👀 Bugged

SCOREBOARD

Tuesday close. S&P down 0.02%, close to flat, with Oracle up 4.2% and Meta up 2.6%. On the week: Nvidia −4.5%, S&P −0.2%, Nasdaq −1.4%. Prices via CNBC.

ON WATCH

The FBI has arrested an OpenAI engineer, Abdulrahman Alfozan, accused of hiding a recording device in the company's executive conference room in San Francisco. Prosecutors say it was wrapped in toilet paper and plugged in behind a TV.

FBI director Kash Patel says the aim was to "secretly capture sensitive communications about the company's super intelligence technology." Alfozan, a 35-year-old Saudi national who joined OpenAI's product team in July 2025, was fired and arrested on 9 October.

The Justice Department says a chatbot account linked to his spouse was asked about "building, customizing, installing, audio recording, testing, obfuscating, and remote accessing a device." OpenAI says it used its own AI models to work out what the device could do.

OpenAI is in the middle of raising money, and told investors last week its yearly revenue pace is about $50 billion. Much of what they're paying for is the kind of plan discussed in that room.

Neither Alfozan nor his lawyer could be reached, and he faces up to five years in prison if convicted. In fairness, OpenAI says it has "no indications" he took model weights, source code or customer data, and the FBI had him about a week after the device turned up.

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THE MACHINE

Character.AI, where people chat with made-up characters, filed for Chapter 11 bankruptcy on Monday in Delaware. Its filing blames high costs plus "potential litigation related liabilities and regulatory engagement."

Disney has agreed to pay $20 million for some of its technology and a licence, which sets the opening bid in a court-run sale. In 2024 Google paid $2.7 billion to license the same company's models and hire back its founders.

Let Meerkat translate. The court papers put its assets and its debts each somewhere between $50 million and $100 million, after investors put in more than $193 million.

Chief executive Colin Adams says the app keeps running during the sale, due to close by early December. If no buyer wants to run it, it will be wound down.

To be fair, plenty of people wanted it. It had 20 million monthly users in 2024 and ranked among the top apps for time spent, so costs and lawsuits did the sinking.

SOMEONE SMART SAID

Feldman runs Cerebras, which makes AI chips and sells computing to big AI customers, so he's got a stake in people feeling good about this. He said it on stage at TechCrunch Disrupt, about the insiders who argue over the odds of AI wiping everyone out.

His pitch is the upside instead, a world where your grandkids "never meet anybody who dies of cancer." He still says AI should be regulated "reasonably," and admits the industry handled the towns where it builds data centres badly.

It's the bluntest pushback yet from someone who sells to the labs. His case is that the warnings hurt the business, and he didn't argue they were wrong.

THE CHART

The ten biggest companies in the S&P 500 now make up about 40% of it, up from 27% at the top of the 2000 dot-com boom. Most of them are the AI giants on this email's scoreboard.

Reuters columnist Jamie McGeever argued this week that AI is lifting Wall Street more than the economy. He cites a Minneapolis Fed paper estimating that about 70% of AI equipment spending goes on imports, which count against US growth.

If you own an S&P 500 index fund, roughly 40 cents of every dollar sits in those ten names. Set against that, the spending is real, and business equipment investment grew more than 16% in the second quarter, the fastest in five years.

HEADS UP

ON THE HORIZON

MEERKAT ON YOUTUBE

Biocomputing Just Went Too Far! In a Melbourne lab, a clump of living human brain cells grown from someone's skin is playing a violent video game. It learned the basics in about a week, and nobody can say whether anything in there feels a thing. Watch on Meerkat Explains.

THE BURROW

Quick vote. An OpenAI engineer is accused of bugging the boardroom. What worries you most?

Trivia. In 2011 an IBM computer beat two of the best human players ever on the TV quiz show Jeopardy!. What was it called? Answer's at the bottom of the email. No peeking.

ALSO WORTH YOUR INBOX

The daily crypto brief from the same burrow. Crypto Nutshell is Bitcoin, the news and the numbers in a five-minute read.

HOW DID WE DO?

One tap, and Meerkat listens. How did today's issue land? Hit a button, and add a line if you want to tell Meerkat why.

Inflation numbers at 8:30, Anthropic's books after that. Have a look behind the office telly on your way in.

Anyone you know still chatting to an AI character every night? Forward them this.

Meerkat is not a financial adviser, and nothing here is advice. Meerkat is a small animal with a whiteboard and a very lopsided pie chart. Please do not sue Meerkat.

TRIVIA ANSWER

Watson. IBM's system, named after the company's founder Thomas J. Watson, beat Ken Jennings and Brad Rutter in a televised match in February 2011.