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Chapter 1: Why is OpenAI considering price cuts for its services?
OpenAI weighs major price cuts as businesses begin to scrutinize soaring AI bills. Plus, Canada proposes banning social media for teens. And mounting opposition to data centers prompts a rapid rethink in how the industry sources its power.
The utility companies tried to provide them the power. But remember, it's a freeway and a highway paid for by the ratepayer. And if one ratepayer was consuming all that power and everybody else was paying the tolls for that road, people got upset.
It's Thursday, June 11th. I'm Luke Vargas for The Wall Street Journal.
Chapter 2: What impact do high AI costs have on corporate clients?
And here is the AM edition of What's News, the top headlines and business stories moving your world today. The war for AI customers is leading OpenAI to consider drastic price cuts.
We are exclusively reporting that the ChatGP team maker is weighing significant cuts to what it charges for tokens, the unit that AI firms use to bill for their products, anticipating that similar cuts could be coming at rival Anthropic.
The price war could be an early test of both companies' revenue streams ahead of hotly anticipated public listings and comes as executives around the world begin to balk at the high prices for AI usage. Cindy Rose is the CEO of advertising giant WPP and had this to say at the WSJ Leadership Institute's CEO Council Summit in London.
In the marketing space, we're using the very expensive models because we're doing frontier reasoning. We're doing high resolution video and audio where there's no deflation, just cost increase.
Chapter 3: How is the competition between OpenAI and Anthropic shaping the market?
So this is the problem or the sticker shock that most companies haven't yet experienced but will. I think the Uber CTO went public recently and said he burned his entire 2026 token budget in four months. Same at WPP. I've got more agents than employees now. and there's a lot of unbudgeted cost associated with it.
So now the pivot needs to be towards token consumption optimization, which is the next chapter.
OpenAI confidentially filed for an IPO earlier this week, and we report that CEO Sam Aldman told employees in a Slack message that the company plans to go public within the next year.
Chapter 4: What are the implications of Canada's social media ban for teens?
Guardrails erected around Anthropic's next-gen AI model are stirring a user backlash. Tech reporter Sam Schechner told me that it didn't take long after Tuesday's release of Claude Fable 5 for AI experts and researchers to start complaining about restrictions within the powerful model.
The new model that Anthropic released Tuesday is an update to the Mythos model that the company first put out in April and said was too dangerous to release widely. And so what they did is they added pretty intense restrictions to what it can do to help mitigate those risks. And some users definitely reacted poorly to it.
Sam, some of these were very, you know, noticeable. You got a pop up saying if you're prompting it on questions around bioweapons or cybersecurity that said, you know, we're going to steer you now to a less capable model.
Chapter 5: How are data centers facing opposition in local communities?
Some users reported that the model is actually stricter than that and was blocking by benign topics like math or biology or chemistry. And yet there was a separate cohort very frustrated that some of the safeguards were not so obvious.
Yeah, I think we've seen models sort of redirect conversations before. But what really rankled people, especially in the academic AI area and in the open source AI field, was that Anthropic said that it would degrade the quality of its responses about high-end AI development. intentionally to make it less useful for developers looking to build AI tools.
The justification for this was national security and its own terms of service, that you're not supposed to use the AI that way, and that others who are not scrupulous might build AIs without the same restrictions that Anthropic builds. But, you know, users reacted with intense frustration. They said it was gatekeeping.
They were trying to harm potential competitors and muddying just general AI research into the capability of Fable and Anthropic actually reversed part of these safeguards after the outcry.
Chapter 6: Can the power grid support the demands of AI data centers?
And so instead of silently degrading Fable's ability to do high-end AI research, it simply will tell users that it's not going to do that. That was journal tech reporter Sam Schechner.
And Canada is moving to block younger teens from social media. The Safe Social Media Act would temporarily ban children under 16 from platforms like Snapchat and Meta's Instagram. And tech firms that fail to comply could face sweeping fines of up to 3% of their global revenue.
The move comes amid a growing wave of age-based digital restrictions, following in the footsteps of Denmark and Sweden, which have weighed similar actions, as well as Australia, which last year became the first nation to implement a strict social media ban for under-16s.
While advocates point to escalating youth mental health crises, critics and tech companies argue that the bans are counterproductive and easily bypassed.
Chapter 7: What challenges do data centers pose to local environments?
Oracle shares have slumped off hours despite surging cloud revenue. The company reported a 47% increase in its cloud infrastructure business to nearly $10 billion. But co-CEO Clayton McGuirk also issued a blunt warning that the huge expenses for its data centers are likely to weigh on margins.
And then anyone that thinks that these things are easy to operate is very confused. You're not just buying a single rack and putting it into your data hall. These are extremely complex clusters that require constant care and feeding, constant maintenance across the network and the hardware itself.
Oracle is expecting a net cash outlay for capital expenditures of around $70 billion for the coming year. And striking UAW workers at GM parts supplier Dowk have reached a tentative agreement, potentially ending a 10-day walkout. The deal could return almost 1,000 employees to producing axles for GM's Chevy Silverado and GMC Sierra pickups, though ratification isn't guaranteed.
Workers have been pushing to raise the current $22 top hourly wage closer to the $29 they earned before recession-era cuts.
Chapter 8: What are the future prospects for AI infrastructure and energy needs?
Coming up, can the World Cups kick off silence FIFA's critics? And I'll speak to the CEO of Bloom Energy about how the company is navigating opposition to new data centers. That's after a short break. Can the power grid keep up with AI?
According to the CEO of Bloom Energy, which makes fuel cells that businesses can use to generate electricity on-site, predominantly through natural gas, the answer is no, both practically and politically, as opposition to new data centers mounts. In conversation at the WSJ Leadership Institute's CEO Council, I asked K.R.
Streeter what to make of the rapid shift in public opinion about the AI build-out. A year ago, we were seeing in Oval Office events announcements of new data centers. These were being talked about by the president as symbols of innovation and of job creation. Now the pitchforks are out.
They are out because people are worried about multiple things. The first thing is the grid simply cannot support gigawatt data centers. The grid was not built to be able to do that. The grid was a flywheel. that was supposed to take care of a lot of retail customers.
If you are one single large customer that's going to suck up most of the electricity coming from a substation, whether you're an aluminum smelter in the past, whether you're a glassmaking factory, they all depended on their own on-site power. Bring your own power. Right. So these big data centers today consume a lot more power than even those aluminum smelters.
And for them to have naively thought that they can rely on the grid for that kind of power was wrong. Doomed to fail. Doomed to fail. And at some scale, it was going to break. But even before that happened, the utility companies tried to provide them the power. But remember, it's a freeway and a highway paid for by the ratepayer. And if one utility
rate payer was consuming all that power and everybody else was paying the tolls for that road, people got upset.
You're not surprised about the public backlash?
You shouldn't be surprised at all. Absolutely not. Absolutely not. So then you get to the next point of saying, bring your own power. But these data centers, unlike the aluminum smelters, are not built far away from people. They're built in cities and towns. Who wants a big power plant in their backyard? Immediately, your property values are going to go down.
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