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.
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.
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.
As quickly as the artificial intelligence (AI) industry appeared, it may disappear just as quickly. That may have significant ramifications for cybersecurity, according to industry watchers, as the technology falls into the trough of disillusionment.
When OpenAI burst on the scene more than two years ago, Microsoft was a significant instigator in its growth and adoption. Microsoft invested billions in the not-for-profit enterprise for early access to cutting-edge AI technologies and helping accelerate OpenAI's research. It transformed its Azure cloud platform into a leading infrastructure provider for AI development, offering specialized hardware (like GPUs and TPUs) and services tailored for machine learning workloads. AI capabilities were embedded across its product suite, and Microsoft Research contributed significantly to AI advancement in computer vision, natural language processing, and deep learning.
All of that came with extreme demands on computing resources. Microsoft began a buying spree in data centers, both to secure resources and build new centers. They even entered into a deal to reopen the notorious Three Mile Island nuclear power plant.
Spree ends
That has all come to an end. As reported in Bloomberg last week, the company decided to scale back data center projects in the UK, Australia, and Indonesia. Data center development in Illinois, North Dakota, and Wisconsin is also canceled. All tolled, Microsoft has walked away from more than 2GW. That’s on top of the news that Microsoft had walked away from two data center projects in the US and Europe, piling on to a February announcement that it was canceling data center leases.
Pig-butchering may be proving the Luddites were right. The social-engineering scam bypassed ransomware as the most profitable cybercrime approximately two years ago. After government regulations and law enforcement took a big bite out of returns for ransomware this past year, public-private partnerships are taking aim at the new champ.
TL;DR
* Pig butchering eclipses losses from ransomware
* Top targets are tech savvy people under 50
* Human error trumps cyber awareness
* Public/private partnerships making inroads at dismantling scam operations
* Tips to avoid scams
* Podcast with Arkose CEO
Between 2020 and 20023, scammers reaped more than $75 billion from victims around the world. Approximately 90 percent of the losses came from of purchasing fraudulent cryptocurrency, according to the US Treasury Department’s, Financial Crimes Enforcement Center. In comparison, ransomware attacks in that same period harvested $20 billion worldwide in ransoms and cost approximately another $20 billion in recovery costs.
State legislatures are scrambling hard to enact regulations of the cybersecurity and AI industries to protect them from themselves. And the leaders of those industries object to the efforts, like drug abusers forced into rehab.
For the past 10 years, the investor world shoveled money into any company that said they are focused on AI, but that support is starting to shake. Many AI startups that have received billions of investment are struggling financially, not the least of which is the elephant in the room, OpenAI. The most successful AI company in the world is on pace to lose $5 billion this year and, according to CEO Sam Altman, the company needs more than $8 billion more investment this year or will face bankruptcy inside 12 months.
Part of the loss of confidence in AI are the number of failures that seem to be increasing. The AI Incident Database, which chronicles incidents dating back to 1983, now contains 629 incidents. An even bigger reason is the self-governing rules the industry says it has adopted either don’t work or are ignored altogether.
The industry has generally acknowledged its weaknesses. More than a year ago, Altman sat before the US Senate essentially begging for the government to regulate the industry. Support for that legislation has waned, however, as 15 U.S. state legislatures are considering dozens of bills to regulate the development and use of artificial intelligence.
In a letter from OpenAI Chief Strategy Officer Jason Kwon to California Senator Scott Wiener (author of SB 1047), the company highlighted several reasons it opposed the bill, including the recommendation that regulation should be, "shaped and implemented at the federal level. A federally-driven set of AI policies, rather than a patchwork of state laws, will foster innovation and position the US to lead the development of global standards."
The “patchwork” argument has been used to oppose proposed laws in nine states. The problem with that is most federal laws come after a critical mass of laws at the state level. Historically, when two thirds of the sites pass similar laws, the US Congress considers standardizing them nationally. The US is less than halfway through that process.
The legislators authoring these bills seem to understand that they are not “experts” in technology and have been working with tech companies to make the bills more palatable. In California’s SB 1047, Weiner, removed provisions for criminal prosecution and an entirely new state bureaucracy to enforce the bill before it went to the governor’s desk last week. Instead, the bill merely directs the state attorney general to file civil charges when companies violate the mandates.
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The cybersecurity industry is just absolute chaos, and rightly so. This is the industry charged with plugging dikes during the Class-5 hurricane that the internet seems to be today. Nowhere is that chaos more evident than at RSAC just from a marketing perspective. Everyone has “ground-breaking”, “industry-leading”, and “first ever” product offerings and this year was no different. But if you can look past the Macho-man impersonations, Formula One cars, and the mesmerizing miasma of the website and show floor, you can see an order forming in the chaos. Change is coming.
Back to step one
RSA CEO Rohit Ghai, said we have missed a step in AI development. “We’ve seen it first as a co-pilot alongside of a human pilot and then see it taking over flying the plane.” He said the first step is making it an advanced cockpit making it easier for less trained and experienced people to do the work. He pointed out that cybersecurity is an industry with negative employment making it difficult to find experienced technicians to do the work.
Last year, any discussion of ethical development was met with confused stares. This year, the need for ethical AI development is taken seriously but few can see a profit in it. Cybersecurity VC Rob Ackerman (DataTribe) and Carmen Marsh, CEO of the United Cybersecurity Alliance, were open to suggestions,
“From the perspective of (companies like OpenAI), I understand the reasons to go as fast as they can to develop a true artificial intelligence, the question is, who are the people in the room guiding the process?” said Ackerman. “Once you get a diverse set of advisors working on the problem, then you do the best you can to create something ethical. But right now, we aren’t even doing the best we can.”
When we received an invitation to review AI Doctor we were quite excited to get a look inside what a serial entrepreneur, investor, and cardiologist thinks about dealing with those vulnerabilities.
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From our predictions issue: AI is rapidly infiltrating the business world and our daily lives. While revolutionizing how – and how efficiently – work gets done, it also introduces a new set of cybersecurity challenges.
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From our predictions issue: AI dominated the news in 2023. For 2024, our experts predict that AI will mature further, resulting in more AI-driven solutions in the cybersecurity industry.
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