2025.25: Snapshots of an Evolving AI Landscape

Welcome back to This Week in Stratechery!

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On that note, here were a few of our favorites this week.

1. OpenAI Gets Testy and xAI Gets Expensive. A slow news week after WWDC provided an opportunity to take a closer look at two leading AI players. First, Tuesday’s Daily Update covered the latest round of tensions between OpenAI and Microsoft, as OpenAI reportedly threatens a complaint to regulators and the companies continue to haggle over contract terms in the midst of OpenAI’s attempts to change its corporate structure (again). Next, Wednesday’s Daily Update drew on reports of spiraling costs and limited revenue at xAI to examine the company’s core challenges, potential solutions, and why it would benefit the entire AI ecosystem to maintain xAI as an additional competitor in the space. Alliances are evolving and costs are spiraling as the hierarchies that will define the future are still very much in flux.— Andrew Sharp
   
   
2. Speedbumps for China’s Car Industry. The overnight emergence and dominance of Chinese EV companies has been one of the biggest stories in the world over the past two years, both because of the skill and ingenuity of PRC manufacturers, as well as the low cost and (over)supply of Chinese brands, which has inflamed trade tensions and threatened incumbent car companies elsewhere in the world. This is context for recent reports that many of the biggest Chinese companies are struggling for cash flow, themselves, caught in the middle of a ruthless domestic competition for market share. Bill and I discussed that story at the end of this week’s episode Sharp China, including why consolidation in the industry has been slower than experts predicted, and why shutting down any factories in China is politically sensitive and rare in 2025. Also covered in that show: a new framework for a temporary US-China trade truce, and worldwide tensions surrounding rare earth access, which may be a theme for the rest of the decade. — AS
   
   
3. Meta Continues Its AI Hiring Spree. One week removed from hiring Alexandr Wang to lead a “superintelligence” division as Meta attempts to reset its AI efforts, The Information reported on Wednesday night that Meta is also in advanced talks to add prominent AI investors Daniel Gross and Nat Friedman to the new AI team with an offer that could exceed $1 billion. In light of that news, my recommendation here is two-fold. First, anyone unfamiliar with Friedman and Gross should review the Stratechery Interviews with Friedman and Gross over the last three years, as that interview series is not only a window into how Gross and Friedman think about AI and related products, but also just a great way to trace the mind-blowing evolution of the AI conversations we’ve all been having since October 2022 (seven weeks before ChatGPT launched). And second, for contemporary thoughts on what these moves signify at Meta and what the astounding price tag may signify for the future of tech salaries, Ben and I had a great time reacting to the news on this week’s Sharp Tech. — AS
   

Stratechery Articles and Updates

• WBD Split, HBO and Warner, Whither Sports? — WarnerBros. Discovery is splitting up, but the real split goes back to Turner Broadcasting.
• Microsoft-OpenAI Drama Continues, WhatsApp Ads, Channel Subscriptions and the Creator Perspective — Microsoft and AI continue to fight, and WhatsApp adds ads and subscriptions (and I explain why as a creator I’m not interested).
• xAI Raising Money, xAI and Oracle, Xbox = Windows — Everyone wants xAI to exist, but is anyone actually using it? Then, Xbox as it once existed is dead; it’s just Windows now.

Dithering with Ben Thompson and Daring Fireball’s John Gruber

• OpenAI Dependency
• iPad Windows

Asianometry with Jon Yu

• Why Gene Therapy is So Expensive
• A Great Water Battery on a Hill

Sharp China with Andrew Sharp and Sinocism’s Bill Bishop

• A US-China Trade Framework and Continuing Rare Earth Fun; The PRC and the War in Iran; Challenges in China’s Car Industry?

Greatest of All Talk with Andrew Sharp and WaPo’s Ben Golliver

• Jalen Williams and the Thunder are One Win Away, Pacers Euphoria and Haliburton Pain, Bane and the Bet in Orlando

Sharp Tech with Andrew Sharp and Ben Thompson

• The Futures for Cursor and Perplexity, Multi Modality Dreams and Apple Possibilities, Normies Contemplate an AI Future
• Meta Continues Its AI Spending Spree, More Fun with OpenAI and Microsoft, ‘Apple in China’ and Related Matters

This week’s Stratechery video is on Apple Retreats.