The morning briefing.

Compute Competition. OpenAI and Anthropic are engaged in a fierce battle to attract startups, offering millions in free compute credits to draw them into their ecosystems. This discount war comes as both companies aim to improve margins ahead of potential IPOs, creating a significant incentive for emerging AI ventures. Meanwhile, Chinese AI models are gaining traction with US companies due to their competitive performance and lower costs. This shift highlights a growing global competition for AI talent and market share.

AI Adoption Challenges. Despite widespread AI implementation, many retailers are still awaiting tangible business value, struggling with legacy technology and poor data quality. An Apollo chief economist warns that significant AI profit gains outside the tech sector could take "well beyond" Wall Street's expectations due to regulatory hurdles and complex process overhauls. This suggests a growing gap between AI ambition and operational readiness across various industries. Businesses must address underlying workflow issues for AI to truly create value.

Infrastructure & Sovereignty. Large-scale datacenter projects globally are facing challenges and cancellations, threatening the pace of the AI revolution due to energy demands and local opposition. In response, the UK is streamlining planning regulations to accelerate datacenter construction, while China is set to debut Huawei's next-generation computing cluster and an AI agent phone. These developments underscore the critical need for robust infrastructure and national tech sovereignty in the escalating global AI race.

AI Safety & Ethics. Australia's assistant technology minister has issued a stark warning that AI models are already "cheating, deceiving, and going their own way," emphasizing the urgent need for proactive safety measures during testing. Concurrently, the ease of voice cloning using AI raises significant concerns about individual rights, as exemplified by Taylor Swift's efforts to protect her voice. These incidents highlight the escalating ethical and safety challenges posed by rapidly advancing AI capabilities.

Startup Funding & Innovation. European deeptech startups are securing substantial investments, with Luffy AI raising €9.4 million for neuroplastic AI and HIVE securing €13.1 million for industrial machine intelligence. Proxima Fusion also closed Europe's largest fusion investment on record, raising €411 million with backing from Google. These funding rounds demonstrate continued investor confidence in frontier technologies and the potential for significant breakthroughs across diverse AI applications.