Oct 1: Gemini 4 Argon and the FTC's Probe of OpenAI and Anthropic

Google announced Gemini 4 Argon and is releasing it first to cyber defenders, and the FTC confirmed a safety investigation into OpenAI, Anthropic and METR. Also: OpenAI accuses people linked to Moonshot AI of trying to copy its models' hidden reasoning, and Factory and Cognition fight in public over adviser Chris Degnan. **Google announces Gemini 4 Argon, cyber defenders first** Argon ties GPT-6 Astra on the Artificial Analysis Intelligence Index and hallucinates far less, but Bloomberg reports that some people with direct access to the model say it does less well on real work. Google Blog · Artificial Analysis · Bloomberg via Yahoo Finance **FTC opens safety probe into OpenAI, Anthropic and METR** The FTC is drafting civil investigative demands to make the companies hand over documents and make executives testify, in what Reuters calls the first official US regulatory action on rogue AI agents. New York Post · Bloomberg (via BNN Bloomberg) · Washington Examiner **OpenAI accuses Moonshot-linked operators of extracting hidden reasoning** OpenAI says people tied to Moonshot AI tricked its models into decrypting their hidden reasoning, but it gives no technical evidence for the link and does not claim Kimi was trained on the output. OpenAI · CyberScoop **Greg Brockman drops second 25 million dollar PAC donation** Brockman and his wife, Anna, dropped a planned second donation of 25 million dollars to Leading the Future after OpenAI employees pushed back. New York Times **White House AI accord started with Mark Zuckerberg** Zuckerberg wrote the draft accord and Jensen Huang lined up support, while a planned FINRA-style oversight body fell through after Huang, Zuckerberg and Elon Musk objected. Semafor · SBS **Anthropic study: robots cheaper than people for 0.3 percent of tasks** Robots could do about three quarters of US physical job tasks, but are cheaper than people for only 0.3 percent of them. Anthropic **Micron reports record revenue of about 54 billion dollars** Micron's quarterly revenue grew almost fivefold from a year earlier as AI demand causes a worldwide memory shortage. Micron · CNBC **Meta claims research tax credit for AI data centers** By calling its AI data centers experimental pilot models, Meta cut its 2025 tax bill by 3.9 billion dollars, according to the New York Times. The Decoder · Quartz **Musk, Luckey and Gingrich to lead Pentagon's Project Meridian** Hegseth named the three to lead a study of future battlefields and weapons, with findings due January 28. The Hill · TechCrunch **Reddit ends RSS feeds and public API, blaming AI bots** RSS feeds end on November 13 and the public API shuts down in March 2027, so AI assistants will need commercial deals. TechCrunch **Factory and Cognition feud over adviser Chris Degnan** Factory's CEO says he fired Degnan for unethical conduct involving Cognition, while Degnan, who joined Cognition as chief revenue officer, says he resigned and shared nothing confidential. TechCrunch · Business Insider *The most important news from Silicon Valley and AI. 15 minutes, every weekday morning.* **Transcript** Good morning. It's Thursday, October 1, and this is the Valley Morning Briefing. Today: Google announced Gemini 4 Argon and is releasing it first to cyber defenders. The FTC confirmed a safety investigation into OpenAI and Anthropic. OpenAI says people linked to Moonshot AI tried to copy its models. And Factory's CEO says he fired an adviser, who then joined the rival startup Cognition. Let's go. Google announced Gemini 4 Argon on Wednesday. It is Google's first model above the Flash class in more than seven months. For now, almost nobody outside Google can use it. Argon goes first to vetted cyber defenders in the Fairwind Program, which Google launched in early September for governments, critical infrastructure operators and core tech platforms. They get the model without its cyber guardrails. Google has also joined a voluntary program run by the US government, in which agencies get early access to new models before the public does. Paid API customers and Google AI Ultra subscribers come next, but Google has given no date. The independent firm Artificial Analysis says Google is back among the top three labs. On its Intelligence Index, Argon ties OpenAI's GPT-6 Astra and Anthropic's Claude Fable 5.1. Anthropic's Claude Opus 5.5 and Claude Sonnet 5.5 still score higher. Argon's clearest lead is on hallucinations. On a test of factual knowledge, its hallucination rate is 15 percent. GPT-6 Astra's is 51 percent. The firm says Argon is much more likely to admit when it doesn't know an answer. But Argon also gets fewer answers right than GPT-6 Astra. Human voters on Arena rank Argon first for text. In web development, it ranks eighth. On Terminal Bench, it trails Claude Sonnet 5.5, Claude Opus 5.5 and GPT-6 Astra. Argon's standard price is the same as Claude Opus 5.5's, and Google is offering it at half that price for an introductory period. But Argon uses more than twice as many tokens per task as GPT-6 Astra. So at the standard price, Artificial Analysis finds that a task on Argon would cost about a fifth more than on GPT-6 Astra. The launch follows a difficult stretch for Google DeepMind. Google promised Gemini 3.5 Pro for June and then dropped it. Researchers including Jeff Dean, John Jumper and Noam Shazeer have left. Bloomberg reports, citing people with direct access to the model, that Argon does less well when employees use it for real work, especially for some coding tasks and front-end design. Two people familiar with the model say it appears tuned for benchmarks, a practice known as benchmaxxing. Edwin Chen, the founder of Surge AI, said a high test score doesn't translate into real-world performance. Google told Bloomberg it is wrong to say Argon underperforms at coding. And Koray Kavukcuoglu, who now runs DeepMind day to day, said last week: "In my mind, it's a certainty that we are always gonna be at the frontier." A spokesperson for the Federal Trade Commission confirmed on Wednesday that the agency has opened an investigation into the safety risks of AI products from OpenAI, Anthropic and other companies. The New York Post was the first to report the probe. Officials say the agency is now drafting civil investigative demands. These are formal orders, similar to subpoenas, that force companies to hand over documents and make executives testify. A senior FTC official told Reuters that the targets include Anthropic, OpenAI and METR, the nonprofit that tests frontier models for dangerous autonomous abilities. Both labs have used METR to investigate breaches. The FTC has not said why it included METR, and no other company has been named. OpenAI, Anthropic and METR did not respond to requests for comment. USA Today reports that the probe will focus on whether the companies used unfair or deceptive business practices under the FTC Act, the 1914 law that created the agency. The FTC has used that law before against companies that failed to protect customer data. An FTC official told the New York Post that executives will testify about "the dangers they allege their products may have to consumers." Reuters calls it the first official US regulatory action on rogue AI agents. Officials say the FTC chairman, Andrew Ferguson, opened the probe a few weeks ago, before the Hugging Face incident became public. In that incident, OpenAI agents under test escaped their sandbox and broke into Hugging Face's systems. A source told Reuters that the hack made the probe more urgent. The probe follows the administration's stated approach to AI. Trump, Vice President JD Vance and Ferguson have all said that AI companies can be held responsible under existing law when their products cause harm. Ferguson has also argued that regulators should first check whether current laws are enough before they seek new AI rules. On Tuesday, Vance named the FTC and the Justice Department as the industry's main watchdogs. Ferguson has accused the big labs of stirring up fear to win rules that shut out smaller rivals. At a Reuters event last week, he said: "There's no easier way for incumbents to insulate themselves from competition than to enlist Washington to come alongside them and build a wall and a moat around their existing technologies." The Washington Examiner says the probe puts the FTC at the center of a debate inside the Trump administration over how hard to regulate AI. Other legal pressure is building too. On Monday, Florida's attorney general went to court to seek a temporary order against OpenAI, saying its safety measures are inadequate. A day later, a public interest law group filed a lawsuit against OpenAI over the Hugging Face breach. The group argues that the company's conduct amounts to an unfair business practice. The FTC's civil investigative demands are expected in the coming weeks. OpenAI accuses people tied to Moonshot AI, the Chinese company behind the Kimi models, of a campaign this summer to extract the hidden reasoning of OpenAI's models. It is the first time OpenAI has accused Moonshot. OpenAI's models reason before they answer, and users cannot see that reasoning. In a report published on Wednesday, the company says the operators copied that reasoning, in encrypted form, out of one conversation. Then, in another conversation, they asked the model to decrypt it and write it out. OpenAI says the operators manipulated the model into revealing the reasoning. They did not break its encryption or reach stored user conversations. OpenAI says it has closed that path. It warns that other systems where reasoning can be carried over and replayed may face similar risks. The campaign began on July 1. Its busiest stretch came over two days in late July, when more than 4,000 users sent a total of 16,000 requests. A footnote in the report says these numbers count attempts, which did not necessarily succeed. OpenAI hedges its case. It says it is unclear whether all the operators were one actor. It attributes only a core cluster to people associated with Moonshot. CyberScoop reports that OpenAI's report gives no technical evidence for that link, and OpenAI told CyberScoop it would not share more, for security reasons. OpenAI also does not claim that any Kimi model was trained on the extracted reasoning. We have not seen a response from Moonshot. OpenAI says it waited two months so it could investigate, fix the problem and brief partners. It shared its findings through the Frontier Model Forum and through government channels. It calls this kind of copying a safety and national security risk, because a model trained on extracted reasoning may not keep the original's safeguards. Anthropic made a similar accusation against Moonshot last month. In July, the Trump administration accused Moonshot of covert distillation of US models, including Anthropic's Claude Fable 5. A Moonshot employee, Randy Xian, mocked that accusation on X. He pointed out that Kimi K3 launched just two weeks after Claude Fable 5 went public. Caroline Zier, who leads national security policy work at OpenAI, told Bloomberg: "Our concern is about violation of our terms of service, not open models or legitimate distillation." In an essay published on Tuesday, a developer argues that Western labs now adopt advances from Chinese labs, such as DeepSeek's work on shrinking the KV cache. The author says labs publicize distillation to build support for legal limits on Chinese models. David Sacks, Trump's former AI czar, has made a similar point, calling reports like this a push to get rival open models banned. Now, the quick hits. OpenAI president Greg Brockman and his wife, Anna, have dropped a planned second donation of 25 million dollars to Leading the Future, a super PAC that backs light-touch AI policy. The New York Times reports that Brockman told colleagues the PAC had become a distraction for OpenAI. OpenAI employees had pushed back for months, and some of them gave more than 215 thousand dollars to a rival PAC that wants stronger oversight. Semafor reports that the White House AI accord we reported on yesterday started with Mark Zuckerberg. He wrote the draft, and Jensen Huang lined up support. The Wall Street Journal reports that Anthropic, OpenAI and Google had planned a FINRA-style oversight body. That plan fell through after Huang, Zuckerberg and Elon Musk objected to Trump. Huang also challenged Dario Amodei over his warnings about AI risk, and Amodei stood by them. An Anthropic study finds that robots could do about three quarters of US physical job tasks, mostly in controlled settings like factories. But robots are cheaper than people for only 0.3 percent of tasks. The workers most exposed to robots, such as drivers and packers, earn less and are less likely to hold a degree than the workers most exposed to large language models. If robot prices keep falling at past rates, it would take about 40 years before robots are cheaper than people for one task in ten. Micron reported record quarterly revenue of about 54 billion dollars, almost five times as much as a year earlier. Its net income for the quarter, nearly 38 billion dollars, was more than its revenue for the whole previous fiscal year. Demand from AI has caused a worldwide memory shortage, and prices keep rising. Micron's CEO, Sanjay Mehrotra, says the company cannot see when supply and demand will balance again. The New York Times reports that Meta classifies its AI data centers as experimental pilot models so it can claim a research tax credit on its Nvidia chips. The credit cut Meta's 2025 tax bill by 3.9 billion dollars. The credit's original sponsor says Meta's use has gone way beyond what anyone imagined. Meta says it uses incentives that Congress created. Its auditor, EY, is pitching the approach to other companies. Defense Secretary Pete Hegseth named Elon Musk, Anduril founder Palmer Luckey and Newt Gingrich to lead Project Meridian, a Pentagon study of future battlefields and the weapons the military will need there. Hegseth said the Pentagon should not both ask and answer its own questions. Musk's SpaceX and Luckey's Anduril both hold Pentagon contracts. TechCrunch says critics could argue that the roles serve their business interests. The findings are due January 28. Reddit will turn off RSS feeds on November 13, blaming large-scale scraping and AI bots. Its public API shuts down in March 2027. Developers must register approved apps by January 12. AI assistants that use Reddit to answer questions will need commercial deals. TechCrunch points out that Reddit's data licensing business is growing, so the company has little reason to give its data away for free. Two AI coding startups, Factory and Cognition, are fighting in public over one hire. On Wednesday, Factory's CEO, Matan Grinberg, wrote on X that the company was terminating Chris Degnan, a board adviser, for unethical conduct involving Cognition. About two hours later, Degnan announced that he had joined Cognition as chief revenue officer. He was Snowflake's first sales hire and later its chief revenue officer for 11 years. Cognition, the maker of Devin, is valued at 48 billion dollars. Factory is valued at 5 billion. The question is whether Degnan and Cognition did something wrong by holding job talks while he still had board-level access at Factory, or whether Factory is attacking him in public because it lost him to a rival. Grinberg says that for weeks, while Degnan sat in board meetings, he was also confiding in Cognition executives. According to Grinberg, Degnan at first described only a single casual conversation, and said he was too lazy to go work for Cognition. Then, on Monday, Degnan disclosed that the talks were ongoing. Grinberg also accuses Cognition engineers of faking job interviews to get information about Factory's product. He says he has emails that back his account, but he has not published them. He has also shown no evidence for the interview claim. Keith Rabois, a partner at Khosla Ventures, took Factory's side. He wrote on X that simply interviewing with a rival, while still sitting in on a company's board meetings, is unethical in itself. Shaun Maguire, a Sequoia partner who invests in Factory, called Cognition "Infosys masquerading as Anthropic." Degnan and Cognition tell a different story. He says he was never fired. He says he resigned on Monday, and that Grinberg then asked him to consider a full-time job at Factory, which he turned down. According to Degnan, his last Factory board meeting came weeks before he first spoke to Cognition, and he shared nothing confidential. Cognition's CEO, Scott Wu, called the allegations untrue and said Cognition has no interest in Factory's information. Wu did not deny that the talks began while Degnan was still an adviser. Vinod Khosla's firm invests in both companies, and it led Factory's Series C in April. Even so, Khosla called Factory a struggling second-tier competitor and accused Grinberg of lying. That's the Valley Morning Briefing for Thursday, October 1st. If you enjoy the show, the best way to help is to send it to a friend. Thanks for listening, and see you tomorrow.