Andrew here. Keep your eyes on this storyline: Mark Zuckerberg of Meta released an ad this morning, arguing that A.I. is ultimately about helping people \u2014 a clear attempt to articulate how the technology is meant to assist, not replace, you.<\/p>\n
The industry is coming to a realization: Hyper-focusing on the raw power of A.I. and its return on investment for companies has backfired. That approach ignited widespread public anxiety (remember the booing at commencement speeches this year?) instead of excitement about human empowerment or breakthroughs in health care.<\/p>\n
Jeff Bezos recently told me that he believes that A.I. will create more jobs, not fewer. Tech leaders may genuinely believe this, but for a worried public, it is firmly a \u201cshow-me\u201d situation. As multiple C.E.O.s have been telling me, if the industry doesn\u2019t deliver on these promises, A.I. won\u2019t just face regulation. It could become the defining wedge issue of the 2028 election.<\/p>\n
On a personal note: My mother-in-law, Bobbi Queen, died this month at 84. She spent four decades as an arbiter of fashion at Women\u2019s Wear Daily, where she championed generations of female designers like Donna Karan and Vera Wang. Here\u2019s The Times\u2019s obituary<\/a> of her.<\/p>\n Capex concerns <\/p>\n Alphabet, Google\u2019s parent company, just reported $112 billion in quarterly profit<\/a>, up fourfold from a year earlier.<\/p>\n Yet Wall Street is far more focused on what Google\u2019s capital expenditure plans say about the state of the artificial intelligence race, and whether tech giants\u2019 lavish investments will pay off.<\/p>\n Google\u2019s results suggest that its A.I. capex is worthwhile. The company\u2019s cloud business, which rents out computing power and A.I. models to corporate clients, reported an 82 percent surge in revenue, to $24.8 billion.<\/p>\n Unlike many other tech companies, Google can also directly benefit from its investments in more sophisticated A.I., applying the technology to its important advertising business. Ad revenue for the quarter rose roughly 14 percent, to $81.6 billion.<\/p>\n But Google said it planned to spend even more on A.I., raising its capex forecast for the year yet again, to $195 billion to $205 billion. That\u2019s a big financial strain, even for Google: The company reported negative quarterly free cash flow<\/a>, a rarity.<\/p>\n Sundar Pichai, its C.E.O., defended the move: \u201cOur A.I. investments are redefining what\u2019s possible across every part of our business,\u201d he said.<\/p>\n Will other tech giants follow suit? One that seemingly will is Tesla, which is increasingly betting on things like autonomous vehicles and robots. \u201cThis is a massive capex year<\/a>, but I\u2019m confident that all the \u200bthings that we are investing in will yield incredible returns,\u201d Elon Musk told analysts on Wednesday.<\/p>\n The real test will come next week, when Amazon, Meta and Microsoft report. (Expect them to continue spending heavily: Meta, for instance, just put out a promotional video declaring that it was \u201cdoubling down\u201d on A.I.<\/a>)<\/p>\n Big A.I. labs are investing a lot, too:<\/p>\n Anthropic agreed to buy up to two gigawatts\u2019 worth<\/a> of the latest AMD chips; in return, AMD will invest up to $5 billion in the company.<\/p>\n OpenAI has reportedly raised its projected spending on computing power to a staggering $750 billion<\/a> through 2030, according to The Wall Street Journal.<\/p>\n But the specter of rivals from China looms large. Even U.S. tech leaders acknowledge how good their Chinese counterparts have become: \u201cIt\u2019s a pretty good model<\/a>,\u201d Greg Brockman, OpenAI\u2019s president, said of Moonshot AI\u2019s Kimi K3 software.<\/p>\n But while Brockman didn\u2019t speculate about whether those rival offerings got so good through illicit means, a top A.I. official in Washington was less circumspect:<\/p>\n Michael Kratsios, the director of the White House\u2019s Office of Science and Technology Policy, accused Moonshot of illegally gaining access to Nvidia chips<\/a> in violation of U.S. export controls.<\/p>\n He also accused Moonshot of training Kimi K3 by improperly extracting information en masse from Anthropic\u2019s Fable.<\/p>\n The accusations raise the possibility of the Trump administration moving to clamp down<\/a> on open-weight software from China. But for Wall Street, the bigger question is whether hyperscalers\u2019 skyrocketing capex makes sense when cheaper Chinese models are quickly catching up<\/a> to Western rivals.<\/p>\n HERE\u2019S WHAT\u2019S HAPPENING <\/p>\n Oil hits a seven-week high. Brent crude<\/a>, the international benchmark for oil, climbed above $98 a barrel this morning after the Houthis, an Iranian-backed militant group in Yemen, claimed strikes on Wednesday on two Saudi oil tankers<\/a> in the Red Sea. Investors worry a new front in the war in the Middle East could stoke inflation fears and pressure central banks to raise interest rates.<\/p>\n Google is fined $1 billion. E.U. regulators hit the tech giant with the hefty fine after finding that it had illegally undercut competition via its dominance in search<\/a> and boosted its services in areas like shopping and travel. The move may escalate tensions with President Trump, who has threatened to retaliate against the bloc for what he views as the unfair targeting of American technology companies.<\/p>\n More Amazon workers are on food stamps and Medicaid. A U.S. Government Accountability Office study found a big increase in the number of employees at Amazon and those of delivery and ride-share companies on the list of working adults who required government assistance<\/a>, following a recent trend of more Americans turning to part-time warehouse and gig work. In other Amazon news, the tech giant is laying off<\/a> an unspecified number of employees in a unit focused on artificial intelligence.<\/p>\n The E.U. approves Paramount\u2019s purchase of Warner Bros. Discovery. The bloc gave conditional approval to the deal<\/a> after Paramount agreed to end a distribution accord with Universal Pictures in Europe within 13 months of the transaction closing. Investors are nonetheless pricing in the likely delays<\/a> to the deal in the U.S., as 12 states sue to stop the merger on antitrust grounds.<\/p>\n Republican senators revise a major crypto bill, with the White House\u2019s blessing. Before a potential floor vote next week<\/a>, they released a draft of the Clarity Act that addresses a major sticking point<\/a>: barring public officials, including Trump, from sponsoring or issuing digital coins while they are in government. But the proposed rule does not apply to their children and is set to lapse in 2029. It may not be enough to win over enough Democrats who\u2019ve grown concerned about Trump\u2019s big crypto earnings while in office.<\/p>\n Mamdani\u2019s latest test to New York businesses<\/p>\n From the moment Zohran Mamdani emerged as a leading candidate for mayor of New York City, corporate leaders have worried that he would be hostile to the business community.<\/p>\n Mamdani, a democratic socialist, has insisted he can keep the interests of both business and his political supporters in balance. That tension is visible in his latest move: picking the leadership<\/a> of the city\u2019s Economic Development Corporation, an agency with a crucial role in setting New York\u2019s economic agenda.<\/p>\n Here\u2019s who will lead the nonprofit group, which helped build the High Line and plan the Hudson Yards development:<\/p>\n Lina Khan, the former F.T.C. chair, will be the chair of its board.<\/p>\n Anthony Shorris, a partner at McKinsey & Company, will become its C.E.O.<\/p>\n Khan needs little introduction. The legal scholar used her tenure as F.T.C. chair to strictly police corporate giants, especially technology companies. That riled even Democratic-leaning corporate donors: The venture capitalist Reid Hoffman, for instance, publicly called for replacing her as F.T.C. chair<\/a>.<\/p>\n Shorris is less prominent, but is a known quantity among business leaders. He served as first deputy mayor under Bill de Blasio, overseeing key initiatives like universal pre-K.<\/p>\n The corporate community wasn\u2019t sure what to expect. The selection came after a search for an E.D.C. president<\/a>, with Mamdani officials interviewing at least 10 candidates across the ideological spectrum.<\/p>\n And some business leaders grew nervous early this year after a memo from Julie Su, the city\u2019s first deputy mayor for economic justice, said the E.D.C. should focus on \u201cquality (not just number) of jobs created<\/a> for the people who call N.Y.C. home.\u201d<\/p>\n Mamdani strove to present the hires as a well-balanced duo to lead the E.D.C.\u2019s mission, saying at a recent news conference that \u201ceconomic development and economic justice must go hand in hand. This is no radical concept.\u201d<\/p>\n Business leaders remain wary. For instance, Steven Fulop, the head of the Partnership for New York City, which represents many corporate giants, described the appointments as a \u201cmixed message,\u201d adding<\/a>:<\/p>\n Lina Khan\u2019s reputation has been built on an adversarial approach to large enterprises at the federal level, whereas NYCEDC\u2019s mission has always been to support the growth and investment in NYC. It\u2019s unclear to us the ultimate direction EDC will be taking and how this will play out over time.<\/p>\n Scoop: A big departure in the nonprofit world <\/p>\n The top-ranking official at Laurene Powell Jobs\u2019s education philanthropy has quietly left, Theodore Schleifer is first to report for DealBook.<\/p>\n Russlynn Ali, who a decade ago helped found the nonprofit group XQ Institute with Powell Jobs, recently departed. Ali is one of Powell Jobs\u2019s closest friends, so her exit has turned heads.<\/p>\n Ali\u2019s departure happened sometime this month. It came after an article<\/a> by \u201cInside Philanthropy\u201d in mid-June that raised questions about Ali\u2019s management style as the nonprofit\u2019s C.E.O. In response, XQ told the publication that it was \u201creviewing these matters internally.\u201d<\/p>\n \u201cAfter thoughtful conversations with the board, Russlynn Ali made the decision to step down as C.E.O. of XQ,\u201d XQ\u2019s board said in a statement to The Times. \u201cWe are grateful for her innovative, groundbreaking work, and her role in founding and building this organization.\u201d Ali did not respond to a request for comment.<\/p>\n Ali was a top official in the Education Department under Barack Obama. She joined Emerson Collective, Powell Jobs\u2019s sprawling investment shop and family office, in 2012.<\/p>\n Three years later, she started an affiliated organization, the XQ Institute, which sought to revamp U.S. high schools. Ali will remain at Emerson Collective, a spokesman for XQ said.<\/p>\n Powell Jobs is one of America\u2019s most influential philanthropists. Among the organizations she helps fund is College Track, a nonprofit she helped found in 1997 to support students from underserved communities. Powell Jobs, who was married to the Apple co-founder Steve Jobs, is worth about $10 billion, according to the Bloomberg Billionaires Index<\/a>.<\/p>\n Education has always been at the center of Powell Jobs\u2019s philanthropic efforts. The XQ Institute raised about $567 million in donations over the past decade, according to available tax filings. Powell Jobs is chair of the nonprofit\u2019s board, which also includes Yo-Yo Ma and Jimmy Iovine.<\/p>\n THE SPEED READ <\/p>\n Deals<\/p>\n Politics, policy and regulation<\/p>\n The fast-growing peptides industry faces a major test<\/a> as the F.D.A. meets to review the substances\u2019 health benefits. The hearing could pit agency scientists against the agenda<\/a> of Health Secretary Robert F. Kennedy Jr. (AP, NYT)<\/p>\n \u201cHow Tether Benefited as Trump Insiders Shaped First U.S. Crypto Law<\/a>\u201d (Bloomberg)<\/p>\n Best of the rest<\/p>\n