AI Daily: OpenAI awarded $200M U.S. defense contract

Catch up on the top artificial intelligence news and commentary by Wall Street analysts on publicly traded companies in the space with this daily recap compiled by The Fly:

DEFENSE CONTRACT: OpenAI Public Sector has been awarded a fixed amount, prototype, other transaction agreement with a value of $200,000,000 from the U.S. Chief Digital and Artificial Intelligence Office. Under this award, the performer will develop prototype frontier AI capabilities to address critical national security challenges in both warfighting and enterprise domains. The work will be primarily performed in the National Capital Region with an estimated completion date of July 2026. Fiscal 2025 research, development, test and evaluation funds in the amount of $1,999,998 are being obligated at time of award. Office of the Secretary of Defense Chief Digital and Artificial Intelligence Office, Washington D.C., is the contracting activity. The Fly notes that OpenAI is backed in part by Microsoft (MSFT).

BOILING POINT: Tensions between OpenAI and Microsoft are flaring up and reaching a “boiling point” as negotiations have been so difficult in recent weeks that OpenAI’s executives have discussed what they view as a “nuclear option,” namely accusing Microsoft of anticompetitive behavior during their partnership, people familiar with the matter told The Wall Street Journal‘s Berber Jin. OpenAI wants to loosen Microsoft’s grip and secure its blessing for conversion into a for-profit company, as Microsoft’s approval of the conversion is key to OpenAI’s ability to raise more money and go public, the report stated.

WORKFORCE: Andy Jassy, CEO of Amazon (AMZN), shared a message with Amazon employees earlier today, in which he stated in part, “Today, in virtually every corner of the company, we’re using Generative AI to make customers lives better and easier. What started as deep conviction that every customer experience would be reinvented using AI, and that altogether new experiences we’ve only dreamed of would become possible, is rapidly becoming reality. Technologies like Generative AI are rare; they come about once-in-a-lifetime, and completely change what’s possible for customers and businesses. So, we are investing quite expansively, and, the progress we are making is evident… While we’ve made a lot of progress, we’re still at the relative beginning. There are a few reasons we believe this and want to go even faster… Today, we have over 1,000 Generative AI services and applications in progress or built, but at our scale, that’s a small fraction of what we will ultimately build. We’re going to lean in further in the coming months. We’re going to make it much easier to build agents, and then build (or partner) on several new agents across all of our business units and G&A areas. As we roll out more Generative AI and agents, it should change the way our work is done. We will need fewer people doing some of the jobs that are being done today, and more people doing other types of jobs. It’s hard to know exactly where this nets out over time, but in the next few years, we expect that this will reduce our total corporate workforce as we get efficiency gains from using AI extensively across the company… There’s so much more to come with Generative AI. I’m energized by our progress, excited about our plans ahead, and looking forward to partnering with you all as we change what’s possible for our customers, partners, and how we work.”

AI ADVERTISING TOOLS: In a blog post, Reddit (RDDT) introduced Reddit Community Intelligence, the “collective knowledge from the billions of human conversations across Reddit.” “This engine powers products and insights that no other platform can deliver, turning Reddit’s 22+ billion posts and comments into structured intelligence for smarter marketing decisions,” the company said. Reddit also unveiled two early-stage products powered by Reddit Community Intelligence: Reddit Insights, in Alpha, which is an AI-powered social listening tool designed to unlock strategic value from Reddit’s 20 years of conversations, and Conversation Summary Add-Ons, also in Alpha, which is a new ad feature that dynamically integrates positive content from Reddit users directly below an advertiser’s creative, putting community conversations front-and-center in the user experience and blending AI-driven efficiency with real human perspectives.

EQUITY FUNDING: Elon Musk’s artificial intelligence startup xAI is in talks to raise $4.3B through an equity investment on top of the $5B it has recently been trying to borrow from debt investors, according to information the company shared with investors who asked not to be identified because it is private, Bloomberg’s Carmen Arroyo and Jill R Shah report. Musk’s company, which is responsible for the AI chatbot Grok, needs the new money, in part, because it has already spent most of what it previously raised, the materials shared with investors indicate. Between its founding in 2023 and when the debt sale was launched this year, xAI raised $14B via equity fundraising, according to the materials. But as of March 31, only $4B of that was left on the company’s balance sheet, the information showed.

SAFETY CHARTER: Alphabet’s (GOOGL) Google unveiled Google’s Safety Charter for India’s AI-led transformation. “India’s digital economy has grown progressively, thanks to the flywheel created by affordable devices and access, online citizen services, ease of payments and a bustling digital marketplace of goods and services,” the company said in a blog post. “The invisible connective tissue that keeps this flywheel moving, is trust. The digital sphere can be an engine of growth only as long as the citizenry that use it feel safe in doing so. As AI proliferates deeper into our digital lives, it’s crucial that we, as responsible stewards of India’s tech industry, ensure that the trust reposed by users in India’s digital ecosystem remains unchanged. Towards this, we’re excited to share Google’s Safety Charter for India’s AI-led transformation. Under this charter, we shared how AI is eliminating vulnerabilities in enterprise software, how Google’s investment in its products and programs are keeping users safe, and the various ways in which AI is closing the gap between attackers and defenders.” The three key themes for the charter include: keeping the end user safe from online frauds and scams; the DigiKavach campaign or mitigating financial fraud in the ecosystem and its products; and advancing cybersecurity for public and enterprise infrastructure.