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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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Microsoft AI chief Suleyman sees advantage in building models ‘3 or 6 months behind’

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Microsoft AI chief Suleyman sees advantage in building models ‘3 or 6 months behind’

Microsoft owns lots of Nvidia graphics processing units, but it isn’t using them to develop state-of-the-art artificial intelligence models.

There are good reasons for that position, Mustafa Suleyman, the company’s CEO of AI, told CNBC’s Steve Kovach in an interview on Friday. Waiting to build models that are “three or six months behind” offers several advantages, including lower costs and the ability to concentrate on specific use cases, Suleyman said.

It’s “cheaper to give a specific answer once you’ve waited for the first three or six months for the frontier to go first. We call that off-frontier,” he said. “That’s actually our strategy, is to really play a very tight second, given the capital-intensiveness of these models.”

Suleyman made a name for himself as a co-founder of DeepMind, the AI lab that Google bought in 2014, reportedly for $400 million to $650 million. Suleyman arrived at Microsoft last year alongside other employees of the startup Inflection, where he had been CEO.

More than ever, Microsoft counts on relationships with other companies to grow.

It gets AI models from San Francisco startup OpenAI and supplemental computing power from newly public CoreWeave in New Jersey. Microsoft has repeatedly enriched Bing, Windows and other products with OpenAI’s latest systems for writing human-like language and generating images.

Microsoft’s Copilot will gain “memory” to retain key facts about people who repeatedly use the assistant, Suleyman said Friday at an event in Microsoft’s Redmond, Washington, headquarters to commemorate the company’s 50th birthday. That feature came first to OpenAI’s ChatGPT, which has 500 million weekly users.

Through ChatGPT, people can access top-flight large language models such as the o1 reasoning model that takes time before spitting out an answer. OpenAI introduced that capability in September — only weeks later did Microsoft bring a similar capability called Think Deeper to Copilot.

Microsoft occasionally releases open-source small-language models that can run on PCs. They don’t require powerful server GPUs, making them different from OpenAI’s o1.

OpenAI and Microsoft have held a tight relationship shortly after the startup launched its ChatGPT chatbot in late 2022, effectively kicking off the generative AI race. In total, Microsoft has invested $13.75 billion in the startup, but more recently, fissures in the relationship between the two companies have begun to show.

Microsoft added OpenAI to its list of competitors in July 2024, and OpenAI in January announced that it was working with rival cloud provider Oracle on the $500 billion Stargate project. That came after years of OpenAI exclusively relying on Microsoft’s Azure cloud. Despite OpenAI partnering with Oracle, Microsoft in a blog post announced that the startup had “recently made a new, large Azure commitment.”

“Look, it’s absolutely mission-critical that long-term, we are able to do AI self-sufficiently at Microsoft,” Suleyman said. “At the same time, I think about these things over five and 10 year periods. You know, until 2030 at least, we are deeply partnered with OpenAI, who have [had an] enormously successful relationship for us.

Microsoft is focused on building its own AI internally, but the company is not pushing itself to build the most cutting-edge models, Suleyman said.

“We have an incredibly strong AI team, huge amounts of compute, and it’s very important to us that, you know, maybe we don’t develop the absolute frontier, the best model in the world first,” he said. “That’s very, very expensive to do and unnecessary to cause that duplication.”

WATCH: Microsoft Copilot beginning of a seismic shift in AI integration, says Microsoft AI CEO Suleyman

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Former Microsoft CEO Steve Ballmer says, as shareholder, tariffs are ‘not good’

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Former Microsoft CEO Steve Ballmer says, as shareholder, tariffs are 'not good'

President Trump’s new tariffs on goods that the U.S. imports from over 100 countries will have an effect on consumers, former Microsoft CEO Steve Ballmer told CNBC on Friday. Investors will feel the pain, too.

Microsoft’s stock dropped almost 6% in the past two days, as the Nasdaq wrapped up its worst week in five years.

“As a Microsoft shareholder, this kind of thing is not good,” Ballmer said, in an interview with Andrew Ross Sorkin that was tied to Microsoft’s 50th anniversary celebration. “It creates opportunity to be a serious, long-term player.”

Ballmer was sandwiched in between Microsoft co-founder Bill Gates and current CEO Satya Nadella for the interview.

“I took just enough economics in college — that tariffs are actually going to bring some turmoil,” said Ballmer, who was succeeded by Nadella in 2014. Gates, Microsoft’s first CEO, convinced Ballmer to join the company in 1980.

Gates, Ballmer and Nadella attended proceedings at Microsoft’s Redmond, Washington, campus on Friday to celebrate its first half-century.

Between the tariffs and weak quarterly revenue guidance announced in January, Microsoft’s stock is on track for its fifth straight month of declines, which would be the worst stretch since 2009. But the company remains a leader in the PC operating system and productivity software markets, and its partnership with startup OpenAI has led to gains in cloud computing.

“I think that disruption is very hard on people, and so the decision to do something for which disruption was inevitable, that needs a lot of popular support, and nobody could game theorize exactly who is going to do what in response,” Ballmer said, regarding the tariffs. “So, I think citizens really like stability a lot. And I hope people — individuals who will feel this, because people are feeling it, not just the stock market, people are going to feel it.”

Ballmer, who owns the Los Angeles Clippers, is among Microsoft’s biggest fans. He said he’s the company’s largest investor. In 2014, shortly after he bought the basketball team for $2 billion, he held over 333 million shares of the stock, according to a regulatory filing.

“I’m not going to probably have 50 more years on the planet,” he said. “But whatever minutes I have, I’m gonna be a large Microsoft shareholder.” He said there’s a bright future for computing, storage and intelligence. Microsoft launched the first Azure services while Ballmer was CEO.

Earlier this week Bloomberg reported that Microsoft, which pledged to spend $80 billion on AI-enabled data center infrastructure in the current fiscal year, has stopped discussions or pushed back the opening of facilities in the U.S. and abroad.

JPMorgan Chase’s chief economist, Bruce Kasman, said in a Thursday note that the chance of a global recession will be 60% if Trump’s tariffs kick in as described. His previous estimate was 40%.

“Fifty years from now, or 25 years from now, what is the one thing you can be guaranteed of, is the world needs more compute,” Nadella said. “So I want to keep those two thoughts and then take one step at a time, and then whatever are the geopolitical or economic shifts, we’ll adjust to it.”

Gates, who along with co-founder Paul Allen, sought to build a software company rather than sell both software and hardware, said he wasn’t sure what the economic effects of the tariffs will be. Today, most of Microsoft’s revenue comes from software. It also sells Surface PCs and Xbox consoles.

“So far, it’s just on goods, but you know, will it eventually be on services? Who knows?” said Gates, who reportedly donated around $50 million to a nonprofit that supported Democratic nominee Kamala Harris’ losing campaign.

— CNBC’s Alex Harring contributed to this report.

WATCH: There will be many LLM winners, says infrastructure investor Morrison

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AppLovin can offer TikTok ‘much stronger bid than others,’ CEO says

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AppLovin can offer TikTok 'much stronger bid than others,' CEO says

Piotr Swat | Lightrocket | Getty Images

AppLovin CEO Adam Foroughi provided more clarity on the ad-tech company’s late-stage effort to acquire TikTok, calling his offer a “much stronger bid than others” on CNBC’s The Exchange Friday afternoon.

Foroughi said the company is proposing a merger between AppLovin and the entire global business of TikTok, characterizing the deal as a “partnership” where the Chinese could participate in the upside while AppLovin would run the app.

“If you pair our algorithm with the TikTok audience, the expansion on that platform for dollars spent will be through the roof,” Foroughi said.

The news comes as President Trump announced he would extend the deadline a second time for TikTok’s Chinese-owned parent company ByteDance to sell the U.S. subsidiary of TikTok to an American buyer or face an effective ban on U.S. app stores. The new deadline is now in June, which, as Foroughi described, “buys more time to put the pieces together” on AppLovin’s bid. 

“The president’s a great dealmaker — we’re proposing, essentially an enhancement to the deal that they’ve been working on, but a bigger version of all the deals contemplated,” he added.

AppLovin faces a crowded field of other interested U.S. backers, including Amazon, Oracle, billionaire Frank McCourt and his Project Liberty consortium, and numerous private equity firms. Some proposals reportedly structure the deal to give a U.S. buyer 50% ownership of the company, rather than a complete acquisition. The Chinese government will still need to approve the deal, and AppLovin’s interest in purchasing TikTok in “all markets outside of China” is “preliminary,” according to an April 3 SEC filing.

Correction: A prior version of this story incorrectly characterized China’s ongoing role in TikTok should AppLovin acquire the app.

WATCH: AppLovin CEO Adam Foroughi on its bid to buy TikTok

AppLovin CEO Adam Foroughi on its bid to buy TikTok

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