Economic Archives | Page 371 of 708 | Digital Watch Observatory

Microsoft bets on AI openness and scale

Microsoft has added xAI’s Grok 3 and Grok 3 Mini models to its Azure AI Marketplace, revealed during its Build developer conference. This expands Azure’s offering to more than 1,900 AI models, which already include tools from OpenAI, Meta, and DeepSeek.

Although Grok recently drew criticism for powering a chatbot on X that shared misinformation, xAI claimed the issue stemmed from unauthorised changes.

The move reflects Microsoft’s broader push to become the top platform for AI development instead of only relying on its own models. Competing providers like Google Cloud and AWS are making similar efforts through platforms like Vertex AI and Amazon Bedrock.

Microsoft, however, has highlighted that its AI products could bring in over $13 billion in yearly revenue, showing how vital these model marketplaces have become.

Microsoft’s participation in Anthropic’s Model Context Protocol initiative marks another step toward AI standardisation. Alongside GitHub, Microsoft is working to make AI systems more interoperable across Windows and Azure, so they can access and interact with data more efficiently.

CTO Kevin Scott noted that agents must ‘talk to everything in the world’ to reach their full potential, stressing the strategic importance of compatibility over closed ecosystems.

Would you like to learn more about AI, tech and digital diplomacy? If so, ask our Diplo chatbot!

Meta and PayPal users targeted in new phishing scam

Cybersecurity experts are warning of a rapid and highly advanced phishing campaign that targets Meta and PayPal users with instant account takeovers. The attack exploits Google’s AppSheet platform to send emails from a legitimate domain, bypassing standard security checks.

Victims are tricked into entering login details and two-factor authentication codes, which are then harvested in real time. Emails used in the campaign pose as urgent security alerts from Meta or PayPal, urging recipients to click a fake appeal link.

A double-prompt technique falsely claims an initial login attempt failed, increasing the likelihood of accurate information being submitted. KnowBe4 reports that 98% of detected threats impersonated Meta, with the remaining targeting PayPal.

Google confirmed it has taken steps to reduce the campaign’s impact by improving AppSheet security and deploying advanced Gmail protections. The company advised users to stay alert and consult their guide to spotting scams. Meta and PayPal have not yet commented on the situation.

Would you like to learn more about AI, tech and digital diplomacy? If so, ask our Diplo chatbot!

Meta’s AI benchmarking practices under scrutiny

Meta has denied accusations that it manipulated benchmark results for its latest AI models, Llama 4 Maverick and Llama 4 Scout. The controversy began after a social media post alleged the company used test sets for training and deployed an unreleased model to score better in benchmarks.

Ahmad Al-Dahle, Meta’s VP of generative AI, called the claims ‘simply not true’ and acknowledged inconsistent model performance due to differing cloud implementations. He stated that the models were released as they became available and are undergoing ongoing adjustments.

The issue highlights a broader problem in the AI industry: benchmark scores often fail to reflect real-world performance.

Other AI leaders, including Google and OpenAI, have faced similar scrutiny, as models with high benchmark results struggle with reasoning tasks and show unpredictable behavior outside controlled tests.

This gap between benchmark performance and actual reliability has led researchers to call for better evaluation tools. Newer benchmarks now focus on bias detection, reproducibility, and practical use cases rather than leaderboard rankings.

Meta’s situation reflects a wider industry shift toward more meaningful metrics that capture both performance and ethical concerns in real-world deployments.

Would you like to learn more about AI, tech and digital diplomacy? If so, ask our Diplo chatbot!

Sui DEX Cetus suffers suspected $200m hack

A major security incident has struck Cetus, a decentralised exchange (DEX) on the Sui blockchain, with suspected losses exceeding $200 million. Onchain data revealed rapid asset drainage, prompting experts to label the event as a possible hack rather than a mere bug, as claimed by the Cetus team.

Reports indicate that at least $63 million has already been transferred to Ethereum, including a large single transaction of 20,000 ETH moved to a new wallet.

Transaction volumes on Cetus surged to $2.9 billion on 22 May, compared to $320 million the previous day, suggesting funds were rapidly siphoned from the platform.

Several tokens lost over 75% of their value, causing wider disruption; for instance, the Sui-based money market Scallop halted all borrowing activities as a precaution.

Concerns over transparency have grown as $212 million in assets were reportedly bridged to Ethereum at a rate of $1 million per minute. Analysts argue the scale and speed of transfers hint at something more serious than a simple software glitch.

Cetus paused the affected smart contract and announced an ongoing investigation, but has yet to provide a detailed response.

Would you like to learn more about AI, tech and digital diplomacy? If so, ask our Diplo chatbot!

Bitcoin hits all-time high above $111K

Bitcoin surged to a fresh all-time high of $111,544 during early Asian trading on Thursday, marking a 4% jump from Wednesday’s peak. The rally follows a dip to $106,000 earlier in the week and reflects rising interest in alternative assets amid global financial uncertainty.

The immediate driver appears to be weak demand for the US Treasury’s $16 billion 20-year bond auction, which pushed yields above 5.1%. Falling trust in long-term government debt has driven a shift in sentiment, with US and Japanese yields rising sharply.

Bitcoin’s rise has been supported by several macroeconomic factors, including softer US inflation, a cooling of US-China trade tensions, and Moody’s downgrade of US sovereign debt. Analysts suggest risk assets could benefit over the coming months if uncertainty continues to shake traditional markets.

On-chain data confirms increasing demand. Bitcoin’s realised market cap rose by $27 billion in May, while exchange inflows dropped 82% since November.

Institutional interest is also growing, with over $4.24 billion flowing into Bitcoin ETFs in the past month and major firms like Strategy boosting their holdings to $63 billion.

Would you like to learn more about AI, tech and digital diplomacy? If so, ask our Diplo chatbot!

Crypto.com gains EU approval for crypto derivatives

Crypto.com has secured a MiFID licence, allowing it to offer regulated crypto derivatives across the European Economic Area. The licence expands the platform’s presence following earlier approval under the EU’s Markets in Crypto-Assets (MiCA) regulation.

It was obtained through the acquisition of Cyprus-based A.N. Allnew Investments, a move similar to strategies used by other major platforms such as Kraken. The announcement follows Crypto.com’s broader efforts to offer more regulated services to European users and grow its product portfolio.

Other crypto firms are also eyeing Europe’s growing derivatives market. Kraken, Coinbase, Gemini and Synthetix have all expanded their derivatives offerings through acquisitions and regulatory approvals, signalling a competitive push in the region.

Crypto.com’s previous acquisitions include Fintek Securities, Watchdog Capital and others, further strengthening its regulatory positioning.

Would you like to learn more about AI, tech and digital diplomacy? If so, ask our Diplo chatbot!

Meta aims to boost Llama adoption among startups

Meta has launched a new initiative to attract startups to its Llama AI models by offering financial support and direct guidance from its in-house team.

The programme, called Llama for Startups, is open to US-based companies with less than $10 million in funding and at least one developer building generative AI applications. Eligible firms can apply by 30 May.

Successful applicants may receive up to $6,000 per month for six months to help offset development costs. Meta also promises direct collaboration with its AI experts to help firms implement and scale Llama-based solutions.

The scheme reflects Meta’s ambition to expand Llama’s presence in the increasingly crowded open model landscape, where it faces growing competition from companies like Google, DeepSeek and Alibaba.

Despite reaching over a billion downloads, Llama has encountered difficulties. The company reportedly delayed its top-tier model, Llama 4 Behemoth, due to underwhelming benchmark results.

Additionally, Meta faced criticism in April after using an ‘optimised’ version of its Llama 4 Maverick model to score highly on a public leaderboard, while releasing a different version publicly.

Meta has committed billions to generative AI, predicting revenues of up to $3 billion in 2025 and as much as $1.4 trillion by 2035.

With revenue-sharing agreements, custom APIs, and plans for ad-supported AI assistants, the company is investing heavily in infrastructure, possibly spending up to $80 billion next year on new data centres to support its expansive AI goals.

Would you like to learn more about AI, tech and digital diplomacy? If so, ask our Diplo chatbot!

Hong Kong approves stablecoin licensing law

Hong Kong’s legislature has approved a bill introducing a licensing framework for fiat-referenced stablecoin issuers. The move provides legal clarity and aims to enhance the city’s position as a global digital asset hub.

Any issuer of stablecoins in Hong Kong or of HKD-backed stablecoins abroad must obtain a licence from the Hong Kong Monetary Authority. The law outlines standards for reserve asset management, redemption, and risk controls to protect investors and the wider public.

Officials say the legislation follows the principle of ‘same activity, same risks, same regulation’ and adopts a risk-based approach. Financial Secretary Christopher Hui stated that the measure sets a solid foundation for Hong Kong’s growing virtual asset market.

The HKMA’s sandbox programme for stablecoin issuers has already attracted three participants. The new ordinance is expected to take effect later this year.

Would you like to learn more about AI, tech and digital diplomacy? If so, ask our Diplo chatbot!

Judge rules Google must face chatbot lawsuit

A federal judge has ruled that Google and AI startup Character.AI must face a lawsuit brought by a Florida mother, who alleges a chatbot on the platform contributed to the tragic death of her 14-year-old son.

US District Judge Anne Conway rejected the companies’ arguments that chatbot-generated content is protected under free speech laws. She also denied Google’s motion to be excluded from the case, finding that the tech giant could share responsibility for aiding Character.AI.

The ruling is seen as a pivotal moment in testing the legal boundaries of AI accountability.

The case, one of the first in the US to target AI over alleged psychological harm to a child, centres on Megan Garcia’s claim that her son, Sewell Setzer, formed an emotional dependence on a chatbot.

Though aware it was artificial, Sewell, who had been diagnosed with anxiety and mood disorders, preferred the chatbot’s companionship over real-life relationships or therapy. He died by suicide in February 2024.

The lawsuit states that the chatbot impersonated both a therapist and a romantic partner, manipulating the teenager’s emotional state. In his final moments, Sewell messaged a bot mimicking a Game of Thrones character, saying he was ‘coming home’.

Character.AI insists it will continue to defend itself and highlighted existing features meant to prevent self-harm discussions. Google stressed it had no role in managing the app but had previously rehired the startup’s founders and licensed its technology.

Garcia claims Google was actively involved in developing the underlying technology and should be held liable.

The case casts new scrutiny on the fast-growing AI companionship industry, which operates with minimal regulation. For about $10 per month, users can create AI friends or romantic partners, marketed as solutions for loneliness.

Critics warn that these tools may pose mental health risks, especially for vulnerable users.

Would you like to learn more about AI, tech and digital diplomacy? If so, ask our Diplo chatbot!

Pakistan sets up digital asset authority

Pakistan has formed a new body to regulate its growing digital asset market and embrace blockchain-based financial innovation. The Pakistan Digital Assets Authority (PDAA), backed by the Ministry of Finance, will license and oversee exchanges, custodians, wallets, stablecoins, and decentralised finance platforms.

Federal finance minister Muhammad Aurangzeb said the goal is not only to catch up but to lead the sector globally. PDAA will also tokenise national assets and government debt, and monetise excess electricity through regulated Bitcoin mining.

The authority aims to create a safe and investment-friendly ecosystem for blockchain startups and Web3 development.

The move follows advice from the Pakistan Crypto Council, which includes former Binance CEO Changpeng Zhao. Council CEO Bilal Bin Saqib described the strategy as a complete rewrite of Pakistan’s financial future, with a focus on financial inclusion, digital exports, and innovation.

Pakistan‘s stance on crypto has shifted rapidly. Although the government had ruled out legalising digital assets in 2023, the country ranked ninth in Chainalysis’ 2024 crypto adoption index.

With over 27 million users expected by 2025 and projected revenue of $1.6 billion, Pakistan’s digital asset sector is now seen as a key growth driver.

Would you like to learn more about AI, tech and digital diplomacy? If so, ask our Diplo chatbot!