OpenAI IPO? Grok-SpaceX Merger? The AI IPO Race Heats Up

0:00Today on the AI Daily Brief, OpenAI IPO, SpaceX XAI merger, a bunch of stories that help us understand the state of the AI race as we head into February. Before that in the headlines, you can finally play with Google's Genie 3 world model. The AI Daily Brief is a daily podcast and video about the most important news and discussions in AI.

0:23All right, friends, quick announcements before we dive in. First of all, thank you to today's sponsors, KPMG, Section, Zencoder, and Superintelligent. To get an ad-free version of the show, go to patreon.com slash ai daily brief, or you can subscribe on Apple Podcasts to learn about sponsoring the show. Send us a note at sponsors at aidailybrief.ai. And while you are on aidailybrief.ai, I would so appreciate it if you would fill out our AI usage pulse survey. The TLDR here is that I think everyone is trying to start benchmarking themselves and actually understand with data, not just anecdotes, how others are using AI.

0:56To help with that, we're trying to do a lot more original research, a lot more data collection. And one piece of that is these monthly usage pulse surveys. It's going to ask you questions like which AI models did you use this month? what use case categories were most valuable, how often you use it. It should take you about two minutes. Like I said, you can find that at AIDailyBrief.ai. There'll be a couple of different links to it, and I would so appreciate it if you would take the time to fill that out. I'll just be leaving it up for a few days, probably till about the middle of next week, and anyone who fills it out will get the first read results about a week before we share it more broadly.

1:28Thanks in advance for your help. Now with that said, let's talk some world models. Welcome back to the AIDailyBrief Headlines Edition, all the daily AI news you need in around five minutes. One of the things that we talked about throughout 2025, but especially towards the end of the year, was the idea of world models. World models are, in some ways, a fundamentally different approach for getting to the next level of AI. World models have a deep understanding of the physics of the world around them, which allows them to do things that LLMs can't. Last year, one of the most impressive demos we got was the research preview of Genie 3 that came in August.

2:03That preview was circulated among a fairly tight group of researchers, but we still got to see some fairly breathtaking videos. Genie 3 is capable of generating playable 3D worlds, allowing the users to navigate through the scene with the mouse and arrow keys. Even back in the preview, the quality was fairly astounding, and it seemed like DeepMind was making rapid progress on world models. Well, now the model is fully available to the public, rolling out first two Gemini Ultra subscribers. It's still a research preview, but people can now start playing around and creating their own generated worlds for the first time.

2:35Jay Peters from The Verge used it to generate a string of worlds that resembled popular Nintendo games including Mario 64, Metroid Prime, and Legend of Zelda. Rebecca Belan of TechCrunch used it to create a marshmallow castle in a claymation style. You better believe that I am an ultra subscriber, and thankfully this was a model where when they said a certain category of subscribers had access to it, they actually did. The first thing I generated was a neon cyberpunk world set in the 2060s, but where there were no humans, only animals. I wanted a flying squirrel character, and the thing that you're seeing bounce around your screen now is that.

3:07The way that it works is you use text to describe your environment as well as your character, and then it's off to the races. The second world I created was an alternative multiverse Earth world, but where we actually got things like flying cars in a 1960s retrofuture aesthetic. The character I plopped down was a time traveler from the 1990s. Lastly, it being the 250th anniversary of the Declaration of Independence and the birth of America, I of course had to do a bleak winter scene of late 1776. Chris on Twitter summed up the feelings of a lot of folks who had a chance to play around with this.

3:37He writes,

3:54Genie 3. Kyle Russell agreed, resharing Ethan Mollick's generation of the world of Hamlet, as seen from the perspective of the Poison, writing, world models are going to hit the video game industry like an atomic bomb. Swix from Latent Space said that this finally got him to pony up for a Gemini Ultra subscription, and said that while Genie 3 has obvious flaws, it's here! Real-time playable video world model. For the flaws, he says, it clips through a lot of terrain, worse than in a game engine. It also sometimes errors out, that you can only live in the world for 60 seconds, and that nothing else except the main character moves.

4:25But at the same time, he points out that it is again a real-time video world model, that its instruction following was pretty good, that its movement accommodates weird legs, he asked for a giant robot spider like in Wild Wild West, and finally he said they never ever shipped genie models to production, never ever. What TPU sorcery is this? Congrats to the Genie 3 team. I can't believe this actually shipped. What absolute mad lads. Now, speaking of AI video and AI video adjacent things, TechCrunch reports that the Sora app from OpenAI is struggling. Now, you might remember that when OpenAI launched Sora 2 in late September, it came along with a companion app.

5:02That app gathered over 100 ,000 downloads on day one and actually became the top app, exceeding ChatGPT. New data suggests, however, that the churn is extreme and new downloads have rapidly tapered off. According to app figures, Sora saw 3 million downloads across September and October, with another 3.2 million in November. Monthly downloads are now down almost two-thirds since then, with January figures at 1.2 million. On the US App Store, Sora has now fallen out of the top 100 list for free apps on both iOS and Android. Now, at this point, we don't really know exactly how OpenAI views Sora. I don't think that they necessarily released it because they had conviction that it was going to become the next TikTok.

5:39I think they released it because they wanted a place for people to try Sora video generations, and they wanted to see how people would receive an AI-first social network. Remember, OpenAI has a deal with Disney, and so we'll see if over time that actually changes the fate of Sora, or whether AI video just ain't it. As an AI video aside, if you haven't seen Times on this day 1776 yet, I highly encourage you to go check it out. You can find it on Times' website, and basically they got Darren Aronofsky to use AI to create a series that brings us back to the incredibly fraught and important year of 1776, but in a way that's an actual film rather than just a documentary of historians talking about it.

6:16The comments are of course just chockerblock full of people screaming about what AI slop it is, and while I understand that there could be good faith critique of where we are with AI video, I think it's pretty awesome, really well done, and shows of course where we are headed. Moving back however to our last couple of headlines, Perplexity has signed a massive new cloud deal with Microsoft diversifying them away from AWS. The deal includes$750 million in spending across a three-year term. Interestingly, Perplexity said that part of the rationale for the deal was the ability to access models from OpenAI, Anthropic, and XAI through Microsoft's Foundry platform.

6:49Perplexity has their own in-house model that powers free usage, but paid users have access to a variety of models from other labs. The Microsoft deal could allow them to consolidate the service onto a single platform instead of tapping individual APIs from rival labs, which could of course become relevant if first-party API access is blocked, as Anthropic has done to multiple other competitors over the past year. The deal also gives Perplexity a failover option if Amazon pulls the plug. AWS has been Perplexity's major cloud provider since launch, however, in November, Amazon sued Perplexity for disguising their web-crawling activity related to agentic shopping.

7:20If that lawsuit gets nasty, Perplexity could certainly benefit from having another option. Speaking of Anthropic, our last story today is that Anthropic is going to war with the Pentagon over limits to their military AI deal. In the first half of last year, each major AI lab signed a deal to provide AI technology to the military. OpenAI, Meta, Google, XAI, and Anthropic all signed up, with multiple labs shifting their acceptable use policies to facilitate the deals. Now, the notion was that the technology would be mostly used for administrative tasks at the Department of Defense slash Department of War, with limits on surveillance and warfighting applications.

7:55Anthropic's deal came in July and was worth$200 million, which for some felt like kind of a big departure from Anthropik's founding principles regarding AI safety. In the latter part of the year, the Department of War announced a string of initiatives aimed at driving AI adoption at the Pentagon, which included discussions of lethal applications of the technology. Reuters now reports that Anthropik's relationship with the Department of War is souring to the point the contract might be terminated. Sources said that tensions began almost immediately. Anthropik's terms had rejected the use of the technology for lethal operations and domestic surveillance.

8:26Administration officials were reportedly frustrated by Anthropik dictating terms, arguing that usage should be unrestricted as long as it complies with U.S. law. The government's desire to leverage AI fully autonomous weaponry and mass surveillance is apparently weighing on the mind of CEO Dario Amadei, with both themes featuring prominently in his recent essay about the dark side of AI adoption called The Adolescence of Technology. Secretary of War Pete Hegseth is also airing the grievance in public. At an event earlier this month, he said the Pentagon would not, quote, employ AI models that won't allow you to fight wars.

8:54Sources said that these comments were squarely aimed at the simmering dispute with Anthropic. Officially, Anthropic issued a partial denial of the schism. Their spokesperson said, Anthropic is committed to protecting America's lead in AI and helping the U.S. government counter foreign threats by giving our warfighters access to the most advanced AI capabilities. They added that Claude is used, quote, extensively in national security missions, and that Anthropic is in productive discussions with the Department of War about ways to continue that work. However, with a quick glance over the current headlines, it's easy to see why Anthropic might be second-guessing their provision of the technology to the government.

9:26both Wired and the information reported on ICE's use of AI in 2025, which has also become apparently an issue for Palantir employees. MAI on Twitter summed up the stakes, writing, The stakes here go way beyond one contract. It's about whether Frontier AI labs become neutral infrastructure providers or political actors that get to say no when governments want to weaponize their models. Whatever compromise or standoff emerges will likely shape how regulators, allies, and rivals think about AI red lines for years. This, my friends, is very much deserving of a full exploration, and I'm sure we will have context at some point to do that.

9:59For now, however, that is going to do it for the headlines. Next up, the main episode.

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13:09Welcome back to the AI Daily Brief. Yesterday's episode was all about Meta and Microsoft's earnings. And of course, the context through which we explored that was what it said about the market's expectations and thoughts around an AI bubble as we move into 2026. Interestingly, we got a set of news in the past 24 hours that almost serves as a compliment to that to get a better view of the entire state of the AI race, looking at basically all of the big players. Some of it's expected and some of it's very unexpected. So let's look at some of the biggest stories defining the AI race as we head into the new month of February.

13:42First off, Apple, yes, Apple, has made an acquisition in the AI space. It is not perplexity or any of the big ones that people have speculated on. Instead, it's a frankly mysterious company called QAI, the goal of whom seems to be understanding what a person wants without them having to speak. So let's talk about what this isn't. This is not a slam dunk, get back into the LLM race acquisition of the type that people had been advocating for throughout 2025. You might remember that back at the beginning of last summer, I said that Apple should try to pay up and get Anthropic while they were still even in the realm of affordable, but at that time, Anthropic was worth around$60 billion.

14:21The latest fundraising has it at$350 billion, so probably fairly outside of acquisition range. Anthropic, of course, has given no indication that they have any interest in doing anything than continuing to accumulate consumer and business devotion, and so that I think can safely be taken off the table. Now, there had been rumblings at various points that Apple had explored a deal like perplexity. Apple SVP of services at EQ in particular was a leading advocate of a perplexity deal, although that didn't come to fruition either. Instead, what we have is the second largest acquisition in Apple's history.

14:51Their deal for Beats remains their largest at$3 billion, but according to the Financial Times, they are paying$2 billion for QAI. So what is QAI? QAI works on imaging and machine learning, using the technology to develop a system that can detect speech without audio. At the moment, their systems can enhance audio in noisy environments and detect whispered speech. However, the reporting noted that QAI holds a patent for optical sensors technology that can recognize and interpret facial skin micro-movements as speech. The patent describes the technology being built into headphones or glasses, and the speculation is that this technology could be used to enable silent communication with an AI assistant by simply mouthing words.

15:29Now, making the deal even more notable, QAI was acquired out of stealth without releasing a product. That said, the company does have an extremely strong pedigree. For CEO and co-founder Aviad Maisels, this is his second time being acquired by Apple. He previously founded PrimeSense, which developed the image recognition technology that powered Xbox Kinect and was repurposed for Apple's Face ID system. Tom Hulme, a venture investor at Google Ventures who led QAI's seed round, wrote that their technology could help us find out, quote, what happens when the computer finally disappears into our daily lives.

16:00Broadly speaking, I think there are two interpretations of this. The first is, when you combine this move with Apple's decision to partner with Google on foundation models that are going to power experiences like Siri, it feels like they're more or less, at least unless something radical changes, passing on the foundation model space. At the same time, one could view this move as Apple sticking to their core focus around hardware. Indeed, it's been a long time since Apple was truly a software-first company. The iPhone has become their core business, and their only notable AI success to the extent that you can call it that has been on the hardware side, with the M-series chips and the perpetual popular Mac Mini, which we'll talk about in a minute.

16:38So some wonder maybe Apple doesn't need an AI model, and they are in fact better off putting all their resource into winning the competition for AI devices. Now, yesterday also saw Apple report earnings with a blowout result. They recorded their largest quarter ever for iPhone sales with$85 billion in smartphone revenue. Max sales and services revenue both came in below expectations, but top-line revenue still grew by 23%, which was a significant beat. Going back to those possible interpretations, the earnings really reinforced that Apple is in the iPhone business, and business is good. On the AI side, the company continues to be completely directionless, at least in terms of what they're telling us.

17:13TechCrunch summed it up with a headline, Guys, I don't think Tim Cook knows how to monetize AI. Responding to a question about how Apple will turn AI bets into revenue, Cook said,

17:33Which even for a public market CEO is some impressive word salad. Then again, it does feel like it's not impossible that over the next year or two, Apple's strategy, whether intentional or not, is going to come into clearer view. Robert Scoble wrote, This is an important purchase for Apple because later this year it will introduce a new kind of camera. In two years, everyone will have a camera, headphones, and glasses that all work together joined by the phone. This sort of echoes those recent comments from Mark Zuckerberg on his earnings call, where he said it's hard to imagine a world in several years where most glasses that people wear aren't AI glasses.

18:07The other topic of conversation around this was summed up by Village Global's Ben Casnocha, who wrote, Apple just did its second largest acquisition ever. One can imagine a world where Apple, feeling behind in AI, finally ramps up M &A and spends $10-20 billion buying AI startups over the next couple of years. That would be great for the venture ecosystem. So maybe the hanging back and letting it all happen will work for them? In the flurry last weekend around ClawedBot, which is now known as OpenClaw, it didn't escape people's notice that one of the major beneficiaries was Apple, as dozens if not hundreds or even thousands of people took to Twitter to talk about how they had ordered a Mac Mini.

18:41Sharing a post of Google's Logan Kilpatrick sharing his Mac Mini order, investor Sam Lesson wrote, Apple's AI strategy remains undefeated. Next up, let's talk about Amazon. Broadly speaking, I would say that the perception of Amazon is at once similar and opposite to the perception of Apple when it comes to AI. Whereas many have felt Apple felt rudderless for having no AI strategy, to some Amazon has felt rudderless for having every AI strategy. The most recent news is that the company is considering a$50 billion bet on OpenAI. Earlier in the week, we got reports that suggested that Amazon, NVIDIA, and Microsoft were all in talks to invest in OpenAI to the tune of$60 billion between them.

19:20The rumors were that Amazon was probably in for$20 billion. At the time, the takeaway was mostly that OpenAI should have no problem hitting their$100 billion fundraising target. However, the Wall Street Journal is now reporting that Amazon is the lion's share of that number, which dramatically changes the implications. At OpenAI's rumored$830 billion valuation target, this investment if it comes to fruition would give Amazon a 6 % stake. It would also represent around half of their CapEx spend for last year. Reports suggest that CEO Andy Jassy is holding negotiations directly with Sam Altman around the exact shape of the deal.

19:53An investment of this size could change Amazon's position in the AI race. They already put$8 billion into Anthropic in 2024, which is likely somewhere north of a 10 % stake. By adding a sizable chunk of OpenAI, Amazon simply might not need to compete on frontier models. They could license or create a custom version to make AI Alexa and just focus on their core infrastructure business as their big AI bet. It looks kind of like Amazon is trying to construct a win-win-win scenario for themselves. If either OpenAI or Anthropic come out on top, Amazon wins. If both companies flounder, well, Amazon made a ton of money along the way selling them compute.

20:29At the same time, I certainly don't think it's clear that markets are seeing things in quite that light. Jason Luongo summed up the bull case when he wrote,

20:54At the same time, I certainly don't think that view is consensus in the markets yet. Now, part of that is that any sort of momentum narrative is confused by the fact that Amazon also this week announced that they were cutting 16 ,000 employees. This follows 14 ,000 layoffs from Amazon's corporate workforce back in October. On Wednesday, SVP of People Beth Galetti published a blog post confirming the layoffs were going ahead. She framed them as a continuation of the headcount reduction from October, stating that they will, quote, strengthen our organization by reducing layers, increasing ownership, and removing bureaucracy.