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Many hotel chains are racing to replace the plastic room key with digital options, including Apple Wallet and Google Wallet apps. Plastic hotel key cards have had a rough few years. During the pandemic, touch was taboo, so touchless trends accelerated. And cybersecurity concerns have mounted around hotel key technology. Earlier this year, researchers found a vulnerability in plastic hotel keys that could render up to three million keys easy prey for hackers and take years to fix.

Cybersecurity and safety issues have prompted many hotel chains to accelerate plans to transform hotel room door locks. While major U.S. chains have had the digital key capability for years, Google Wallet and Apple Wallet are jumping in by offering hotels the ability to save guests’ room keys to their wallets, enabling them to access their rooms by simply tapping the back of their phones against a reader near the door handle.   

Hilton Hotels has its Honors app, which allows guests to check in and use a room key through their smartphone. The 119-room Harpeth Hotel in Franklin, Tennessee, is a Hilton property, and guests can check in digitally and store keys in their Google or Apple wallet app.

“The benefit to the digital check-in is that your phone is the key,” said Kimberly Elder, director of sales for the Harpeth Hotel, adding that many guests still prefer the plastic key cards.

Eli Fuchs, regional director of operations at Valor Hospitality Partners, which has Hilton and Holiday Inn Express hotels in its portfolio, says digital is the next wave in hotel room door technology.

“Traditional hotel room keys are staring down the end of their existence,” Fuchs says.

However, some security experts caution that even the newer lock methods aren’t foolproof.

“Keyless systems can introduce entirely new threat vectors for hotel security operations to manage,” said Lee Clark, cyber threat intelligence production manager at Retail and Hospitality Information Sharing and Analysis Center (RH-ISAC).

While Clark says these threats can be mitigated through security control policies and configurations, such as multifactor authentication (MFA), these introduce extra steps that harried guests may not always want to jump through.

Clark says it’s unlikely that all hotels will replace all key cards with digital keys any time soon because some guests may prefer a key card or may not have a personal device compatible with digital lock systems, along with the expense.

“Transitioning to digital and keyless lock systems carries a significant cost in equipment, installation, maintenance, and security,” Clark said.

Hotel chains begin to require digital key systems

And human habits keep getting in the way, too.

For instance,  data from J.D. Power’s research on hotels found that only 14% of total branded hotel guests used digital keys during their hotel stay. Even guests who downloaded the brand’s app to their phones used the plastic key card.

According to J.D. Power data, among guests who have the app for the hotel company/brand, 30% use a digital key, and 70% use a plastic card most of the time.  

On the other hand, many hotels simply haven’t installed locks capable of digital entry.

“Several large hotel chains, whose apps are most likely to support digital keys, are beginning to require that hotel franchise owner to install new door locks as part of updated brand standards,” said Andrea Stokes, hospitality practice lead at J.D. Power.

Despite the slow adoption of digital options by customers, J.D. Power data does show that keyless customers feel safer than those using plastic cards.

“Guests using ‘digital key’ provide significantly more positive ratings for safety of the hotel compared to those who did not use digital keys,” Stokes said.

Chad Spensky, CEO of Allthenticate, which develops smartphone access capability and credential management, compares the plastic key card to passwords, which cybersecurity specialists view as low-tech and dated.

“We all still use passwords, despite the glaring security holes and clunky user experience. In the same way, key cards are likely here to stay,” Spensky said.  

He says the real promise of digital cards is less about security and more about convenience.

“While the card implementations are no more secure than their plastic counterparts, their user experience is far superior,” Spensky said. If given a choice between shuffling around a bunch of plastic cards or having your smartphone, “the phone is a clear winner.”    

 The consumer convenience factor is pushing hotel chains forward in their quest for digital keys. While digital keys offer an additional attack surface, they also allow for quick course correction.

One of the biggest problems with keycards, Spensky says, is that when a vulnerability is discovered there is no easy way to patch the vulnerability, “With smartphones  patches can be pushed out almost instantly over the air,” he said.

Don’t count out the plastic key card yet

Mehmet Erdem, professor, and chair of the department of resort, gaming, and golf management at the University of Las Vegas’s William F. Harrah College of Hospitality, warns that no system is foolproof and that people shouldn’t let digital entry give them a false sense of security.

“Everything can be hacked, everything can be breached,” Erdem said. “If someone has the intention to hack, it will happen.”

Erdem says not to count the plastic key card out yet. There are magnetic key cards that require a swipe and the newer radio frequency identification (RFID) cards that simply require proximity or can be loaded onto a phone. Erdem says RFID technology is improving, which makes plastic keys more versatile.

“RFID is not outdated,”  Erdem said, adding that it allows people who want less interaction to download the app, get the key, activate it, and go to the room.

“Because of sustainability and cost, hotels will push for mobile app,” Erdem said, but he added that some people will always prefer the physical plastic key. The advantage of the digital version of a plastic key, he said, comes down to human nature. “People forget their wallets, people forget their ID, but they don’t forget their phone.”

But in Las Vegas, where people routinely head to their hotel rooms flush with winnings from the blackjack tables and slots, there is an old-fashioned, low-tech option that makes the door discussion moot.

“There’s always the safe in the room, the guests should use that if they have something very valuable,” Erdem said.

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These Chinese apps have surged in popularity in the U.S. A TikTok ban could ensnare them

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These Chinese apps have surged in popularity in the U.S. A TikTok ban could ensnare them

Lemon8, a photo-sharing app by Bytedance, and RedNote, a Shanghai-based content-sharing platform, have seen a surge in popularity in the U.S. as “TikTok refugees” migrate to alternative platforms ahead of a potential ban. 

Now a law that could see TikTok shut down in the U.S. threatens to ensnare these Chinese social media apps, and others gaining traction as TikTok-alternatives, legal experts say. 

As of Wednesday, RedNote — known as Xiaohongshu in Chinawas the top free app on the U.S. iOS store, with Lemon8 taking the second spot. 

The U.S. Supreme Court is set to rule on the constitutionality of the Protecting Americans from Foreign Adversary Controlled Applications Act, or PAFACA, that would lead to the TikTok app being banned in the U.S. if its Beijing-based owner, ByteDance, doesn’t divest it by Jan. 19.

While the legislation explicitly names TikTok and ByteDance, experts say its scope is broad and could open the door for Washington to target additional Chinese apps. 

“Chinese social media apps, including Lemon8 and RedNote, could also end up being banned under this law,” Tobin Marcus, head of U.S. policy and politics at New York-based research firm Wolfe Research, told CNBC. 

If the TikTok ban is upheld, it will be unlikely that the law will allow potential replacements to originate from China without some form of divestiture, experts told CNBC.

PAFACA automatically applies to Lemon8 as it’s a subsidiary of ByteDance, while RedNote could fall under the law if its monthly average user base in the U.S. continues to grow, said Marcus. 

The legislation prohibits distributing, maintaining, or providing internet hosting services to any “foreign adversary controlled application.” 

These applications include those connected to ByteDance or TikTok or a social media company that is controlled by a “foreign adversary” and has been determined to present a significant threat to national security.

The wording of the legislation is “quite expansive” and would give incoming president Donald Trump room to decide which entities constitute a significant threat to national security, said Carl Tobias, Williams Chair in Law at the University of Richmond. 

Xiaomeng Lu, Director of Geo‑technology at political risk consultancy Eurasia Group, told CNBC that the law will likely prevail, even if its implementation and enforcement are delayed. Regardless, she expects Chinese apps in the U.S. will continue to be the subject of increased regulatory action moving forward.

“The TikTok case has set a new precedent for Chinese apps to get targeted and potentially shut down,” Lu said.

She added that other Chinese apps that could be impacted by increased scrutiny this year include popular Chinese e-commerce platform Temu and Shein. U.S. officials have accused the apps of posing data risks, allegations similar to those levied against TikTok.

The fate of TikTok rests with Supreme Court after the platform and its parent company filed a suit against the U.S. government, saying that invoking PAFACA violated constitutional protections of free speech.

TikTok’s argument is that the law is unconstitutional as applied to them specifically, not that it is unconstitutional per se, said Cornell Law Professor Gautam Hans. “So, regardless of whether TikTok wins or loses, the law could still potentially be applied to other companies,” he said. 

The law’s defined purview is broad enough that it could be applied to a variety of Chinese apps deemed to be a national security threat, beyond traditional social media apps in the mold of TikTok, Hans said. 

Trump, meanwhile, has urged the U.S. Supreme Court to hold off on implementing PAFACA so he can pursue a “political resolution” after taking office. Democratic lawmakers have also urged Congress and President Joe Biden to extend the Jan. 19 deadline

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Nvidia-backed AI video platform Synthesia doubles valuation to $2.1 billion

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Nvidia-backed AI video platform Synthesia doubles valuation to .1 billion

Synthesia is a platform that lets users create AI-generated clips with human avatars that can speak in multiple languages.

Synthesia

LONDON — Synthesia, a video platform that uses artificial intelligence to generate clips featuring multilingual human avatars, has raised $180 million in an investment round valuing the startup at $2.1 billion.

That’s more than than double the $1 billion Synthesia was worth in its last financing in 2023.

The London-based startup said Wednesday that the funding round was led by venture firm NEA with participation from Atlassian Ventures, World Innovation Lab and PSP Growth.

NEA counts Uber and TikTok parent company ByteDance among its portfolio companies. Synthesia is also backed by chip giant Nvidia.

Victor Riparbelli, CEO of Synthesia, told CNBC that investors appraised the businesses differently from other companies in the space due to its focus on “utility.”

“Of course, the hype cycle is beneficial to us,” Riparbelli said in an interview. “For us, what’s important is building an actually good business.”

Synthesia isn’t “dependent” on venture capital — as opposed to companies like OpenAI, Anthropic and Mistral, Riparbelli added.

These startups have raised billions of dollars at eye-watering valuations while burning through sizable amounts of money to train and develop their foundational AI models.

Read more CNBC reporting on AI

Synthesia’s not the only startup shaking up the world of video production with AI. Other startups offer solutions for producing and editing video content with AI, like Veed.io and Runway.

Meanwhile, the likes of OpenAI and Adobe have also developed generative AI tools for video creation.

Eric Liaw, a London-based partner at VC firm IVP, told CNBC that companies at the application layer of AI haven’t garnered as much investor hype as firms in the infrastructure layer.

“The amount of money that the application layer companies need to raise isn’t as large — and therefore the valuations aren’t necessarily as eye popping” as companies like Nvidia,” Liaw told CNBC last month.

Riparbelli said that money raised from the latest financing round would be used to invest in “more of the same,” furthering product development and investing more into security and compliance.

Last year, Synthesia made a series of updates to its platform, including the ability to produce AI avatars using a laptop webcam or phone, full-body avatars with arms and hands and a screen recording tool that has an AI avatar guide users through what they’re viewing.

On the AI safety front, in October Synthesia conducted a public red team test for risks around online harms, which demonstrated how the firm’s compliance controls counter attempts to create non-consensual deepfakes of people or use its avatars to encourage suicide, adult content or gambling.

The National Institute of Standards and Technology test was led by Rumman Chowdhury, a renowned data scientist who was formerly head of AI ethics at Twitter — before it became known as X under Elon Musk.

Riparbelli said that Synthesia is seeing increased interest from large enterprise customers, particularly in the U.S., thanks to its focus on security and compliance.

More than half of Synthesia’s annual revenue now comes from customers in the U.S., while Europe accounts for almost half.

Synthesia has also been ramping up hiring. The company recently tapped former Amazon executive Peter Hill as its chief technology officer. The company now employs over 400 people globally.

Synthesia’s announcement follows the unveiling of Prime Minister Keir Starmer’s 50-point plan to make the U.K. a global leader in AI.

U.K. Technology Minister Peter Kyle said the investment “showcases the confidence investors have in British tech” and “highlights the global leadership of U.K.-based companies in pioneering generative AI innovations.”

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SEC sues Elon Musk, alleging failure to properly disclose Twitter ownership

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SEC sues Elon Musk, alleging failure to properly disclose Twitter ownership

Beata Zawrzel | Nurphoto | Getty Images

The SEC filed a lawsuit against Elon Musk on Tuesday, alleging the billionaire committed securities fraud in 2022 by failing to disclose his ownership in Twitter and buying shares at “artificially low prices.”

Musk, who is also CEO of Tesla and SpaceX, purchased Twitter for $44 billion, later changing the name of the social network to X. Prior to the acquisition he’d built up a position in the company of greater than 5%, which would’ve required disclosing his holding to the public.

According to the SEC complaint, filed in U.S. District Court in Washington, D.C., Musk withheld that material information, “allowing him to underpay by at least $150 million for shares he purchased after his financial beneficial ownership report was due.”

The SEC had been investigating whether Musk, or anyone else working with him, committed securities fraud in 2022 as the Tesla CEO sold shares in his car company and shored up his stake in Twitter ahead of his leveraged buyout. Musk said in a post on X last month that the SEC issued a “settlement demand,” pressuring him to agree to a deal including a fine within 48 hours or “face charges on numerous counts” regarding the purchase of shares.

Musk’s lawyer, Alex Spiro, said in an emailed statement that the action is an admission by the SEC that “they cannot bring an actual case.” He added that Musk “has done nothing wrong” and called the suit a “sham” and the result of a “multi-year campaign of harassment,” culminating in a “single-count ticky tak complaint.”

Musk is just a week away from having a potentially influential role in government, as President-elect Donald Trump’s second term begins on Jan. 20. Musk, who was a major financial backer of Trump in the latter stages of the campaign, is poised to lead an advisory group that will focus in part on reducing regulations, including those that affect Musk’s various companies.

In July, Trump vowed to fire SEC chairman Gary Gensler. After Trump’s election victory, Gensler announced that he would be resigning from his post instead.

In a separate civil lawsuit concerning the Twitter deal, the Oklahoma Firefighters Pension and Retirement System sued Musk, accusing him of deliberately concealing his progressive investments in the social network and intent to buy the company. The pension fund’s attorneys argued that Musk, by failing to clearly disclose his investments, had influenced other shareholders’ decisions and put them at a disadvantage.

The SEC said that Musk crossed the 5% ownership threshold in March 2022 and would have been required to disclose his holdings by March 24.

“On April 4, 2022, eleven days after a report was due, Musk finally publicly disclosed his beneficial ownership in a report with the SEC, disclosing that he had acquired over nine percent of Twitter’s outstanding stock,” the complaint says. “That day, Twitter’s stock price increased more than 27% over its previous day’s closing price.”

The SEC alleges that Musk spent over $500 million purchasing more Twitter shares during the time between the required disclosure and the day of his actual filing. That enabled him to buy stock from the “unsuspecting public at artificially low prices,” the complaint says. He “underpaid” Twitter shareholders by over $150 million during that period, according to the SEC.

In the complaint, the SEC is seeking a jury trial and asks that Musk be forced to “pay disgorgement of his unjust enrichment” as well as a civil penalty.

This story is developing.

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