Prediction in online multiplayer games has been around since real-time multiplayer games existed. From my own first experience the first versions of counter-strike 1.x had it, but I'm pretty sure it started quite a while before that.
And yes its a classic arms race, in the simple example I can connect my bot to the display output and to input as keyboard and mouse / gamepad and you could probably pretty easily get an aimbot that's superhuman.
Who the fk cares if people cheat in online games? Funnily enough, a hell of a lot of people, but they are generally not talking about online video games, instead they are talking about protocols like DNS, HTTPS, amplication DoS attacks, cryptocurrencies, elections, any number of other things, and it turns out these really hard to impossible to solve, and they definitely don't lend themselves to real time multiplayer games easily.
For games it much easier, you just let people host their own servers, you let them own the compute, you let them manage and mod the servers, you let them build communities of people they want to play with. See Minecraft. Pretty sure that made a bit of money without worrying about losing revenue to some inventive kids who priate/mod/whatever the game. -_oo_-
And yes its a classic arms race, in the simple example I can connect my bot to the display output and to input as keyboard and mouse / gamepad and you could probably pretty easily get an aimbot that's superhuman.
The solution is not a technical one, just like DRM: https://en.wikipedia.org/wiki/Analog_hole