Google has announced the rollout of ‘Passkeys,’ which it describes as “the easiest and most secure way to sign-in to apps and websites” and a major step toward a “passwordless future.”

Working Toward A Passwordless Future : FIDO & Passkeys

Passkeys comes out of the work that Google’s been doing with the FIDO Alliance, an open industry association, formed in February 2013, to develop and promote authentication standards to “help reduce the world’s over-reliance on passwords”. ‘FIDO’ (Fast IDentity Online) sign-in credentials refer to a set of open and scalable authentication standards that aim to reduce reliance on passwords and enhance the security of online services.

Also, in May last year, Apple, Google and Microsoft announced that they were joining forces to support a common passwordless sign-in standard to allow websites and apps to offer consistent, secure, and easy sign-ins across devices and platforms. At the time, the joining of forces between the tech giants enabled users to automatically access their FIDO sign-in credentials (also known as a “passkey”) on many of their devices, even new ones, without having to re-enrol every account and employ FIDO authentication on their mobile device to sign-in to an app or website on a nearby device, regardless of the OS platform or browser.

Passkeys

Passkeys are the latest step in the passwordless sign-in journey and offer users a way to sign-in to apps and sites the same way they unlock their devices: with a fingerprint, a face scan, or a screen lock PIN. Although passwords and 2-Step Verification (2SV) will still work for Google Accounts, Google says that Passkeys are available for Google Accounts today and can be easily set up by visiting g.co/passkeys.

Advantages

There are several key advantages of passwordless sign-ins over traditional password-based authentication methods, which are:

• Increased Security. Passwordless sign-ins provide better security than traditional password-based authentication methods. Passwords can be guessed, stolen, or even obtained through phishing attacks. On the other hand, fingerprint and face scan biometrics are unique to each individual and much harder to replicate. Passkeys, unlike passwords, can’t be written down or shared, and are resistant to popular online attacks like phishing or social engineering, thereby making it much more difficult for someone to impersonate the user where Passkeys are used.
• Convenience. Passwordless sign-ins can provide a more convenient and streamlined user experience. Users don’t need to remember complex passwords, and they can quickly and easily authenticate themselves using their biometric data or a simple screen lock PIN.
• Reduced friction. Passwordless sign-ins can reduce friction in the login process, which can help to increase user engagement and retention. Traditional passwords can be time-consuming and frustrating to enter, especially on mobile devices with smaller screens.
• Improved user experience. Users don’t need to worry about forgetting their password or resetting it, which can lead to a smoother and more enjoyable user experience overall.
• Lower support costs for Google. Password-related support requests can be a significant cost for organisations, particularly if users forget their passwords or need to reset them frequently. Passwordless sign-ins can help to reduce these support costs by eliminating the need for password-related support requests.

What Does This Mean For Your Business?

Finding solutions to keep one step ahead of cybercriminals whilst maintaining or increasing convenience for users, avoiding the damage caused by data breaches whilst staying competitive and increasing user engagement and retention, is an ongoing challenge for big tech companies like Google. The passwordless future has been a vision for some time and the expansion of the FIDO Alliance standards and Apple, Google and Microsoft joining forces have accelerated the steps to date, and the introduction of Passkeys. As outlined above, there are many advantages to not relying on passwords, not least the increased security and convenience, although, as Google acknowledges, the change to Passkeys will take time and passwords and 2SV will still work for Google Accounts. For businesses in today’s digital world, any extra security is welcomed, and Passkeys have the potential to help with customer retention by making it easier to login to apps and websites. For Google, Microsoft, and Apple, having shared standards that they’ve developed that are widely used also simplifies things, will reduce costs going forward, and is another way to help them retain their powerful market positions.

Google has announced that Gmail has introduced blue checkmarks next to select senders’ names to help users identify messages from legitimate senders.

Will Work If You’ve Adopted ‘BIMI’

The new checkmark verification symbols work in accounts where users have adopted Brand Indicators for Message Identification (BIMI). The BIMI system, introduced in 2021, allows users to display logos in their emails that recipients can see to authenticate the email.

How Does BIMI Work?

For a brand’s logo to be displayed, the email must pass DMARC authentication checks, and the sender publishes a standardised DNS record which contains a URL to a logo that may require proof that the logo has been validated with a Verified Mark Certificate (VMC). An organisation publishes a BIMI record containing these URLs and a supporting mailbox provider (MBP) checks the sending domain’s DMARC policy to verify that it is included in the BIMI validation in order for the logo to be used and displayed.

Why The Blue Checks?

Google says that the use of blue checks enables “Strong email authentication” which “helps users and email security systems identify and stop spam, and also enables senders to leverage their brand trust.”

Google says that this “increases confidence in email sources and gives readers an immersive experience, creating a better email ecosystem for everyone.”

When And Who?

The rollout for blue ticks was scheduled for 1–3 days and started on May 3, so should already be visible. Google says that the blue tick feature is available to all Google Workspace customers, as well as legacy G Suite Basic and Business customers, and to users with personal Google Accounts.

Will It Be Like Twitter’s Blue Ticks?

It’s difficult not to make the comparison between this and Twitter’s ill-fated blue tick/blue check system (and which resulted in some derision and confusion) where checkmarks now simply seem to indicate paying customers, rather than authenticated users. Unlike Twitter’s system, however, there’s no fee for setting up BIMI and Google’s blue ticks, plus it doesn’t come with the controversy of the takeover that put Elon Musk in the news in a less-than-positive light. Instagram also has a blue tick system.

What Does This Mean For Your Business?

Last year Google was making the news over the amount of spam emails in Gmail and back in November, it was keen to point out that its systems were blocking huge amounts of bogus and spam emails – 15 billion in a day! Given that phishing emails and email-borne malware are prevalent and major email threats and that social media companies have acted to try and stop impersonators, it makes sense that Google would follow suit. Using an already recognised symbol that’s now widely associated with trust, a blue tick, also makes sense, and if the system (in association with BIMI) enables businesses to quickly and easily show customers that their emails can be trusted, it could help senders to leverage their brand trust, maintain and grow their marketing relationships with customers, and stand out from the crowd.

In this insight, we look at the new online form where customers can report online rip-offs that’s been developed as part of the new government campaign “The Online Rip-Off Tip-Off” to help shoppers spot and avoid misleading online practices.

The Online Rip-Off Problem

According to a recent poll of over 2,000 UK adults by the UK’s Competition and Markets Authority (CMA), 7 out of 10 people said they’d experienced misleading online practices, 85 per cent believe the businesses these practices are being dishonest with their customers, and 83 per cent say they’re less likely to buy from them in the future as a result.

Also, in another OnePoll survey of 3,700 UK adults in March this year, 67 per cent of respondents said cost-of-living pressures have made them more desperate to find the best deals, and 71 per cent said they believed they thought they were ‘saving money’ by purchasing deals that are on offer, some of which may not be genuine. The poll also showed that 1 in 4 (24 per cent) of UK consumers said they’d fallen victim to sneaky online sales tactics, 23 per cent didn’t realise tactics such as ‘15 mins left of sale’ (pressure selling) or ‘buy now’ can sometimes be false or misleading, and 68 per cent thought these types of misleading tactics should be banned.

The Biggest Concerns

The CMA survey also revealed that of those who had experienced misleading online practices, the biggest concern was about hidden charges (85 per cent of respondents), followed by subscription traps (83 per cent), fake reviews (80 per cent), and pressure selling (50 per cent).

New Online Form To Report Rip-Offs

To help tackle this problem, back in February, the CMA launched “The Online Rip-Off Tip-Off” campaign, fronted by Consumer Champions Martin Lewis, and his Money Show co-presenter Angellica Bell, to make consumers aware of these misleading online practices and provide tips on how to avoid them (see www.gov.uk/ripoff-tipoff).

As part of the latest phase of this campaign, the CMA has now launched a new digital reporting form where consumers can report the sneaky online sales tactics they’ve encountered.

‘Red Lines’ Letter For Businesses

In the interest of tackling the online rip-off problem from both angles, the CMA has also published a letter to UK businesses detailing its ‘online red lines’ on misleading price reduction and urgency claims – which are a type of pressure selling. The letter provides examples of where common online tactics may be misleading consumers or applying unfair pressure. The advice in the letter is targeted at all businesses that sell or promote products online to UK shoppers, so businesses can avoid or stop sales practices that could break the law.

Consumers Can Now Call Out Offenders

Angellica Bell said: “We know that the rising cost-of-living is putting a strain on shoppers across the UK. Some online businesses are using sneaky sales tactics to make us part with our money when household budgets are already stretched. We all feel the pressure of securing bargains, making us more susceptible to being ripped off. It’s frustrating when this happens and it’s time we call out these online retailers and report them to the CMA.”

Just The Tip Of The Iceberg

George Lusty, Senior Director for Consumer Protection at the Competition and Markets Authority, commented: “Now more than ever, every penny counts, and the CMA is concerned that some businesses are using underhand tactics designed to part shoppers from their cash.  This poll is just the tip of the iceberg as we believe the true number of victims of these rip-offs is much higher as they are often extremely difficult to spot.

That’s why businesses using urgency and price reduction claims need to consult the CMA’s new advice. It outlines what businesses need to do when designing their online shopping experiences to be sure they comply with the law.”

What Does This Mean For Your Business?

The cost-of-living crisis is making it easier for consumers to fall victim to pressure selling, sneaky online sales tactics and a variety of online rip-offs. This two-pronged campaign from the CMA encompassing the letter for businesses identifying what tactics are unacceptable, and the form for consumers to report them may at least go some way to helping to reduce some sharp online practices that are hitting consumers at a time when they can least afford it. It may be the case for some businesses that they are not fully aware that the tactics they are using are misleading and possibly illegal and, therefore, the letter published for businesses could help them to design online shopping experiences that are compliant and fair. However, the CMA notes that the true number of victims of these rip-offs is likely to be much higher than even their research has shown, as they are often extremely difficult to spot.

Cloud-based CRM company Salesforce has announced the launch of its ‘Green Code,’ a new initiative which it says will help reduce carbon emissions associated with the software development lifecycle.

The Software Development Lifecycle Carbon Emissions Problem 

The Green Code has been developed to tackle the environmental impact caused by the process of developing, deploying, and maintaining software applications. For example, this impact comes from the energy consumption of the servers and other computing equipment used during these activities, as well as from the manufacturing and disposal of this equipment. Software development involves a range of activities, including designing, coding, testing, and deployment and each of these stages requires computing power and energy, which can result in significant carbon emissions e.g., running servers and data centres requires large amounts of electricity, which in turn generates greenhouse gas emissions, and disposing of e-waste can require carbon-emitting requires energy and resources as well as contributing to environmental pollution and health hazards.

The IT Sector Emissions 

As highlighted by Salesforce, the IT sector is responsible for up to 3.9 per cent of global emissions (almost as much as the airline and shipping industries) with these emissions expected to rise as organisations increasingly rely on software to drive their operations and accelerate their digital transformation.

Salesforce’s own research shows that although the IT sector is a major carbon producer,75 per cent of technologists want to develop software applications that do less harm to the environment, but nearly half simply don’t know how.

What Is The Green Code? 

The Green Code initiative is a set of new sustainability best practices to help anyone from UX designers and software developers to system architects and IT operations managers to work towards net zero. The idea is that offering practical recommendations for designing apps and writing code that have less of an impact on the environment is a powerful leverage point that remains largely untapped and could help make a significant impact toward decarbonisation.

Four Key Areas

The Green Code focuses on the four key areas of:

– Design & UX: Helping designers to reduce energy use while providing a better user experience by making sustainability a design requirement.

– Architecture: Helping software architects to choose an architectural pattern and deployment model for software development that leads to cost savings and reduces environmental impact.

– Development: Helping to develop sustainable code I.e., software code that uses less energy, leading to significant emissions reductions, particularly when deployed at scale.

– Operations: Focusing on e.g., locating capacity in the right regions and scheduling workloads during high renewable energy periods can help companies can reduce their carbon emissions.

The Importance Of Leveraging Green Code Best Practices 

Suzanne DiBianca, EVP, and Chief Impact Officer at Salesforce points out that, “By leveraging these ‘green code’ best practices, technologists and organisations can approach the challenge of sustainability in IT to drive meaningful efficiencies and cost savings across their IT enterprises while accelerating their sustainability journeys.” 

Srinivas Tallapragada, President, and Chief Engineering Officer at Salesforce said, “With Green Code, we’re hoping to inspire software teams and the entire IT sector to prioritise sustainability, just as they do performance, security, and accessibility.” 

What Does This Mean For Your Organisation? 

Salesforce makes the point that minor changes can translate into big impacts for a company’s carbon footprint and that it looks, from their research, as though most technologists want to develop software applications that do less harm to the environment, but they lack any guidance on how to do so. Producing these ‘Green Code’ best practices, therefore, is a way to help make a positive difference in what has thus far been a relatively untapped and overlooked but crucial area. For businesses and organisations in the IT sector, following these best practices could help them on the road to sustainability and if widely adopted could be one way to help the IT sector to become less of a carbon emissions producer.

1954 : Silicon Makes A Splash

On 10th May 1954, Gordon Kidd Teal created a sensation at an Institute of Radio Engineers conference when he presented silicon transistors for the first time by announcing they were ready for production and available for sale.

Why The Big Deal?

Originally, germanium was mainly used to develop transistors. It was easier to work with but had some major limitations, one of those being their operational temperature ranging from 0°C to 70°C. Silicon transistors allowed higher operational temperatures of -55°C to 125°C, meaning they could be relied upon in many more environments and applications. Not only that but silicon has better stability and is much more abundant (and cheaper).

This was made possible due to a high-purity semiconductor silicon supplied by DuPont, a company that developed ‘Teflon’ among other things having first grown huge by being a major gunpowder and explosives supplier for the US Military.

Bell Labs

The first silicon transistor was developed at Bell Labs (the organisation directly created by Alexander Graham Bell, inventor of the telephone). However, they failed to identify and exploit this opportunity, and did not attempt to produce it commercially. This cost them dearly, as today, Texas Instruments (TI) are credited with the production of the first commercial silicon transistor.

The first commercial silicon transistor was developed by Teal, who (having left Bell Labs) was hired to lead a research lab for TI. Teal hired a team of scientists and engineers overseen by Will Adcock, a chemist, tasked to work on silicon transistors. Their efforts led to a breakthrough, adding to TI’s long list of notable inventions. One of those being Jack Kilby’s (another TI employee) Integrated Circuit in 1958 which unfortunately was forsaken in favour of Noyce’s more mass production friendly version.

Teal continued working for TI until his retirement, only taking a short leave of absence for 2 years to become the first Director of the National Bureau of Standards Institute for Materials Research in Washington D.C. He died in 2003 with an estimated net worth of $1 – $8 million.

Texas Instruments continued to flourish outcompeting other companies in the semiconductor space and acquiring many of their competitors along the way. One of their recent acquisitions being that of National Semiconductor in 2011 for $6.5 billion. As of writing this, the company is valued at around $147 billion.

TI’s success can be attributed, among other things, to their keen eye for talent. Hiring experts like Gordon Kidd Teal (who were on the cusp of major breakthroughs) has helped the company capitalise on opportunities that other companies have failed to identify.

All this goes to show that a company’s innovation is unlimited because it can be developed internally by training or sourced by hiring key personnel or by corporate acquisition.

Facebook’s parent company Meta has warned of a rise in ChatGPT-related malware across its platforms, designed to lure users into downloading malicious apps and browser extensions. Meta says that since March it has found around 10 malware families and more than 1,000 malicious links being promoted as tools featuring ChatGPT.

Meta’s Chief Information Security Officer Guy Rosen said: “This is not unique to the generative AI space. As an industry, we’ve seen this across other topics popular in their time, such as crypto scams fuelled by the interest in digital currency. The generative AI space is rapidly evolving and bad actors know it, so we should all be vigilant.”

If you’d like to save time and stay organised by getting outputs from ChatGPT that are already in tabular format, here’s how:

– Ask ChatGPT to list the benefits of two or more different ways of delivering a list, and to answer in a table format. For example, type “List the differences between rugby league and rugby union in a table format.”

– ChatGPT will produce the answer in a table format that can be copied to your required program or platform.

– The same can be done where dimensions and weights of products are involved and for many other purposes. Try it!

In the past, people have primarily focused on their physical belongings and financial assets when planning for the future. However, as more and more of our lives move online, digital assets have become just as important to consider. So, do you need to make an ‘e-will’?

What Are Your Digital Assets?

Digital assets can include a wide range of items, such as social media accounts, email accounts, cloud storage, cryptocurrency, digital photos, and other digital files. When someone passes away, these assets can become difficult to manage or even lost if there are no clear instructions in place.

Electronic Will/E-Will/Digital Estate Plan

To ensure that your digital assets are taken care of after you pass away, you may want to create an electronic will/e-will/digital estate plan. This e-will can include instructions for how your digital assets should be managed or transferred after your death and specifically focuses on your digital assets, such as online accounts, digital files and cryptocurrency. Some e-will planning considerations may include:

• Inventory of your digital assets. Make a list of all your digital assets and accounts, including usernames, passwords, and any other relevant information.
• Decide who should manage your digital assets/designate an official executor. You may want to appoint a trusted individual to manage your digital assets after you pass away. This person should have access to your inventory and be familiar with your wishes.
• Decide what to do with your social media accounts. Some social media platforms allow you to designate a legacy contact who can manage your account after you pass away. Alternatively, you may want to specify that your accounts should be deleted or memorialised.
• Decide what to do with your email accounts. You may want to give access to your email accounts to your designated digital executor or specify that they should be deleted.
• Consider transferring ownership of digital assets. For certain digital assets such as cryptocurrency or domain names, you may want to consider transferring ownership to a trusted individual or organisation.

What Does UK Law Say About Your Digital Assets?

In the UK, the law is still catching up with the increasing importance of digital assets and digital estate planning. However, there are some laws and regulations that govern the management of digital assets after death.

The main piece of legislation that covers digital assets in the UK is the General Data Protection Regulation (GDPR). Under the GDPR, individuals have the right to request that their personal data be deleted, which could include data stored on digital platforms after they have passed away.

It’s worth noting that the terms and conditions of each digital service or platform may also impact how your digital assets are managed after your death. For example, some social media platforms allow you to appoint a “legacy contact” who can manage your account after you pass away.

It’s a good idea to consult with a legal professional who specialises in digital estate planning to ensure that your wishes are legally valid and enforceable.

UK Example

An example of a UK e-will being accepted by a UK court (the High Court) occurred in 2019. A woman named Lesley Trenner created an electronic will using an online will service called ‘WillSuite’. The will was signed digitally and witnessed remotely by two individuals over video conferencing. After Trenner passed away, her electronic will was accepted by the UK High Court, making it the first electronic will to be recognised as legally valid in the UK.

Issues

In the UK, one of the main issues around making e-wills is the lack of clear legal guidelines and legislation regarding their usage. While there have been a few cases where electronic wills have been accepted by courts, there is still some uncertainty around their validity and enforceability. There are also concerns about security and the risk of fraud, as electronic signatures can be easier to forge than traditional signatures.

Furthermore, there is also the issue of how to ensure that the testator was of sound mind and understood the implications of their will when they created it, especially if the will was created remotely without witnesses present.

Digital assets such as cryptocurrency and online accounts can also be difficult to manage and distribute without clear instructions in a will.

What Does This Mean For Your Business?

In today’s digital age, it’s becoming increasingly important for individuals to consider their digital assets when creating a will. Digital assets such as social media accounts, email accounts and digital files can be lost or become difficult to manage without clear instructions in place. This has led to the rise of electronic wills or e-wills, which specifically focus on an individual’s digital assets. While UK law is still catching up with the importance of digital assets, there are laws and regulations in place such as GDPR. However, there are concerns about the lack of clear legal guidelines, security, and the risk of fraud with e-wills. As digital assets become more commonplace, an opportunity has arisen for businesses to offer digital estate planning services to clients and to consult with legal professionals who specialise in this area to ensure that their clients’ wishes are legally valid and enforceable.

In this article, we look at the reasons for the government’s formation of the Foundation Model Taskforce, and how the DeepMind and Google Brain tie-up could solve some big issues for Alphabet in the AI world.

£100 Million Investment In Taskforce Start-Up

The UK government has announced that it will be investing £100 million in initial start-up funding for a ‘taskforce’ which will be responsible for accelerating the UK’s capability in rapidly emerging types of artificial intelligence. The investment will be on top of a £900 million investment into the ‘Budget for Compute’ technology for a new ‘exascale’ supercomputer and a dedicated AI Research Resource to equip the UK with the processing power it needs to support the next generation of AI innovation.

Modelled On The COVID Vaccines Taskforce

The ‘Foundation Model Taskforce’ made up of experts and reporting to the Prime Minister and Secretary of State for Department for Science, Innovation and Technology (DSIT), will be modelled on the success of the COVID-19 Vaccines Taskforce. It will be given the job of developing the safe and reliable use of artificial intelligence (AI) across the economy with the aim of ensuring the UK is globally competitive in this strategic technology and to ensure the UK is “at the forefront of this technology.”

Powerful Potential

Where AI is concerned, the government says that developments like ChatGPT and the announcement of Google Bard have shown the powerful potential for technologies based upon foundation models, including large language models. The government says the new Taskforce will, therefore, be empowered to “advance UK sovereign capability in foundation models” including large language models and also provide direct advice to UK ministers.

AI To Increase GDP

With Foundational AI technology predicted to increase global GDP by 7 per cent over a decade, plus research showing that broad adoption of these systems could even triple national productivity growth rates, it’s no surprise that the government is looking at the economic potential of AI to contribute billions of pounds to UK GDP.

Prime Minister Rishi Sunak said “Harnessing the potential of AI provides enormous opportunities to grow our economy, create better-paid jobs, and build a better future through advances in healthcare and security.”

Prime Minister Sunak also stressed that “By investing in emerging technologies through our new expert taskforce, we can continue to lead the way in developing safe and trustworthy AI as part of shaping a more innovative UK economy.”

What Will It Do?

One of the first priorities for the Taskforce will be to apply its expertise and understanding of the AI sector to present a clear mission to advance the UK’s AI capability and prioritise options, action, and investment.

Broadly speaking (since it’s still in the planning stage), the Taskforce will focus on opportunities to establish the UK as a world leader in foundation models and their applications across the economy and, the government says, will act as a global standard-bearer for AI safety.

First Pilot Next Month

The initial funding will be invested in foundation model infrastructure and public service procurement, to create opportunities for domestic innovation, and the first pilots targeting public services are expected to launch in the next six months.

The government says that the taskforce will also play a crucial role in ensuring the major, multi-year funding announced at the Budget for compute is strategically invested to prioritise and strengthen the UK’s capability in foundation models.

Who’s In The Taskforce?

The Taskforce will be led by an expert Chair (yet to be announced) while Matt Clifford (Chair of the Advanced Research and Innovation Agency) will advise the Prime Minister and the Technology Secretary on the development of the Taskforce while the appointment is ongoing.

UK-based DeepMind Merges With Alphabet and Google Brain

In a separate but promising development in the AI world, Alphabet (Google’s parent) is merging Google Brain (part of the research division) and UK-based DeepMind into a single, unified AI research unit called “Google DeepMind.”

DeepMind CEO Demis Hassabis said of the development: “Through Google DeepMind, we are bringing together our world-class talent in AI with the computing power, infrastructure, and resources to create the next generation of AI breakthroughs and products across Google and Alphabet, and to do this in a bold and responsible way.”

End Rivalry and Help Compete

It is thought that the move will not only end a long-running internal rivalry between the London and Silicon Valley-based groups but will also help Google to catch up on lost ground in generative AI against Microsoft and OpenAI. For example, it was reported that the release of ChatGPT last November led Google’s management to issue a “code red” about the tech giant’s search engine business.

The merging will also be a way for Google to finally complete its nine-year assimilation of DeepMind into its operations.

What Does This Mean For Your Business?

Following the remarkable success of ChatGPT, the UK government has realised the enormous potential for (generative) AI to boost GDP and the economy so it has invested in setting up a Taskforce to help it take full advantage of AI-based opportunities. As highlighted by the UK PM, if the Taskforce can help to harness AI opportunities in the UK, it could be good news for the economy, e.g. through the creation of better-paid jobs, advances in healthcare and security, plus creating a more innovative UK economy. That said, the automation that expanded use of AI will bring could result in many jobs being lost before people have had the chance to retrain to take up any of the predicted new types of jobs that AI could deliver.

DeepMind is an example of a UK-based company that has made great advances in computational biology and reinforcement learning, however the true value of the synergies between this and Google Brain appears, until now, to have been hampered by internal rivalries. The shake-up and merging of Alphabet, Google Brain and DeepMind was in part a response to being caught off-guard by ChatGPT and could now help Alphabet (Google) to maximise focus and value, claw back some lost ground, and establish itself as a major competitor in the rapidly advancing world of generative AI.

The UK’s Competition and Markets Authority (CMA) has blocked Microsoft’s proposed acquisition of US-based video game holding company Activision Blizzard over fears of stifled competition in the cloud gaming market.

What Happened?

Back in January 2022, Microsoft entered a £68.7 billion deal to buy Activision, one of the most popular video games publishers globally.

This led to the CMA launching a review of the deal in September 2022, so in February 2023, the CMA provisionally found that the merger could make Microsoft even stronger in cloud gaming, and in doing so, stifle competition in a growing market that is forecast to be worth up to £11 billion globally and £1 billion in the UK by 2026.

The provisional findings outlined concerns that the CMA had, to which Microsoft replied with remedies that offered a potential solution to the concerns. After considering Microsoft’s proposed solution, the CMA made the decision to block Microsoft’s acquisition of Activision Blizzard, saying: “The final decision to prevent the deal comes after Microsoft’s proposed solution failed to effectively address the concerns in the cloud gaming sector, outlined in the Competition and Markets Authority’s (CMA) provisional findings published in February.”

The Main Concerns

The main concerns that the CMA had/still has, which led to its decision are that :

• Microsoft already has around 60-70 per cent of global cloud gaming services plus other important strengths in cloud gaming, e.g. owning Xbox, the leading PC operating system (Windows) and a global cloud computing infrastructure (Azure and Xbox Cloud Gaming). Acquiring Activision Blizzard would reinforce Microsoft’s already significant advantage in the market by giving it control over important gaming content such as Call of Duty, Overwatch and World of Warcraft.
• The cloud means that UK gamers can avoid buying expensive gaming consoles and PCs and have more flexibility and choice as to how they play. Allowing Microsoft an even stronger position in the cloud gaming market, which is in a rapid-growth stage, would undermine the innovation that is crucial to the development of these opportunities.
• Also, the CMA noted that, without the merger, Activision looked likely to start providing games via cloud platforms in the near future.

Shortcomings in the Remedies

The behavioural remedies submitted to the CMA by Microsoft, i.e. the ways it said it could regulate its behaviour to the point where it may be contrary to its commercial incentives in the interest of fairness (to be judged by the CMA) did not satisfy the CMA. For example, the shortcomings noted by the CMA which led to the recent decision to block the merger were:

• It didn’t fully cover different cloud gaming service business models, including multigame subscription services.
• It could have been more open to providers wanting to offer versions of games on PC operating systems other than Windows.
• It would standardise the terms and conditions on which games are available, rather than letting the developing market decide them.
• There would be a risk of disagreement and conflict between Microsoft and cloud gaming service providers due to Microsoft’s remedy only applying to a certain set of Activision games, and only streamable in a defined set of cloud gaming services if purchased in a defined set of online stores.

Essentially, the CMA thought that accepting Microsoft’s remedy would mean that regulatory oversight would be required, whereas such oversight wouldn’t be required if the merger was prevented, and market forces were simply allowed to naturally operate and shape the development of cloud gaming.

One Down – Two To Go

Although the UK’s regulator has made its decision, the merger deal also needs to be approved by regulatory bodies in the United States and European Union to go through. However, the worry is that the CMA’s ruling could have destroyed any chances of the others ruling in its favour.

Reaction

The blocking of the merger led to an initial angry reaction from Microsoft, with Microsoft’s president Brad Smith saying, “The CMA’s decision rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the United Kingdom” and that “this decision appears to reflect a flawed understanding of this market and the way the relevant cloud technology actually works.”

Activision’s CEO Bobby Kotick echoed the criticism of the decision, saying, “We will reassess our growth plans for the UK” and the company said in a separate statement: “Global innovators large and small will take note that – despite all its rhetoric – the UK is clearly closed for business.”

What Does This Mean For Your Business?

Gaming market commentators have highlighted how Microsoft has invested heavily in the cloud gaming model where gaming titles are streamed rather than the customer owning them. Also, the merger would have been about securing Microsoft’s place in this future model of gaming and controlling some extremely popular games, hence the angry reaction when the UK regulator blocked the merger. However, as noted by the CMA, Microsoft is already in a very powerful position in the gaming market, thus approving the merger could have led to the need for regulation and could have stifled competition and been unwelcome news for many smaller competitors in what is a rapidly growing and changing gaming market. It has also been noted by some commentators that Sony may be particularly pleased with the decision given its opposition to the merger over how its PlayStation could have suffered restricted access to some of the world’s most popular games.

However, the matter is certainly not over yet, with Microsoft and Activision Blizzard planning to reverse the decision on appeal in the UK, plus with decisions from EU and US regulators still to come in a deal that many expected would have gone through. The outcome of these additional regulatory reviews could have significant implications for the gaming industry, Microsoft, and Activision Blizzard, as well as for businesses and consumers who rely on these platforms and services.