2026-06-16 00:59:25
Today, a double-feature – a sort of one-two punch on the situation in which Anthropic currently finds themselves. How they might work their way out, and why they might not – because they might not want to...
M.G. Siegler
M.G. Siegler
Inklings is a newsletter featuring links and commentary from M.G. Siegler on timely topics found around the web.
💫 Satya Nadella's "Frontier Ecosystem" – Look, it's clearly easier to write a call-to-arms against frontier model domination when you don't currently control one of those leading frontier models. Though it's also awkward when you own 25%+ of a startup that does control one of those – and even more so when you're now spending billions of dollars to try to create one of those leading frontier models. That said, that doesn't mean Nadella is wrong in any of this – and many, increasingly, would hope he's right, I imagine! Beyond the models, it puts the premium on people, the true "orchestration layer" within a company that makes it what it is – not just an automated system. Yet questions remain about how many people are actually needed to build such companies versus the status quo – and what exactly their jobs will entail. The other elephant in Nadella's room here is that Microsoft obviously wants to be the platform on which this future is built. It's not a bad pitch, just a bit obtuse. But that makes it seem as if Nadella actually wrote it, which is a good thing. [SN Scratchpad]
🇬🇧 The UK Bans Social Media for Kids – While I'm generally not in favor of "nanny state" moves, I think overall this is the right, tough call. To me, it's less about taking something away from kids – which, they'll figure out a way to access anyway, as I would have when I was that age – and more about the signal it sends. And not even necessarily to the tech companies, more just to society. This ban, if implemented well – admittedly a big "if" – will act to switch the norm from all kids needing to be on social media to be "normal" to the opposite. It will hopefully relieve that pressure – performative and otherwise. I am torn about roping YouTube into this – on one hand, I get it given its scale and social dynamics, but on the other, for all the crap, it is also a wealth of interesting and useful content (not to mention entertainment, of course). I guess not banning YouTube Kids, is an okay work-around, but still... I'm also really not sure about the gaming element of this. Again, I get it, but this slope is already awfully slippery. AI chatbots will have to be included at some point, right? This isn't the first such ban and won't be the last, but it happens to be where I live raising young children so... we'll see how this goes. The "Big Techbacco" trend continues... [Reuters]
🦊 Fox Gets Their Own Streaming Box – The $22B deal for Roku will have all kinds of ramifications. While it is the most popular streaming box, the company actually makes most of its money from its ad-based streaming service. And Fox already has another one of those in Tubi (which they say they're not merging). Meanwhile, the "Switzerland" nature of the company – which, many forget, actually started as a skunkworks project inside Netflix way back when – has allowed their boxes to flourish. (Well that and the fact that they're cheap and easy-to-use – even as they've gotten increasingly spammy with ads in the UI.) If they're no longer Switzerland, will it change the way other competitors view them? Wall Street clearly hates this deal, with Fox's stock down over 15% today. But it's probably a smart deal if they can maintain the status quo, which is not certain. Beyond the FAST services, their "Howdy" low-price streaming service is intriguing too. Let's also remember, that at the height of the pandemic streaming boom, Roku had a market cap of $65B. [WSJ 🔒]
🍿 Steven Spielberg: The Return – The past few weeks have been all about the youth movement, largely driven by YouTube, happening in real time at the box office. But this past weekend, Steve Spielberg came roaring back to life – incredibly, the man who created the summer blockbuster with Jaws hasn't had one in 24 years! The 79-year-old learned some new tricks – TikTok, viral stunts, etc – but it was the olds who ultimately saved the Disclosure Day: 59% of the audience for the $44M opening were over 34 (which yes, qualifies as "old" for moviegoing). There's still a ways to go for profitability, as the movie cost just under $200M to make and market – it will need to make around $400M to break-even at the box office, so let's see how the second weekend holds – sadly, as expected, Masters of the Universe plunged almost 70% in its second weekend. Somehow, Obsession, in its 5th weekend, stayed at #2, which marks four straight weekends which were bigger than its actual opening. Wild. [NYT]
"He simply did not want to be conflated with Mark Zuckerberg anymore, that he has his problems with the guy. He doesn’t like kids coming up to him in airports with business cards that say 'I'm CEO, bitch' for him to sign."
– Aaron Sorkin on why Jesse Eisenberg didn't want to reprise his role as Mark Zuckerberg in The Social Reckoning, the sequel (at least spiritually) to The Social Network.
I had been wondering why he passed – Sorkin noted that he tried for three straight days to get him to do it. Fair enough. And Jeremy Strong's vocal performance as Zuck seems like it will be one for the ages, even if, oddly Jeremy Allen White, who plays journalist Jeff Horwitz, actually looks more like Zuck.
Below, members of The Inner Ring will find thoughts on:
• SpaceX's Colossal Data Center Problem
• Inside Meta's "Gulag"
2026-06-15 17:55:27
Everyone knows the old proverb, "be careful what you wish for..." And while no one is sure of its exact origins, it has retained its power over perhaps centuries because while everyone knows it, many still fail to heed its warning time and time again. These past few days have brought the latest example: Anthropic.
The AI startup has been the loudest proponent of stricter controls over the broader technology, often equating it to nuclear weapons to drive the point home. Well, message received – even if garbled and mangled.
With the news late last week that the Trump administration would be putting in place export controls on Fable 5, Anthropic's latest model, the company is now once again scrambling to figure out a path forward. I say "again" because we're a mere three months from the last blow-up with the administration, which ended in the company being deemed a supply-chain risk. This new situation has nothing to do with that one, the administration is quick to say. But of course it does, even if indirectly. It's a dance between two sides that clearly don't like one another because they clearly don't see eye-to-eye on some crucial policies and ideals. This, in turn, seemingly gives the administration a decidedly quicker trigger finger when it comes to things such as this current situation.
And Anthropic is giving them every excuse in the world to do this because again, they're asking for it. Literally! Again, the endless calls for stronger controls and oversight, while perhaps noble in ways and prudent in others, are simply not a good way to impact policy. At best, you're going to be charged with fear-mongering. At worst, you're scaring away would-be customers.
Now, Anthropic may say that actually, these stances are engendering some level of trust with the customer base. The notion that they're perhaps the only ones telling the truth about AI and even willing to stand up to the government to prove it. Certainly, their recent surge in numbers plays to this narrative. But it's also far more nuanced than this. Because beyond the battles with the government, Anthropic's actions are also undermining such trust in other ways.
There's a growing sense that it's increasingly Anthropic's way or the highway. That applies to the administration and to partners and to customers. And that's perhaps okay when you're the scrappy underdog. But when you move into the position of power as the de-facto leader in AI, that's a problem. Potentially a big one.
As such, when the company complains that the export control around Fable is unwarranted, it has the decided ring of "regulation for thee, not for me." I'm not saying they don't have a point – in fact, based on everything I've read and heard, I think they do (more below)! But the point is that this misses the point because Anthropic is increasingly missing the point. The company does not operate in a perfect simulation, but rather in the real world. The very messy, very chaotic real world. The reality here, sadly, is that you must often bend to get your way. Because you have to work with others. Sometimes that involves bending to the point of breaking, the key is simply not to go over that line, obviously.
You would have thought Anthropic would have learned this lesson already. They were against taking money from certain entities in the Middle East until the reality of the world dictated that they had to in order to survive. The DoD situation was one the company seemed fine going to war over, until the realities of actual war dictated that they had to tone down the rhetoric and let cooler heads prevail.
But, well, they keep finding themselves in compromising situations! It's to the point where you almost have to wonder if Anthropic isn't actually angling for such outcomes. That is, while calling for regulation is one thing, forcing yourself to be regulated is, well, a more direct way to enact such regulation! Wait a minute.
What if this is what Anthropic wants?!
Again, it simply can't be discounted to zero at this point. There's a way to tell this story where what they're doing is actually forcing the government to act and to make an example of them for the greater good. Well, for Anthropic's version of the greater good, at least. "Regulate me, Daddy," and all that.
The problem with this narrative is that the administration doesn't seem eager or ready to regulate anyone else except for Anthropic. So yeah, that's a problem if that's your game of 3D chess. It turns the game into checkers, fast.
At some point last week, it seems like the Trump administration was alerted of a potential security problem with Fable. Multiple stories point to Amazon as the main whistleblower, though other reports have multiple entities raising such concerns. At least one report notes that Amazon flagged this to Anthropic first, and this is plausible because it sure seems like the actual issue here is that Anthropic doesn't believe this vulnerability is a big deal, while the administration does.
So it's entirely possible that Anthropic was made aware of this issue, but decided there was no immediate action needed because, in fact, the precautions they took to turn Mythos into Fable should take care of the concern raised. Further, it seems like the same vulnerability – a bypass, not a "universal jailbreak", per Anthropic – exists in other leading models and they clearly don't view it as an exploit that's going to lead to catastrophic harm. Again, this is Anthropic, the company quick to jump on any and all reasons to declare that some element of AI is going to cause potentially existential harm!
Anyway, again, the administration clearly believed otherwise. Or at least that's the cover they're conveying. It's certainly possible that someone convinced them of this, but it's also entirely possible that they're wrong. Regardless, the situation led to a phone call to Anthropic the outcome of which was... not great!
A lot of he said/she said (he sAId/she sAId) here. Clearly someone on the administration side leaked out that when they tried to get Dario Amodei on the phone, he was said to be out of office at a wellness retreat. The fact that Anthropic flat out denies this is amazing. It suggests that someone really wanted to make Anthropic look unserious in this situation. "Sorry, Dario couldn't be bothered to save the world because he was in a sound bath." That kind of thing.
I can't wait to hear the real background of this aspect – it does seem like he was stuck in something, was it a meeting about wellness, something about the model and/or safety, that was distorted, intentionally or not, into a "wellness retreat"?
Whatever Amodei was busy with, the fact that he was busy when the White House called is obviously not a great look. No matter what you think about the administration, it's the White House! You should probably have some level of respect for the institution and their concerns over safety. Even if you think they're misguided! You probably shouldn't leave them waiting for a – very specific – hour and fifteen minutes. Sure, others may have been tasked with managing the situation, but again, it's the White House. This is a CEO situation.
And then when the phone calls were finally connected, it sounds like that didn't go well either. To the point where Scott Bessent and perhaps Susie Wiles – notable as they were said to be two of the key drivers to cool down the previous DoD situation – are clearly being conveyed as annoyed/pissed off. Again, the reporting suggests that Amodei gave the administration the "this is no big deal" explanation and it sure seems like they didn't like that explanation too much! One can imagine they viewed this response as flippant.
Anthropic was given an hour and a half – 90 minutes! – just fifteen minutes longer than Amodei left them hanging on the phone, to pull Fable.
Anthropic ended up doing so after the White House took the drastic action of the export ban. This was not only a problem for other countries – including allies – looking to use the model, or its variations, like Mythos, continuing their security research, but also for American companies with non-US citizens working there. Including, Anthropic! So yeah, Anthropic had little choice but to pull the model.
It feels like this is all a bad game of telephone, both figuratively and literally.
It's still not entirely clear which side is "right" and there's undoubtedly nuance here. It sounds like most outside experts are siding with Anthropic right now, recognizing what the problem is and recognizing that the administration may not realize what the actual issue is. OpenAI is oddly – perhaps not so oddly – quiet here even though their own models may have the same issues. Ditto for Google, xAI, and everyone else. Many rushed to defend – or at least pretend to – Anthropic in the DoD situation, but there are a lot of crickets here. If nothing else, it showcases that Anthropic is perhaps burning more bridges than just those with the Trump administration.
At the same time, China got quickly thrown into the mix. Just as a bogeyman, or as a legitimate concern? Unclear. Anthropic, for what its worth, says China was never brought up as an actor of concern in all this...
And why on Earth is Andy Jassy, fresh off of a massive capital infusion from Amazon to Anthropic, in the middle of this? He can't be the actual whistleblower, right? Right?! Maybe he just happened to be on the phone with President Trump, or some other high-ranking official, when all this was going down? And when pushed for his thoughts, he just relayed what his researchers found? There are some great memes around this though, as you might imagine.
Again, this is all just some triangulation and guesswork to come to the Occam's razor of it all. It's likely a misunderstanding – on a few fronts. And it's undoubtedly exacerbated by the existing bad blood between Anthropic and the Trump administration. As such, Anthropic finds itself once again scrambling, not necessarily to fix Fable, but to convince the administration that they don't have to. Because they're right, you see. Oh, you don't?
This all points to that bigger issue: the complete and utter lack of trust between the two sides. Arguably the most important AI player in the world and the entity that runs the free world – and the country in which said AI player operates. That seems like a bad disconnect to have.
The good news for Anthropic is that the Trump administration won't be in power forever. The bad news for Anthropic is that they will be in power for another two and a half years. A lot can and will happen in that time – especially in AI.
M.G. Siegler
M.G. Siegler
M.G. Siegler
M.G. Siegler
M.G. Siegler
2026-06-13 18:58:20
This is a great post by Hari Raghavan, despite the fact that it's written on Xitter, which offers up an experience that's a bit like reading in an active war zone. He makes the case for why the sentiment around Anthropic, which started as the sort of lovable underdog of AI compared to OpenAI,1 is shifting, fast.
Part of it is as simple as moving from an entity playing catch-up to one in the lead. This naturally changes perceptions – just ask Apple. But a lot of it is the self-inflicted wounds Anthropic keeps giving themselves over and over again. None of it seems actually nefarious, but all of it suggests a complete and utter inability to read a room.
At first, this was the Pentagon, which, admittedly, is complicated, and perhaps especially under the current administration – an administration full of folks that flat-out don't like Anthropic, I should note. And that's in part because of their ideals, some of which stem from the term which has become the bogeyman of tech: effective altruism. The government perhaps thought they locked up that notion with Sam Bankman-Fried, but then Anthropic came roaring into prominence and placement with their superior models and Claude Code.
Anyway, a lot of the EA stuff is undoubtedly FUD at this point. It's Anthropic's actual rhetoric, as outlined in the many missives of Dario Amodei that is arguably more problematic now. They may have not been asking for this in this latest particular situation, but they really sort of were asking forexactly this overall. And it's turning the strength of the company – their idealistic nature and maximal stances on AI, from Dario on down, which has naturally built up a team of "true believers" who don't waver when, say, Mark Zuckerberg comes calling with billion-dollar poaching offers – into a liability.
So I repeat: the real problem is that they don't seem to see the predicaments they're getting themselves into until after it's too late. Or maybe they do see some of it and think they're being clever. And how's that working out for them, being clever? Even after getting blacklisted by the Pentagon and quickly scrambling to de-escalate, they're right back at it, escalating again.
Again, I don't view any of it as nefarious. But they simply don't understand how the world is going to react when, say, they release their Fable model that secretly sabotages the abilities of others looking to use Claude for augmenting their own models. On the surface, we can all understand why they did this – they're sick of everyone from Elon Musk on down using Claude to distill to their own competitive offerings. And they undoubtedly also believe such actions can be used by bad actors to create bad models to do bad things. But it's insanity to handle this via subterfuge – certainly when there are legitimate use-cases from academics aiming to study AI or researchers aiming to quantify models, for example. But even if it's just to thwart bad actors, this is a bad look and policy when you're now viewed as the leader in the space – one trying to build a reputation around trust and safety no less!
This is all Comms 101 and Strategy 101.2 And to beat the dead horse, that's the real problem here. It would be one thing if this was a one-off situation, but Anthropic keeps shooting themselves in the foot over and over again. Because they clearly just can't see the problem with anything that they're doing. Because they obviously think that the fact that they believe they're doing what they're doing for the right reasons outweighs anything else. That's just not how the world actually works, sadly.
So while I think the public is now viewing this as a sort of classic wrestling "heel turn", where the hero becomes the villain – Harvey Dent, if you prefer the movie analogy – I actually think this is more like an Anakin Skywalker situation. That is, he turns to the Dark Side for arguably justifiable reasons: to save the life of his wife, Padme, and their unborn child.3 But he too doesn't fully think through the ramifications and can't think clearly about how such a move is likely to play out.
Next thing you know, he's slaughtering young Padawans and battling his master. HE WAS THE CHOSEN ONE. Which is how I think many viewed Anthropic. Which is why, like Obi-Wan Kenobi, we're so disappointed in the decision-making here. The good news? It's not too late for Anthropic. They just need to wake up to the realities of the real world in which they operate, fast.
Update June 15, 2026: More thoughts around the current battle with the administration...
M.G. Siegler
M.G. Siegler
M.G. Siegler
M.G. Siegler
1 The rival company from which they were born out of, of course. Because of idealistic differences. Which adds another interesting dynamic to all of this. ↩
2 OpenAI clearly needed some help on this front too. Really, all of AI (and perhaps all of tech) does at the moment! But again, Anthropic's new front-running position makes this more problematic for them right now. As has long been a problem for OpenAI with their many stumbles! ↩
3 Spoiler – lol – twins! ↩
2026-06-13 02:46:50
As the AI frontier models keep improving unabated, a funny thing is happening to the user base. That is, different segments are increasingly looking elsewhere as costs rise and capabilities become more clear. Apple's hybrid approach with Siri AI between on-device and cloud is clearly something we're going to see more of...
M.G. Siegler
Inklings is a newsletter featuring links and commentary from M.G. Siegler on timely topics found around the web.
😈 Anthropic Walks Back Their Sabotage Strategy – Because we can't go a week without an AI strategy and comms crisis, after some major pushback, Anthropic has decided that, you know what, maybe they will tell those trying to use their new Fable model for their own training purposes that they can't do that – rather than just quietly undermining their code! Look, we get that they don't want rivals (and potentially bad actors) trying to distill their work, but who thought this strategy would work for a company that is trying to grab the ethical high ground and help with AI's trust issues?! Now that Anthropic is seen as the AI front-runner, we should and they should expect even more scrutiny over some of their um, interesting strategies and comms blunders. Upside: I now have some Beastie Boys stuck in my head. And now you do too. [Wired 🔒]
🗣️ Siri AI Actually Seems To Just Work – The early reviews are in! Well, previews. This is just the first of many betas before a roll out – which will still be in beta – in the Fall. But these first impressions seem pretty universally positive across the board. Clearly, the bar was low – perhaps so low so as to be impossible to go under. Most takes seem to be "well, this is simple" or "yeah, other systems have been able to do this for a while" but still... it works! I have Siri AI on two systems currently, a backup MacBook and an old iPad. It's a bit buggy (again, as you'd expect) and slightly slow on the iPad which is several years old. But still, it works! You just couldn't say that really about Siri, and not just in the past couple of years with Apple Intelligence debacle, but really since Siri first launched 15 years ago. There will obviously be times still where she doesn't work or misfires – and we'll see how she scales – but the hits seem to happen far more often already. It's early, but I've been impressed. If anything, she might be too cold? [Verge]
💎 Elon's Diamond Hands – A trillion dollars. It's an insane amount of money, obviously. But as with Hollywood box office results, there's some caveats and context required. First and foremost, Bill Gates and then Jeff Bezos would have hit the number first if they had just held on to all of their shares in Microsoft and Amazon, respectively. Instead, they either sold off over time or in the case of Gates, famously gave most of it to charity alongside Warren Buffett. Musk's method is a very uncharitable way to look at things, quite literally. The divorces haven't helped either of course, but Musk has plenty of those too. The difference is that Musk has held (or bought up/been granted more shares) in each of his companies. Diversification is for wimps, one might say. Actually, Musk's method of diversification is to start new companies. Whereas almost all of his net worth used to be tied to Tesla, with today's IPO and $2T+ valuation, his 50% stake in SpaceX now dwarfs his other holdings (and he's obviously going to merge them all at some point anyway). Bezos is perhaps learning this lesson with his new Prometheus AI startup, currently valued just under $30B and rising fast. But really, while the piece notes that Musk's trillion would now trump John D. Rockefeller's billion back in 1937 in terms of share of US GDP (3% versus 1.5%), globally, Musk controls a mere 0.9% of GDP (honestly, that is maybe the most insane stat).Augustus controlled something more like 25% - 30% during his time atop the Roman Empire. Mansa Musa may have commanded more during the Mali Empire. Everyone needs goals to aspire to, even Elon. [NYT]
📺 Apple TV Really is the New (Old) HBO — From a quality-perspective, I’ve been saying this for years at this point, but Janko Roettgers' point here is a slightly different one: that Apple TV is relying on a few tentpole shows to drive their subscriptions and word-of-mouth, just like HBO used to do in the days of cable. But streaming has obviously changed everything, and as a result, Apple TV remains a non-player to the point of still not showing up on overall charts despite some of their high-profile content. They started with no library, of course, but years later, it’s still tiny compared to Netflix and the like. If and when they push into an ad-tier, that’s likely to change. They’ll start licensing more content on top of what they produce. This is inevitable from a Services-perspective – because ads are. Because while being the new HBO is nice and the content is for the most part great – big fan of their latest show, Widow's Bay – it still isn’t moving many — if any — needles. There’s some halo effects, for sure, but Apple is a $4T company. They missed out on HBO. Maybe they should buy Disney? [Lowpass]
'Xbox Everywhere' doesn't make sense if Xbox is nowhere...
M.G. Siegler
"The faster the potential RSI takeoff looks like it could be, the more it could be advantageous to delay an IPO. Technology and the world may change in surprising ways, and there might be good reasons to be a private company during that time."
– Sam Altman, telling OpenAI employees why the company may not rush to IPO even with SpaceX now public and Anthropic on the path.
There's been a lot written about that race and while I do think it would have been good for OpenAI to go out before Anthropic for all the obvious optics and narrative reasons, with that ship having sailed, it may actually make more sense to wait. Then the question becomes if they can afford to, quite literally. Given their burn, they'll need to raise money again before achieving profitability – yes, even after the largest fundraise in history – and the public market is going to give them more avenues to do so. That said, there are tradeoffs, as Altman is alluding to. And given where OpenAI seems to be on the path to profitability versus Anthropic – which is to say, far behind – there's a world in which the market punishes OpenAI more than their peers. And that's not a good place to be.
Lastly, it's interesting to see the seemingly coordinated pivot around "RSI" – recursive self-improvement – as the key talking point in terms of the next big thing in AI. Obviously, it points towards the path to AGI, but all of the labs clearly going to believe it's either the first step, the next step, or the major step. And coming soon – earlier this week I noted that OpenAI put a very specific date out there: March 2028. Anthropic clearly thinks we're on the cusp. Google. Etc.
The look that Apple SVP of Marketing Greg Joswiak gives – to the camera – after SVP of Software Craig Federighi tells Laurie Segall that "I don't think the sexy part belongs in your computer, it belongs in your life." is just priceless. A real Office-like moment of breaking the fourth wall. It's the look of a man who knows that what Craig just said it going to launch a thousand headlines and memes.
I'll spare Apple here, but might I just suggest that were I to write a whole post around this, it might be titled something like: Siri AI Not DTF.
In all seriousness though, the whole interview for Segall's Mostly Human podcast is well worth the watch/listen, a lot of meat in here about Apple's AI mindset. And yes, it went decidedly better for Federighi and Joz than last year's showdown with Joanna Stern. It helps when they have something to actually talk about!
Aside: while asked to reflect on his 40th anniversary at Apple (!) Joz gives a nice Michigan shout-out (as both he and Segall are grads). #GoBlue
🎶 Listening to "Sabotage" by Beastie Boys
🍺 Enjoying a Kernal Table Beer
🇬🇧 Sent from London, England
2026-06-12 20:53:23
There are a number of narratives the past few weeks that I think you can tie together with the same string. That is, we may be slowly shifting into a world where frontier AI isn't needed for most workflows. I mean, technically that has always been the case. But we're starting to see real action and movement around that notion to turn it into a reality for many.
First came the narrative around costs spiraling out of control at many companies trying to leverage AI in day-to-day operations. Some of this is obviously related to the "tokenmaxxing" trend, but it's also seemingly just around "normal" AI deployment too. With usage growing and the shift towards consumption-based pricing...
Then came the news of NVIDIA 'RTX Spark' systems. The company's shift into CPUs for PCs is all about local inference. Why? At least in part to be able to cut AI costs and workloads in the clouds, while also potentially boosting speed if you simply don't need the biggest and best models for everything.
Next we saw Apple at WWDC showcase 'Siri AI' – for real this time – which is heavily predicated around their on-device models. While much was made about the Google Gemini partnership, and rightfully so, the real key may be their routing system which is able to quickly know when to use those local models versus when to call to their models running in the cloud – Google's Cloud, running NVIDIA chips, no less. For a lot of Siri queries, you won't need that. And for a lot of your personal content, you may not want that. And if you do need it, Apple may charge you more for it.
Speaking of, this week also brought Claude Fable 5 – yes, Anthropic's 'Mythos' model meant for the masses, at last. Beyond the security concerns, there are major cost concerns too. To the point where Anthropic has a big disclaimer on the model picker that customers will have access to Fable through June 22, at which point it's likely to be an extra-cost add-on. Read: credits will be burned. And the reality here is that Fable is undoubtedly overkill for many "regular" AI workflows.
And that's my word to tie all of these things together: it feels like we're entering the Era of AI Overkill.
Famous last words and all that, but while everyone has spent the past couple of years debating if and when frontier model development would slow down, the real story may be reaching a sort of equilibrium where end-users (and businesses) are realizing that they simply don't need the latest and greatest model for every task. And certainly, given the rising costs with rising usage, they may not want to pay for the best every time.
Again, on paper, this isn't anything new. It's the reason why we've long had the model picker drop-downs within the various AI products. They always implied that maybe you don't need the biggest and best model for your task – and, in fact, this other model may be far faster. But money has a way of talking that time doesn't. If you're telling someone that using this other model will be not just faster, but far cheaper, they're more likely to listen. Provided the end result is still good. And again, for many queries/tasks, "good enough" is now just that.
Countering this is the ongoing push towards agentic workflows and yes, coding. But as Apple may more clear this week, that's probably not going to be the AI workflows that the masses use any time soon. Over time, sure, agents will continue to creep into our lives. But for a lot of tasks, the on-device agentic work that Apple is offering will be more than enough to surprise and delight the masses.
The power users like you and me will undoubtedly continue to use – and pay for – the Claudes and the ChatGPTs at the bleeding edge. But again, it's impossible to argue with free.
What will be truly interesting will be watching how enterprises strike this balance. In light of the rising AI bills, do they start to buy up RTX Spark machines to take a lot of AI work offline as it were? "Unmetered intelligence" is a term that Microsoft and others would really like to make happen. Spending a few thousand dollars up-front versus tens or hundreds of thousands per employee over time is obviously a pretty easy equation. Again, provided the output is still good!
Do we enter a world of 'have and have-nots' in business where the biggest businesses pay up for the frontier AI all the time while smaller businesses "settle" for cheaper AI?
Hybridization seems inevitable here as well. And that will require good routing systems to know what should be done locally, for free, versus what needs to be handled at the frontier in the cloud. The buzzword you're actually looking for here is "orchestration", again, not new. But it will be increasingly important. Not just to route between different models from different providers, and different models from the same provider, but also local versus cloud models.
How the model makers themselves handle this will also be interesting to watch. Obviously they've been trying to take on more of the work of picking the right model for you, but this has also prompted some backlash and backtracking. At the same time, it was never going to be tenable to have a Microsoft Office-like toolbar system of drop-downs, and instead, most people will want what Apple is now offering with Siri AI: one prompt box to rule them all.
Yes, yes, here too power users will want to decide and pick their own. But also undoubtedly not always. It's just far too big of a cognitive burden to have to think about which model you want to use for each query or task. And as workflows move more towards audio and perhaps to different types of AI devices, the UI to handle such model picking quickly goes away out of necessity.
And as agentic workflows become more automated, the system will necessarily need to pick the right models for your task. Interestingly, while much of this work started local with OpenClaw and the like, this will probably increasingly move the other way: to the cloud as more devices get incorporated into such workflows. But there still might be a home "hub" for local model work to save cost/time? Even if it's a smartphone?
Again, if nothing else, people may feel more comfortable running their personal information locally. Certainly Apple believes this! And going forward, does our personal AI morph into our professional AI, or do they stay fully separate?
Anyway, yes, it's fun to try Fable to see if it can answer "who let the dogs out?", but it's also increasingly insanely expensive and stupid to do that. I mean, it was always stupid to do that. But now money talks. And barks back.
As we enter the Era of AI Overkill, are the cheaper and local models ready to answer the call? And is the orchestration layer ready to route to them?
2026-06-12 02:10:11
I'm not sure it's entirely fair, but it's right there: if the new leadership of Xbox just wrapped up their 'Charm Offensive', the next phase looks to be the 'Harm Offensive'.
While Asha Sharma and team spent their first 100 days rejuvenating the XBOX brand, killing off AI, dropping subscription prices, restoring exclusives, bringing on talent, retro green translucent anniversary consoles, an Oprah moment! Yeah, these next 100 are going to be significantly tougher. Including, it seems, mass layoffs...
It's harsh, but I also think it's a sound strategy. You want to give consumers hope that you've heard what the problems are and to showcase that you intend to change them, instantly in some cases. At the same time, there are very real structural and business problems in the division, which is going to require some drastic actions to help course-correct. If you launch those first, it's just going to fuel the fear, uncertainty, and doubt about the entire endeavor. So you start with the carrots before switching to sticks...
During said charm offensive, I noted that Sharma's fast, big moves reminded me of the early days of her boss, Satya Nadella, when he took over the larger Microsoft org a dozen years ago. One of his very first moves was to announce Office for iPad. Obviously, it had been in the works for some time – hence it being ready to be shown off – but the key was the symbolism of the move. It signaled a new day and era for Microsoft. After Steve Ballmer's "lost decade" of mostly milking profits from Windows, the company was ready to change and reorient itself to move forward.
Sharma's moves were arguably more dramatic, because she was rapidly retconning a lot of what Phil Spencer and team had spent the past several years putting in place. Of course, that's also fairly easy to do when none of that stuff was working. And Sharma's 'Next 100 Days' memo outlines just how dire things are:
We will end this fiscal year at about a 3% accountability margin, down year-over-year. Excluding Activision Blizzard King, over the past five years, we have spent over $20 billion on ongoing investments in our content, platform, and hardware subsidy, but our annual revenue has declined nearly half a billion during that time. Going forward, this cannot continue.
Yes, that's aside from the nearly $70B spent on Activision Blizzard. And that's important to note because that deal was masking the growing disaster within Xbox. The core was no longer working, Microsoft was buying revenue to mask it. Sharma ripped the mask off. "Going forward, this cannot continue."
Earlier this week, she was noting that her job, first and foremost, was to build Xbox back into a leading entertainment company. Just last week, she was specifically noting that her job wasn't about the margins – something which Nadella and Microsoft CFO Amy Hood were clearly pushing the division on previously. But as this memo showcases, it is also still about the margins. Xbox isn't a charity, it needs to be sustainable, as Nadella has made clear.
Part of that, unfortunately, means layoffs. And part of it means backtracking from the weird, piecemeal strategy put in place by Sharma's predecessors. 'Xbox Everywhere' doesn't make sense if Xbox is nowhere. And while I think it's fine to do some level of cross-promotion and pollination of older games and/or IP to other platforms, the goal obviously has to be to bring more people back to Xbox, not to make it so that no one needs to buy an Xbox.
As such, exclusives are back on the menu. Which also means ripping off some band-aids with your would-be awkward partners like Sony. Sorry, we're no longer going to be feeding you so that you can kill us even faster.
In a way, I'm reminded a bit of another famous tech CEO coming in: Steve Jobs. When Jobs came back to Apple in early 1997, the company was obviously in bad shape. Infamously close to death. One of the first orders of business was massive layoffs – executed by then-CEO Gil Amelio, before he himself was executed and Jobs was officially elevated into his famous 'iCEO' role.
Jobs too had a sea-change moment like Nadella, albeit in reverse, by striking a deal with Microsoft to ensure that Office would continue to be supported on the Mac. Everyone remembers the equity investment, but this was the key to that deal. Well, and Bill Gates showing up on screen behind Jobs during his keynote at Macworld in Boston. While the "Big Brother" vibes are humorous today, this moment also signaled a new era at Apple and a path forward, "for Apple to win, Microsoft doesn't have to lose". 17 years later, Nadella had the same message in reverse.
Sorry, I've gotten a bit lost in the nostalgia here. My point is that after these moves, Jobs also acted fast to cut the product lines – perhaps most notably, killing off the Mac clones. One can't help but see parallels here between Xbox putting their titles on other systems and the Mac clones. On paper, it sounds like expanding the addressable market and getting paid to do so. In practice, it nearly destroyed the soul of Apple and perhaps was doing the same to Xbox.
Yes, I just compared Sharma's early efforts at Xbox to the magic of both Satya Nadella and Steve Jobs. That's unfair – to them and to her. It's early – just 100 days! – we'll see where this goes. But certainly her first moves have been impressive and have completely transformed the vibes around the brand in short order.1 But now comes the hard part. The layoffs and getting the business actually in order.
While the strategy sucked, Xbox also got blindsided by component prices – of course, fueled in part by Microsoft's own role in the AI arms race... That perhaps puts 'Project Helix' – the next Xbox – in jeopardy, or maybe just makes it more likely that they rely more on third party manufacturers for the hardware. Uh oh, that sounds a lot like Xbox Clones... What's the plan for Game Pass? Mysterious new business models? How long until they spin out Activision Blizzard?
Speaking of disastrous massive acquisitions... While Ballmer handed Nadella a range of issues – cough, Nokia, cough – Microsoft's underlying business remained in great shape. Xbox's business is perhaps more like Apple's back when Steve Jobs came back: on the brink. The big difference, of course, is that Xbox is under Microsoft. So it's sort of a hybrid of those two situations. Xbox is not going to die tomorrow, but they still need to figure out the correct path forward to be viable.
A bunch of good will has seemingly been restored, fast. A smart move ahead of some major, but necessary hard calls. A full spin-off? Hang on...
Update June 13, 2026: A new report by Aaron Holmes for The Information notes that Microsoft is weighing making Xbox into its own, wholly-owned company under the parent, much like they have with LinkedIn and GitHub (two companies they acquired, of course). But the bigger option: spinning the unit off entirely...
M.G. Siegler
M.G. Siegler
M.G. Siegler
1 Especially when you consider that she was thought to be the assassin sent by Microsoft to terminate Xbox. Perhaps death by AI, was the general feared given her previous role. Good on her for quickly changing that narrative. ↩