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A-cartoon-image-of-the-logos-for-OpenAI-Anthropic-and-Grok-standing-at-a-crossroads

AI industry at a crossroads

Lou Covey

The AI industry appears to be reaching a crossroads that will determine its future in the next two years. The only clear outcome is it will not be what it is now, nor what it is predicted to be.

Most doomsayers and cheerleaders largely agree on a single vision: The technology will destroy hundreds of thousands of jobs. Wealthy investors and captains of industry consider that a good thing and mumble about universal income legislation and Star-Trekkian futures. White-color workers and unions see the future less optimistically. But cooler heads see a precarious future. Those cooler heads include Anthropic’s Claude, OpenAI’s Chat GPT, and X.ai’s Grok. Cyber Protection Magazine talked to all three, and they all came up with four likely scenarios that may be brewing even as this article is read.

A security breach or a major AI system collapse.
Technical plateau causing diminishing returns on scalability.
Strict regulatory legislation that stifles innovation and makes development too expensive to pursue.
A significant economic downturn or massive market correction drying up capital investment.

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A world surrounded by disconnected data centers

Prediction 2026: Beginning of the end of the WWW

Lou Covey

As the world stumbles head on into deglobalization we predict national sovereign clouds will replace international access to data. That is good news for in-country corporations and for security companies in specific fields. It may not be so good for large multinational tech firms and people living in authoritarian countries. It may also mean the end of the World Wide Web.

Sovereign clouds used to be referred as proprietary clouds to keep intellectual property (IP) secure. National sovereign clouds today are used to control access to citizens private data. For big tech, multiple governments require organizations to comply with data protection laws requiring specific data residency and management practices. National sovereign clouds facilitate that within the country but create significant complexity for multinational operations. Even within a specific politico-economic bloc like the EU, there are different regulations within the bloc for data security.

In a recent blog post, Cory Doctorow summed up the current business climate caused by geopolitical shifts, "There's finally political space to stop worrying about tariffs and reconsider anti-circumvention laws, to create disenshittification nations that stage raids on the most valuable lines of business of the most profitable companies in world history – Big Tech."

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Wizards making predictions

When predictions fail

Lou Covey

It’s that time of year when the weather turns cold, shoppers obsess over gift ideas, and tech companies start pounding the inbox with predictions for the next year. But for Cyber Protection Magazine we collect them all through December and compile them in January. Today we will look back and see how we did on our predictions for 2025.

Usually, we do quite well. This year…not so good. It might be because we changed how we did our predictions In January 2025. We ran several prediction articles from various companies and hand-selected a few we thought we could agree with. That was a mistake.

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Sarah Ralston, CPO of Proxyware

The problem with proxies

Lou Covey

Proxies are absolutely crucial to the operation of the internet, but they also represent a clear and present danger to users. Finding that balance is pretty much a full-time job for cybersecurity. The recent Amazon Web Services (AWS) and Microsoft Azure outages are good examples of that.

Amazon explained the outage was caused by “failing intermediaries” monitoring system health, preventing proper traffic routing. Another word for intermediaries is “proxies”. When the monitoring subsystem malfunctioned, health check updates were not propagated properly, causing backend servers to appear offline even when they were active, which invalidated DNS lookups. This created a cascading failure.
Likewise, the Azure outage was caused by a misconfiguration of the proxy Front Door, a global entry point for content delivery network functionality, load balancing, and application acceleration.

How Proxies Function

When a user wants to access a website, the request goes to the proxy server instead of going directly to the internet. The proxy server receives the request, then forwards it to the target website. It modifies the request header to hide the user's original IP address.

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Gartner hype cycle shows generative AI well down the slope into the trough if disillusionment

Credibility and fortunes at risk with AI

Lou Covey

The failure of the current iteration of generative AI to live up to its promises is putting severe strain on its credibility. A collapse could result in the destruction of personal wealth on a massive scale. While it is probably a given that the artificial intelligence (AI) industry is here to stay, questions are many. What form will survive, what will it really cost, and what is the near-term effect on other sectors like the cybersecurity industry?
There are more than 5,000 cybersecurity tool providers and thousands more MSSPs and all of them, in some form, are reliant on AI to some degree. Cybersecurity marketing, investment, and especially technology development could be a disastrous dependency… or not.
AI startup funding reached $333 billion in 2024 AI in 2024. Global venture capital funding for generative AI reached approximately $45 billion in 2024, from $24 billion in 2023 AI Investment Trends 2025. AI-related investments accounted for 33 percent of total investments into VC-backed companies in the U.S. This year, global venture capital investment in generative AI appears ready to dwarf those totals, with $49.2 billion in the first half of 2025. It is on track to exceed $100 billion this year .
The big knock on AI is the lack of an effective infrastructure to support the claims the AI companies are making on potential uses. In response, tech giants are making massive infrastructure investments: More than $300 billion has been invested this year on AI infrastructure tech megacaps plan to spend more than $300 billion in 2025 as AI race intensifies.

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A man is besieged by robots offering products, sevices and scams

Preview: Special Issue on NHI

Lou Covey

For good or bad, we are in the age of autonomous artificial intelligence systems. They can be categorized as bots, AI, agents, daemons, work flows, digital workers and a dozen others. Some may argue all of that are completely separate things but for the purpose of this article, we will call them all non-human identities (NHI). Their purpose is to eliminate the need for humans to do that same work. The problem is, humans are almost outnumbered by the total of good and bad.

This interview with Mike Towers, chief security and trust officer at Veza previews our coverage of the rise of and issues related to NHI. To read the entire issue, get a subscription today.

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Bruce Schneier

Schneier predicts “public” LLMs

Lou Covey

ibuted and democratic, according to renowned security technologist, Bruce Schneier, not controlled by corporations. Developments in the past few weeks indicate he may be right.

Speaking at the RSAC Conference in San Francisco last week, Schneier talked of trust and how we give it to people, strangers, organizations, and technology. His description of that process predicted the development of artificial intelligence controlled almost exclusively by the user, rather than the dystopian corporate AI replacing humanity.

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Engineer calibrating laser on Atom computer

An encryption primer: Don’t wait

Lou Covey

Encryption became a hot topic in the news in the past month. The United Kingdom, Sweden, France and the EU are considering requiring “back doors” to encryption protections. The “Signalgate” scandal in Washington, DC started most people asking, “What is this encryption stuff?” So we decided to provide a primer on the state of encryption today.

While the technology behind encryption is complex, it is not new. The basic algorithms have been with us for decades, silently running on devices and servers, invisible to the user. The purpose is basic: to keep data safe from prying eyes, like criminals and nation states.

Encryption is also a good way of saving money and not just in avoiding ransoms. Insurance companies often offer up to 15% premium discounts to businesses demonstrating strong security practices, including proper data encryption. Encryption significantly reduces the risk of data breaches and their associated costs.

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