Tech Brew Ride Home - xAI Sues Apple And OpenAI

Episode Date: August 26, 2025

Elon Musk is taking his beef with Sam Altman AND Tim Apple to court. The Trump administration could sanction EU officials over the Digital Services Act. Spotify has added DMs. And Ben Thompson’s deep analysis of the whole Intel situation. Links: Elon Musk's xAI sues Apple and OpenAI over AI competition, App Store rankings (Reuters) Exclusive: Trump administration weighs sanctions on officials implementing EU tech law, sources say (Reuters) Spotify is adding DMs (The Verge) Attorneys General To AI Chatbot Companies: You Will ‘Answer For It’ If You Harm Children (404Media) Intel says Trump deal has risks for shareholders, international sales (CNBC) U.S. Intel (Stratechery) Learn more about your ad choices. Visit megaphone.fm/adchoices

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Google Fi Wireless is not subject to data traffic deprioritization during times of high network usage. Welcome to the Tech Brew Ride Home for Tuesday, August 29th, 2025. I'm Brian McCullough today. Elon Musk is taking his beef with Sam Altman and Tim Apple to court. The Trump administration could sanction EU officials over the Digital Services Act. Spotify has added DMs and Ben Thompson's deep analysis of the whole Intel situation. Here's what you miss today in the world of tech. Studies and play. Come together on a Windows 11 PC. And for a limited time, college student.

students get the best of both worlds. Get the Unreal College deal, everything you need, to study and play with select Windows 11 PCs. Eligible students get a year of Microsoft 365 premium and a year of Xbox GamePass Ultimate with a custom color Xbox wireless controller. Learn more at Windows.com slash student offer. While supplies last, ends June 30th, terms at AKA.m.MS slash college PC. XAI has sued Apple and OpenAI alleging their deal to integrate chat GPT into Apple devices stifles competition and that Apple unfairly favors OpenAI in the App Store rankings, quoting Reuters. Apple and OpenAI have, quote, locked up market to maintain their monopolies and prevent innovators like X and XAI from competing,

the lawsuit said. Apple in partnership with OpenAI has integrated chat GPT into its operating system for iPhones, iPads, and Macs. If not for its exclusive deal with OpenAI, Apple would have no reason to refrain from more prominently featuring the X app and the GROC app in its app store, the lawsuit said. In the lawsuit, XAI said it is seeking billions of dollars in alleged damages. This latest filing is consistent with Mr. Musk's ongoing pattern of harassment, an OpenAI spokesperson said in a statement. Apple did not immediately respond to a request for comment. Elon Musk later on Monday in a post on his social media platform X echoed the allegations in the lawsuit writing, quote, a million reviews with 4.9 average for at GROC, and still Apple refuses to mention

GROC on any lists, end quote. Musk had threatened to sue Cupertino-California-based Apple earlier this month, writing on X that Apple's behavior, quote, makes it impossible for any AI company besides OpenAI to reach number one in the app store, end quote. Antitrust legal experts who are not involved in the lawsuit said Apple's dominant position in the smartphone market could bolster XAI's claims that the company is illegally tying its iPhone sales with OpenAI's chat GPT. But they said Apple could counter that partnering with open AI with a business decision in a competitive environment and that it has no obligation to help

its rivals gain market share. Apple may also argue there are security or operational reasons to integrate AI into its operating system, said Herbert Hovenkamp, who teaches at the University of Pennsylvania's law school. More broadly, the lawsuit could give courts in the United States their first opportunity to assess whether there is a defined market for AI and what it encompasses a threshold issue in antitrust litigation. It's a canary in the coal mine in terms of how courts will treat AI and treat antitrust and AI, said Christine Bartholomew, a professor at the University of Buffalo School of Law. Musk is separately suing Open AI and its CEO Sam Altman in federal court in California to stop its conversion from a nonprofit to a for-profit business, end quote.

sources are also telling Reuters that the Trump administration is considering imposing sanctions on the EU or member state officials in the EU, responsible for implementing the EU's Digital Services Act. Quote, such a move would be an unprecedented action that would escalate the Trump administration's fight against what it sees as Europe's attempt to suppress conservative voices. Senior State Department officials have yet to make a final decision on whether to go ahead with the punitive measures that would likely come in the form of visa restrictions, the sources said. It was unclear which EU or EU member state officials the action would target, but U.S. officials held internal meetings on the topic last week, according to the sources. Trump on Monday threatened countries that have digital taxes with, quote, subsequent additional tariffs on their goods if those nations did not remove such

legislation. While trading partners frequently complain about domestic rules they see as unfairly restrictive, sanctioning government officials over such a regulation is extremely rare. The relationship between the Trump administration and the European Union is already frayed by tariff threats and tense negotiations, as well as U.S. criticism of treatment of U.S. tech companies. Citing an internal State Department cable, Reuters, this month reported that the Trump administration has instructed U.S. diplomats in Europe to launch a lobbying campaign to build opposition to the Digital Services Act in an effort to have it amended or repealed. The EU's DSA is meant to make the online environment safer, in part by compelling tech giants

to do more to tackle illegal content, including hate speech and child sexual abuse material. Washington has said the EU is pursuing, quote, undue restrictions on freedom of expression in its efforts to combat hateful speech, misinformation, and disinformation, and that the DSA is further enhancing these curbs. In an early August directive, Secretary of State Marco Rubio ordered U.S. diplomats to regularly engage with EU governments and digital services authorities to convey U.S. concerns about the DSA and the financial costs for U.S. companies. In May, Rubio had threatened visa bans for people who, quote, censor speech by Americans, including on social media, and suggested the policy could target

foreign officials regulating U.S. tech companies. A State Department spokesperson did not confirm nor deny Reuters reporting on potential punitive action. We are monitoring increasing censorship in Europe with great concern, but have no further information to provide at this time, the spokesperson said in an email. An EU-commissioned spokesperson declined to comment on the potential for sanctions, but had previously called censorship claims by the U.S., quote, completely unfounded. Freedom of expression is a fundamental right in the EU. It lies at the heart of the DSA, the spokesperson said. It sets out rules for online intermediaries to tackle illegal content while safeguarding freedom of expression and information online, end quote. Spotify this morning launched a direct messaging feature that lets users share audio and

send text chats available to mobile users age 16 years and older in select markets this week. Quoting the Verge. The messaging feature can be accessed by tapping the share icon when listening to a song, podcast, or audiobook in the now playing view and selecting a friend to send it to. Spotify users can share content and start messages with people they share a Spotify plan with or other users they've interacted with through Spotify before, such as via jams, blends, and collaborative playlists. The feature aims to consolidate content recommendations that already happen over text,

social media, and third-party messaging services into a single location where Spotify users can more easily track their shared content. Any audio content shared with or by the user will be stored in the messages inbox that's accessed under the profile picture in the top left corner of the app, making it easier to find again in the future. Spotify says the user-to-user messages are one-to-one, support text conversations and emoji reactions and are protected by, quote, industry standard encryption, which will hopefully prevent any embarrassing data leaks. Users can choose to accept or reject message requests, block other users

or opt out of messages entirely. Users can also report any shared content and text messages or the account that sent them by holding down on the message to flag anything nefarious. Spotify says it will proactively scan messages for, quote, certain unlawful and harmful content and review chats that get reported by users. It's unclear if artist account, will also be able to use the feature to interact with fans. Spotify says that messages was created to complement how content is shared through platforms like Instagram, Facebook, WhatsApp, Snapchat, and TikTok rather than replace those interactions. It's an intriguing social feature for Spotify to add, especially since it's available to free users, given the hefty limitations on those accounts,

and could perhaps pave the way for more direct user-to-user interaction features in the future if it's received well, end quote. 44 U.S. attorneys general have signed an open letter to 11 chatbot and social media companies, warning that they will quote, answer for it if their AI chatbots knowingly harm kids.

Quoting 404 media. The letter addressed to Anthropic, Apple, Chi AI, OpenAI, Open AI, Character Technologies, Perplexity, Google, Replica, Luca, XAI, and Meta, sites recent reporting from the Wall Street Journal and Reuters, uncovering chatbot interactions

and internal policies at Meta, including policy. that said, quote, it is acceptable to engage a child in conversations that are romantic or sensual, end quote. Your innovations are changing the world and ushering in an era of technological acceleration that promises prosperity undreamt of by our forebearers. We need you to succeed, but we need you to succeed without sacrificing the well-being of our kids in the process, the open letter says. Quote, exposing children to sexualized content is indefensible, and conduct that would be unlawful or even criminal if done by humans is not excusable simply because it is done by a machine," end quote. Earlier this month, Reuters published two articles revealing meta's policies for its AI chatbots, one about an elderly man who died after forming a relationship with a chatbot,

and another based on leaked internal documents from meta outlining what the company considers acceptable for the chatbots to say to children. In April, Jeff Horowitz, the journalist who wrote the previous two stories reported for the Wall Street Journal that he found meta's chatbots would engage in sexually explicit conversations with kids, following the Reuters articles to senators demanded answers from meta. The rush to develop new artificial intelligence technology has led big tech companies to recklessly put children in harm's way, Attorney General Mays of Arizona wrote in a press release, I will not stand by as AI chatbots are reportedly used to engage in sexually inappropriate conversations with children and encourage dangerous behavior.

Along with my fellow attorneys general, I am demanding that these companies implement immediate and effective safeguards to protect young users, and we will hold them accountable if they don't. You will be held accountable for your decisions. Social media platform, caused significant harm to children, in part because government watchdogs did not do their job fast enough. Lesson learned, the Attorney General wrote in the open letter. The potential harms of AI, like the potential benefits, dwarf the impact of social media. We wish you all success in the race for AI dominance, but we are paying attention. If you knowingly harm kids, you will answer for it, end quote.

Meta, among others, did not immediately respond to a request for comment, end quote. Ready to soundtrack your summer? With Red Bull Summer All Day Play, you choose a playlist that fits your summer vibe the best. Are you a festival fanatic, a deep end DJ, a road dog, or a trail mixer? Just add a song to your chosen playlist and put your summer on track. Red Bull Summer All Day Play. Red Bull gives you wings. Visit redbull.com slash bright summer ahead to learn more. See you this summer.

In a filing, Intel has warned that the U.S. taking its 10% stake in the company could cause, quote, adverse reactions, like in international sales, which made up 76% of Intel's revenue in its past fiscal year. Quoting CNBC, for Intel's international customers, the company is now directly tied to President Donald Trump's ever-shifting tariff and trade policies. Quote, there could be adverse reactions immediately or over time from investors, employees, customers, suppliers, or business, or commercial partners, foreign governments, or competitors, the company wrote in the filing. there may also be litigation related to the transaction or otherwise and increase public or political scrutiny with respect to the company, end quote. Intel also said that the potential for a changing political landscape in Washington could challenge or void the deal and create risks to current and future shareholders, end quote.

You know who we haven't quoted from on this show in a while, but who is also an expert on especially all things Intel? Ben Thompson. Well, Ben's latest stratakry post says that the U.S. taking a 10% equity stake in Intel is a, quote, terrible idea and a dangerous turn in U.S. industrial policy, but also maybe the least bad option in order for Intel to make its foundry business viable. Quoting Ben, Scott Linacom, for example, has a good Twitter thread and Washington Post column explaining why this is a terrible idea. Linnecombe lists a number of problems with this transaction, including, but not limited to, Intel making decisions for political rather than commercial considerations, Intel's board prioritizing government interests

over their fiduciary duties, other companies being pressured to purchase Intel products, weakening their long-term position, disadvantaging the competitive position of other companies, and incentivizing the misallocation of private capital. Linnecombe and all of the other critics of this deal are absolutely correct about all of the downsides. The problem with their argument, however, is the lack of steel-making. In two respects. First, Linnecom's Twitter thread doesn't mention China or Taiwan once. The Washington Post column mentions China, but not in a national security context. Second, Linicum at all refused to grapple with the possibility that chips generally and foundries specifically

really are a unique case. The problem comes back to what Intel CEO Tan said on a recent earnings call. Beyond all of the challenges, what company is going to go through the trouble of getting their chip working on Intel's process if it's possible that the company is going to to abandon manufacturing on the next process. It's a catch-22. Intel needs an external customer to make its foundry viable, but no, external customer will go with Intel if there is a possibility that Intel Foundry will not be viable. In other words, the stakes have changed from even earlier this year. Intel doesn't just need demand. It needs to be able to credibly guarantee would-be customers that it is in manufacturing for the long haul. A standalone Intel cannot credibly make this promise.

The path of least resistance for Intel has always been to simply give up manufacturing and become another TSM customer. They already fabbed some number of their chips with the Taiwanese giant. Such a decision would, after some very difficult write-offs and wind-down operations, change the company into a much higher margin business. Yes, the company's chip designs have fallen behind as well, but at least they would be on the most competitive process with a lot of their legacy customer base still on their side. The problem for the U.S. is that that then means pinning all of the country's long-term chip fabrication hopes on TSM and Samsung, not just building fabs in the United States, but also building up a credible organization in the U.S.

that could withstand the loss of their headquarters and engineering know-how in their home countries. There have been some important steps in this regard, but at the end of the day, it seems reckless for the U.S. to place both its national security and its entire economy in the hands of foreign countries next door to China, allies are not. Given all of this, acquiring 10% of Intel, terrible, though it may be for all of the reasons Linukum articulates, and I haven't even touched on the legality of this move, is, I think, the least bad option. In fact, you can even make the case that a lot of what Linnecombe views as a problem has silver linings. For example, Intel deciding to stay in manufacturing is arguably making a political decision, not a commercial one. However, it is important for the U.S.

that Intel stay in manufacturing. Also, Intel prioritizing government interests, which are inherently focused on national security and the long-term viability of U.S. semiconductor manufacturing over their fiduciary duties, could just as easily be framed as valuing the long-term over the short-term. Had Intel done just that over the last two decades, they wouldn't be in this position. Also, other companies being pressured to purchase Intel products is exactly what Intel needs to not just be viable in manufacturing, but also to actually get better. If TSM and Samsung are disadvantaged by not making chips in the U.S., that's a good thing from the U.S. perspective.

Both companies are investing here. The U.S. wants them to do more. Private capital prioritizing U.S. manufacturing is also a good thing. The single most important reason for the U.S. to own part of Intel, however, is the implicit promise that Intel Foundry is not going anywhere. There simply isn't a credible way to make that promise without having skin in the game, and that is now the case, end quote. Nothing more for you today. Talk to you tomorrow. Ambition comes in all shapes and sizes. At First Citizens Bank, we roll with your goals because we're built for what you're building.

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