Welcome, AI Trailblazers!
The world's most powerful AI players are no longer aligned. OpenAI is threatening Microsoft. Google is filming with AI. Adobe is flooding the market with tools. McKinsey says most of it isn’t working. The money is bigger, the tensions sharper, and the promises more fragile than ever.
In today’s Generative AI Newsletter:
OpenAI may sue Microsoft, as their partnership veers toward collapse
Google DeepMind premieres its first AI-generated film at Tribeca
Adobe Firefly goes mobile, bundling top models into one sleek app
McKinsey warns: 80% of AI users see no business impact at all
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🧨 OpenAI-Microsoft Partnership Nears Breaking Point
Justin Sullivan/Getty Images
The Wall Street Journal just revealed that tensions between OpenAI and Microsoft have hit a "boiling point", with internal debates at OpenAI about filing antitrust complaints and triggering federal review of its own partnership with the tech giant.
The latest flashpoints:
OpenAI wants to withhold IP from its recent acquisition of Windsurf, fearing Microsoft will use it to boost GitHub Copilot, a direct competitor.
Executives are considering accusing Microsoft of anticompetitive behavior, a dramatic escalation that could end up in court or Congress.
Microsoft reportedly slowed OpenAI’s switch to a new corporate structure, protecting its stake and control.
OpenAI is actively diversifying its dependencies, signing fresh deals with Google Cloud to reduce Microsoft reliance.
The collaboration that powered the AI boom is now unraveling under the pressure of control, IP, and AGI ambitions. OpenAI is clawing for independence before it’s too late but making an enemy of its biggest backer could come at a brutal cost.
🎬 Google DeepMind Debuts Veo-Generated Short at Tribeca
Credit: Ancestra/Eliza McNitt
Google DeepMind just premiered “ANCESTRA,” a genre-defying short film at Tribeca Festival, created in collaboration with Primordial Soup, the new studio launched by Darren Aronofsky. Directed by Eliza McNitt, the film blends live-action footage with scenes generated by Veo, DeepMind’s cutting-edge video model.
Key highlights:
The film draws on McNitt’s own birth story, where a mother’s love becomes a force that transcends biology and space.
Veo was used to produce cosmic sequences layered into the live-action narrative, creating a surreal blend of realism and imagination.
Over 200 creatives contributed to the production, including VFX artists, composers, animators, and an entire live-action crew.
This is the first in a three-film slate from DeepMind and Primordial Soup, aiming to explore how top-tier generative models can reshape cinema.
DeepMind's aiming for Oscars, not just clicks, as generative AI moves past simple demos to genuinely embed in Hollywood's pipelines, expanding filmmakers' tools rather than replacing them.
📱 Adobe’s Firefly AI App Lands on Mobile, Adds Big-Name Partners
Credit: Adobe/CNET
Adobe has launched its first dedicated generative AI app for smartphones, bringing Firefly to iOS and Android and bundling it with AI models from OpenAI, Google, Luma AI, Runway, Pika, and Ideogram. It’s no longer just about editing this is a push to dominate social-friendly AI generation, anywhere, anytime.
Key features and moves:
Firefly users can now generate images, videos, and AI edits on mobile using text prompts, synced via Creative Cloud.
Premium models (like Imagen 4 or OpenAI’s generator) are available through a credit-based system starting at $10/month.
Adobe is pitching commercial safety as a core advantage, training its models only on legally cleared content.
Firefly Board, Adobe’s collaborative whiteboard with AI support is also expanding with video generation tools and third-party model integration.
Generative AI is going mobile in a big way, and Adobe is going for the pro crowd with built-in trust, portability, and integrations. If this trend holds, AI won't just perform as if it grasps the world. It may soon perceive reality in a way strikingly similar to our own.
💸 McKinsey Warns: AI Spending Is Skyrocketing, Impact Isn’t
Image Credit: McKinsey
McKinsey just dropped a report dissecting the “genAI paradox.” Nearly 80% of companies say they’ve deployed generative AI, but just as many say they’ve seen no material impact on earnings. The consultancy says the solution isn’t more tools. It’s a total rewrite of how businesses operate.
Key points:
Most firms use general-purpose tools like copilots and chatbots that deliver vague, unmeasurable gains.
Vertical use cases, which target specific business functions, are stuck in pilot purgatory never scaling to impact.
McKinsey argues that agents, not copilots, are the path forward. But they require rebuilding workflows from the ground up, not duct-taping bots onto outdated processes.
The firm calls for a top-down leadership overhaul, moving from experimentation to enterprise-level transformation.
Companies are racing to deploy AI, but few are asking the hard questions about structure, process, and scale. McKinsey’s warning is clear without bold operational redesign, today’s AI investments might become tomorrow’s sunk costs.
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