OpenAI Surrounded on Four Sides | Rewire News Morning Report

On the same day Elon Musk pursued $130 billion in court, OpenAI’s growth figures and its cloud monopoly simultaneously cracked. The scene of three fronts falling at once was last seen with Meta in 2022.

1｜OpenAI court, growth, and cloud monopoly collapse on three fronts

Elon Musk’s lawsuit against OpenAI opened in Oakland on Tuesday. Musk was the first to testify, saying he “came up with the name, recruited key people, and provided all initial funding,” accusing Altman of turning a charity into a private cash machine. He is seeking $130 billion in damages and the restoration of the nonprofit structure. OpenAI’s lawyer pushed back: Musk “failed, then left—my client succeeded just fine without him.” Early investor Vinod Khosla said the real reason Musk left was, “He wanted to be CEO.”

Outside the courtroom, the WSJ reported on Monday night that OpenAI failed to meet its self-set user growth and revenue targets. The year-end milestone of 1 billion weekly active ChatGPT users is now out of reach. CFO Friel warned that if revenue growth doesn’t accelerate, the company will struggle to afford compute contracts. Shares of Oracle, CoreWeave, Nvidia, and AMD all fell across the board.

On the same day, Microsoft changed an exclusivity agreement to a non-exclusive license. Within 24 hours, Amazon rolled out GPT-5.5 and the Managed Agents service on Bedrock. The speed at which exclusivity becomes openness signals one thing: Microsoft no longer has enough confidence in OpenAI to justify the cost of exclusive terms.

(Source: Axios / WSJ / Reuters / Bloomberg / TechCrunch / Stratechery / Fortune)

2｜The UAE exits OPEC, and the first crack forms in a 50-year alliance

The UAE announced it will exit OPEC and OPEC+ effective May 1. This is the largest blow of member departures OPEC has suffered since its founding in 1960.

On the surface, it looks like a quota dispute. The UAE’s idle production capacity of 3.2 million barrels per day has long been constrained by OPEC quotas, and Abu Dhabi has wanted to set its own prices for a long time. But the timing is the key: the exit happens against the backdrop of the United States imposing a maritime blockade on Iran and much of the Strait of Hormuz being closed. Just days earlier, the UAE had signed a currency swap agreement with U.S. Treasury Secretary Bessent. Abu Dhabi is not just choosing freedom of production—it is choosing security guarantees.

In the short term, the blockade of the strait limits the UAE’s export capability, so the actual impact is limited. But once the crisis is resolved, OPEC’s remaining effective idle capacity will be almost only Saudi Arabia’s—about 2 million barrels per day. Goldman Sachs estimates that current global daily crude oil production has fallen by 14.5 million barrels due to regional conflicts. Without the UAE, OPEC’s ability to regulate oil prices is significantly weakened. Qatar exited in 2019; the UAE will exit in 2026. Gulf countries are re-selecting their positions one by one.

(Source: Al Jazeera / Axios / Financial Times / NPR / Goldman Sachs / Fortune)

3｜Pentagon AI supply chain rewired: Google fully enters, Anthropic continues to exit

Google signed an agreement with the Pentagon that allows the U.S. military to use Gemini on classified networks, covering “any lawful purpose.” On the same day, 600 Google employees jointly wrote a letter to Pichai demanding that the company reject the deal. Google ignored it.

This is the direct fallout after Anthropic was labeled a “supply chain risk” by the Pentagon. In February this year, Anthropic refused to use Claude for domestic mass surveillance and autonomous weapons, prompting Defense Secretary Hegseth to put it on a blacklist right away. This is the first time this label has been applied to a U.S. company; previously it had only been used against foreign adversaries. A federal judge in San Francisco approved a temporary restraining order, but the U.S. Court of Appeals for the Washington Circuit upheld the supply chain designation, and Anthropic remains locked out of new defense contracts.

The current picture is this: Google, OpenAI, and xAI have all signed military AI agreements. Anthropic drew a red line and was kicked out of the supply chain. The chief AI officer of the U.S. Cyber Command told Axios that they are building a “model-agnostic” infrastructure that can switch among different vendors. In other words, no AI company is irreplaceable.

(Source: TechCrunch / Bloomberg / CNBC / Axios / Defense One)

4｜Oil price hits $111 and meets a Fed decision; war-driven inflation blocks the path to rate cuts

Brent crude settled at $111.26 per barrel, while WTI is approaching $100. Since the end of February, the Strait of Hormuz has been nearly shut down. Iran proposed a plan to open the strait first and then negotiate nuclear issues, but Trump was reportedly not satisfied with it. Leaders of the Gulf Cooperation Council held their first summit since the war began in Jeddah. Qatar’s foreign ministry explicitly said that using the strait as a “political weapon” is unacceptable.

The Federal Reserve released its rate decision on Wednesday. Markets expected 100% that rates would be kept unchanged at 3.5%-3.75%. This would be the third hold this year, and it may also be Powell’s last meeting as chair. A CNBC survey showed 81% of respondents believe that higher oil prices will push up core inflation. The incoming chair Waller wants to cut rates, but energy prices driven up by war block that path. The World Bank warned on the same day that the conflict in the Middle East will weaken global growth.

The contradiction between the energy crisis and monetary policy is narrowing. If the Strait doesn’t open, rate cuts are just fueling inflation.

(Source: Reuters / Al Jazeera / CNBC / World Bank / WSJ)

Also worth knowing ↓

Australia passed a bill that imposes a 2.25% revenue tax on tech giants that do not pay for news content. This is the most aggressive news-payment legislation in the world. Meta and Google previously exited some news deals in Australia, and this time they were given a direct choice between two options. (Source: TechCrunch)

Customers Bank CEO Sam Sidhu admitted during a Q1 earnings call that his AI clone hosted the first 30 minutes. The bank, which has $25.9 billion in assets, calls it an “experiment.” Analysts had not noticed before he admitted it. (Source: Fortune)

China announced the “Ling Shen” exascale supercomputing project, with 47,000 Huawei Kunpeng processors and 2 Exaflops of computing power, with no foreign components included. This is the first publicly announced fully domestic CPU-based exascale supercomputer. The United States’ latest Aurora supercomputer uses Intel GPUs. (Source: Tom’s Hardware)

The chief AI officer of the U.S. Cyber Command revealed that the department is building infrastructure that can switch between different AI models without being constrained by vendors or countries. After Anthropic was added to the blacklist, the NSA is still trying to obtain the Claude Mythos Preview model. (Source: Axios / Defense One)

Hedge fund manager Paul Tudor Jones said Bitcoin is the “best inflation hedge” and warned that U.S. stock valuations are too high. Against the backdrop of surging oil prices and war-driven inflation, traditional finance heavyweights are increasingly turning to Bitcoin narratives. (Source: CoinDesk)

Poolside released a free open-source agentic coding model, Laguna XS.2. Its performance is close to Claude Opus 4.7 but with far lower costs. Outside China and the U.S., this American startup has taken a “close to the frontier, yet open-source and free” route. (Source: VentureBeat)

GitHub Copilot announced that starting June 1 it will switch to usage-based billing, bidding farewell to the fixed monthly fee model. The official explanation is “aligning pricing with actual usage,” but behind it is financial discipline returning under pressure from AI compute costs. (Source: Ars Technica)

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