OpenAI's big move & California's AI misstep—here's what you missed

Hey there, welcome back to AI Odyssey!

Another week, another wave of AI breakthroughs. We’ve rounded up the biggest updates, coolest innovations, and the must-know moments in AI—all in one place.

Let’s dive in…

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1: OpenAI secures $6.6 billion, valuing company at $157 billion

OpenAI has completed a $6.6 billion funding round, raising its valuation to $157 billion.

Key details: Thrive Capital led the round, with participation from Microsoft, Nvidia, SoftBank, and others. Apple reportedly opted out of investing.

• The funding deal surpasses Elon Musk’s xAI’s $6 billion round earlier this year.

• OpenAI plans to transition to a for-profit structure within two years, or investors could request refunds.

The big picture: OpenAI's shift to a product-focused model has drawn investors but led to internal tensions, contributing to the recent departures of CTO Mira Murati and two top researchers.

What they said: "The funding will help expand AI research, boost compute capacity, and build tools to solve complex problems," OpenAI stated.

Bottom line: OpenAI's rising costs are driving massive investments, despite internal challenges.

2: California’s AI bill…well-meaning but missed the mark

Governor Gavin Newsom vetoed California’s AI safety bill, sparking debate over tech regulation. While it aimed to hold developers accountable and set safety protocols like a "kill switch," critics said the bill was too vague and could stifle innovation—even for low-risk AI applications.

Why it matters: Striking a balance between regulation and innovation is tough. The bill didn’t differentiate between high-risk AI use and everyday tech, potentially slowing progress. Newsom's decision makes sense, but AI safety concerns still need addressing.

What’s next: Newsom plans to work with experts on better rules, while tackling present issues like deepfakes and misinformation. California’s approach will likely influence national AI regulations.

Bottom line: AI safety is crucial, but regulation must support innovation too. Lawmakers need to find that balance.

3: OpenAI asks investors to avoid five rival AI startups

As OpenAI raised $6.6 billion from investors like Thrive Capital and Tiger Global, the company made an unusual request: asking backers not to fund five competing AI startups, sources told Reuters. The list includes companies building large language models, such as Anthropic, Elon Musk’s xAI, and co-founder Ilya Sutskever’s new company, Safe Superintelligence (SSI).

Why it matters: OpenAI is using its market dominance to secure exclusive support from investors in a fiercely competitive AI space, where billions are required for development.

The ask: While not legally binding, this request signals OpenAI’s intent to limit funding access for direct competitors, a move that could impact future fundraising for these startups.

Bottom line: It’s a bold play by OpenAI to protect its lead, though some late-stage investors have a history of backing multiple players in the same space.

4: ChatGPT's new 'canvas' interface simplifies writing and coding

OpenAI has introduced a new "canvas" interface for ChatGPT, designed to make editing text and code easier. Canvas allows users to work side-by-side with the chatbot, offering a separate window for manual edits or targeted changes without needing to start new prompts. The update is aimed at improving collaboration by providing features like grammar checks, length adjustments, and coding tools for debugging and translation.

Why it matters: Previously, users had to rely on multiple prompts to fine-tune results. Now, canvas simplifies that process, giving users more control over edits and revisions.

The details: Canvas is currently in beta and available to ChatGPT Plus and Teams users, with a global rollout to Enterprise, Edu, and free users expected soon.

5: MIT economist warns AI won’t drive economic revolution

Daron Acemoglu, a prominent MIT economist, believes the current hype around artificial intelligence is overblown. While he acknowledges AI's potential, he estimates only 5% of jobs could be significantly impacted by AI over the next decade.

Why it matters: Companies are sinking billions into AI with expectations of major productivity boosts, but Acemoglu argues that the technology won’t live up to the hype. He foresees wasted investments as AI won’t bring the economic revolution some are predicting.

What he’s saying: Acemoglu outlines three possible futures for AI:

1. The hype cools, and modest investments in practical AI applications succeed.

2. The frenzy continues, leading to a tech stock crash as expectations fail to materialize.

3. Companies overinvest in AI, cut jobs, and face economic fallout when AI fails to deliver.

The big picture: Acemoglu highlights limitations in AI’s reliability and inability to perform complex physical tasks, making widespread job replacement unlikely. The AI boom may be impressive, but he urges caution, predicting that a combination of hype and reality checks could lead to negative outcomes for the economy.

AI NOTES 🗒️

Stat: 85%. That’s how many U.S. companies are actively exploring or piloting AI tools, with 40% already reporting significant efficiency gains from their AI implementations, according to a PwC report.

Extra read: How to opt out of A.I. online (The New York Times)