Good morning, Microsoft just turned its biggest AI competitors into coworkers, the Iran war is putting a question mark over the largest AI spending spree in history, and California is writing its own AI rulebook. Here’s what happened 👇
1. Microsoft Makes GPT and Claude Work Together Inside Copilot
Microsoft unveiled a new feature called “Critique” for its Copilot research assistant that does something no major tech company has tried at this scale: it makes rival AI models collaborate on the same task. When you ask Copilot a question, OpenAI’s GPT generates the response while Anthropic’s Claude reviews it for accuracy and quality before you ever see it. Microsoft plans to make this bidirectional, letting GPT review Claude’s work too. A separate feature called “Council” lets users compare responses from different models side by side. The company also began rolling out Copilot Cowork, its new autonomous AI agent tool, to early-access customers.
Why it matters: Instead of betting everything on one AI model, Microsoft is treating them like a team that checks each other’s work. If this reduces hallucinations the way they claim, it could set the standard for how businesses use AI going forward.
2. Big Tech’s $635 Billion AI Budget Faces an Energy Crisis
Microsoft, Amazon, Alphabet, and Meta planned to spend roughly $635 billion on data centers, chips, and AI infrastructure in 2026, up from $383 billion last year and just $80 billion in 2019. But the Iran war is threatening those plans. According to S&P Global’s head of research, persistently high oil prices could force spending revisions as early as this quarter, potentially triggering “a really meaningful correction in all equity markets.” Data centers consume enormous amounts of electricity, making the entire AI boom directly exposed to energy costs. Oil executives at last week’s CERAWeek conference warned that supply risks aren’t fully priced in yet.
Why it matters: A 30% jump in energy prices doesn’t just hurt your utility bill. It could slow down the AI infrastructure buildout that every major tech company is racing to complete, delaying the products and services that depend on it.
3. California Requires AI Safeguards for State Contracts
Governor Gavin Newsom signed an executive order requiring any company that wants a California state contract to prove it has safeguards against AI misuse, including protections against illegal content generation, harmful bias, and civil rights violations. The order also requires agencies to watermark AI-generated images and videos. In a notable move, if the federal government labels a company as a supply chain risk (as the Pentagon did with Anthropic), California will conduct its own independent assessment and may still allow the company to remain a contractor. Within 120 days, two state departments will submit recommendations for new AI vendor certifications.
Why it matters: California is the world’s fifth-largest economy. When it sets AI procurement rules, it effectively sets standards for every major tech company. This order also signals that states won’t automatically defer to federal AI decisions.
Quick Hits
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Nebius announces $10 billion AI data centre in Finland. The 310-megawatt facility near the Russian border will be one of Europe’s largest, powered by cheap renewable energy and cold climate cooling. Nebius already has $40 billion in supply contracts with Microsoft and Meta. Source: Reuters
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Mistral raises $830 million in debt to build a Paris data centre. Europe’s leading AI startup is buying 13,800 Nvidia chips and positioning itself as a sovereign alternative to U.S. tech giants. The facility is expected to go live in Q2 2026. Source: Reuters
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South Korean AI chip startup Rebellions raises $400 million at a $2.3 billion valuation in a pre-IPO round, as the global race for AI chip alternatives to Nvidia heats up. Source: TechCrunch
That’s it for today. The theme is infrastructure: who’s building it, who’s paying for it, and what happens when the energy to power it gets expensive. The AI race isn’t just about better models anymore. It’s about who can keep the lights on.
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