TheChek News Flow

Google’s World-Generating AI Product Causes Selloff in Videogame Stocks

The reaction to Google’s new product is yet another example of the acute sensitivity of equity investors to potential AI threats to traditional software—even if the threats are half-baked. For instance, Google called the product an “experimental research prototype” and said “generated worlds might not look completely true-to-life or always adhere closely to prompts or images, or real-world physics.” It added that “characters can sometimes be less controllable, or experience higher latency in control.”

Investors likely are considering the possibility that Google could quickly improve the product to the point where it can materially draw interest from videogame creators. For now, Google is including Project Genie in a large bundle of AI services for $249 a month.

Ministers and officials meet on Monday to discuss ‘reset’ of relations, including closer security and trade ties

Sir Keir Starmer has declared he will reconsider joining an EU rearmament scheme, in spite of talks breaking down last year when France was among the nations demanding an “onerous” entry fee.

Britain decided to stay out of the first round of the original €140bn defence fund last November when the EU insisted on a UK entry fee running to around €2bn.

But Starmer said he would look again at taking Britain into any second round of the so-called Security Action for Europe fund (SAFE) if it was in the national interest. The scheme involves the EU using its balance sheet to back cheap loans to member states for defence projects.

Speaking during a visit to China and Japan, he said: “Europe, including the UK, needs to do more on security and defence. That’s an argument I’ve been making for many months now with European leaders.

“I do think on spend, capability and co-operation we need to do more together,” he added. “I’ve made the argument and that should require us to look at schemes like SAFE and others to see whether there is a way in which we can work more closely together.”

If Britain were to join a future round of SAFE, it would allow its defence companies to supply up to 50 per cent of a collaborative project with other European countries — the current limit for non-participants is 35 per cent — and to lead projects.

Some Brussels officials expect tentative discussions about the idea to arise when UK and EU ministers and officials meet on Monday to discuss the “reset” of relations, including closer trade ties.

A European Commission spokesman refused to “speculate” on whether there would be a second round of SAFE and British officials said they would consider other ways of deepening UK-EU defence co-operation.

The FT reported last November that Brussels had put a €2bn price tag on the UK taking part in the loan guarantee scheme, while Britain offered about £200mn, creating a significant gap.

French defence minister Catherine Vautrin told the FT last month that although France appreciated how Starmer had strengthened defence co-operation, particularly the so-called “coalition of the willing” to back Ukraine, the French position remained unchanged.

“They chose to leave Europe with Brexit, and so I spoke with John [Healey, the British defence minister], who was telling me that the conditions are very onerous. I said, ‘Yes, but John, you’re not in the EU anymore, are you?’” said Vautrin.

“It’s a trade-off between the two. At one point they made a choice, and unfortunately that choice has consequences.”

The French position has confounded allies, who say it undercuts efforts for Europe to wean itself off US weapons by boosting its own industry as quickly as possible, a strategic imperative that Paris has pushed.

Germany and Italy were among countries frustrated by the French stance towards British participation. The UK has a strong defence sector and having access to SAFE would likely create export opportunities, while France is the world’s second-biggest arms exporter after the US. 

Senior ministers from both sides, including EU trade commissioner Maroš Šefčovič and UK business secretary Peter Kyle, will meet in London on Monday for the annual Partnership Council to manage post-Brexit relations.

Top of the agenda will be turbocharging the EU-UK “reset” that was agreed at a summit in London in May 2025 to improve trade relations, including removing border checks of food and plant products and relinking the EU and UK carbon-pricing schemes.

But significant gaps remain over the “Youth Experience Scheme” for 18-30 year-olds which Brussels has repeatedly warned is a must-have component of any deal.

UK business leaders were told at a meeting with UK officials last week that gaps remained both over the overall size of any scheme and the range of activities eligible, according to two people present.

EU member states are also continuing to insist on a return to “home” level tuition fees for European students coming to study in the UK, which the UK government has repeatedly ruled out and UK universities say is not affordable. 

EU and UK officials said the UK side was pushing for a second “reset” summit as early as May, at which Starmer says he hopes to map out new areas for future co-operation.

But two EU officials familiar with discussions said that this timetable looked “optimistic” given the remaining gaps between the two sides.

Harsh winter and policy changes push prices to 10-month high

The EU’s gas storage levels have fallen to their lowest for this time of year since before the 2022 energy crisis, as the continent entered winter with lower-than-normal stockpiles and cold weather accelerates withdrawals.

Supply concerns have driven prices to their biggest monthly gain in more than two years, with the TTF benchmark gas price rising to as much as €42.60 per megawatt hour this week, a ten-month high.

Prices have also been affected by severe winter storms in the US, which have disrupted domestic gas markets and lifted European prices, as the continent has become increasingly reliant on seaborne US LNG following a sharp reduction in pipeline supplies from Russia.

The EU is missing roughly 130 full-sized cargoes’ worth of gas compared with the level a year ago, with 490 terawatt-hours of storage as of January 29, according to industry body Gas Infrastructure Europe. This has left gas in storage tanks at 43 per cent of capacity, the lowest seasonal level since 2022, when Russia’s invasion of Ukraine triggered a severe energy supply crisis across the bloc.

European storage was drawn down more quickly than usual during the month to mid-January, a move that was especially pronounced in countries such as Germany, where government policy meant less gas was stored than in previous years, said Natasha Fielding, gas analyst at Argus.

Germany entered the winter with roughly 20 per cent less gas in storage than at the peak level of the previous year, a result of both market conditions and policy changes. 

In recent years, prices for some forward gas contracts have inverted, with summer prices trading above winter contracts. This was driven by government mandates requiring more gas to be stored in readiness for winter, which pushed up summer prices and, paradoxically, made it harder for traders to build inventories economically, said Fielding.

Last summer, however, both Germany and the EU eased storage targets in an attempt to cool the market and encourage more flexible storage behaviour. 

These decisions were based on a more “relaxed” view of market conditions including a potential oversupply, with countries such as the US and Canada likely to increase production, said Olympe Mattei d’Ornano, global LNG analyst at BloombergNEF. 

Even in an extreme scenario, such as conditions similar to the severe cold wave in Europe in 2018, the north-west European bloc would still retain 11 per cent of its storage by the end of March, a level not low enough to trigger blackouts, said Mattei d’Ornano.

Gas prices are likely to fall as the heating season ends and new capacity comes online, she added.

Investor positioning has shifted alongside the tightening storage picture. Data from Argus shows that hedge funds had moved to a net long position on the Intercontinental Exchange by mid-January, indicating rising expectations of higher prices, reversing their net short positions a week earlier. Many hedge funds, which typically take shorter-term positions, had previously been betting on falling prices since October.

French ministers have criticised IT group for lack of oversight of skip-tracing services

Capgemini will sell a US subsidiary that has come under fire for its contracts with the US immigration enforcement agency that involved the French IT services group in the tracking and deportation of individuals.

The company said the divestment of the Capgemini Government Solutions (CGS) business would begin immediately, though it did not refer directly to the Immigration and Customs Enforcement contract.

“Capgemini determined that the customary legal restrictions imposed for contracting with federal government entities carrying out classified activities in the US did not allow the Group to exercise appropriate control over certain aspects of the operations of this subsidiary,” it said on Sunday.

French ministers have criticised the group for its lack of oversight over the contracts for so-called skip-tracing services — used to locate people for legal processes on behalf of ICE using data analysis and private investigators. 

The company has said previously that the US unit operates autonomously in order to meet US requirements to handle sensitive government contracts.

Capgemini said CGS represented 0.4 per cent of global estimated revenues for 2025, and less than 2 per cent of its turnover in the US. 

The scrutiny of external contractors to ICE follows the backlash against the US immigration agency after its officers shot and killed two US citizens in Minnesota, sparking sustained and widespread protests.

ICE violence and brutal tactics in enforcing the Trump administration’s policies of large-scale deportation have attracted international government attention. Italy last week sought to quell tensions over the inclusion of ICE agents as part of the security for the US Winter Olympics delegation by clarifying that agents would be confined to the US consulate in Milan.

Capgemini has signed $12.2mn in contracts for skip tracing under the Trump administration on top of earlier work worth $2.5mn in data support. ICE has said it plans to spend up to $281mn through vendors as it seeks to investigate 1.5mn addresses. 

Capgemini said earlier this week that its most recent contract with ICE signed in December was “not currently being executed” and that it became aware of it “through public sources”. French finance minister Roland Lescure criticised the group for not having sufficient oversight of its subsidiaries.

Most US federal contracts, including ones with ICE, are publicly available online through the government’s Federal Procurement Data System.

A solicitation document published in November by ICE said vendors would be asked to “verify alien address information” and “confirm the new location of aliens” using both digital tools and “in-person surveillance”. 

The Trump administration gave ICE an extra $75bn last year to pursue aggressive deportation quotas, creating lucrative opportunities for the agency’s contractors.