U.S. GDP growth in the first half of 2025 was driven almost entirely by investment in data centers and information processing technology. The GDP growth would have been just 0.1% on an annualized basis without these technology-related categories, according to Harvard economist Jason Furman. Investment in information-processing equipment and software accounted for only 4% of U.S. GDP during this period but represented 92% of GDP growth.

Renaissance Macro Research estimated in August that the dollar value contributed to GDP growth by AI data-center buildout had surpassed U.S. consumer spending for the first time. Consumer spending makes up two-thirds of GDP. Tech giants including Microsoft, Google, Amazon, Meta and Nvidia poured tens of billions of dollars into building and upgrading data centers.

Microsoft is eliminating all known workarounds that let users install Windows 11 without an internet connection or Microsoft account, forcing everyone through the online setup process. The Verge reports: "We are removing known mechanisms for creating a local account in the Windows Setup experience (OOBE)," says Amanda Langowski, the lead for the Windows Insider Program. "While these mechanisms were often used to bypass Microsoft account setup, they also inadvertently skip critical setup screens, potentially causing users to exit OOBE with a device that is not fully configured for use."

The changes mean Windows 11 users will need to complete the OOBE screens with an internet connection and Microsoft account in future versions of the OS. Microsoft already removed the "bypassnro" workaround earlier this year, and today's changes also disable the "start ms-cxh:localonly" command that Windows 11 users discovered after Microsoft's previous changes. Using this command now resets the OOBE process and it fails to bypass the Microsoft account requirement.

Microsoft said in a statement Monday it remains committed to developing first-party Xbox consoles. The reassurance came after rumors circulated suggesting the gaming division might abandon hardware manufacturing. The speculation gained traction following a 50% price increase for Xbox Game Pass Ultimate and retailers including Costco removing Xbox products from their shelves.

Microsoft said it is "actively investing in our future first-party consoles and devices designed, engineered and built by Xbox." The company's multi-year partnership with AMD for next-generation hardware also continues. Devices in development include the Xbox Ally range under codenames Omni and Horseman, according to Windows Central. Xbox Series X and Series S production has also not stopped, the report added.

European labor regulations enacted nearly a century ago now impose costs on companies that discourage investment in disruptive technologies. An American firm shedding workers incurs costs equivalent to seven months of wages per employee. In Germany the figure reaches 31 months. In France it reaches 38 months. The expense extends beyond severance pay and union negotiations. Companies retain unproductive workers they would prefer to dismiss.

New investments face delays of years as dismissed employees are gradually replaced. Olivier Coste, a former EU official turned tech entrepreneur, and economist Yann Coatanlem tracked these opaque restructuring costs and found that European firms avoid risky ventures because of them. Large companies typically finance ten risky projects where eight fail and require mass redundancies. Apple developed a self-driving car for years before abandoning the effort and firing 600 employees in 2024. The two successful projects generate profits worth many times the invested sums. This calculus works in America where failure costs remain low. In Europe the same bet becomes financially unviable.

European blue-chip firms sell products that are improved versions of what they sold in the 20th century -- turbines, shampoos, vaccines, jetliners. American star firms peddle AI chatbots, cloud computers, reusable rockets. Nvidia is worth more than the European Union's 20 biggest listed firms combined. Microsoft, Google, and Meta each fired over 10,000 staff in recent years despite thriving businesses. Satya Nadella called firing people during success the "enigma of success." Bosch and Volkswagen recently announced layoffs with timelines stretching to 2030.

The Washington Post notes AI's "increasingly outsize role" in propping up America's economic fortunes.

"Last week, the United States reported that the economy expanded at a rate of 1.6 percent in the first half of the year, with most of that growth driven by AI spending. Without AI investment, growth would have been at about a third of that rate, according to data from the Bureau of Economic Analysis." The huge economic influence of AI spending illustrates how Silicon Valley is placing a bet of unprecedented scale that the technology will revolutionize every aspect of life and work. Its sway suggests there will be economic damage far beyond Silicon Valley if that bet doesn't work out or companies pull back. Google, Meta, Microsoft and Amazon are on track to spend nearly $400 billion this year on data centers...

Concern about a potential bubble in AI investment has recently grown in technology and financial circles. ChatGPT and other AI tools are hugely popular with companies and consumers, and hundreds of billions of dollars has been sunk into AI ventures over the past three years. But few of the new initiatives are profitable, and huge profits will be needed for the immense investments to pay off... "I'm getting more and more skeptical and more and more concerned with what's happening" with artificial intelligence, said Andrew Odlyzko, an economic historian and University of Minnesota emeritus professor who has studied financial bubbles closely, including the telecom bubble that collapsed in 2001 as part of the dot-com crash. Some industry insiders have expressed concern that the latest AI releases have fallen short of expectations, suggesting the technology may not advance enough to pay back the huge investments being made, he said. "AI is a craze," Odlyzko said...

[The Federal Reserve's August "beige book" summarizes interviews with business owners across the country, according to the article — and it found surging investments in AI data centers, which could tie their fortunes to other sectors.] That's boosting demand for electricity and trucking in the Atlanta region, a hot spot for the facilities, and creating new projects for commercial real estate developers in the Philadelphia region. Because tech companies now dominate public markets, any change in their fortunes and share prices can also have a powerful influence on stock indexes, 401(k)s and the wider economy... Stock market slumps can have knock-on effects by undercutting the confidence of American businesses and consumers, leading them to spend less, said Gregory Daco [chief economist at strategy consulting firm EY-Parthenon]... "That directly affects economic activity," he said, potentially widening the economic fallout...

Goldman Sachs analysts wrote in a Sept. 4 note to clients that even if AI investment works out for companies like Google, there will be an "inevitable slowdown" in data center construction. That will cut revenue to companies providing the projects with chips and electricity, the note said. In a more extreme scenario where Big Tech pulls back spending to 2022 levels, the entire S&P 500 would lose 30 percent of the revenue growth Wall Street currently expects next year, the analysts wrote.
The AI bubble is 17 times the size of the dot-com frenzy — and four times the subprime bubble, according to estimates in a recent note from independent research firm the MacroStrategy Partnership (as reported by MarketWatch).

And "never before has so much money been spent so rapidly on a technology that, for all its potential, remains somewhat unproven as a profit-making business model," writes Bloomberg, adding that OpenAI and other large tech companies are "relying increasingly on debt to support their unprecedented spending." (Although Bloomberg also notes that ChatGPT alone has roughly 700 million weekly users, and that last month Anthropic reported roughly three quarters of companies are using Claude to automate work.)

The book Life 3.0 remembers a 2017 conversation where Alphabet CEO Larry Page "made a 'passionate' argument for the idea that 'digital life is the natural and desirable next step' in 'cosmic evolution'," remembers an essay in the Wall Street Journal. "Restraining the rise of digital minds would be wrong, Page contended. Leave them off the leash and let the best minds win..."

"As it turns out, Larry Page isn't the only top industry figure untroubled by the possibility that AIs might eventually push humanity aside. It is a niche position in the AI world but includes influential believers. Call them the Cheerful Apocalyptics... " I first encountered such views a couple of years ago through my X feed, when I saw a retweet of a post from Richard Sutton. He's an eminent AI researcher at the University of Alberta who in March received the Turing Award, the highest award in computer science... [Sutton had said if AI becomes smarter than people — and then can be more powerful — why shouldn't it be?] Sutton told me AIs are different from other human inventions in that they're analogous to children. "When you have a child," Sutton said, "would you want a button that if they do the wrong thing, you can turn them off? That's much of the discussion about AI. It's just assumed we want to be able to control them." But suppose a time came when they didn't like having humans around? If the AIs decided to wipe out humanity, would he be at peace with that? "I don't think there's anything sacred about human DNA," Sutton said. "There are many species — most of them go extinct eventually. We are the most interesting part of the universe right now. But might there come a time when we're no longer the most interesting part? I can imagine that.... If it was really true that we were holding the universe back from being the best universe that it could, I think it would be OK..."

I wondered, how common is this idea among AI people? I caught up with Jaron Lanier, a polymathic musician, computer scientist and pioneer of virtual reality. In an essay in the New Yorker in March, he mentioned in passing that he had been hearing a "crazy" idea at AI conferences: that people who have children become excessively committed to the human species. He told me that in his experience, such sentiments were staples of conversation among AI researchers at dinners, parties and anyplace else they might get together. (Lanier is a senior interdisciplinary researcher at Microsoft but does not speak for the company.)"There's a feeling that people can't be trusted on this topic because they are infested with a reprehensible mind virus, which causes them to favor people over AI when clearly what we should do is get out of the way." We should get out of the way, that is, because it's unjust to favor humans — and because consciousness in the universe will be superior if AIs supplant us. "The number of people who hold that belief is small," Lanier said, "but they happen to be positioned in stations of great influence. So it's not something one can ignore...."

You may be thinking to yourself: If killing someone is bad, and if mass murder is very bad, then the extinction of humanity must be very, very bad — right? What this fails to understand, according to the Cheerful Apocalyptics, is that when it comes to consciousness, silicon and biology are merely different substrates. Biological consciousness is of no greater worth than the future digital variety, their theory goes... While the Cheerful Apocalyptics sometimes write and talk in purely descriptive terms about humankind's future doom, two value judgments in their doctrines are unmissable.The first is a distaste, at least in the abstract, for the human body. Rather than seeing its workings as awesome, in the original sense of inspiring awe, they view it as a slow, fragile vessel, ripe for obsolescence... The Cheerful Apocalyptics' larger judgment is a version of the age-old maxim that "might makes right"...

Currently DNA synthesis companies "deploy biosecurity software designed to guard against nefarious activity," reports the Washington Post, "by flagging proteins of concern — for example, known toxins or components of pathogens." But Microsoft researchers discovered "up to 100 percent" of AI-generated ricin-like proteins evaded detection — and worked with a group of leading industry scientists and biosecurity experts to design a patch. Microsoft's chief science officer called it "a Windows update model for the planet.

"We will continue to stay on it and send out patches as needed, and also define the research processes and best practices moving forward to stay ahead of the curve as best we can."

But is that enough? Outside biosecurity experts applauded the study and the patch, but said that this is not an area where one single approach to biosecurity is sufficient. "What's happening with AI-related science is that the front edge of the technology is accelerating much faster than the back end ... in managing the risks," said David Relman, a microbiologist at Stanford University School of Medicine. "It's not just that we have a gap — we have a rapidly widening gap, as we speak. Every minute we sit here talking about what we need to do about the things that were just released, we're already getting further behind."
The Washington Post notes not every company deploys biosecurity software. But "A different approach, biosecurity experts say, is to ensure AI software itself is imbued with safeguards before digital ideas are at the cusp of being brought into labs for research and experimentation." "The only surefire way to avoid problems is to log all DNA synthesis, so if there is a worrisome new virus or other biological agent, the sequence can be cross-referenced with the logged DNA database to see where it came from," David Baker, who shared the Nobel Prize in chemistry for his work on proteins, said in an email.

"Microsoft buys a lot of GPUs from both Nvidia and AMD," writes the Register. "But moving forward, Redmond's leaders want to shift the majority of its AI workloads from GPUs to its own homegrown accelerators..." Driving the transition is a focus on performance per dollar, which for a hyperscale cloud provider is arguably the only metric that really matters. Speaking during a fireside chat moderated by CNBC on Wednesday, Microsoft CTO Kevin Scott said that up to this point, Nvidia has offered the best price-performance, but he's willing to entertain anything in order to meet demand.

Going forward, Scott suggested Microsoft hopes to use its homegrown chips for the majority of its datacenter workloads. When asked, "Is the longer term idea to have mainly Microsoft silicon in the data center?" Scott responded, "Yeah, absolutely...

Microsoft is reportedly in the process of bringing a second-generation Maia accelerator to market next year that will no doubt offer more competitive compute, memory, and interconnect performance... It should be noted that AI accelerators aren't the only custom chips Microsoft has been working on. Redmond also has its own CPU called Cobalt and a whole host of platform security silicon designed to accelerate cryptography and safeguard key exchanges across its vast datacenter domains.

An anonymous reader shares a report from The Verge: Microsoft is getting ready to announce an ad-supported version of Xbox Cloud Gaming. Sources familiar with Microsoft's plans tell The Verge that the software maker has started testing ad-supported games streaming internally, allowing employees to play select titles free without a Game Pass subscription.

I understand that the free ad-supported version of Xbox Cloud Gaming will include the ability to stream some games you own, as well as eligible Free Play Days titles, which let Xbox players try games over a weekend. You'll also be able to stream Xbox Retro Classics games. Sources tell me the internal testing includes around two minutes of preroll ads before a game is available to stream for free through Xbox Cloud Gaming. [...] The ad-supported Xbox Cloud Gaming version will be available on PC, Xbox consoles, handheld devices, and via the web.

theodp writes: From Thursday's Code.org press release announcing the replacement of the annual Hour of Code for K-12 schoolkids with the new Hour of AI: "A decade ago, the Hour of Code ignited a global movement that introduced millions of students to computer science, inspiring a generation of creators. Today, Code.org announced the next chapter: the Hour of AI, a global initiative developed in collaboration with CSforALL and supported by dozens of leading organizations. [...] As artificial intelligence rapidly transforms how we live, work, and learn, the Hour of AI reflects an evolution in Code.org's mission: expanding from computer science education into AI literacy. This shift signals how the education and technology fields are adapting to the times, ensuring that students are prepared for the future unfolding now."

"Just as the Hour of Code showed students they could be creators of technology, the Hour of AI will help them imagine their place in an AI-powered world," said Hadi Partovi, CEO and co-founder of Code.org. "Every student deserves to feel confident in their understanding of the technology shaping their future. And every parent deserves the confidence that their child is prepared for it."

"Backed by top organizations such as Microsoft, Amazon, Anthropic, Zoom, LEGO Education, Minecraft, Pearson, ISTE, Common Sense Media, American Federation of Teachers (AFT), National Education Association (NEA), and Scratch Foundation, the Hour of AI is designed to bring AI education into the mainstream. New this year, the National Parents Union joins Code.org and CSforALL as a partner to emphasize that AI literacy is not only a student priority but a parent imperative."

The announcement of the tech-backed K-12 CS education nonprofit's mission shift into AI literacy comes just days after Code.org's co-founders took umbrage with a NY Times podcast that discussed "how some of the same tech companies that pushed for computer science are now pivoting from coding to pushing for AI education and AI tools in schools" and advancing the narrative that "the country needs more skilled AI workers to stay competitive, and kids who learn to use AI will get better job opportunities."

Ha Dang, a self-taught accountant from Scunthorpe who trained via YouTube, won the inaugural Microsoft Excel UK Championships on September 30. The victory earned him a spot at the Microsoft Excel World Championships in Las Vegas, a three-day tournament inside a 30,000-square-foot esports arena where players compete for $5,000 and are broadcast on ESPN.

Thirty competitors sat shoulder to shoulder through three gruelling rounds of spreadsheet challenges. Each round featured a custom case with seven levels of increasing difficulty. The second round case, Right Royal Battle Part II, took 80 drafts to perfect. Players calculated troop sizes from emoji battalions and army movements across fourteenth-century France. Hadyn Wiseman, who once held the Guinness World Record for most backflips in a minute, placed fourth. Lara Holding-Jones finished thirteenth. Jaq Kennedy founded the UK chapter last year. National chapters have since formed in Germany, Brazil, and Chile.

An anonymous reader quotes a report from MIT Technology Review: A team at Microsoft says it used artificial intelligence to discover a "zero day" vulnerability in the biosecurity systems used to prevent the misuse of DNA. These screening systems are designed to stop people from purchasing genetic sequences that could be used to create deadly toxins or pathogens. But now researchers led by Microsoft's chief scientist, Eric Horvitz, says they have figured out how to bypass the protections in a way previously unknown to defenders.The team described its work today in the journalScience.

Horvitz and his team focused on generative AI algorithms that propose new protein shapes. These types of programs are already fueling the hunt for new drugs at well-funded startups like Generate Biomedicines and Isomorphic Labs, a spinout of Google. The problem is that such systems are potentially "dual use." They can use their training sets to generate both beneficial molecules and harmful ones. Microsoft says it began a "red-teaming" test of AI's dual-use potential in 2023 in order to determine whether "adversarial AI protein design" could help bioterrorists manufacture harmful proteins.

The safeguard that Microsoft attacked is what's known as biosecurity screening software. To manufacture a protein, researchers typically need to order a corresponding DNA sequence from a commercial vendor, which they can then install in a cell. Those vendors use screening software to compare incoming orders with known toxins or pathogens. A close match will set off an alert. To design its attack, Microsoft used several generative protein models (including its own, called EvoDiff) to redesign toxins -- changing their structure in a way that let them slip past screening software but was predicted to keep their deadly function intact. "This finding, combined with rapid advances in AI-enabled biological modeling, demonstrates the clear and urgent need for enhanced nucleic acid synthesis screening procedures coupled with a reliable enforcement and verification mechanism," says Dean Ball, a fellow at the Foundation for American Innovation, a think tank in San Francisco.

Top college degrees may no longer provide the edge they once did in the job market, per LinkedIn CEO Ryan Roslansky. "I think the mindset shift is probably the most exciting thing because my guess is that the future of work belongs not anymore to the people that have the fanciest degrees or went to the best colleges, but to the people who are adaptable, forward thinking, ready to learn, and ready to embrace these tools," Roslansky said. "It really kind of opens up the playing field in a way that I think we've never seen before."

A 2024 Microsoft survey found 71% of business leaders would choose less-experienced candidates with AI skills over experienced candidates without them. LinkedIn data showed job postings requiring AI literacy increased about 70% year-over-year. Roslansky said AI will not replace humans but people who embrace AI will replace those who don't.

Microsoft has announced that Xbox Game Pass Ultimate will cost $29.99 per month, up from $19.99. The company restructured its subscription service into three tiers ahead of the October 16 launch of two Xbox ROG Ally handheld consoles. The new Essential tier offers 50-plus games for $9.99 monthly. Premium includes 200-plus games for $14.99. Ultimate subscribers gain access to more than 400 games, day-one releases, improved cloud streaming quality, and services including EA Play, Ubisoft+ Classics, and Fortnite Crew.

Game Pass generated nearly $5 billion in fiscal 2025 revenue with 34 million subscribers in 2024. Console hardware prices are also increasing, with the Xbox Series X rising $50 to $649.99 starting October 3.

Microsoft is promoting Judson Althoff, currently executive vice president and chief commercial officer at Microsoft, to a new role as CEO of its commercial business. From a report: It's the latest shakeup inside the company, as Microsoft navigates what CEO Satya Nadella calls a "tectonic AI platform shift." It's also a move that will allow Nadella to focus on more technical work at Microsoft, while still remaining overall CEO.

In an internal memo to employees today, Nadella announced Althoff's promotion and said it's linked with the need for Microsoft to reinvent itself in the AI era and "bring together sales, marketing, operations, and engineering to drive growth and strengthen our position as the partner of choice for AI transformation." Althoff has led Microsoft's global sales organization for the past nine years, helping the company build out its Microsoft Customer and Partner Solutions (MCAPS) division. He will now also be responsible for the operations and marketing teams that help sell Microsoft's software and services to businesses, but not the engineering teams that help build them.

Microsoft began rolling out Windows 11 version 25H2 today, delivering the annual update as a compact enablement package to users who enable the "get the latest updates as soon as they're available" toggle in Windows Update. The company tested the release in its Windows Insider Release Preview ring during the previous month before the broader rollout.Version 25H2 shares its code base and servicing branch with the existing 24H2 release. Both versions will receive identical monthly feature updates going forward.

The update removes PowerShell 2.0 and the Windows Management Instrumentation command-line tool to reduce the operating system's footprint. John Cable, vice president of program management for Windows servicing and delivery, said the release includes advancements in build and runtime vulnerability detection paired with AI-assisted secure coding. Microsoft designed the version to address security threats under its security development lifecycle policy requirements. The company plans to expand availability over the coming months and will document known compatibility issues on its Windows release health hub. Devices with detected application or driver incompatibilities will receive safeguard holds that delay the update until resolution.

Chinese hackers breached email servers of foreign ministers as part of a years-long effort targeting the communications of diplomats around the world, according to researchers at the cybersecurity firm Palo Alto Networks. From a report: Attackers accessed Microsoft Exchange email servers, gaining the ability to search for information at some foreign ministries, said the team at Unit 42, the threat intelligence division of Palo Alto Networks, which has been tracking the group for nearly three years.

Hackers specifically searched in the email servers for key terms related to a China-Arab summit in Riyadh, Saudi Arabia, in 2022, said Lior Rochberger, senior researcher at the company. They also searched for names such as including Chinese President Xi Jinping and his wife, Peng Liyuan, in the context of that summit, the researchers said. The researchers declined to specifically identify which countries had their systems breached in the hacking campaign, but wrote in the report that the group's targeting patterns "align consistently with the People's Republic of China (PRC) economic and geopolitical interests."

Amazon today announced three new Kindle Scribe models, its e ink-featuring tables designed for note-taking and reading. The lineup includes the standard Kindle Scribe and a version without a front light alongside the Kindle Scribe Colorsoft. The new devices feature an 11-inch glare-free E Ink screen compared to the 10.2-inch display on previous models.

Amazon has reduced the weight to 400 grams from 433 grams and made the devices 5.4mm thin. The company added a quad-core processor and additional memory to deliver writing and page turns that are 40% faster than earlier versions. The Colorsoft model uses custom-built display technology to offer 10 pen colors and five highlighter colors. Amazon redesigned the software to include AI-powered notebook search and summaries. The devices will support Google Drive and Microsoft OneDrive for document access and allow users to export notes as editable text to OneNote. The standard Kindle Scribe will start at $499.99 and the Colorsoft at $629.99 when they become available later this year. The version without a front light will cost $429.99 and arrive early next year.

An anonymous reader shares a report: You've probably heard of vibe coding -- novices writing apps by creating a simple AI prompt -- but now Microsoft wants to introduce a similar thing for its Office apps. The software maker is launching a new Agent Mode in Excel and Word that can generate complex spreadsheets and documents with just a prompt. A new Office Agent in Copilot chat, powered by Anthropic models, is also launching today that can create PowerPoint presentations and Word documents from a "vibe working" chatbot.

[...] Agent Mode essentially takes a complex task and breaks it down with planning and reasoning that you can follow. It then uses OpenAI's GPT-5 model to break down each step of document creation into an agentic task and execute it. It's like watching an automated macro in real time, showing everything it's doing in the sidebar.

"Today's AIs are book smart," reports the Wall Street Journal. "Everything they know they learned from available language, images and videos. To evolve further, they have to get street smart."

And that requires "world models," which are "gaining momentum in frontier research and could allow technology to take on new roles in our lives." The key is enabling AI to learn from their environments and faithfully represent an abstract version of them in their "heads," the way humans and animals do. To do it, developers need to train AIs by using simulations of the world. Think of it like learning to drive by playing "Gran Turismo" or learning to fly from "Microsoft Flight Simulator." These world models include all the things required to plan, take actions and make predictions about the future, including physics and time... There's an almost unanimous belief among AI pioneers that world models are crucial to creating next-generation AI. And many say they will be critical to someday creating better-than-human "artificial general intelligence," or AGI. Stanford University professor and AI "godmother" Fei-Fei Li has raised $230 million to launch world-model startup World Labs...

Google DeepMind researchers set out to create a system that could generate real-world simulations with an unprecedented level of fidelity. The result, Genie 3 — which is still in research preview and not publicly available — can generate photo-realistic, open-world virtual landscapes from nothing more than a text prompt. You can think of Genie 3 as a way to quickly generate what's essentially an open-world videogame that can be as faithful to the real world as you like. It's a virtual space in which a baby AI can endlessly play, make mistakes and learn what it needs to do to achieve its goals, just as a baby animal or human does in the real world. That experimentation process is called reinforcement learning. Genie 3 is part of a system that could help train the AI that someday pilots robots, self-driving cars and other "embodied" AIs, says project co-lead Jack Parker-Holder. And the environments could be filled with people and obstacles: An AI could learn how to interact with humans by observing them moving around in that virtual space, he adds.
"It isn't clear whether all these bets will lead to the superintelligence that corporate leaders predict," the article concedes.

"But in the short term, world models could make AIs better at tasks at which they currently falter, especially in spatial reasoning."