Good morning. If you thought the tale of the Pentagon’s controversial AI deal had reached its end, this morning’s newsletter will gently disabuse you of that notion, and bring you up to speed on all the latest developments in that drama.
With all the focus on AI and war, it’s hard to believe that just one week ago the markets were obsessed with the SaaS-pocalypse. But don’t mistake quiet on the Saas front with resolution. Another blog post or earnings call could quickly ignite another round of tech market volatility. Today’s tech news below.
Alexei Oreskovic
@lexnfx
alexei.oreskovic@fortune.com
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OpenAI and Sam Altman go into damage control mode
The fallout from the Pentagon's controversial deal with OpenAI, and its parallel castigation of Anthropic, had several more unexpected twists on Monday. OpenAI in particular appears to be in damage control mode, as it faces questions and public backlash about its role in the events and the terms of its agreement with the Department of Defense.
According to Axios, OpenAI CEO Sam Altman reached out on Monday to Emil Michael, the undersecretary of Defense for research and engineering, to rework part of the contract and add additional protections regarding the surveillance of Americans. The deal terms now explicitly prohibit OpenAI's technology from being used on "commercially acquired" data, whereas the deal previously only referred to private information.
It was probably not lost on Altman that Anthropic became the No.1 most downloaded app on the Apple App Store over the weekend, displacing ChatGPT, in the wake of the Pentagon deal news. In a note to OpenAI employees on Monday that Altman later posted to X, he said he regretted moving so fast to "get this out" on Friday. "We were genuinely trying to de-escalate things and avoid a much worse outcome, but I think it just looked opportunistic and sloppy. Good learning experience for me as we face higher-stakes decisions in the future," Altman said. (He then followed up in another post, with yet more thoughts).
While Altman reiterated that he strongly disagreed with the Pentagon's designation of Anthropic as a supply chain risk, the U.S. government appeared to be moving forward with efforts to isolate Anthropic. In a series of separate announcements on Monday, the Department of State, the U.S. Treasury Department, and the Federal Housing Finance Agency all announced plans to stop using Anthropic tools. "The American people deserve confidence that every tool in government serves the public interest, and under President Trump no private company will ever dictate the terms of our national security," Treasury Secretary Scott Bessent said in an X post.—AO
SCOTUS Rejects Case on AI Art Copyrights
The U.S. legal system isn’t allowing AI artwork to be copyrighted anytime soon. The Supreme Court has declined to hear a long-running case over whether AI-generated art can receive copyright protection, leaving lower court decisions in place.
The case involved Stephen Thaler, a computer scientist from Missouri, who has been trying to copyright an image created by his AI system called “A Recent Entrance to Paradise.” Thaler is behind a string of high-profile AI copyright claims and has fought for IP rights in part to spotlight his belief that his AI system, DABUS, is sentient and capable of true independent thought.
Back in 2019, the U.S. Copyright Office rejected Thaler’s request, ruling that works must have “human authorship” to qualify—a decision that was upheld in U.S. courts in 2023. The Copyright Office has consistently maintained that purely AI-generated artwork, even when based on text prompts, isn’t eligible for copyright. Thaler argued that these rulings could discourage creative uses of AI. AI systems can’t be listed as inventors on patents either, though humans can still use AI tools to assist in innovation. Similar decisions have been reached internationally, including by the U.K. Supreme Court.—Beatrice Nolan
Apple revamps budget iPhone
With Mobile World Congress underway in Barcelona and a parade of new gadgets grabbing headlines, Apple is doing a bit of counter-programming. The company announced a couple of new products on Monday, including a new version of its "budget" iPhone.
The $599 iPhone 17e, which goes on sale March 11, is $200 cheaper than the standard iPhone 17 (just as the 16e was compared to the iPhone 16 last year). Apple's latest budget iPhone still has a 6.1 inch screen but gets twice the memory of last year's model, plus the MagSafe feature that lets you quickly snap-on and off nifty accessories like battery packs, wallets, or stands. Apple also announced a new iPad Air on Monday, and according to Bloomberg, the company is expected to release some other products throughout the week. And of course, Apple is streaming a "special event" on Wednesday where it's expected to unveil yet more products. —AO
More tech
—Meta testing AI shopping research tool. Matches Gemini and ChatGPT.
—Kalshi to void certain bets on Khamenei ouster. No bets 'directly tied to deaths'
—X introduces 'paid partnership' label. Easier disclosure for creators.
—Apple and Google forging more ties. Siri in the cloud with Google.
—Nvidia to invest $4 billion in Coherent and Lumentum. All about the photonics.
—Could Iran launch AI-powered cyber attacks? It has the intent and the tools.
