Tech Predictions 2023

Welcome to our 2023 technology predictions - it's that time of year again, so grab yourself a cuppa!  2022 saw some important developments and some evolutionary ones.  Let's look ahead to what might just happen in 2023. 

1 Tech in the workplace

Most employers wrestle with how they best use technology to attract and retain staff.  2023 will see tech increasingly being used to augment, or sometimes replace, staff functions and help productivity. 

Employers will be keen to stay ahead of digital workplace trends to ensure that employees benefit from positive day-to-day experiences, improved communication and collaboration, and a boost in morale, which is important given the reduced face to face time (if a little ironic).  So, expect to see more spend on digital employee experiences. DEX is the process of designing and delivering digital workplace experiences that enable employees to be productive, engaged and to have the right tech at their fingertips. DEX tools include automation, asynchronous communication, workflow management and self-service tools.  Be wary of those automation tools that (in reality) simply move tasks from one team/person (thus reducing headcount) to another - the savvy business leaders will know how each person's time is best spent. 

If you work in the HR space, also see our super article on the Eight Drivers of Change - 2022 and Beyond which touches on the effects that tech is having in the workplace, especially in light of the general skills shortage.

2 Social commerce and superapps!

2023 will see the rise of 'superapps', one-stop shops combining different features, such as messaging, commerce and payments, all within the same app, designed to create a tailored end-user experience.  Starting with WeChat and Alipay in the early days, expect to see even more features added to platforms such as Whatsapp, Uber, Tiktok and Amazon. 

Some social media platforms may be on the backfoot, but expect to see major AI investments in the space. Examples are ChatGPT, a highly sophisticated chatbot, that improves content creation, and Lensa AI, an image generator that transforms portraits and integrates with social media.

Social commerce will gain momentum, with global sales forecast to reach USD 2 trillion by 2026. Buying products from social platforms will become easier with platforms offering more immersive experiences, such as Twitch, which has blended livestreaming with e-Commerce. 

But platforms beware, the Regulators have new laws in place to police the intermediaries and the digital gatekeepers:  See our article on the Digital Markets Act in force from May 2023.  Further laws are on the horizon Digital Services Act - are you ready? 

3 Metaverse, Web3 and Crypto – beyond the hype?

The crypto world experienced a dark winter in 2022, but the development of blockchain and Web3 applications remains strong.  Phenomena such as the collapse of the centralized crypto exchange FTX will prompt tighter regulation at least in respect to crypto exchanges, and although it may take a while for crypto to bounce back, the rise of decentralized finance (DeFi) and new crypto use cases may inject new life into digital currency.

Some may question the role of NFTs in the future, yet they have become more 'mainstream' in the worlds of art, sport and fashion.  In 2023, although it may be right to be cautious, we expect to see new havens being explored:

• big brands in the food industry such as McDonald's and Campbell's, and luxury houses such as Louis Vuitton, Nike and Gucci, are releasing limited-edition NFTs to raise money for charity
• NFT lending is booming, allowing people to lend NFTs as collateral to borrow crypto, usually through smart contracts. On NFTfi and Arcade, lenders compete on terms such as loan-to-value ratio or interest rates
• We are seeing expansion in the NFT real estate market. Whether to acquire a house, an island or a piece of land, we will see more opportunities to invest and buy living spaces in the Metaverse.

The Metaverse will gain some momentum, with decentralized Metaverses, such as Decentraland and The Sandbox continuing to be major players.  Expect to see enhanced and realistic avatar technologies, and new Web3 mixed realities with AR and VR making the virtual culture more immersive and blurring the lines between virtual and real worlds.

And what of online safety? The Metaverse has forced legislators to modernise how they protect citizens online. As it develops, platforms need to cater for user safety and many are already implementing user-activated features to help address this. In Meta's Horizon, avatars can activate a 'safe zone' to create a protective bubble around themselves where they cannot be touched, spoken to, or interacted with. Is this enough? The Online Safety Bill in the UK is set to make it platforms' responsibility proactively to protect users. The real challenge for platforms will be the sheer cost of complying with these new requirements for online safety, and it seems likely (initially at least) that those requirements will be more stringent in the UK than in the EU (under the Digital Services Act). 

4 Games and tech

If you like it, then you should have put an Elden Ring on it...Toss a coin to your Witcher

The current trend of existing video game IP crossover into TV show and film adaptations is set to continue at an impressive rate in 2023. Current video game show giants such as The Witcher will continue with The Witcher: Blood Origin dropping on Christmas Day and The Witcher Season 3 due in Summer 2023. Cavill won't disappear from fans' screens anytime soon, however, with Amazon in agreement with Game Workshop, to adapt the popular table-top game Warhammer into a film and TV show.  

Newcomers to the scene include video game scene titan of this year, 'God of War' set to be made into a TV series at Amazon Prime, HBO and HBO Max's 'The Last of Us' series adaptation, and upcoming favourite The Mario Bros. Movie.

The opposite trend also continues, with film IP making its way into new video games with open-world MMO Dune: Awakening from studio Funcom, best known for survival game, Conan Exiles, as well as Ubisoft's Avatar: Frontiers of Pandora announcement, a first-person action-adventure game being developed in collaboration with Lightstorm Entertainment and Disney.

Multiverse of madness: cross-platform IP

Video games are prime real-estate for narrative tie-ins. With lovers of games keen to dive deeper into the universe, we usually see a relatively small part of in-gameplay. One of the first major explorations in this area is for a new IP, The Callisto Protocol, a survival horror game from Striking Distance Studio released in early December 2022.  Krafton, Striking Distance and IGN partnered to release a six-part scripted prequel podcast to ready fans for their journey as protagonist Jacob Lee on the Jovian moon, Callisto.

Industry commentators expect to see a wave of these over the next 18 months, and it will be interesting to see what format developers take – whether they follow suit with Striking Distance and generate hype for the game with a prequel cross-platform offering or extend the publicity of the game by releasing more material once the game is out.

To quote the Skyrim guards, 'disrespect the law and you disrespect me'!

Regulation of the games industry has been embarrassingly light-touch, yet 2023 will see the regulatory landscape change, with a rise in enforcement particularly under legislation for the protection of children, most notably the FTC's fine of more than half a billion dollars to Fortnite creator Epic Games for violations of the Children's Online Privacy Protection Act (COPPA), as well as a refund to consumers for use of dark patterns and billing practices. The UK's CMA is also focused on dark patterns (and not just in the games sector).

A draft report from the European Parliament's Internal Market and Consumer Protection committee has called for a harmonised European approach to "loot boxes", in-game grab bags so that such features of in-game purchase monetisation systems cannot pose harm to players.

5 Proptech to be driven by cost and ESG

Proptech outside of the Metaverse is evolving.  Think co-living, co-working, climate tech, smart cities, smart homes, smart buildings, real estate marketplaces, and all of this across commercial property (especially offices, warehouses and logistics), residential and rising energy costs.

Big Data will be key to ESG: real-time data on environmental performance via a digital platform across an entire real estate portfolio helps to provide up to date insights on pricing, value trends, risks and necessary real estate changes.

AI and IoT solutions will drive down energy bills: in most cases, a building's heating, ventilation, air conditioning (HVAC) and lighting are run on a fixed system without adaptation to real-time conditions.  Use of AI-tech will become the norm in 2023 to optimise systems and reduce energy use.  AI and IoT will make data more actionable and allow occupiers to implement strategies to maintain and improve air quality and optimise space allocation. Expect to see proximity and PIR sensors being deployed in existing buildings (as well as new ones) to optimise the use of space, and to reduce energy costs and facilitate smart cleaning.

AR and VR: The use of digital floor plans, interior design and virtual viewing solutions will become more commonplace for owners, investors and occupiers.  Read on to learn about real estate and the Metaverse.

6 TMT M&A activity

Deloitte Global predicts that the total value of TMT divestitures in 2023 could expand by 25- 50% year over year to range from US$250–300 billion. Macroeconomic uncertainty and disruption will prompt businesses to reassess non-core assets.  Additionally, activist investors will push for divestitures sooner, as a variety of challenges have led to some disappointing returns.  PE and VC firms may become more aggressive buyers as they see more attractive valuations.  Most funds have plenty of dry powder and some are keen not to be late to the 'consumer revival' party again, so watch out for busier times in late Q2-Q3 onwards.

The media-telco convergence trend seems to be slowing, with some telcos starting to look at prospective buyers for their media assets, especially, film and television businesses. Consumers continue to change how they consume content as well as their spending on telecoms, media, and entertainment services. Streaming wars and personal financial constraints are leading consumers to reduce subscriptions: for media players offering content, broadcasting, connectivity and entertainment, consumer trends may also prompt them to dispose of non-core businesses, not least to help shore up balance sheets.

7 Permissions to use first party data

Last year, we highlighted that privacy challenges would lead advertisers to focus on building their own first-party data assets.  This prediction came to fruition, and we expect more of the same in 2023, not only by advertisers, but also by publishers that help advertisers to reach their desired audience.

However, there is regulatory attention, and we expect the focus to shift from building data assets to ensuring that appropriate permissions (consent or opt-out based) are in place lawfully to use data assets, including for data sharing and matching activities between advertisers and publishers.

8 Cyber, cyber, cyber!

The security of internet-connected products will remain in the spotlight, not least due to the UK's Product Security and Telecommunications Infrastructure Bill and the EU's Cyber Resilience Act, both of which will introduce cybersecurity requirements for IoT devices, continue on their (lethargic) legislative journeys.  Manufacturers, importers and distributors will have just 12 months from Royal Assent of the Bill to ensure that products are secure.

More generally, 2023 will see cyber risk management being forced further up boardroom agendas on both sides of the Atlantic by legislators and regulators looking to improve security and resilience and to protect their citizens.

9 Robots march forwards!

We have been talking about robots since the early noughties, but the last few years have forced many to rethink the way in which they operate due to supply chain disruption, geopolitical unrest and labour shortages. In 2023, expect to see robotic automation developments unfolding in numerous sectors – in fact, the global robotics market is set to hit USD 215 billion by 2030.

Logistics and manufacturing will experience a big change, with Amazon already paving the way with the deployment of warehouse robots. Collaborative robots (aka 'cobots') are being developed to work side-by-side with humans. More generally, robotic solutions and investments will increase, which also presents IP licensing opportunities.

The dining and eating-out sector has seen good examples of the use of tech. We have seen the increasing self-service culture of QR codes in restaurants (meaning fewer waiting staff).  And 2023 may see your food and drink being brought to your table by small robots, and yes tips will remain welcome!.   

10 The AI patent inventor... 

Will 2023 see 'AI tools' being named as inventors under UK patent law?  We'll see this play out in the UK Supreme Court in March 2023, as the UK's decision that a computer cannot be named as an inventor on a patent application, has been appealed (Stephen Thaler v the Comptroller General of Patents, Trade Marks and Designs).

In July 2021, Australia became the first country legally to recognise a non-human as a valid inventor on a patent application, yet this decision was overturned on appeal, with the Australia Full Court holding that only a natural person can be an inventor for the purposes of the Australian Patents Act.  An appeal request by Dr Thaler was refused, so human inventorship remains a requirement in Australia. This leaves South Africa as the only jurisdiction in which Dr Thaler's AI inventor has succeeded in obtaining a patent.  Could the UK really be next?

The IPO has published helpful guidance on patents relating to AI inventions – which is in line with the existing approach to computer-implemented inventions - Examining patent applications relating to AI.

Looking ahead to 2023

Sir Arthur Clarke said "any sufficiently advanced technology is equivalent to magic."   There is much truth in that, although with so much choice out there, the challenge for business leaders is identifying what technology to use (or develop) and how best to deploy it, so that the 'magic' can be released! 

And with that, we wish you a healthy, happy and prosperous 2023 – as ever, may your tech fears be dispelled and your tech dreams come true!    

James Gill
Partner
Lewis Silkin LLP