The Morning Download: OpenAI Doubts Shadow AI Boom

Good morning. As OpenAI moves toward an IPO, it's facing more warnings about its spending and its growth trajectory. Increasingly, the calls are coming from inside the house.

The Wall Street Journal’s Berber Jin reports that CFO Sarah Friar has told company leaders that she worries the company might not be able to pay for future computing contracts if revenue doesn’t grow fast enough. Friar has also expressed reservations about OpenAI’s plans to go public by the end of this year, according to people familiar with the matter.

Friar and other executives are now seeking to control costs and instill more discipline, the Journal reports, signaling that the "spend, spend, spend" formula that helped fuel the AI boom may be hitting its limits.

That potential shift raises fresh questions for CIOs: If the company itself is questioning the spending strategy that's supposed to fuel AI progress, what does that say about the bets they're making?

In a joint statement, CEO Sam Altman and Friar said, “We are totally aligned on buying as much compute as we can and working hard on it together every day,”

Highlights from the WSJ’s exclusive story:

• OpenAI missed an internal goal of reaching one billion weekly active users for ChatGPT by the end of last year and has also fallen short of monthly revenue targets this year, according to people familiar with the goals.
• The company has also struggled with subscriber churn.
• OpenAI recently raised $122 billion in what was the largest funding round in Silicon Valley history. "But the company has signed up for so much computing power that it expects to burn through that amount in the next three years, assuming that it meets ambitious revenue targets," the Journal reports.

Meanwhile, rivals are on a tear. As rivals gain ground, particularly in coding and business use, OpenAI has shelved side projects, focusing on the enterprise. OpenAI recently released GPT-5.5, a model that topped a number of industry benchmarks.

OpenAI and Microsoft restructure ties. The two companies, partners since OpenAI's early days and connected through Microsoft's multibillion-dollar investments, have restructured their contentious relationship to give OpenAI significantly more autonomy, WSJ reports. 

OpenAI can now sell products across any cloud provider, ending Microsoft's exclusive access to its intellectual property. The revised agreement also removes a clause that would allow OpenAI to limit Microsoft's access to its future technology upon reaching artificial general intelligence.

The deal reflects both companies' shifting competitive priorities as OpenAI pursues independence and Microsoft develops technological alternatives like partnerships with Anthropic.

EU tells Google to open Android to AI rivals. The European Commission said Monday that Google should ensure competing AI services can “effectively interact” with applications on Android devices. But Clare Kelly, Google’s senior competition counsel, said that is already happening. “Device makers have full autonomy to integrate and customize the AI experiences their users want,” Kelly said.

Meta signs with space solar firm. Meta signed a first-of-its-kind deal with space solar firm Overview Energy to secure up to 1GW of power, Data Center Dynamics reports. Overview is developing spacecraft that collects solar energy in space and beams it to ground facilities for conversion to electricity. Initial orbital demonstration begins in 2028, with commercial delivery expected in 2030.

Former Google DeepMind researcher raises $1.1 billion seed round for his startup. Ineffable Intelligence, valued at $5.1 billion, focuses on developing superintelligence through reinforcement learning, CNBC reports.. The round was co-led by Sequoia and Lightspeed, with participation from Nvidia and Google, among others.

UK Health Service split over Palantir contract. Palantir's contract to build a data platform for the UK's National Health Service has sparked controversy. Critics question the project's feasibility and cost, which is expected to exceed £1 billion. “It’s all pixie dust and rainbows,” one senior NHS official who has looked at the platform, tells the FT. Others report the platform is already improving patient care.

Google's Pentagon rebellion. Over 600 Google employees signed a letter askingChief Executive Sundar Pichai to reject a proposed deal with the Defense Department to use Google’s AI on classified work, the Information reports.

Australia targets tech news. Australia aims to tax major tech companies 2.25% of local revenue if they don’t agree to pay local media outlets for news distributed on Facebook, Google and TikTok, WSJ reports.

Activist takes stake in AI software maker Dynatrace. Activist investor Starboard Value has taken a significant stake in Dynatrace, betting that the software company should be a big winner from more companies integrating artificial intelligence into their operations, WSJ reports. Dynatrace specializes in so-called observability platforms that are powered by AI and help companies monitor and automate their own software systems.

Foreign-based automakers have warned the Trump administration that they are looking at pulling their cheapest car models out of the U.S. market if the U.S.-Mexico-Canada Agreement isn’t renewed or is watered down, according to people familiar with the discussions. (WSJ)

Iran is scrambling to find new ways to store its oil, hoping to avoid a crippling production shutdown as a U.S. naval blockade bottles up its exports and negotiations to end the war remain deadlocked. (WSJ)

President Trump on Monday called on Disney’s ABC to remove late-night host Jimmy Kimmel over a joke he made last week about Melania Trump, in the latest skirmish between the administration and the comedian. (WSJ)

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The WSJ CIO Journal Team is Steven Rosenbush, Isabelle Bousquette and Belle Lin.

The editor, Tom Loftus, can be reached at thomas.loftus@wsj.com.