Good morning. Andrew here, in Cannes, France. Much of the media world and the globe’s largest marketers are flocking to the Cannes Lions International Festival of Creativity for meetings and networking — or what some critics deride as a giant boondoggle. Many boldfaced names are here, including Oprah Winfrey, Demis Hassabis of Google DeepMind and the podcaster Alex Cooper. (I’m here for less than 48 hours, so this is squarely for work purposes.) And yet the war in the Middle East continues with uncertain prospects for peace. Here on the Croisette, the coming days will provide a real-time study in corporate cognitive dissonance. Can an industry obsessed with ad dollars and with engineering an A.I.-driven future remain insulated from the grinding friction of geopolitical risk? This just in: Alan Greenspan, who as Fed chairman reshaped American capitalism over 19 years, died today. He was 100. We’ll have more on his legacy soon. (Was this newsletter forwarded to you? Sign up here.)
Is Silicon Valley giving Chinese A.I. a boost?China is still weighing heavily on the Trump administration’s approach to artificial intelligence, including a clampdown on Anthropic’s top models. But corporate America isn’t showing as much reluctance about using Chinese A.I. — especially as newer models are quickly closing the gap with their American rivals. Microsoft may make DeepSeek available for its Copilot Cowork product, which would mean adopting one of the most disruptive Chinese models for a product used by potentially millions of enterprise users. The tech giant recently told Axios that DeepSeek’s V4 model would be meant as a lower-cost alternative to Anthropic or OpenAI models. It was also fine-tuning the model — possible because DeepSeek’s products are open-source — to try to reduce any biases inherent in the base model. Developers are already embracing Chinese A.I. Six of the 10 most popular models available on OpenRouter, an A.I. model marketplace, are Chinese, including those from DeepSeek, Tencent and Xiaomi. Alex Atallah, OpenRouter’s C.E.O., previously told DealBook that cost concerns were driving the greater adoption of Chinese models, many of which are open-source and so free to use. Bigger companies had been using Chinese models as well: Cursor, the popular coding tool, built its Composer 2 model on Kimi K2.5, which was made by the Chinese lab Moonshot AI. (Cursor appears to be moving away from Kimi now.) Chinese models are getting more powerful, too:
And they’re doing so at a faster rate. Dario Amodei, Anthropic’s C.E.O., had warned this spring that Chinese rivals were about “six to 12 months” behind frontier-level U.S. models. Chinese developers appear to be taking that as a challenge. In response to a prediction by Elon Musk that Chinese models could become as powerful as Anthropic’s Fable model, Jie Tang, a founder of Z.ai, wrote on X, “won’t take that long.” How will the U.S. respond? In the spring, the Trump administration said it would crack down on Chinese companies reportedly using American A.I. models to train their own, a process known as distillation. But further efforts to limit the practice haven’t been announced. Indeed, the administration reportedly held off on blacklisting DeepSeek as a national security risk, according to Reuters, citing unnamed sources.
Corporate America will be watching as Coca-Cola takes its giant tax case to court. The beverage maker is set to begin arguments in a federal court in Miami this week in a decade-old dispute with the I.R.S. over how it books profits at home and abroad. The stakes are high: A win could spare Coke a potential tax hit of more than $20 billion, and it could clarify similar cases involving multinationals under audit for similar reasons. SpaceX receives a lousy environmental, social and governance rating. MSCI, the stock index provider, handed Elon Musk’s space and artificial intelligence company its lowest possible score — triple C, the same designation it gave Russia — before its mega-I.P.O. Some major public pension funds have raised concerns over SpaceX’s corporate governance, arguing that shareholders get limited rights and that Musk has vast control. The rating is unlikely to faze Musk, who has described E.S.G. as a “scam.” ‘Toy Story 5’ lifts Hollywood again. The Pixar animated sequel was expected to sell about $160 million worth of tickets in North America on its opening weekend, raising Hollywood’s take to $1.85 billion this summer — the highest since 2019. The movie’s strong debut, rare for a fifth installment of a series, follows similar successes from “The Devil Wears Prada 2,” “Obsession” and “Backrooms,” cooling arguments that the pandemic had permanently damaged moviegoing.
‘Encouraging progress’A first round of talks between Washington and Tehran concluded hours ago in Switzerland, with some mediators reporting “encouraging progress.” But global stock markets remain under pressure amid uncertainty about the path to a lasting peace settlement. A slew of difficult issues loom over negotiations, including the future of Iran’s nuclear program and whether a fragile cease-fire in the conflict between Israel and Hezbollah in Lebanon will hold. But there was promising news: Oil tanker traffic in and out of the Strait of Hormuz picked up this weekend, Bloomberg reported, even after Iran declared it had closed the vital trade corridor. The latest:
Investors are focused on the Fed and inflation. Lower oil prices are a welcome relief, but households and businesses are still contending with the war’s wider economic consequences. On Thursday, the Personal Consumption Expenditures report for May, an inflation measure closely watched by the Fed, will be released. A higher-than-expected number could tilt central bankers further toward raising interest rates. The futures market this morning sees at least one rate rise this year, while economists at Deutsche Bank see two, and Bank of America forecasts three. That could pile pressure on Kevin Warsh, the new Fed chairman. Raising rates to fight inflation may be the prevailing bet in the markets, but it would most likely rile President Trump, who has repeatedly berated Fed officials for not lowering rates. The president has said he wants Warsh to “do whatever he wants, and I don’t want to have a big influence on him.” But would Trump stay quiet if rates go up? Another thing to watch: Micron Technology. The chipmaker, which reports quarterly results on Wednesday, has been on an astonishing run. Its high-bandwidth memory chips are in huge demand from companies at the forefront of advanced artificial intelligence. The company’s results should give investors clues into whether the A.I. trade has more room to run — or feed A.I. bubble fears
Forget Polymarket. It’s “Poiymarket.”Prediction markets have been accused of allowing apparent insider trading — on subjects including the operation to oust Nicolás Maduro of Venezuela or whether George Santos would attend a State of the Union address. Now, The Wall Street Journal reports that Polymarket has marketed itself by hiring social media content creators who posted videos of themselves making fake bets at dummy websites made to look like Polymarket’s. The Journal said its analysis of more than 1,100 videos revealed that Polymarket paid content creators to produce videos, which were promoted by an army of social media “clippers” who reposted the footage. More from The Journal: One of the earliest videos showing signs of a fake trade was posted to social media in June 2025, and it was filmed inside Polymarket’s New York office. The video shows someone betting $100,000 that Jerome Powell would say “good afternoon” during a press conference. The caption described the bet as “a valid testosterone test” — and the bet would have won. The Journal identified more than a dozen discrepancies between the real Polymarket and the simulated sites. A handful of videos the Journal reviewed also contained short glimpses of URLs indicating the sites were test environments for Polymarket engineers. One of those sites was “poiymarket.com,” which is essentially indistinguishable from Polymarket if the “i” is capitalized. (It was taken down after The Journal reached out for comment, the publication reported.) Polymarket told The Journal that it was “committed to maintaining accurate, fair, and transparent markets” and that it planned to audit its active promotional content. We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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