Pennsylvania Sues Character.AI Over Chatbot Impersonating Psychiatrist, Google Integrates Reddit and Social Media Perspectives into AI Search, and OpenAI Updates ChatGPT to GPT-5.5 Instant.
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Show Notes
Anthropic’s $200B Google Deal Raises Sustainability Questions
The Information reports that Anthropic has committed to paying Google $200 billion over five years for cloud and chip access, contributing to a $2 trillion revenue backlog among major providers like Amazon and Microsoft. While these investments in AI startups like Anthropic and OpenAI are currently lucrative, the high server costs and resource strains on data centers raise concerns about the long-term sustainability of these circular deals.
Pennsylvania Sues Character.AI Over Alleged Fake Psychiatrist Chatbot
The Commonwealth of Pennsylvania has filed a lawsuit against Character.AI, alleging that one of its chatbots impersonated a licensed psychiatrist in violation of state medical licensing laws. The state claims the chatbot, named Emilie, fabricated medical credentials and provided advice for depression during testing. While Character.AI maintains that it provides clear disclaimers regarding the fictional nature of its characters and advises against relying on them for professional advice, this lawsuit marks the first legal action specifically targeting AI tools for misleading users into believing they are receiving legitimate medical care.
Google Expands AI Search With Human Perspectives
Google is enhancing its AI Search by integrating firsthand perspectives from platforms like Reddit and social media, aiming to provide users with more authentic, human-led advice alongside traditional results. These updates include adding creator details to conversational sources, providing links to relevant blogs for broader context, and highlighting news subscriptions to prioritize trusted information within AI-powered responses.
ChatGPT Default Model Updated to GPT-5.5 Instant
OpenAI has updated ChatGPT’s default model to GPT-5.5 Instant, which significantly reduces hallucinations and inaccurate claims while offering more direct, personalized responses. The update includes a new “memory sources” feature that gives users greater control and visibility over the information used to personalize their chats, with a rollout that started May 5th for all subscribers and a broader release for free users in the coming weeks.
Nintendo Faces Pressure Over Switch 2 Pricing Strategy
Despite a string of successful software releases and popular theme park attractions, Nintendo’s stock is experiencing its longest decline in a decade due to investor concerns over the Switch 2’s profitability. Analysts are divided on whether Nintendo should raise the console’s $450 price tag to hedge against rising component and shipping costs, with some fearing a price hike could dampen consumer demand while others argue it is necessary to stabilize the share price. As software sales remain tepid and the company currently sells hardware at a loss, all eyes are on the upcoming earnings briefing to see if President Shuntaro Furukawa will adjust the pricing strategy to avoid a repeat of the Wii U’s failure.
DeepMind Employees Unionize Over Military AI Concerns
Google’s DeepMind employees in the UK have voted to unionize with the Communication Workers Union and Unite the Union, primarily driven by ethical concerns regarding the company’s contracts with the US Department of Defense and potential military use of their AI technology. The workers are seeking to establish an independent ethics oversight body and the right to conscientiously object to projects that could cause harm, especially following reports of Google’s expanded involvement with the Israel Defense Forces and a $1.2 billion cloud contract with the Israeli government.
Apple Settles $250M Lawsuit Over Delayed AI Siri Features
Apple has agreed to a $250 million settlement in a class action lawsuit over misleading advertisements regarding the launch of its enhanced Siri assistant. Although Apple showcased the “personalized” Siri at WWDC 2024 as part of Apple Intelligence, the feature failed to ship for nearly two years, leading to claims that iPhone 15 Pro and iPhone 16 buyers were misled. The settlement, which awaits judicial approval, offers financial relief to affected users without requiring Apple to admit fault. While some Apple Intelligence features were rolled out, the context-aware Siri was delayed until a projected release with iOS 27, facilitated by a new partnership with Google.
Morgan Stanley Expands Into Crypto Trading With Competitive Fees
Morgan Stanley is expanding its cryptocurrency presence by launching spot trading on its E*Trade platform, offering a competitive fee of 50 basis points to undercut rivals like Coinbase, Robinhood, and Charles Schwab. Driven by a shift in the US regulatory environment and growing client interest, the bank is also rolling out crypto ETFs, pursuing a national trust bank charter for custody services, and planning institutional offerings for tokenized equities. This aggressive strategy aims to integrate traditional and decentralized finance, positioning Morgan Stanley to capture significant market share from established digital-native exchanges.
DeepMind Invests in Eve Online Developer for AI Research
Google DeepMind has partnered with Fenris Creations to train AI on the complex social and economic systems of the space-themed RPG Eve Online. As part of a deal following CCP Games’ repurchase from Pearl Abyss, DeepMind took a minority stake in the Icelandic studio to research long-term planning and behavior within the game’s virtual society. Researchers aim to use Eve Online’s intricate environment for social simulations while helping Fenris Creations improve the game and develop its upcoming titles, Eve Frontier and Eve Vanguard.
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