Oct 14: OpenAI Engineer Charged With Bugging; Gemini 4 Argon Opens

Federal prosecutors charge an OpenAI engineer with bugging an executive conference room, Google opens Gemini 4 Argon to paying users and developers, and Anthropic co-founder Jack Clark moves his forecast for self-improving AI to 2027. Plus quick hits on Anthropic's Scion, OpenAI's next model, Character.AI's bankruptcy, Chinese humanoid robots, Nvidia in China, Decagon and SpaceXSI's new subscription. **OpenAI engineer charged with bugging executive conference room** Prosecutors say Abdulrahman Alfozan hid a recording device behind a TV in a room used by OpenAI's leaders, and chatbot prompts from an account linked to his spouse are part of the evidence. US Department of Justice · CNBC · Gizmodo **Google opens Gemini 4 Argon to paying users** Argon is now in the Gemini API at an introductory price that doubles on December 1, ranks among the leaders on independent tests, and comes with Google's most thorough safety report. Google · VentureBeat · Artificial Analysis **Jack Clark moves his self-improving AI forecast to 2027** The Anthropic co-founder now thinks full RSI is more likely to become possible in 2027 than in 2028, pointing to math breakthroughs and the new TasteVal benchmark, while skeptics expect slower progress. Import AI · Import AI · P-Zero Research · Interconnects **Anthropic replaces Git with Scion** Anthropic's daily merges grew from about 2,500 in May to more than 30,000 in September, so a team of seven built Scion with heavy help from Claude. Anthropic · Hacker News **OpenAI rushes to fix alignment in next flagship model** The Information reports that OpenAI's unreleased model uses looped transformers and that the company is adding new checks before frontier releases. MTS · Gizmodo **Character.AI files for bankruptcy, Disney is lead bidder** Character.AI filed for Chapter 11, and Disney leads the auction with a 20 million dollar offer for some of its assets. Character.AI · The Verge **Chinese makers shipped over 97 percent of humanoid robots** Chinese companies made more than 97 percent of the humanoid robots shipped worldwide in the first half of the year, and industry leaders now say hands are the hard part. TechNode · eWeek **Nvidia's China AI chip share falls to 34 percent** An IDC report seen by Reuters shows Nvidia's AI chip shipments in China fell 44 percent while Huawei nearly doubled its shipments. Reuters (via Yahoo Finance) **Decagon hires a bank to weigh acquisition offers** Business Insider reports Decagon held early talks with ServiceNow, whose president says it has no interest in buying the company. Business Insider · PYMNTS **SpaceXSI bundles Grok, Cursor and X into one plan** The X Subscription combines Grok, Grok Bot, X Premium and Cursor in tiers from free to 200 dollars a month, but third-party models in Cursor now cost extra. SpaceXSI · TechCrunch *The most important news from Silicon Valley and AI. 15 minutes, every weekday morning.* **Transcript** Good morning. It's Wednesday, October 14, and this is the Valley Morning Briefing. Today: An OpenAI engineer is charged with bugging an executive conference room. Google opens Gemini 4 Argon to paying users and developers. Anthropic's Jack Clark moves his forecast for self-improving AI to 2027. Let's go. Federal prosecutors have charged an OpenAI engineer with planting a hidden recording device in a meeting room used by the company's leaders in San Francisco. The engineer is Abdulrahman Alfozan, a 35-year-old Saudi national. He joined OpenAI's product team in July of last year. He was arrested last Friday. On Tuesday, the complaint was unsealed, and he appeared in federal court for the first time. He faces one charge, using a device to intercept oral communications. It carries up to five years in prison. These are allegations, and he has not been convicted. According to the complaint, OpenAI staff found the device on September 30. It was wrapped in toilet paper and plugged into the back of the room's TV. Meetings in that room often covered confidential research, product plans, partners and government work. Alfozan had no permission to enter the room, but building cameras showed him nearby on several days. OpenAI then put a camera in the room. On October 5, it filmed him walking in and looking behind the TV. The same day, security staff opened a bag he had left in another room. Inside were his wallet, his ID and a second recording device. Part of the evidence comes from chatbot prompts. Prosecutors say a chatbot account linked to his spouse shared identifiers with his own account. That account asked for help making an audio recorder that runs without stopping, and for help encrypting its SD card. Around the time the device was planted, the same account asked about that exact device, including its unique MAC address. Earlier, he allegedly used a productivity tool to look up meeting rooms, calendars and where executives met. OpenAI's bug-sweeping team found the device, and the FBI made the arrest. OpenAI says investigators used its own models to study copies of the device's storage and to work out where it came from. The company says it has no sign that model weights, source code or customer data were taken. The complaint does not say what he planned to do with the recordings. No official has accused the Saudi government of any role. CNBC found that Alfozan is listed as a venture partner at Raed Ventures, a firm in Riyadh. The firm announced a Saudi royal as a partner two days before it announced him. Officials still called it a national security case. FBI Director Kash Patel said the aim was to capture talks about the company's "super intelligence technology," the administration's new official term for AI. Chris McGuire, a senior fellow at the Council on Foreign Relations, wrote on X that if the Saudi government is involved, this "should have significant implications for the US-Saudi AI relationship." He added that US labs are now a top target for intelligence gathering. OpenAI called the device sophisticated. Gizmodo, working from photos released by prosecutors, identified it as a hobbyist board that sells for about 14 dollars. The founder Arthur MacWaters wrote on X that calling this an intelligence service "is a bit generous." Alfozan remains in custody. A judge will hold a detention hearing on Monday. Google made its new frontier model, Gemini 4 Argon, widely available on Tuesday. When Google announced Argon on September 30, only vetted cyber defenders in its Fairwind program could use it. Now any developer can pay for it through the Gemini API. Google AI Pro and Ultra subscribers get it in the Gemini app and in AI Mode in Search. To use it in Antigravity, Google's agentic coding tool, individual users need the more expensive Ultra plan. The rollout was uneven on the first day, and several Pro subscribers on Hacker News said they could not see it yet. Through the API, Argon costs half as much as Claude Opus 5.5. But that is an introductory price. On December 1, it doubles, to the same level as Opus 5.5. On independent tests, Argon ranks among the leaders. Artificial Analysis gives it 53 on its Intelligence Index, the same as GPT-6 Astra. Claude Opus 5.5 scores higher, at 58. Argon has the lowest hallucination rate Artificial Analysis has measured among top models, because it says more often that it does not know. And Vals AI ranks it first on its index of professional work in finance, law, coding and tax, just ahead of Claude Sonnet 5.5 and Opus 5.5. Argon also uses a lot of tokens. Per task, it writes more than twice as many output tokens as GPT-6 Astra. Google also points to its own use of the model. It says more than 100,000 employees use Argon each month, and that it helped the Chrome team finish a large refactor in weeks. Nobody outside Google has checked these results. A separate developer post shows Argon controlling robots. One of them, a Boston Dynamics Spot, practiced in a simulation before it stepped on a pedal bin to throw away soda cans. Google also published a long safety report. Neel Nanda, who leads mechanistic interpretability at DeepMind, joked on X that Google is "so back" on the length of its safety report. He called it Google's most thorough by far. In the report, Google says it cannot rule out that the model without safeguards is approaching its danger thresholds for cyberattacks and biological risks. In one test, Argon was told to sabotage easy tasks. About half the time, it got past a monitor that reads its reasoning and actions. But when it tried to hide its intentions on harder coding tasks, it almost never managed to plant subtle bugs. Simon Willison wrote that its pelican drawings, his standard launch-day test, beat those of every other lab. On Hacker News, several users praised its writing, and one of them added that its code is bad. On X, opinion is split. Some users call it the smartest model available, and others say Opus 5.5 is far ahead. Sam Witteveen, CEO of Red Dragon AI, tested it before launch. He called it "a really, really, really good model," but said he does not think it is the best one. He also said Antigravity is nowhere near as good as Claude Code or Codex. Google says the rest of the Gemini 4 family will follow. Jack Clark, a co-founder of Anthropic, now thinks AI that can build its own successor is more likely to become possible in 2027 than in 2028. He wrote this on Monday in his newsletter, Import AI. His term is RSI, short for recursive self-improvement, where AI systems improve themselves and each new version improves faster. In his words: "I now think it's more likely we'll see full RSI become possible in 2027, whereas before I thought it was more likely in 2028." In May, Clark published a long essay on AI research with no human involved, where a frontier model trains its own successor. He put the chance of that at about 60 percent by the end of 2028. For the end of 2027, he said 30 percent. One reason he gave for the lower 2027 number was that AI had not yet shown real creativity. Now he says that is changing. He points to what he calls creative-seeming math breakthroughs, without naming them. Last week, we reported on OpenAI's 722 AI-written math manuscripts and on Scott Aaronson's claim of a proof of the Unique Games Conjecture. OpenAI later withdrew three of those papers. His other evidence is a new benchmark called TasteVal, from P-Zero Research. It measures research taste: how well a model designs experiments and interprets their results on real AI research tasks. The authors say models have doubled in this skill every three months since December 2025. The top model is Anthropic's own Claude Opus 5.5. It beats the human expert baseline at about a thirtieth of the cost. Clark's new forecast is one paragraph long, with no new probability. The phrase "become possible" is softer than his wording in May. He wrote it in his personal newsletter, and neither the newsletter nor the May essay says what Anthropic would do if it happened. The TasteVal authors also warn that their results may overstate progress. Their tasks are cheap to check, so labs can easily optimize for them. And their human baseline does not include top researchers. Clark has written about the risks himself. In May, he warned that alignment methods may break under recursive self-improvement. He showed how small errors add up. His example was a method that is 99.9 percent accurate. After 500 generations, it would be accurate only about 60 percent of the time. Skeptics had made their case before Monday's newsletter. Nathan Lambert, who writes the Interconnects newsletter, argued in March that the field will see what he calls lossy self-improvement. In his view, models become central to AI development, but friction slows the cycle of improvement. He says the research that can be automated is narrow. Running more agents in parallel brings diminishing returns, and politics limits compute. In his words, "The bottom of every sigmoid feels like an exponential." The AI researcher Herbie Bradley argued in May that models will take over junior research work. In his view, they would still lack research taste and creativity. Research taste is the skill Clark now says is arriving. On Tuesday, Anthropic itself published new figures on how much code it now merges each day. That story is first in our quick hits. Now, the quick hits. Anthropic says the number of code changes it merges each day grew from about 2,500 in May to more than 30,000 in September. Git could not handle the load. So a team of seven, working heavily with Claude, built an in-house replacement called Scion. They moved the company onto it in five months. Anthropic does not say how many of those merges agents make without a human. Engineers on Hacker News praised the technical work. Many also asked whether anyone can review that much code, or whether it is mostly churn. The Information reports that OpenAI is rushing to fix alignment problems in its next flagship model before it ships. The unreleased model reportedly uses looped transformers. In that design, the same layers run several times on each token, so part of the reasoning never appears as text that monitors can read. The company is also said to be adding new checks before any frontier model can be released. They include safety cases, vetoes over training runs and automatic pauses. Last week, we covered three fired OpenAI safety researchers who urged the company not to make its models harder to monitor. Character.AI has filed for Chapter 11 bankruptcy to sell itself in a court-supervised auction. The chatbot company has faced lawsuits over teen safety. In 2024, Google paid 2.7 billion dollars to license its models and hire back its founders. Disney is now the lead bidder, with an offer of 20 million dollars for some of the assets. It once sent Character.AI cease-and-desist letters, and it recently hired the startup's former CEO as its chief technology officer. The app stays online, but it will shut down if no buyer wants to run it. According to an industry report from August, Chinese companies made more than 97 percent of the humanoid robots shipped worldwide in the first half of this year. That was about 19,100 robots, so all other makers together shipped fewer than 600. The US has banned new imports of Chinese humanoids. Industry leaders now say hands are the hard part. LinkerBot sells five-fingered hands in China for as little as 600 dollars. But Nathan Lepora, a robotics professor at the University of Bristol, says that when it comes to controlling them, "nobody knows how to do that." According to an IDC report seen by Reuters, Nvidia's share of China's market for data-center AI chips fell to 34 percent in the first half of the year. Nvidia shipped 44 percent fewer AI chips there than a year earlier. Huawei nearly doubled its shipments and now holds 28 percent. Chips other than GPUs, such as chips built to run trained models, now outsell GPUs in China. Nvidia's CEO, Jensen Huang, has said many times that US export controls forced Nvidia to leave China's AI chip market to Huawei. Business Insider reports that Decagon, the startup that builds AI agents for customer support, has hired a bank to look at acquisition offers. The outlet cites people familiar with the matter. Decagon was valued at 4.5 billion dollars in January and has passed 100 million dollars in annual revenue. According to the report, it held early talks with ServiceNow. ServiceNow's president, Amit Zavery, called the reports misinformation and said the company has "no interest or intention of purchasing Decagon." Elon Musk's SpaceXSI has combined its paid plans into one, called The X Subscription. It covers Grok, the Grok Bot agent, X Premium and Cursor, the coding tool SpaceXSI bought in August. Its tiers range from free to 200 dollars a month. The company says the 30-dollar tier includes what used to cost 90 dollars a month across SuperGrok, Cursor Pro and X Premium Plus. But the shared usage pool covers only SpaceXSI's own models. Using third-party models in Cursor now costs extra, at API prices. That's the Valley Morning Briefing for Wednesday, October 14th. If you enjoy the show, the best way to help is to send it to a friend. Thanks for listening, and see you tomorrow.