NO. 605   FREE EDITION   SUNDAY 17 AUG 2025
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My work

AI eats the world

Every year, I produce a big presentation exploring macro and strategic trends in the tech industry. New in May 2025, ‘AI eats the world’. LINK

News

OpenAI fumbles?

As I noted last week, ChatGPT 5 continues the steady, incremental model improvement we’ve seen in the last 2-3 years, rather than being a step change. However, because it’s called ‘5’ rather than, say, 4.6, and because of the way Sam Altman and other people at OpenAI had talked about it, and casually tossed around (essentially meaningless) terms like ’super-intelligence’, there’s now something of a backlash because the model isn’t a big further jump. It’s about time for the hype cycle to turn, or at any rate people are trying.

Slightly more interesting: the most significant part of GPT5 is the ‘router’ that auto-selects which model to send your query based on its complexity, and as part of that OpenAI got rid of the model picker entirely and retired the 4o model. But it turned out that a small but very loud group of early adopters preferred the tone of voice of 4o, so OpenAI brought it back. This is a classic step in the maturing of a space: as you build out the product, you simplify and abstract, and remove access to the nuts and bolts at the lower levels, but your earliest users like twiddling the nuts and bolts themselves. So you either keep that complexity and then have to maintain it (Windows, Android) or hide it (the web, Mac, iOS).

Finally, Sam Altman did a PR dinner with a group of SF tech journalists, with many maybe-casual remarks, such as that the new head of apps, Instacart’s Fidji Simo, will be launching multiple consumer apps outside of ChatGPT. That gets to the core of all LLM debates: is this one universal UI and one universal product, or an enabling layer and API for many other things? Fewer and fewer people really believe the former. SLOWDOWN, OLD MODELS, DINNER

Chips to China

Chinese open-model labs are doing well, but they’d be doing better with access to Nvidia’s latest and best compute. DeepSeek’s latest model is apparently delayed by attempts to use Huawei’s chips instead, and there’s a lot of smuggling to fill the gap: the US has been hiding location trackers in shipments and two people were just arrested in California.

Trump’s position, on this as so much else, has been spinning like a weather vane, but the latest idea is that Nvidia (and AMB) will pay the US government 20% of revenue from sales in China - for Nvidia this applies to the H20 product that was designed to comply with a previous set of export restrictions. This belies the point of export controls - if you don’t want China to have the chips, the price is irrelevant. DEEPSEEK, TRACKERS, ARRESTS, FIFTEEN PERCENT

Bailing out Intel?

After Trump (briefly) claimed that Intel’s new turnaround CFO is too Chinese, apparently the White House is now considering buying a stake in Intel, presumably to support the investment it needs to get its next-generation process to market and stay in the game. As I’ve written before, you don’t have to be Trump to think it would be a major strategic problem for the USA not to have its own cutting-edge chip manufacturing capability. LINK

Perplexity pumps

Perplexity claimed to be bidding $35bn for Chrome, which Google may be obliged to sell as part of one of the ongoing antitrust cases it’s involved in. This was another of the publicity stunts that this company favours (so transparent that literally everyone saw through it - giving an ‘exclusive’ to both the WSJ and Bloomberg didn’t help), but it prompts two thoughts. First, we should remember that while antitrust cases are very boring and rumble on for ever, Chrome really might be subject to a forced sale, with its billions of eyeballs but with no revenue of its own, and that no-one really knows what that would look like. And second, no-one really knows what the UX of LLMs will be (note OpenAI above talking about spinning off apps), but memory, user data and distribution all seem important. LINK

About
What matters in tech? What’s going on, what might it mean, and what will happen next?

I’ve spent 25 years analysing mobile, media and technology, and worked in equity research, strategy, consulting and venture capital. I’m now an independent analyst, and I speak and consult on strategy and technology for companies around the world.

Ideas

China’s top 10 open source AI labs. LINK

Bloomberg and the FT both have stories on how financial markets (especially credit markets) are putting together financing for AI datacenter contraction over the next few years. Meta just raised $29bn for its project in Louisiana, and if there isn’t a big contraction (a huge IF), then this is something like $3tr by 2029. BLOOMBERG, FT

A claim that the ad-tech company AppLovin (market cap: $150bn) side-loads ad-filled games onto Android phones without user permission. (Even if not true, it could be: the openness of Android versus iOS is a trade-off.) LINK

India’s AI sovereignty plans. LINK

Perplexity is doing telco distribution deals in India, and with Deutsche Telekom. INDIA, (MAYBE), TELEKOM

A16Z on how LLMs might change e-commerce search and discovery. LINK

An analysis of the chatbot assistants that have been deployed by major retailer websites. LINK

NY Times - 21 ways that people use generative AI at work. LINK

Havas launched a tool to help brands track what LLMs say about them. Expect far more of this. LINK

On the other hand, plenty of people talk about strategies to influence LLMs’ brand ‘opinions’, but there’s no science behind it yet. LINK

Outside interests

This house in Astoria is a labour of love and commitment. LINK

A first look at Sothebys’ refurbishment of Marcel Breuer’s old Whitney, one of the most beautiful buildings in New York. LINK

This Russian oligarch’s super-yacht, impounded by the USA, is now up for auction if you have $300m or so to spend, plus running costs. The interiors are huge, ugly, and uncomfortable, but you do get two pianos, a glass elevator, and a helipad (only one, though— real super-yachts have two, so your friends can visit). LINK

Data

Threads now has 400m MAUs, roughly the same as Twitter. LINK

UK traffic to the biggest adult sites fell by a third, other than a half, in the last couple of weeks after the UK brought in age verification requirements. LINK

Character AI has about 20m MAUs for its LLM-based virtual friends. LINK

The UK’s Press Gazette surveyed over 500 publishers and found that Google referral traffic is indeed roughly flat, as Google claimed last week, despite the deployment of ‘AI Overviews’. LINK

The amount of money now being spent on US datacenter construction (excluding compute) is now twice as large as retail and about to overtake office space. LINK

Preview from the Premium edition

Personal context and some second steps for AI

LLMs are fuzzy reasoning engines that grow out of a fuzzy encyclopaedia. They have a meaningful portion of the world's information, locked up in there somewhere, or at least they've seen that information in the training process, but it can't be consistently or precisely retrieved. 

And they have a reasoning engine, or they look like a reasoning engine, or they might become one, eventually. How much each of those matters depends on the use-case - most enterprise LLM use cases would work fine if you could have the ‘reasoning’ without the ‘encyclopaedia’ - what some people call a ‘world model’. 

But besides those two aspects, then there's a third idea, which Apple and then Google have called personal context, which is a model that might actually know everything about you. An LLM is trained on all the data

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