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Dario Amodei, CEO of Anthropic, will head to the Pentagon on Tuesday to meet with Defense Secretary Pete Hegseth about how the military uses the companys artificial intelligence models. And its likely to be a tense meeting, as sources first told Axios. Contract talks between the AI startup and the Department of Defense have gone off course in recent weeks as Anthropic has insisted on some safeguards for how its technology will be used. While the San Francisco-based company is willing to loosen some of its usage restrictions for the Department of Defense, it doesnt want its models used for at least two specific purposes: spying on Americans or developing autonomous weapons. Heading into Tuesdays meeting, the two factions seem to have differing views on how those contract talks have been proceeding. While a spokesperson for Anthropic said in a statement Monday that the company is having productive conversations, in good faith with the Pentagon, a Defense Department spokesman said last week that Anthropics relationship with the Pentagon is under review. Anthropic knows this is not a get-to-know-you meeting,” a senior Defense official told Axios. “This is not a friendly meeting.” ANTHROPICS ROLE IN NATIONAL SECURITY Anthropic is currently the only AI company available in the militarys classified networks and was among several companies awarded a $200 million contract with the Defense Department to in July advance U.S. national security. The company has repeatedly reiterated its commitment to supporting national security, including again on Monday. In June, it announced Claude Gov, a suite of models it built exclusively for U.S. national security customers. And yet, Amodei has become vocal about balancing the opportunities that AI presents with the concerns that it poses. In a lengthy piece published last month, the Anthropic co-founder warned: Humanity is about to be handed almost unimaginable power, and it is deeply unclear whether our social, political, and technological systems possess the maturity to wield it. At the India AI Impact Summit last week, Amodei that hes concerned about the autonomous behavior of AI systems and the potential for misuse of AI by individuals and governments. THE MADURO FACTOR Another factor thats strained the relationship between Anthropic and the Pentagon came to light last week: Claude was used in the U.S. militarys operation at the start of the year to capture former Venezuelan President Nicolás Maduro, as The Wall Street Journal reported. That mission would seem to violate Anthropics usage guidelines that prohibit, among other things, that Claude not be used to incite violence or for criminal justice and surveillance. The companys usage policy, most-recently updated in September, is intended to strike an optimal balance between enabling beneficial uses and mitigating potential harms. But Anthropic also notes that the company may enter into contracts with certain governmental customers that tailor use restrictions to that customers public mission and legal authorities if, in Anthropics judgment, the contractual use restrictions and applicable safeguards are adequate to mitigate the potential harms. POKING THE BEAR Anthropic has tried to set itself apart from the rest of the universe of AI developers with a safety-first approach thats even seen it take a swipe, via a Super Bowl ad, at OpenAIs recent decision to incorporate ads into the ChatGPT platform. While Amodei has emerged as a contrarian of sorts, at times, by pushing back on unrestricted use of its Claude AI model for the U.S. military, Amodei is effectively poking the bear that is Hegseth. As Axios reported last week, Hegseth has threatened that the Pentagon could declare Anthropic to be a supply chain risk, which would void its contracts and force other companies that work with the Pentagon to certify they arent using Claude in any related workflows. Our nation requires that our partners be willing to help our warfighters win in any fight, chief Pentagon spokesman Sean Parnell told media outlets last week. Ultimately, this is about our troops and the safety of the American people.
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Fridays news of a major shake-up at Microsofts Xbox division caught the gaming world by surprise. Phil Spencer, who has run Xbox for almost 12 years, announced his retirement, effective immediatelyjust months after Microsoft insisted he was not retiring anytime soon. Asha Sharma, the president of Microsofts CoreAI product, was tapped to run the division. Once a powerhouse earner, Xbox has seen its profitability and influence shrink in recent years. (Xbox president Sarah Bond, long seen as Spencers heir apparent, was passed over and also left the company.) Sharma may face an uphill battle. Microsoft has not reported updated Xbox console sales or Game Pass subscription numbers in years. The available figures havent been encouraging. Xbox hardware revenue fell 32% year over year in the recent holiday quarter. Overall gaming revenue dropped 9%, and Xbox content and services, which includes Game Pass, declined 5%. Sharma has already taken some knocks online for lacking a deep history in video games. Some of that online blowback reflects the sexism that often runs rampant in gaming. (Sharma will be the first woman to run a major console manufacturer.) But criticism of her gaming pedigree also reflects a kind of gatekeeping. Strauss Zelnick, CEO of Take-Two Interactive Software, has said he was not a gamer when he took chargeand still isnt. Yet Take-Two has delivered a string of hits under his leadership, most notably the Grand Theft Auto franchise, and its share price has increased fifteenfold since he took the job. I don’t think anyone wants or needs my specific creative expertise, such as it is, Zelnick once said. It’s my job to attract, retain, and provide the resources to the best creative talent in the business. Dwindling sales and a divided focus Time will tell if Sharma follows that same path. But if she does, instead of focusing on big individual launches, shell have to persuade gamers to buy both the hardware and a subscription service that increasingly makes that hardware feel optional. The Xbox Series X and Series S have faced inventory issues in recent months and remain expensive when available. With memory shortages affecting a wide range of consumer technology products, a price cut anytime soon appears unlikely. At the same time, Microsoft has been pivoting away from consoles, expanding Game Pass across multiple platforms, including as an app on Samsung TVs. (An Xbox mobile store was planned but never launched.) Despite that shift, Microsoft has also been working on a next-generation Xbox, once expected to debut next year, though that timeline could slip due to component shortages. Starting over? Sharmas promotion could mark a reset, shifting focus back to consoles and exclusive titles rather than the Xbox anywhere strategy of recent years. Even then, some hurdles remain. Microsofts hands are tied with its biggest franchise, Call of Duty, which it acquired through the Activision-Blizzard takeover three years ago. Under its agreement with regulators, Microsoft must continue offering those games and features to Sony through 2033. Still, the company has deep development resources, even after steep layoffs. The Halo franchise has struggled but could rebound with a strong release. Bethesda Softworks, acquired in 2021, is developing a new Elder Scrolls title and also controls proven franchises such as Fallout and Doom. Microsoft also has Gears of War, Fable, and Forza, and enjoys strong relationships with independent developers. Refocusing on consoles could require changes to Game Pass. The services appeal lies in offering new titles on day one without requiring individual purchases. But with AAA games now costing $200 million or more to develop, Game Pass will need either a surge in subscribers or structural changes to remain viable. (A price increase could be challenging, as the top tier already costs $30 per month.) Whatever direction Sharma chooses, she faces a steep climb. Spencer may have been beloved by gamers, but Microsofts biggest bets of the past six years have largely fallen short. And as headwinds gather across the gaming industry, Microsoft is no longer the dominant force it was in the Xbox 360 era. Regaining that ground will require steady leadership.
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It’s a good day to be the pharmaceutical giant Eli Lilly. This morning, the company unveiled its latest innovation in the weight-loss drug wars: the KwikPen. Per a press release , the KwikPen contains a months-worth of Zepbound, Eli Lillys GLP-1 designed to combat obesity, and it’s designed to make taking the medicine more convenient. Alongside the announcement of this new innovation, Eli Lilly’s main competitor, Novo Nordisk, dropped the news that its experimental drug, CagriSema, perfomed worse for patient weight loss in a head-to-head trial against Eli Lilly’s proprietary drug, tirzepatide. A November study from the health policy non-profit KFF found that about one in eight American adults were using a GLP-1 for weight loss or to treat a chronic condition. And as the weight-loss drug market soars, its two most dominant playersEli Lilly and competitor Novo Nordisk, the maker of Ozempicare battling it out to offer the most convenient, most effective, and least expensive iterations of their respective drugs. Right now, Eli Lilly appears to be the leader in the GLP-1 race amidst multiple difficult headwinds for Novo Nordisk. As of this writing, Novo Nordisk stock is down nearly 16% since market open, while Eli Lilly is up by nearly 5%. Weight-loss drugs take new, more convenient forms Over the past several months, both Eli Lilly and Novo Nordisk have invested in novel drug formats to retain customers and reach new audiences. Back in December, Novo Nordisk received FDA approval for a first-of-its-kind, once-daily pill for weight loss. The pill, which is an oral form of Novo Nordisks GLP-1 Wegovy, offers a less invasive way for users to administer weight-loss drugs, which are typically delivered via an injector. Eli Lilly is currently in the testing phases of its own oral GLP-1, but it does not yet offer anything similar to the Wegovy pill. In the meantime, the KwikPen will presumably make taking Zepbound a bit easier for Eli Lillys customer base. Currently, patients use a separate autoinjector for each of their weekly doses of the drug. Each KwikPen, by contrast, comes pre-loaded with four doses, meaning one pen lasts for a full month. Its available in six strengths, ranging from 2.5 mg to 15 mg. For cash-paying patients, the KwikPen will be available via Eli Lillys direct-to-consumer website, LillyDirect. Eli Lilly pulls ahead Eli Lilly may be lagging behind Novo Nordisk in GLP-1 pill design, but its notched several more significant wins against its top competitor in recent months. Novo Nordisk has been fighting an uphill battle as the weight-loss drug market becomes more crowded, including by the proliferation of compounded (aka copycat) versions of Ozempic and Mounjaro made by smaller manufacturers. In its fourth quarter report, released in early February, Novo Nordisk announced strong revenue of $12.34 billion, but warned that its sales and profit growth would decline by between 5% and 13% in 2026 amidst growing competition and lower U.S. prices. These same struggles have caused the companys stock price to plummet by more than 55% year-over-year. Meanwhile, Eli Lilly has been buoyed by the major success of Zepbound since its 2023 debut, as customers opt for the medicine given its greater effectiveness for weight loss than Ozempic. In its February fourth quarter report, Eli Lilly boasted revenue of $19.3 billion and guided for its sales to grow by a whopping 25% in 2026. The companys stock has risen by more than 25% year-over-year. Now, Novo Nordisk is taking yet another blow, as a Feburary 23 report showed that its new experimental drug CagriSema could not demonstrate non-inferiority against Eli Lilly’s tirzepatide. Based on Novo Nordisk’s report, “if all people adhered to treatment, people treated with CagriSema 2.4 mg/2.4 mg achieved a weight loss of 23.0% after 84 weeks compared to 25.5% with tirzepatide 15 mg.” As GLP-1 usage continues to become more mainstream, pharmaceutical giants will be fighting an increasingly competitive battle for market share.
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