Tech Brew Ride Home - China (AI) Rising

Starting point is 00:00:04 Welcome to the TechBrewrite home for Wednesday, July 8th, 2026. I'm Brian McCullough today. Chinese AI models grabbed over 30% of U.S. token use as Beijing Way's curbing access. Anthropic expanded co-work to mobile and the web. Meta launched its first AI image generator on Instagram and WhatsApp, and Xbox's $80 billion game pass bet has officially failed. Here's what you miss today in the world of tech. Every day, shareholders meet to discuss important matters about the companies you invest in. now you can make your voice heard two. Vanguard Investor Choice makes it easy to set your proxy

Starting point is 00:00:43 voting preferences for your eligible Vanguard index funds, whether you hold a Vanguard fund directly or through another brokerage firm. All it takes is a few clicks to select your proxy voting preferences and be heard on important shareholder topics like Executive Pay and Director elections. Visit vanguard.com slash investor choice to learn more. It's your shares. It's your voice. It's easy. Vanguard investors own shares of our index funds and those funds own shares in the companies they invest in. Vanguard Marketing Corporation Distributor. I'm going to continue banging on this drum because I think it's important. In the background of the race to IPO between OpenAI and Anthropic, there continues to be this, which, if you think about it, may be contributing to the

Starting point is 00:01:28 sense of urgency to get to the open market. According to OpenRouter, Chinese AI models have drawn more than 30% of token usage by U.S. companies each week since February 8th, peaking at 46%, which would be up from 11% over the previous 12 months. So it's more than triple, quoting CNBC. Chinese-built AI models are gaining traction among U.S. companies as they narrowed the performance gap with leading American rivals while remaining significantly cheaper to use. Recent model releases from Chinese companies, including DeepSeek and ZAI, are seen by many as highly competitive compared to leading frontier systems from the likes of Anthropic and Open AI. Those advances in capability come as token prices for the most advanced models rise at many U.S.

Starting point is 00:02:14 AI labs, leaving companies grappling with unexpectedly high costs associated with using the tech. The share of tokens used by U.S. companies on Chinese AI models via OpenRouter, a platform that enables developers to access a range of AI models, has sat above 30% each week since February 8th with that figure rising as high as 4. 46%. The average across the previous 12 months was just 11% falling to 4.5% in the first half of 2025. Chinese AI models are particularly attractive to American companies now as AI costs skyrocket. Kyle Chan, fellow at the John L. Thornton China Center at Think Tank Brookings, told CNBC, where previous U.S. companies were prioritizing AI adoption regardless of model, now they're

Starting point is 00:02:59 getting more cost-conscious, end quote. In June, AI startup, Lindy moved 100% of its traffic from Anthropics-Claude models to DeepSeek, a Chinese company which burst onto the scene with a bombshell release in early 2025 and launched a new model in April. We did it, and you could see the cost curve go down like crash to the ground. CEO Flo Crivello told CNBC, he said the decision will save Lindy millions of dollars within months. Deep Seek saw its share of gateway tokens climb between May and June on Versel, a platform that allows developers to deploy and run apps and websites. ZAI's GLM 5.2 was released to great fanfare in June and saw the fastest adoption of any model

Starting point is 00:03:43 tracked by Vursell in 2026. Harpreet Aurora, head of agentic infrastructure at Versel told CNBC. In its first full week after launch, daily token volume grew about 27X and the number of customers using it grew about 80x. Price is doing the work here, Aurora said. When a task doesn't need the best model, teams are beginning to route it to the cheapest one, that's good enough, and the recent wave of models coming out of China is winning that trade. Open source Chinese models can be 60 to 90% cheaper than the leading Anthropic and Open AI models.

Starting point is 00:04:14 Justin Somerville, who works on data and analytics at OpenRouter told CNBC, we're seeing companies increasingly motivated to turn to cheaper AI stacks they can control and adapt themselves, and given the state of open source and open weight models, that often mean leveraging Chinese options. is Yassine Jernte, head of machine learning at Hugging Face told CNBC, there is a real risk that users get stuck having to choose between performant but expensive U.S. proprietary models whose price and accessibility can quickly fluctuate, or using Chinese models as the only feasible alternative whenever they want to control costs or their own AI stack, end quote.

Starting point is 00:04:52 Yes, but what if that option is taken away? Quoting Reuters, Chinese authorities have held meetings with top tech firms over the past month about potentially restricting overseas access to China's most advanced AI models, including those yet to be released, three people familiar with the discussion said. The talks follow a number of steps by Beijing to keep homegrown AI within the country and underscore how China, like the U.S., is now treating cutting edge artificial intelligence as a critical national asset that needs controls. Companies present at the talks include tech giants, Alibaba and Bight Dance, as well as startup

Starting point is 00:05:26 Z-A-I, said the people who were not authorized to speak to media and declined to be identified. At the meetings, led by China's Ministry of Commerce, participants discussed putting limits on the most advanced AI models, both closed source and more open versions, according to two of the sources. Officials talked about making any leak or theft of proprietary AI technology and offense under China's stringent national security law, one of the sources said. The officials also raised the possibility of implementing new measures to restrict who can fund domestic AI startups, the source added. The scope of the potential restrictions is still being discussed, two sources said, adding that

Starting point is 00:06:01 they may only apply to future models, though it was not immediately clear when or even if they would come into force, end quote. I've heard of Santa Sam, but Claudezmus in July? Anthropic has extended Claude Fable 5 access to all paid plans through July 12. Access to that model was set to shift to token-based usage. yesterday. I've been hearing all week that we're probably going to get GPD 5.6 sometime this week, probably on Thursday. So maybe this front runs that just a bit. Also, there is this, quoting ZDNet. Anthropic announced today it's bringing the agentic helper for Claude users called Claude

Starting point is 00:06:50 co-work to the web and to mobile devices. After analyzing 1.2 million co-work sessions, Anthropic is also sharing some unexpected usage details. Let's start with the co-work upgrade. According to the company, a user can start a task at a desk, check progress from a phone, and pick up finished output from any browser. It says you no longer need your laptop open to run co-work. I normally run co-work on my massive Mac Studio with 128 gigabytes of RAM and a 38-inch monitor, but it's the same idea. The machine could be off, and the task would still run. Close the laptop and head to your meeting. Claude keeps going, said Anthropic. In fact, scheduled tasks can work entirely online as long as

Starting point is 00:07:29 the task itself is online. So Co-Work can sift through email threads, check transcripts, and examine news all while you sleep. The limitation is that you have to use connected apps. Claude code doesn't have access to your browser experience. There's a mobile version of the app for Android and iOS, and this serves two purposes. First, you can check status and get notifications on your phone. If Claude Co-Work reaches a point where it needs permission or clarification, it'll push a notification to your phone. Drafts of messages won't be sent until you review and approve them. Along with the new feature announcement, Anthropic offered up some very interesting statistics

Starting point is 00:08:07 derived from its session logs. Anthropics said it sampled $1.2 million anonymized and aggregated Claude Co-Work sessions from May 11th to May 31st across more than 600,000 organizations. With all the hullabaloo about Claude code, you might have expected that co-work use would be dominated by coding-related tasks. But Anthropics said that more than 90% of the sampled sessions were unrelated to software development. A full 50% of co-work usage can be attributed to business process and content creation. Business process and operations was the largest category at 33.4%, followed by content creation

Starting point is 00:08:41 and copywriting at 16.4%. Our data suggests that people are using Claude Co-Work to assemble and structure the information they can use to act on their expertise, Anthropics said. So here's the thought that's been banging around in my head ever since I learned about this announcement and started writing this piece. If I have co-work and it runs, autonomously in the cloud and on schedule, do I even need a dedicated server with OpenClawe anymore? Can't most of what I want done with OpenClaught be done with Claw and be safer and more reliable at the same time? OpenClaude doesn't incur usage limits with on-device AI. It doesn't have a fee, but if I'm already paying for Claude Max, how far can I take it? Stay tuned. I'm sure I'll be back

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Starting point is 00:11:03 And mention ride home for your first month of Scribe Capture Free on Select Plans. That's S-C-R-I-B-E-D-HOWS-R-I-E-D-H-R-I-M-E-E-E-M-E-E-M-E-M-A-E-M-E-M-A-M-E-M-A-M-M-A has launched on Instagram and WhatsApp, the company said users can generate AI-FOTOS-S-M-M-A-FOMAY to those they would normally post, including vacation selfies from a beach or a reel from a photo booth. Mews Image acts as the creative partner that knows your world, making it easy to turn your ideas into high-quality visuals, the company said in a blog post. It added, One Tap restores an old family photo lets you see yourself with trending hairstyles or reimagines you as a claymation character. The company also previewed an AI video generator, Muse Video.

Starting point is 00:11:59 It will become available to the public in the coming months in the meta-AI app, the stand. standalone platform for Meta's AI chatbot. Muse Image is the first AI generator created under the company's new AI division, meta Super Intelligence Labs. After Meta fell behind in the AI race last spring, Mark Zuckerberg, the chief executive, spent billions of dollars revamping the division

Starting point is 00:12:19 in an attempt to compete with Google Anthropic, Open AI, and others. In the last year, meta has slowly narrowed the gap, but Muse Spark, its top chatbot model, released in April, still lags rivals. Muse Image will replace technology from Mid-Journey and AI startup that Meta previously worked with to generate AI images in the meta-AI app. Users can tag friends in the app to create personalized birthday cards, group trip memes, or playful edits based on their friend's Instagram accounts, the company said. In the coming weeks, advertisers will be able to use the new AI model to make ads, end quote.

Starting point is 00:12:54 But there's also this little nugget. Do you have a public Instagram account? well, without asking your permission, other users could now pull you into their AI creations. Quoting Wired, as part of this update, public Instagram profiles are now automatically opted into being fodder for generative AI remixes. All someone has to do is tag your account's profile in a prompt, if it's public, and they can use meta-AI to generate an image using your likeness. Meta-positions this feature as a cheeky way to personalize generations with images of real people, Whether you want to design a custom event invitation, mock up a collaborative creative concept,

Starting point is 00:13:31 or generate a personalized graphic, tagging a username lets MetaAI use public photos to build a visual that's ready to post. Reads one of Meta's announcement blogs about the new AI tool. If you want to avoid these AI generations of your Instagram posts without switching your account to private, you'll have to dig into the app's settings. Open the Instagram app, tap your profile, and then tap the three lines in the top right corner of the screen. Then scroll down to the sharing and... reuse tab. Here is where you should see a section labeled Allow people to use your content on Instagram and with AI features on meta with a toggle for posts and one for reels.

Starting point is 00:14:08 Instagram's help center site includes more details about how this feature will impact users, saying that people may be able to create content with your Instagram content using AI features at meta if you leave your account public and on the default settings. A previously archived version of this page from 2025 does not include similar AI-focused language. While switching your account to private or adjusting your settings will prevent additional images from being generated, already existing AI images made with your content will not be deleted. It's also notable that Instagram users may be remixing your images using AI without your knowledge. You will not be notified about content created using AI features at Meta reads the

Starting point is 00:14:47 company's help page of the numerous aspects of this rollout that make me uncomfortable. Not even getting a notification when someone does this seems like the biggest red flag of all. Even though, So it's overwhelming just how often companies require you to opt out of AI training rather than opting in, just like how Google Search now stores media uploads, like from reverse image searches to train its AI. As the default option for consumers, this new toggle is worth switching, end quote. Finally today, I'll admit to not being as plugged into the gaming world as maybe I should have to be able to rock this happening.

Starting point is 00:15:27 But the reason why Microsoft is basically doing a full turn-it-off. take out the cartridge and blow on it to its Xbox business is interesting to me, quoting Bloomberg. Microsoft's Xbox spent nearly $80 billion in the last decade on deals that would give it popular video game titles like Call of Duty and Skyrim, betting that gamers would flock to its Netflix-like subscription service offering hundreds of options for endless play. What started as an attempt to boost Xbox's last-place position among console makers, after Sony's PlayStation and Nintendo Switch, ended in a glut of overspending, leaving Xbox bloated with studios, staff, and too many games people didn't want to play. When Xbox launched its GamePath subscription service in 2017,

Starting point is 00:16:10 executive set a goal of reaching 77 million subscribers by fiscal year 2026, which ended last month, according to a document published during a lawsuit contesting Microsoft's 2023 purchase of Activision Blizzard. Today, the platform has just 30 million subscribers, according to a person familiar with the matter, 4 million fewer than it did when the company last publicly shared data in 2024. Employees had been growing concerned that the number of GamePass subscribers had peaked. According to two former employees, later millions of customers canceled their subscriptions after GamePass announced last October, it was raising prices by 50%.

Starting point is 00:16:45 Executives at Xbox hoped the $20 monthly GamePass ultimate subscription, which rose to $30 last October, before Xbox reverted to $23 in April, would draw users into its content ecosystem them and eventually boost sales. Some employees warned that putting in-demand high-budget games on GamePass the day they released could devalue them and cannibalize sales of individual higher-priced copies. It was a controversial decision internally, according to five former employees. When GamePass launched, it was designed to activate back catalog games without a clear path to potential audiences, not essentially offer hit games at a fraction of the price. Call of Duty, for example, cost $70 before it landed on Game Pass, where for less than half the price, players could access that game and

Starting point is 00:17:29 hundreds of others. In 2024, Xbox gave up more than $300 million in sales of Call of Duty on Xbox consoles and PCs, a person familiar with the matter told Bloomberg last year. Instead, PlayStation accounted for 82% of Call of Duty Black Op 6 sales that year. Underlying GamePass's problem was a central flaw, according to the people. While consumers might be willing to pay a monthly fee to Netflix to stream thousands of TV shows and movies, most gamers don't take the same approach, preferring to stick with a handful of favorite games they play on repeat. Research from Circana shows that the majority of U.S. gamers buy two games at most per year and a third of the market doesn't even purchase one, end quote. So what's interesting to me is I'm positing that

Starting point is 00:18:15 maybe it's all the same across media. You know, how all Hollywood can produce is iterations on old IP and new original content is increasingly rare at the multiplex. We know that the vast majority of streams on Spotify is back catalog stuff. So what if games are the same way? I'll maybe buy two new games a year, but I'm just as happy to go back and play Red Dead 2 again as I am to try the new Grand Theft Auto. Does all of media work this way? There's this burst of creativity when a medium is new,

Starting point is 00:18:49 and then we just spend the rest of the cycle going back to the classic media. This is getting to you a little early because we have to fly back to the States all day today, literally all day. I'm up again at 6 a.m. and I likely won't sleep again for at least 20 hours, so talk to you tomorrow, which for me will likely feel like next week.

Tech Brew Ride Home - China (AI) Rising

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