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Remember back to last December, when President Donald Trump issued an executive order designed to “remove barriers to United States AI leadership”? Trump said he was revoking former President Joe Biden’s “attempt to paralyze this industry” and planned a “minimally burdensome national standard” for regulation. It’s a different story now.
Today, The Information reported that in response to a request from the Trump administration, OpenAI was releasing its latest model only to a small group of companies. The government will approve access “customer by customer” during the preview period. This follows the administration’s imposition of export controls on Anthropic’s Fable model. How exactly does either of these moves square with the phrase “minimally burdensome”?
Whatever happened to the idea of small government and free enterprise? (Then again, this is the same administration that is talking about giving the public a stake in the AI firms.)
To be fair, the power of these new AI models deserves attention from the federal government. Someone has to make sure AI firms don’t wreak havoc with uncontrolled release of new models. But that should have been obvious when the administration threw out the old rules.
Meanwhile, the funniest story of the day has to be the one in The New York Times, revealing that OpenAI is “leaning toward holding off” going public until next year. One reason given is that SpaceX shares have fallen since their public debut earlier this month. Now, this may not be the real reason for any delay (if there is one). But if the story is true, the AI firm needs new advisers.
What person in their right mind imagined that SpaceX would go public at a huge valuation, and then just keep going up afterward? And yet that’s what happened: The stock rose 56% to a high of $211 in the days after the offering. Since then, it has fallen 27% from that high, to Thursday’s close of $153, but that is still well above its IPO price of $135, which means it remains a success. If OpenAI sees SpaceX’s sell-off as a bearish signal, something isn’t right in its perception of the world.
Sure, other factors in OpenAI’s decision reportedly include the choppy market—but the market has been volatile for months, thanks to the ups and downs of the Iran war. Are people at OpenAI just not paying attention to the wider world?
Apple’s Price Hike
In case anyone needs another reason to dislike AI, add the rising cost of consumer goods. Apple today made that connection clear when it blamed its decision to raise prices for iPads, Mac computers and other products on “the rapid expansion of AI data centers,” which had led to an “extraordinary surge in demand for memory and storage.”
In its announcement, Apple didn’t specify the size of the price increases, although someone who kept a record of the old prices would be able to easily figure it out. The Wall Street Journal estimated prices rose 15% to 25%.
Apple stock dropped 6%, suggesting investors worry that higher prices will choke off demand, which may well happen. But let’s put this into context. Firstly, Apple products were not cheap to begin with, so the price increase may not necessarily squeeze demand that much. Moreover, many rivals have already raised prices for the same reason. Samsung, for instance, jacked up prices in April, while Motorola—maker of less expensive phones—also did so around the same time. Meanwhile, Microsoft on Thursday announced price increases on the Xbox.
Everyone is blaming skyrocketing component prices. When Microsoft’s gaming chief, Asha Sharma, sent out a memo about plans to overhaul that business two weeks ago, she said that an expected holiday season price increase in storage components would mean prices had risen to more than five times what Microsoft paid for them just two years ago.
Who’s benefiting? That would be companies like Micron Technology, maker of memory components, whose business has exploded lately. It reported on Wednesday that revenue in the quarter ending May rose to $41.4 billion, compared with $9.3 billion a year earlier. Micron stock rose 15.8% on Thursday, capping an 853% rally over the past 12 months. Micron’s gain is everyone else’s loss.
In Other News
• The National Highway Traffic Safety Administration on Thursday proposed eliminating a rule that requires all vehicles to have a brake pedal. The policy change would only apply to autonomous vehicles. More here.
• Bumble is exploring a sale, Reuters reported Thursday, a sign of the struggles the company has had with slowing growth and declining users over the past few years. It is working with bankers at Morgan Stanley on a potential sale, the report said, though it may not end up selling.
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