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Microsoft looks beyond the console wars as it releases new Xboxes alongside Sony's PS5 – CNBC

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A customer carries away a PlayStation 5 console at an electronics store in Sydney on November 12, 2020, on the day of PS5 official launch.
Saeed Khan | AFP | Getty Images

Microsoft and Sony both released new video game consoles this week: Microsoft has the $500 Xbox Series X and $300 Series S, while Sony has two models of PlayStation 5, starting at $400.

The last generation of consoles released by both lasted about seven years. With the latest systems, Microsoft and Sony are employing different strategies to attract gamers and generate even more revenue from gamers.

A lot is on the line.

The pandemic has given people more free time to play games. Gamers could stay hooked for years to come, which means big business for both companies.

Gaming represents 24% of Sony’s revenue. It’s 8% of Microsoft’s revenue, but Microsoft is more widely held as the third most valuable public company, behind only Apple and Saudi Aramco, and any success in gaming can benefit many shareholders.

What happened last time

In 2013, when Microsoft introduced the Xbox One and Sony released the PlayStation 4, Sony shipped 4.2 million new consoles, ahead of Microsoft, which shipped 3.8 million, according to estimates from technology industry research company IDC.

Sony had set the price of the PlayStation 4 at $400, $100 below the $500 price of the Xbox One. Microsoft spent time promoting the entertainment capabilities of the Xbox, rather than focusing more directly on gaming. At first, the Xbox One came with the Kinect, a device that let people control the Xbox with voice commands and motion gestures. It wasn’t a major hit, and Microsoft wound up releasing a $400 Xbox package that left out the Kinect in 2014.

In later years, PlayStation 4 owners got access to exclusive games unavailable on other systems, including “Uncharted 4,” “Horizon Zero Dawn” and “Spider-Man.” The Xbox One got a few exclusives of its own, including “Halo 5.”

Still, each year the PlayStation 4 outsold Xbox One, according to IDC.

Microsoft has tweaked its gaming approach since the Xbox One launch. Phil Spencer, the executive vice president in charge of gaming at Microsoft, said in an interview with the Verge last year that console shipments, the usual measurement of success, were not as important as engagement, including the number of people are playing.

The shift follows revolutions in other Microsoft products under Satya Nadella, who replaced Steve Ballmer as CEO in 2014. The company stopped being so insistent on defending Windows. It released versions of its Office apps for Android and iOS, and it brought the Teams productivity app in the Office suite to Linux, the open-source operating system. Linux became accessible in Windows. Microsoft started migrating Office customers to subscriptions, and it gave away Windows 10 for free.

Microsoft’s CEO Satya Nadella speaks to participants during the Viva Technologie show at Parc des Expositions Porte de Versailles on May 24, 2018, in Paris.
Chesnot | Getty Images

The new Xbox Series X and S have no slate of exclusive new titles like last time. So how will Microsoft stand out?

The answer is Xbox Game Pass, an online subscription service that gives customers a catalog of more than 100 games, spanning all three previous Xbox consoles, to download — all for as little as $10 a month. Microsoft plans to bolster the service with new titles over time, just as Netflix does with video.

Microsoft’s offering is broader than Sony’s new PlayStation Plus Collection, a similar service with 20 PlayStation 4 games people can play if they subscribe to the PlayStation Plus online multiplayer service, which costs $5 per month.

Game Pass subscribers who pay an additional $5 per month get access to a service for playing Xbox games on Android devices; the games are delivered over the internet from Microsoft data centers. (Microsoft wants to provide a similar service for iOS device, but says Apple’s App Store policies have prevented it from doing so.)

The mobile option represents an answer of sorts to the Nintendo Switch, which delivers powerful gameplay in a portable design. Sony’s PlayStation Now cloud gaming service does not support mobile devices.

Studio deals

More games are coming.

Microsoft’s gaming wing has been on an acquisition spree, with 23 game-development studios, including those stemming from the $7.5 billion Zenimax acquisition Microsoft announced in September. It’s up from 11 in 2018 and larger than Sony’s 14-studio collection. Microsoft has approached game developers in Japan, the home country of Nintendo and Sony, Bloomberg reported earlier this week.

Microsoft’s 343 Industries studio was supposed to release the next episode in its popular “Halo” series of science-fiction shooting games this holiday season to go along with the new Xbox consoles, but in August the company announced the game would be delayed until 2021.

In contrast, both the $500 PlayStation 5 and the $400 PlayStation 5 Digital Edition (which has no disc drive) can play exclusive games such as “Marvel’s Spider-Man: Miles Morales” and “Demon’s Souls.” The PS5 also boasts a software overhaul and major controller design.

Without any of these features in the new Xboxes, people are looking for hardware improvements as a reason to go with Microsoft.

They are there, but they might not be enough to topple Sony.

What Microsoft cares about now

“I don’t see any technologies in this generation that provide an obvious bump to the content,” said Seamus Blackley, the former Microsoft employee credited as the father of the Xbox, who first pushed Microsoft to take on Sony.

Blackley has tried Microsoft’s new gaming hardware, and he said he thought that Sony’s PlayStation 5 will have the upper hand at least at first.

IDC concurs with Blackley’s expectation. Lewis Ward, IDC’s research director for gaming, said he expects Sony to sell as many as 5 million PlayStation 5 consoles this year, and he sees Microsoft selling 3.8 million Xbox Series X and S consoles. (Microsoft will sell every console it makes this year and expects a record holiday in terms of gaming usage, Jerret West, chief marketing officer of Microsoft’s Xbox business, told CNBC in an email. Tim Stuart, chief financial officer of Microsoft’s Xbox business, told Jefferies analyst Brent Thill on Thursday that he expects supply to outstrip demand in the fourth quarter and the first quarter.)

Investors are focusing less on Microsoft’s console sales anyway. Last year the company introduced a new metric: Xbox content and services revenue growth, which includes subscriptions to Game Pass and the longstanding Xbox Live service for online play, as well as sales of popular games such as Minecraft for non-Microsoft devices. That figure has been higher than overall gaming revenue growth in each of the past four quarters.

Moreover, higher console sales do not necessarily help Microsoft’s finances. The more console revenue Microsoft ends up with in its current fiscal year, which ends June 30, the lower the company’s total gross margin will be, Morgan Stanley analysts Keith Weiss and Josh Baer wrote in a note distributed to clients last month.

“I do think that Sony will probably come out of the gate more quickly with selling hardware, but I don’t think that Microsoft cares,” said Ben Throop, founder of Vermont game-development company Frame Interactive. He’s worked on several PlayStation games, and he expects to buy a new PlayStation and a new Xbox — just not right away. He said Microsoft is more focused on racking up Game Pass subscribers than moving consoles, unlike Sony.

West countered that Microsoft offers the most powerful console ever built, and claimed that it absolutely does care about selling consoles.

“But focusing solely on the console is an incomplete way to evaluate the gaming industry and how it will grow in the future,” he wrote. “Developers that work with us can reach gamers across PC, console, and mobile through the cloud. And all the new players picking up their games have just as many options for how to play.”

WATCH: Next-gen Xbox and PlayStation consoles face a ‘challenging battle’: Analyst

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Ottawa orders TikTok’s Canadian arm to be dissolved

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The federal government is ordering the dissolution of TikTok’s Canadian business after a national security review of the Chinese company behind the social media platform, but stopped short of ordering people to stay off the app.

Industry Minister François-Philippe Champagne announced the government’s “wind up” demand Wednesday, saying it is meant to address “risks” related to ByteDance Ltd.’s establishment of TikTok Technology Canada Inc.

“The decision was based on the information and evidence collected over the course of the review and on the advice of Canada’s security and intelligence community and other government partners,” he said in a statement.

The announcement added that the government is not blocking Canadians’ access to the TikTok application or their ability to create content.

However, it urged people to “adopt good cybersecurity practices and assess the possible risks of using social media platforms and applications, including how their information is likely to be protected, managed, used and shared by foreign actors, as well as to be aware of which country’s laws apply.”

Champagne’s office did not immediately respond to a request for comment seeking details about what evidence led to the government’s dissolution demand, how long ByteDance has to comply and why the app is not being banned.

A TikTok spokesperson said in a statement that the shutdown of its Canadian offices will mean the loss of hundreds of well-paying local jobs.

“We will challenge this order in court,” the spokesperson said.

“The TikTok platform will remain available for creators to find an audience, explore new interests and for businesses to thrive.”

The federal Liberals ordered a national security review of TikTok in September 2023, but it was not public knowledge until The Canadian Press reported in March that it was investigating the company.

At the time, it said the review was based on the expansion of a business, which it said constituted the establishment of a new Canadian entity. It declined to provide any further details about what expansion it was reviewing.

A government database showed a notification of new business from TikTok in June 2023. It said Network Sense Ventures Ltd. in Toronto and Vancouver would engage in “marketing, advertising, and content/creator development activities in relation to the use of the TikTok app in Canada.”

Even before the review, ByteDance and TikTok were lightning rod for privacy and safety concerns because Chinese national security laws compel organizations in the country to assist with intelligence gathering.

Such concerns led the U.S. House of Representatives to pass a bill in March designed to ban TikTok unless its China-based owner sells its stake in the business.

Champagne’s office has maintained Canada’s review was not related to the U.S. bill, which has yet to pass.

Canada’s review was carried out through the Investment Canada Act, which allows the government to investigate any foreign investment with potential to might harm national security.

While cabinet can make investors sell parts of the business or shares, Champagne has said the act doesn’t allow him to disclose details of the review.

Wednesday’s dissolution order was made in accordance with the act.

The federal government banned TikTok from its mobile devices in February 2023 following the launch of an investigation into the company by federal and provincial privacy commissioners.

— With files from Anja Karadeglija in Ottawa

This report by The Canadian Press was first published Nov. 6, 2024.

The Canadian Press. All rights reserved.

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Here is how to prepare your online accounts for when you die

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LONDON (AP) — Most people have accumulated a pile of data — selfies, emails, videos and more — on their social media and digital accounts over their lifetimes. What happens to it when we die?

It’s wise to draft a will spelling out who inherits your physical assets after you’re gone, but don’t forget to take care of your digital estate too. Friends and family might treasure files and posts you’ve left behind, but they could get lost in digital purgatory after you pass away unless you take some simple steps.

Here’s how you can prepare your digital life for your survivors:

Apple

The iPhone maker lets you nominate a “ legacy contact ” who can access your Apple account’s data after you die. The company says it’s a secure way to give trusted people access to photos, files and messages. To set it up you’ll need an Apple device with a fairly recent operating system — iPhones and iPads need iOS or iPadOS 15.2 and MacBooks needs macOS Monterey 12.1.

For iPhones, go to settings, tap Sign-in & Security and then Legacy Contact. You can name one or more people, and they don’t need an Apple ID or device.

You’ll have to share an access key with your contact. It can be a digital version sent electronically, or you can print a copy or save it as a screenshot or PDF.

Take note that there are some types of files you won’t be able to pass on — including digital rights-protected music, movies and passwords stored in Apple’s password manager. Legacy contacts can only access a deceased user’s account for three years before Apple deletes the account.

Google

Google takes a different approach with its Inactive Account Manager, which allows you to share your data with someone if it notices that you’ve stopped using your account.

When setting it up, you need to decide how long Google should wait — from three to 18 months — before considering your account inactive. Once that time is up, Google can notify up to 10 people.

You can write a message informing them you’ve stopped using the account, and, optionally, include a link to download your data. You can choose what types of data they can access — including emails, photos, calendar entries and YouTube videos.

There’s also an option to automatically delete your account after three months of inactivity, so your contacts will have to download any data before that deadline.

Facebook and Instagram

Some social media platforms can preserve accounts for people who have died so that friends and family can honor their memories.

When users of Facebook or Instagram die, parent company Meta says it can memorialize the account if it gets a “valid request” from a friend or family member. Requests can be submitted through an online form.

The social media company strongly recommends Facebook users add a legacy contact to look after their memorial accounts. Legacy contacts can do things like respond to new friend requests and update pinned posts, but they can’t read private messages or remove or alter previous posts. You can only choose one person, who also has to have a Facebook account.

You can also ask Facebook or Instagram to delete a deceased user’s account if you’re a close family member or an executor. You’ll need to send in documents like a death certificate.

TikTok

The video-sharing platform says that if a user has died, people can submit a request to memorialize the account through the settings menu. Go to the Report a Problem section, then Account and profile, then Manage account, where you can report a deceased user.

Once an account has been memorialized, it will be labeled “Remembering.” No one will be able to log into the account, which prevents anyone from editing the profile or using the account to post new content or send messages.

X

It’s not possible to nominate a legacy contact on Elon Musk’s social media site. But family members or an authorized person can submit a request to deactivate a deceased user’s account.

Passwords

Besides the major online services, you’ll probably have dozens if not hundreds of other digital accounts that your survivors might need to access. You could just write all your login credentials down in a notebook and put it somewhere safe. But making a physical copy presents its own vulnerabilities. What if you lose track of it? What if someone finds it?

Instead, consider a password manager that has an emergency access feature. Password managers are digital vaults that you can use to store all your credentials. Some, like Keeper,Bitwarden and NordPass, allow users to nominate one or more trusted contacts who can access their keys in case of an emergency such as a death.

But there are a few catches: Those contacts also need to use the same password manager and you might have to pay for the service.

___

Is there a tech challenge you need help figuring out? Write to us at onetechtip@ap.org with your questions.

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Google’s partnership with AI startup Anthropic faces a UK competition investigation

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LONDON (AP) — Britain’s competition watchdog said Thursday it’s opening a formal investigation into Google’s partnership with artificial intelligence startup Anthropic.

The Competition and Markets Authority said it has “sufficient information” to launch an initial probe after it sought input earlier this year on whether the deal would stifle competition.

The CMA has until Dec. 19 to decide whether to approve the deal or escalate its investigation.

“Google is committed to building the most open and innovative AI ecosystem in the world,” the company said. “Anthropic is free to use multiple cloud providers and does, and we don’t demand exclusive tech rights.”

San Francisco-based Anthropic was founded in 2021 by siblings Dario and Daniela Amodei, who previously worked at ChatGPT maker OpenAI. The company has focused on increasing the safety and reliability of AI models. Google reportedly agreed last year to make a multibillion-dollar investment in Anthropic, which has a popular chatbot named Claude.

Anthropic said it’s cooperating with the regulator and will provide “the complete picture about Google’s investment and our commercial collaboration.”

“We are an independent company and none of our strategic partnerships or investor relationships diminish the independence of our corporate governance or our freedom to partner with others,” it said in a statement.

The U.K. regulator has been scrutinizing a raft of AI deals as investment money floods into the industry to capitalize on the artificial intelligence boom. Last month it cleared Anthropic’s $4 billion deal with Amazon and it has also signed off on Microsoft’s deals with two other AI startups, Inflection and Mistral.

The Canadian Press. All rights reserved.

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