Office suites without Teams ranges from US$7.75 to US$54.75, with the standalone Teams option priced at US$5.25, although variations may occur based on country and currency.

Despite proactive measures, Microsoft could still encounter EU antitrust challenges, with concerns arising over pricing strategies and the interoperability of competing messaging services with Office Web Applications. Analysts like Gil Luria from D.A. Davidson suggest that Microsoft’s forward-thinking approach may somewhat mitigate future regulatory scrutiny. Given Microsoft’s history of incurring 2.2 billion euros in EU antitrust fines over the last decade for similar bundling practices, the company is keenly aware of the stakes involved.

J.P. Gownder, a Forrester VP and Principal Analyst, regards the unbundling of Teams as a strategic maneuver by Microsoft in anticipation of regulatory actions from the EU and possibly other regions. This strategy not only levels the competitive landscape by providing a choice to consumers but also simplifies the licensing landscape for multinational companies, which might face complexities under varying regional agreements.

Gownder also anticipates that pricing will emerge as a critical discussion point, with Microsoft potentially advocating for higher individual pricing for components formerly bundled, citing increased operational costs. This move could necessitate substantial marketing efforts to clearly communicate the value and structure of the unbundled offerings.

While Gownder foresees regulatory bodies potentially viewing any price increases critically, interpreting them as punitive measures against EU companies, he believes that the essential purchasing behaviors of enterprises, particularly outside the EU, are unlikely to be significantly altered. They may continue to favor bundled offerings, which are now enhanced by the addition of an unbundled option.

Gownder further speculates on the potential savings for organizations currently using Zoom, which might find financial benefits in dropping the Teams component for an unbundled SKU, though the exact financial implications will depend on the forthcoming pricing details. Zoom and Slack are poised to capitalize on this market shift, though the fundamental dynamics of the market are expected to remain largely unchanged.

The competitive landscape and potential beneficiaries

This strategic pivot could be an advantage for Zoom, which has faced challenges in competing with Microsoft’s comprehensive suite of communication tools. Slack, having been integrated into Salesforce and having previously lodged an antitrust complaint with the European Commission in 2020, has been particularly vocal about the need for such a separation, viewing the bundling of Teams with Office as competitively unfair.

Despite occasional preferences for Zoom, the integrated offering of Teams with Office 365 has consistently attracted customers. This trend was highlighted by CNBC, which pointed out Zoom’s slowing revenue growth from explosive rates in 2020 and 2021 to single digits in recent quarters. Mizuho analysts suggest that Teams’ unbundling could help mitigate some of Zoom’s challenges in retaining enterprise customers.

Over the past year, Microsoft has reported nearly US$53 billion in revenue from its Office suite, including Teams, marking a 14% increase from 2022. The platform’s impact is undeniable, with Teams now boasting over 320 million active users monthly.

Salesforce’s acquisition of Slack in 2021 for US$27 billion, the company’s largest purchase to date, underscored the high stakes in the communication and collaboration tool market. Slack’s 2020 complaint to the European Commission against Microsoft’s practices highlighted ongoing competitive tensions, reminiscent of the ‘browser wars’ of the 1990s.

However, Slack’s stance towards Teams was more measured in 2019, with then-CEO Stewart Butterfield acknowledging the preference of many top customers for Slack over Teams, despite their use of Microsoft’s Office 365 suite.

Last year’s reports that Microsoft would allow companies to choose whether to include Teams in their productivity software subscriptions signaled a strategic shift intended to preclude further EU competition investigations. Subsequently, Microsoft began offering separate subscriptions for Teams and other productivity software across 31 European countries, aligning with the European Commission’s investigation into the bundling practices.

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The ongoing legal battle between Epic Games and Apple, which has captivated the tech world for some time, is escalating. The confrontation has drawn in additional heavyweight players from the tech industry, including Meta, Microsoft, X, and Match, all uniting with Epic Games. These companies are rallying against Apple, accusing it of failing to comply with a court-ordered injunction that pertains to payment processes within its highly profitable App Store.

The origin of the conflict between Epic Games and Apple

In 2020, Epic Games initiated a lawsuit against Apple, claiming the tech giant was operating a monopoly that suppressed competition. This was primarily through its restriction of third-party apps and game marketplaces on iOS devices. However, in 2021, Judge Yvonne Gonzalez Rogers of the U.S. District Court concluded that Apple did not have a monopoly in mobile gaming. Nonetheless, she found that Apple’s prohibition of third-party app marketplaces and its imposition of a 30% commission within its own marketplace were unlawful.

Furthermore, Judge Rogers determined that Apple’s actions breached California’s state laws regarding unfair competition. This was after Apple prevented app developers from promoting alternative payment methods for their services. The Supreme Court, in January, declined to entertain Apple’s appeal, mandating the company to facilitate alternative in-app payment methods.

Earlier this month, the legal skirmish intensified when Epic Games petitioned a federal judge to find Apple in contempt of court. This request was based on allegations that Apple had not adhered to a court mandate that demanded the inclusion of external payment option links within its App Store, as revealed in recent court filings. This is the latest development in the protracted legal conflict between the two firms.

Epic Games has formally requested that Judge Rogers find Apple in contempt of court and compel the company to fully respect the 2021 judgment, as stated in court documents filed in Oakland, California. According to Epic, Apple has rendered alternative payment options practically nonviable by instituting new guidelines and imposing a 27% fee on developers for certain purchases.

Apple has introduced new policy language aimed at deterring users from utilizing purchase options outside the iOS ecosystem, as per Epic Games’ allegations. Additionally, Apple has set forth new regulations that bar developers from creating external links that direct to alternative payment methods.

On January 16, Apple submitted a compliance declaration, asserting that its regulation of external links was a measure to safeguard user privacy and security, and to uphold the integrity of Apple’s ecosystem. As of now, Apple has yet to issue a response to these allegations.

The coalition of tech companies, creators of some of the App Store’s most popular applications, contends that Apple’s actions are a flagrant breach of the September 2021 injunction. This injunction aimed to facilitate consumer access to more economical digital content purchasing options, yet Apple has made this increasingly challenging.

Apple’s response and compliance efforts

While Apple has refrained from directly addressing these accusations, which were detailed in a legal filing with the federal court in Oakland, California, it referenced its January 16 announcement. In this statement, Apple claimed full compliance with the injunction, stating its intent to protect consumers and the integrity of its ecosystem, while also ensuring developers contribute their fair share.

Epic’s 2020 lawsuit against Apple argued that the latter’s App Store policies, which mandate that consumers obtain apps exclusively through the App Store and impose up to 30% commissions on developer sales, were anticompetitive. The injunction sought to allow developers the freedom to direct consumers to alternative payment options through links and buttons.

Recently, Reuters has reported that Epic has intensified its efforts, demanding that Apple be held in contempt of court for instituting new rules and a 27% fee on developers, which have essentially nullified the effectiveness of these links.

In a recent legal document, the coalition of technology firms argued that Apple’s practices effectively sustain the anti-steering provisions previously deemed illegal by the court. This, they claim, upholds Apple’s “exorbitant” commission fees, to the detriment of both consumers and developers.

“Apple’s restrictions on where and how developers can communicate with their users about their options for purchasing in-app content create significant barriers to competition and artificially inflate prices,” the document states.

In January, the Supreme Court opted not to review Apple’s appeal against the injunction, nor did it consider Epic’s challenge of the lower court’s verdict that Apple’s policies did not contravene federal antitrust laws.

Apple has been given until April 3 to formally reply to Epic’s recent filing. The ongoing legal battle underscores the complex dynamics at play within the tech industry, highlighting significant debates over market competition, consumer rights, and the future of digital marketplaces. Apple, headquartered in Cupertino, California, and Epic Games, based in Cary, North Carolina, remain at the forefront of this legal confrontation.

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Legal challenges, and market dynamics presents a fascinating narrative that shapes the fortunes of leading corporations. Among these, Nvidia, a titan in the field of AI, has recently been at the center of a noteworthy legal dispute while simultaneously experiencing an unprecedented surge in its market valuation.

This complex scenario provides a rich case study for examining the broader implications for the tech industry, market competition, and the legal frameworks that govern intellectual property rights.

Nvidia found itself embroiled in controversy when three authors—Brian Keene, Abdi Nazemian, and Stewart O’Nan—levied accusations against the company for allegedly using their copyrighted works without permission. These works were purportedly incorporated into a substantial dataset of approximately 196,640 books to advance the capabilities of Nvidia’s NeMo AI platform, a sophisticated system aimed at mimicking human language.

The fallout from these allegations led to the dataset’s removal in October, underscoring the legal complexities surrounding copyright infringement in the digital age.

A meteoric rise in market valuation

Despite facing this legal hurdle, Nvidia has witnessed a surge in its market valuation, underscoring the intense investor interest in AI technologies. This rise is indicative of the broader trends in the semiconductor industry, where demand for AI chips, particularly those powering popular applications such as ChatGPT, has skyrocketed.

Within a span of nine months, Nvidia’s market value soared from US$1 trillion to over US$2 trillion, surpassing industry giants like Amazon.com, Google’s parent company Alphabet, and Saudi Aramco in the process. This meteoric rise has positioned Nvidia as a formidable contender in the race to become the world’s second-most valuable company, trailing closely behind Apple and Microsoft.

As reported by Reuters, Nvidia’s current market capitalization, standing at approximately US$2.38 trillion, exemplifies the fierce competition at the apex of the global corporate sector. This competitive landscape is not only defined by market valuations but also by the continuous drive for innovation and the development of high-quality products that resonate with consumers and enterprises alike. Apple’s journey to becoming the world’s most valuable company in 2011, bolstered by its array of successful products and services, highlights the critical role of brand loyalty and product innovation in achieving market dominance.

On the other hand, Microsoft’s ascendance in 2024 to claim the title of the most valuable company globally emphasizes the significance of strategic investments in technology, particularly AI. With over 70% of computers worldwide running on Windows, according to Statcounter, Microsoft’s influence extends beyond its operating system. The company’s diversified portfolio, including the Office Suite, Azure cloud platform, Xbox consoles, and Surface devices, alongside a substantial investment in OpenAI, demonstrates its commitment to shaping the future of technology.

Nvidia’s stronghold over the high-end AI chip market, commanding 80% of the sector, combined with its significant stock performance, has propelled Wall Street to new heights this year. This success story is a testament to the investor enthusiasm for AI technologies, positioning Nvidia and Meta Platforms as leaders in a market increasingly focused on digital innovation.

Industry experts, such as Richard Meckler of Cherry Lane Investments, attribute Nvidia’s robust market performance to the solid fundamentals underpinning its business model and the speculative support from investors. This blend of strong business practices and market speculation has facilitated Nvidia’s steady climb in stock value throughout 2024, even as it faces legal challenges and stiff competition from tech giants like Apple and Microsoft.

Apple’s recent challenges with iPhone sales and the shift in market capitalization rankings underscore the dynamic nature of the tech industry, where companies continually vie for leadership positions. Meanwhile, Nvidia’s competitive forward price-to-earnings ratio and the insights from David Wagner of Aptus Capital Advisors suggest that Nvidia represents an attractively priced stock within the AI narrative, with the potential for significant growth in the coming years.

Facing the peaks: The Nvidia market cap challenges

However, as Nvidia’s stock approaches what some analysts believe to be its peak, the challenges of sustaining rapid growth in the face of increasing market capitalization become apparent. The speculative nature of stock valuations, coupled with the potential for innovation and market expansion, presents a nuanced picture of Nvidia’s future prospects. Should Nvidia continue to surpass analyst expectations, it could maintain or even enhance its market position, reflecting the intricate balance between innovation, legal challenges, and market dynamics.

Nvidia’s recent experiences offer valuable insights into the challenges and opportunities faced by leading tech companies today. As legal disputes unfold and market valuations fluctuate, the broader implications for the tech industry, intellectual property rights, and the ongoing pursuit of innovation remain subjects of keen interest. Nvidia’s journey through these complex landscapes underscores the dynamic interplay between legal considerations, market competition, and the relentless drive for technological advancement.

As the industry moves forward, the lessons learned from Nvidia’s story will undoubtedly influence future discussions on copyright law, market dynamics, and the role of AI in shaping the digital future.

The post How Nvidia navigates through legal complexities and market cap dominance appeared first on TechWire Asia.

Remember the copyright infringement lawsuit The New York Times filed against OpenAI and Microsoft? The Times has accused the companies of using millions of its articles to train AI technologies, which now rival the newspaper as a source of trustworthy information.

But how can one use OpenAI’s AI technology to their own advantage while simultaneously fighting against OpenAI over how its AI technology is being used?

The New York Times Vs. OpenAI

In a significant development, OpenAI, whose AI technology, ChatGPT, is used by The Times to generate content, was reported by Reuters as having requested a federal judge to dismiss parts of the lawsuit. Central to OpenAI’s defense is the allegation that The Times “hacked” its chatbot and other AI systems, producing misleading evidence. This legal move by OpenAI, filed in a Manhattan federal court, claims that The Times manipulated its technology to mirror its content and violated OpenAI’s terms of use through deceptive prompts.

OpenAI further asserts that The Times took advantage of a flaw in the AI system, which is under active remediation, to feed its articles directly into the chatbot. This resulted in the chatbot regurgitating exact passages, a use case that OpenAI emphasizes is atypical, pointing to a Times article from April 2023 about real-world AI applications for context.

OpenAI’s criticism of The Times is sharp, highlighting that the newspaper’s complaint does not meet its own high journalistic standards. OpenAI’s contention is that the case will reveal that The Times paid someone to manipulate OpenAI’s products deliberately.

Got a headache yet?

The Times‘ lead counsel, Ian Crosby, addressed these accusations in a statement to The Verge. He challenged the hacking allegation, clarifying that the newspaper was simply employing OpenAI’s products to gather evidence of potential copyright infringement. Crosby noted that OpenAI has not contested the claim that it copied The Times’ work without authorization.

OpenAI refrained from identifying the individual purportedly engaged by The Times to tamper with its systems, and stopped short of accusing the newspaper of breaking anti-hacking laws.

The New York Times fights back: defending its use of AI

In its legal strategy, OpenAI aims to dismiss some aspects of The Times’ copyright infringement claim, specifically those related to reproductions dating back more than three years before the lawsuit. OpenAI also wants to negate other accusations, including contributory infringement, failure to remove infringing content, and engaging in unfair competition through misappropriation. The lawsuit filed by The Times encompasses broader allegations, extending to trademark dilution, common law unfair competition, and vicarious copyright infringement.

The situation mirrors OpenAI’s previous legal challenge, where it managed to narrow down a lawsuit involving Sarah Silverman and other authors to a singular claim of direct copyright infringement. As legal battles against AI firms escalate, industry observers like Nilay Patel and Sarah Jeong from The Verge’s Decoder podcast discuss the ramifications of such lawsuits on the burgeoning AI industry.

The Times represents just one among a cohort of copyright owners, including authors, visual artists, and music publishers, challenging tech companies for purportedly misappropriating their creative works in AI training.

Tech companies, for their part, defend their AI systems’ use of copyrighted material as fair use, cautioning that these legal challenges might impede the progress of a potentially multitrillion-dollar industry.

As the legal landscape evolves, courts have yet to conclusively decide whether AI training qualifies as fair use under copyright law. Several infringement claims against generative AI systems have been dismissed, primarily due to insufficient proof that AI-generated content closely resembles copyrighted works.

Tumblr’s owner to collaborate with OpenAI?

In a separate but related development, a report from 404 Media has alleged that Automattic, the owner of Tumblr and WordPress.com, is engaging in advanced discussions with AI firms Midjourney and OpenAI. An anonymous source within Automattic hinted at imminent deals to harness user-generated content as training data for AI, following speculative chatter on Tumblr about a potential Midjourney collaboration that might open new revenue streams for the platform.

404 Media‘s report sheds light on Automattic’s forthcoming update, slated for 28^th of February, introducing a feature that lets users opt out of data sharing with third parties, including AI entities. This update comes amid revelations from internal communications about a comprehensive data extraction that inadvertently included non-public content, encompassing Tumblr’s public posts from 2014 to 2023. Questions linger about the handling and potential sharing of this extensive dataset with Midjourney and OpenAI.

In response to these claims, Automattic released a statement titled “Protecting User Choice.” Following the 404 Media report, this statement vaguely alludes to partnerships with unnamed AI companies. Automattic affirms its default stance of blocking major AI platform crawlers and its commitment to only sharing public content from WordPress.com and Tumblr with entities that adhere to opt-out preferences. The statement underscores Automattic’s collaboration with AI firms that align with community values, including user attribution, opt-out options, and overarching control.

The recent trend of companies forging agreements with AI technology developers for training data, traditionally sourced from publicly accessible online content, underscores a growing legal complexity. High-profile cases include Reddit’s reported US$60 million annual deal with Google and Shutterstock’s collaboration with OpenAI, using its extensive photo library.

But these arrangements have sparked considerable dissent within the creative community, particularly among artists and writers, who express concerns about their work being repurposed for AI training. This has led to a delicate balancing act for companies striving to satisfy their user base while exploring cutting-edge AI technologies, as evidenced by the mixed reactions within communities like DeviantArt.

Details surrounding any potential agreement between Automattic and the AI firms, including financial implications for Automattic, remain under wraps. Automattic, a veteran in web hosting with WordPress.com and WordPress VIP, has faced challenges in devising profitable strategies for Tumblr, which it acquired from Verizon in 2019. Last year, this led to an announcement about scaling back its ambitions for the site, reflecting the ongoing complexities of integrating social media platforms with emerging AI technologies.

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Cyberattacks by Russian hackers have intensified recently, targeting two major technology companies within the same month. Hewlett Packard Enterprise (HPE) disclosed a breach in its cloud-based email systems, perpetrated by the same Russian hacking group implicated in previous Microsoft email account intrusions.

In a securities filing, HPE revealed that the December 12, 2023 incident affected several email accounts in areas including cybersecurity, marketing, and various business sectors. Following the discovery of the breach, HPE engaged external cybersecurity experts to launch an investigation and response, successfully eradicating the malicious activity.

HPE became aware of the intrusion on January 12, as stated in their Securities and Exchange Commission filing. The company suspects the hackers are part of Cozy Bear, a unit of Russia’s SVR foreign intelligence service.

Cozy Bear: the notorious group behind the attacks

Microsoft, too, experienced a similar breach in its corporate network, reported last week. Originating in late November, this attack compromised accounts of senior executives and staff in cybersecurity and legal departments, with Cozy Bear believed to be responsible.

Cozy Bear is a sophisticated cyber-espionage group with links to Russia’s foreign intelligence service, known by various names like “Midnight Blizzard” and “APT29.” The group, noted for stealthy intelligence-gathering, primarily targets Western governments, IT service providers, and think tanks in the US and Europe. Cozy Bear’s notoriety increased after orchestrating the SolarWinds breach.

HPE’s investigation suggests that the hackers have been accessing and extracting data from certain mailboxes since May 2023. Adam R. Bauer, a spokesperson for HPE, declined to reveal the source of the breach notification. He confirmed that the affected mailboxes were running on Microsoft software. The company is still assessing the full extent of the breach, which appears not to have significantly impacted its operations or financial health. This incident follows a new US Securities and Exchange Commission rule requiring public companies to report breaches that could impact their business promptly.

Additionally, the HPE breach involved unauthorized access to a limited number of SharePoint files in June 2023. SharePoint, a Microsoft 365 suite component, encompasses email, word processing, and spreadsheet applications.

While HPE is unable to confirm a direct link between its breach and the one reported by Microsoft, the company continues its investigation. The seniority of the affected HPE employees and the full scope of accessed mailboxes remain under scrutiny.

In response to these incidents, US officials have pointed out that Cozy Bear used compromised software from US tech firm SolarWinds in 2020 to infiltrate various US government agencies. This led to an overhaul of the US government’s cybersecurity defenses. Since then, the group has continued targeting US and European government agencies, frequently exploiting software providers and demonstrating a particular aptitude for breaching cloud computing networks. The FBI has observed such tactics as early as 2018.

Regarding the December breach, HPE is evaluating its potential impact on the company’s financial status and operations.

Microsoft’s recent disclosure of a breach by Cozy Bear involved a small number of its corporate email accounts, including senior executives. The company’s response included immediate investigation and mitigation efforts. However, Microsoft’s revelation that the hackers employed a simple technique, known as password spraying, has led to increased scrutiny of its security practices. A senior US National Security Agency official expressed disappointment over Microsoft’s vulnerability to such attacks, emphasizing the need for large tech firms to be vigilant against state-backed hackers.

Microsoft has refrained from commenting on these developments. Additionally, the company was involved in an alleged Chinese hack last year, compromising the email accounts of top US officials, including the Commerce Secretary and the US Ambassador to China. This campaign originated with the breach of a Microsoft engineer’s corporate account.

Sweden is also targeted by Russian hackers

In a related development, Russian hackers are suspected of disrupting online services for several Swedish government agencies and retail stores, as reported by IT consultancy Tietoevry. The Swedish-Finnish company indicated that resolving the issue might take considerable time.

The Moscow Times reported that the attack affected Tietoevry’s data center in Sweden, impacting online transactions at the country’s largest cinema chain, department stores, and other retail outlets. Sweden’s central government service center, Statens Servicecenter, experienced disruptions to its human resources system, affecting public sector employees’ ability to submit overtime, sick leave, or vacation requests.

In a statement issued recently, Tietoevry suggested that the restoration process could extend over several days or weeks due to the incident’s complexity and the numerous customer-specific systems involved. Caroline Johansson Sjowall, spokesperson for Statens Servicecenter, reported that the attack affected “120 government agencies and more than 60,000 employees.”

Cybersecurity experts, including Tietoevry, suspect the involvement of Akira, a hacker group with Russian ties. The company has filed a police report regarding the attack and is assessing its financial implications. Currently, Tietoevry has not released any information regarding a ransom demand, which is typical in ransomware attacks where hackers encrypt or steal data and then demand payment for its decryption or to prevent its public release.

Civil Defense Minister Carl-Oskar Bohlin stressed the urgency of prioritizing cybersecurity across both public and private sectors. In a statement on X, formerly known as Twitter, Bohlin announced the government’s intention to convene a meeting with affected parties to thoroughly evaluate the incident and formulate a response strategy once the operational phase is concluded.

The Swedish Civil Contingencies Agency (MSB) underscored the significance of this attack as a critical alert. Margareta Palmqvist, head of information security at MSB, voiced concerns to the Swedish news agency TT about the country’s rapid digitalization outpacing its cybersecurity investments. She emphasized the importance of being proactive in cybersecurity measures, ensuring preparedness for such cyber threats.

This series of cyberattacks underscores the evolving landscape of digital threats, highlighting the critical need for robust cybersecurity measures in both the public and private sectors. The incidents involving HPE, Microsoft, and the Swedish government agencies reflect a growing trend of sophisticated cyber-espionage and ransomware attacks that target vital infrastructure and services.

As these threats evolve, the need for vigilance and investment in cybersecurity becomes increasingly crucial to protect sensitive data and maintain the integrity of critical systems worldwide.

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Here we go again – another round of layoffs is hitting the gaming industry. Microsoft just dropped the news that it’s cutting 1,900 jobs from its video game division, a decision that comes shortly after their massive US$69 billion acquisition of Activision Blizzard.

Microsoft: the major job cuts in the video game division

In a memo from Phil Spencer, the head of Microsoft Gaming, it’s clear that the cuts will primarily affect Activision Blizzard, the creators of hit games like Call of Duty and Guitar Hero. But employees at Xbox and ZeniMax will not be spared from these layoffs. This move signifies a nearly 9 percent reduction in Microsoft’s 22,000-person video game division, though it accounts for less than 1 percent of the company’s approximate 220,000 employees.

Spencer’s memo, obtained by The Verge, reveals a balance between strategic planning and empathy for the affected employees. He highlights the integration of the Activision, Blizzard, and King teams into Microsoft and the company’s strategy for sustainable growth. Spencer states, “we have made the painful decision to reduce the size of our gaming workforce by approximately 1900 roles out of the 22,000 people on our team.” He assures that support will be provided during the transition.

Further details about the situation at Blizzard were shared in an internal memo by Matt Booty, Microsoft’s game content and studios president. Booty addressed the Blizzard team directly, acknowledging the challenge of saying goodbye to colleagues and emphasizing the company’s commitment to delivering ambitious games. He mentioned that the layoffs were part of a focused strategy across Microsoft Gaming aimed at sustainable growth and aligning talent with top priorities.

Booty’s memo also confirmed the departure of Blizzard’s president Mike Ybarra, and chief design officer Allen Adham. Ybarra, who had been with Microsoft for over two decades, played a pivotal role as Blizzard’s president during the acquisition process. Booty thanked him for his leadership and partnership. One of Blizzard’s co-founders, Adham, left a lasting impact on the company’s games and plans to continue mentoring young designers in the industry.

Looking ahead, Spencer expressed optimism about Microsoft’s gaming business, emphasizing continued investment in areas that will broaden their reach to more players globally. Despite the challenges, he remains confident in the team’s ability to deliver engaging gaming experiences.

This layoff trend isn’t exclusive to Microsoft. The industry is reeling from a wave of job cuts as the pandemic-driven surge in gaming recedes.

Tencent’s Riot Games, for instance, is laying off 11% of its workforce, totaling around 530 jobs, including a scale-back in its independent game publishing division. Amazon’s Twitch is reducing its workforce by 35%, impacting around 500 employees, and Unity Software plans to cut a quarter of its staff, approximately 1,800 jobs. Notably, these companies also experienced layoffs last year.

Piers Harding-Rolls, a gaming analyst at Ampere Analysis, observed that some layoffs at Activision Blizzard were expected post-acquisition. However, the scale and extent of the cuts across the industry have been unprecedented, particularly with many companies initiating them in January.

The bigger picture: Microsoft’s gaming business and future outlook

Gaming has become a key component of Microsoft’s consumer business, generating over US$15 billion in annual sales, primarily under the Xbox brand. The acquisition of Activision Blizzard, announced two years ago, was a strategic move despite concerns over Activision’s workplace culture at the time. The deal faced intense regulatory scrutiny, causing delays in its completion. As pandemic restrictions eased and consumer habits shifted, Microsoft reported a 5 percent drop in gaming revenue, amounting to US$764 million, in the last fiscal year.

Layoffs have become a recurring theme this month across various companies in the tech and gaming industries, including Google, Discord, eBay, and others.

Following the completion of Microsoft’s acquisition of Activision Blizzard in October, after overcoming regulatory hurdles in the UK and US, former CEO Bobby Kotick stepped down at the end of December. Now, a suite of Activision Blizzard executives report directly to Matt Booty.

Recently, there have been significant leadership changes at Xbox, with Sarah Bond being promoted to Xbox president, overseeing platform and hardware operations. Booty was also promoted to game content and studios president, managing Bethesda, ZeniMax studios, and Activision Blizzard.

Microsoft’s last major layoff round was a year ago, affecting 10,000 employees. The company is poised to release its fiscal Q2 2024 earnings soon, including the financial effects of the Activision Blizzard acquisition for the first time.

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