What's up: OpenAI CEO says U.S. shouldn’t bail out AI companies; Microsoft's AI wants to be strictly business; Tesla shareholders approve Elon Musk’s $1 trillion pay package

Good morning. AI contributed to a surge of job losses last month, a sign that it’s having an impact on the economy, in this instance for the worse.

Other factors including general cost-cutting and DOGE-driven job losses were at issue, and AI wasn’t the main reason for companies eliminating jobs, according to consulting firm Challenger, Gray & Christmas. Nonetheless, it was in the mix.

Through October, employers announced 1,099,500 job cuts—65% more than in the first 10 months of last year, according to the consulting firm.

October was the real jolt. U.S. companies said they would cut 153,074 jobs, nearly triple September’s 54,064. The report said many firms pointed to cost controls and the impact of artificial intelligence as they reassess staffing.

“October’s pace of job cutting was much higher than average for the month. Some industries are correcting after the hiring boom of the pandemic, but this comes as AI adoption, softening consumer and corporate spending, and rising costs drive belt-tightening and hiring freezes,” said Andy Challenger, workplace expert and chief revenue officer for the firm.

“Those laid off now are finding it harder to quickly secure new roles, which could further loosen the labor market,” Challenger said.

Isolating the impact of AI. Companies cited many reasons for the surge in job cuts, and AI ranked low on the list, although it was there. Challenger ranked the reasons for the cuts in order of how many times companies cited them. The top reason was DOGE, followed by market/economic conditions, closing, restructuring, cost-cutting and AI.

Job cuts by industry. The cuts varied by industry, with technology and government racking up big losses. Retail, not so much.

Job cuts by region. The East was the hardest-hit area, with the majority of cuts in D.C. The West took a big hit, with California leading the way.

The federal government shutdown means the U.S. hasn’t reported official jobs or unemployment for some time. But the Challenger report captures the vibe, and it’s been a tough year for layoffs for a range of reasons. Somewhere in the mix, artificial intelligence is playing a role.

PricewaterhouseCoopers is laying off about 150 employees in marketing, human resources, operations and other support functions, with more cuts coming as the Big Four accounting firm redesigns processes around new tech and data.

“It’ll be a balance of tech and human, but what it’s not is ‘Let’s just take a bunch of people out and see if we can backfill with AI,’” Tim Grady, PwC’s U.S. chief operating officer, tells WSJ Leadership Institute's Mark Maurer. “That’s not what this is.”

Globally, PwC recently scrapped a 2021 pledge to hire 100,000 new people by 2026, the Financial Times reported.

More broadly, tens of thousands of white-collar jobs are disappearing as AI begins to bite, the Journal reported last month.

The conversation began Wednesday at WSJ Tech Live in Napa Valley, where OpenAI CFO Sarah Friar said the startup hoped an “ecosystem of banks, private equity” and perhaps the federal government would support its efforts by helping to guarantee the financing for chips behind its deals.

"The backstop, the guarantee that allows the financing to happen, that can really drop the cost of the financing but also increase the loan-to-value, so the amount of debt you can take on top of an equity portion,” she said.

By Thursday, the pushback arrived. David Sacks, President Trump’s AI adviser, posted on X that there would be no federal bailout.

Friar would clarify her comments on LinkedIn, saying the company isn’t seeking a government guarantee and that her use of the word “backstop” had “muddied the point.”

Her intention, she wrote, was to emphasize that America’s technological strength depends on public and private sectors working together to expand industrial capacity.

“The U.S. government has been incredibly forward-leaning and has really understood that AI is a national strategic asset,” Friar wrote.

OpenAI CEO Sam Altman also weighed in, doubling down on the company’s independence. “If we screw up and can’t fix it, we should fail,” Altman said on X.

Altman clarified that OpenAI has discussed loan guarantees in the context of building U.S. semiconductor fabrication facilities. But he drew a line between proposals to build national computing capacity and any suggestion of financial safety nets. “The government should build and own its own AI infrastructure,” Altman said.

All this comes at a time when Washington has played an increasingly strategic role shaping the technology industry, going so far as to take stakes in chip giant Intel and more recently two U.S. rare-earth startups.

The declines come a week after some of the biggest AI players admitted that capital expenses, already stratospheric, would be higher in the quarters ahead as they raced to build the infrastructure supporting their AI efforts.

Microsoft AI Chief Executive Mustafa Suleyman is setting some boundaries between his team's work and OpenAI, whose technology remains embedded into many of the products it offers to its customers, WSJ reports. 

A recent deal between the companies made it possible for Microsoft to establish its new MAI Superintelligence Team, which will put human interests and guardrails first, Suleyman said.

Microsoft’s Copilot chatbot relies heavily on OpenAI, but Microsoft is building, testing and releasing its own voice, image and text models.

AI “is going to become more humanlike, but it won’t have the property of experiencing suffering or pain itself, and therefore we shouldn’t over-empathize with it,” Suleyman said in an interview.

His remarks come amid a growing number of examples of people forming deep emotional connections with many AI chatbots that in some cases preceded dangerous delusions, hospitalizations and death. OpenAI itself is contending with several lawsuits representing four people who died by suicide and three more who experienced psychological trauma following interactions with ChatGPT.

Tesla’s board explanation of Elon Musk's $1 trillion pay package as pay for performance, designed to motivate Musk to transform the company, raises the obvious question: Couldn't they find someone motivated by a lot less?

The new pay package, approved by shareholders, includes 12 chunks of stock, giving Musk control over as much as 25% of Tesla if he hits a series of milestones and expands the company’s market capitalization to $8.5 trillion over the next 10 years. Its market cap is now around $1.5 trillion, WSJ reports.

Milestones include selling one million robots to paying customers. Shares of Tesla declined 3.5% Thursday.

CBO hacked. The Congressional Budget Office, which studies the financial impact of each bill, is investigating a potential cyberattack on its networks, Axios reports.

Trouble in Vice City. Take-Two Interactive Software is again pushing back the release date of “Grand Theft Auto VI,” delaying it to November of next year, WSJ reports. The videogame developer had previously been planning to debut the game in May.