Welcome to Cautious Optimism, a newsletter on tech, business and power.
Friday. Inflation data came in slightly lower than expected for September. The all-items index rose 0.3% last month, good for a gain of 3% in the past year. Excluding food and energy, prices rose 0.2% in September, leading to a 3% increase over the last 12 months.
It’s both good and bad news. Expectations were for all-item inflation to reach 3.1%, and the data wasn’t as bad as feared. Still, inflation rose from 2.9% to 3.0%. Now, to work! — Alex
📈 Trending Up: Xi’s rule … Palo Alto’s intransigence … cover-ups … the military-industrial complex … tech’s infatuation with MENA cash … Marc Benioff’s rep, maybe … Strava-Garmin relations … Intel stock
📉 Trending Down: US-Canada relations … Gooner AI … employment at Target, Applied Materials … Congressional oversight
Things That Matter
The short half-life of friendship in the AI era: Back in 2023, AI giant Anthropic picked Amazon as its “primary cloud provider.” That partnership was reaffirmed in late 2024, when Anthropic also knighted Amazon as its “primary training partner.” It certainly didn’t hurt that Amazon invested $8 billion into the AI company. Hell, Amazon even built capacity just for its AI junior.
So it was a bit surprising when Anthropic announced plans this week to “expand [its] use of Google Cloud technologies, including up to one million TPUs.” TPUs, or tensor processing units, are the compute chips Google began to develop in-house over a decade ago. “The expansion is worth tens of billions of dollars and is expected to bring well over a gigawatt of capacity online in 2026,” Anthropic said.
Now there’s a chance that Amazon just can’t keep up with Anthropic’s compute demands, and much like its arch-rival, the AI company wants to diversify its bets.
There was a time when OpenAI and Microsoft were so close as to be conjoined. Today, Microsoft is building its own AI models, OpenAI is building its own compute, and Redmond is even making consumer products that will directly try to eat into OpenAI’s massive market share. The two still have a partnership, equity ties and more, but their days as besties are behind us.
Perhaps we should not be surprised. When those deals were put into place, the AI companies had much less revenue, cash and worth. Of course the power dynamics have shifted.
EA taps Stability AI: Gaming giant EA has tapped Stability AI, a startup, to “co-develop transformative AI models, tools, and workflows that empower our artists, designers, and developers to reimagine how content is built.”
Stability AI is behind the Stable Diffusion set of AI models, trained to generate images, video, audio and 3D assets that could be used in video games. In short, EA thinks games are set to head straight into the AI bucket.
Now, AI could be neat in video games in some instances — giving NPCs the ability to chat more naturally, for example — but we’d be naive to think that is what we’re going to get here. You can’t stop the march of technology, but when it comes to art, one can squirm a little bit uncomfortably at its intrusion.
Well this is all terrible
There are three things happening at the moment that are worth our contemplation. In brief:
SpaceX’s Elon Musk and Transportation Secretary Sean Duffy are fighting over timelines to return the nation to the Moon. This is not merely a dispute over the leadership of NASA, or whether or not Musk’s space company is sufficiently behind on the Artemis III mission to warrant the relaunch of bidding for the project. No: The Free Beacon cites a “senior White House official” as saying that the split is the cause of annoyance with Duffy inside the administration, because the Secretary “picking a fight with Elon doesn’t sit well with a lot of people, because Elon is going to be a pretty big factor in the midterms.”
Deciding the country’s space policy to please one donor so that he invests in the ruling party’s electoral success is precisely the sort of corruption you do not want in a democracy.
Next up, media. The NYPost’s Charles Gasparino reports:
Warner Bros. Discovery owns CNN. The President hates CNN. And the Ellison family already took control of CBS News, appointing a regime-aligned ombudsman and installing a fellow political traveler as its chief editor. Now, POTUS wants the Ellisons to take over another media group that annoys him. We’re once again seeing the possible perversion of a fair market to appease and empower the current administration.
And, finally, the CZ pardon. Binance head Changpeng Zhao was previously convicted of “knowingly operating a financial platform without basic anti-money laundering safeguards” that led to “illegal transactions between U.S. users and users in sanctioned jurisdictions such as Iran, Cuba, Syria, and Russian-occupied regions” of Ukraine.” He pleaded guilty, paid fines and spent four months in prison.
So why would Trump pardon him? POTUS’ family discussed buying a stake in Binance’s U.S. arm, and Abu Dhabi-based MGX invested $2 billion into the crypto exchange by buying the Trump family’s USD1 stablecoin before sending the sum to the crypto company. That means the Trump stable gets to generate fat interest off a huge pool of reserves for free (the Binance-affiliated USD1 is still in circulation, charts imply).
There are other crossovers between Binance and those in Trump’s orbit, but I think that should suffice for now.
This is pretty grim shit. Matthew Gertz calls the CNN tussle “the Orbanization of the U.S. media [happening] in plain sight, with the president using regulatory power to direct the sales of news outlets to his wealthy allies.” That’s hard to argue with.
The business world is either supporting POTUS or staying quiet because they are in favor of strongman tactics. Either way, there is no corporate counterweight to the above.
This is how you get oligarchy. This is how you wind up with a restricted press. This is the natural result of a transactional businessperson taking the highest oath of office.
What might change things? The stock market taking a smack to the mouth, I think. Past that, this is only the first year of the second Trump term. Wow.