☕ The big tech AI race is on

Good morning!

Meta just spent $15 billion to hire a 28-year-old.

Well, it’s not quite that simple (or ridiculous). Read on for our take on the big tech AI race.

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Some headlines from this morning:

Israel and Iran exchanged missile strikes for a sixth day after President Trump demanded Iran's "unconditional surrender" on Wednesday. Iran's supreme leader, Ayatollah Ali Khamenei, has warned President Trump of "irreparable harm" if the U.S. military intervenes in Tehran's conflict with Israel. Yesterday, Israeli forces intercepted two Iranian missile barrages over Tel Aviv, while Iran accused Israel of striking a military-linked university near Tehran, killing over 220 people in six days according to Iranian officials. Trump posted on Truth Social that the U.S. knows the location of Iran's Supreme Leader, warning "our patience is wearing thin." The escalation follows Israeli strikes on Iranian nuclear facilities last week, with 24 Israeli civilians killed in retaliatory attacks.

The UK will sanction Russian finance, energy and military facilitators, Prime Minister Keir Starmer announced at Tuesday's G7 summit in Canada. The measures target two UK residents who allegedly supplied electronics to Russia's military and multiple vessels in Russia's "shadow fleet" that disguise ownership to evade oil export sanctions. Starmer said the sanctions aim to "choke off Putin's ability to continue his barbaric war in Ukraine." The UK has sanctioned over 2,300 Russian individuals and entities since the 2022 invasion began.

U.S. retail sales dropped 0.9% in May, exceeding economists' predicted 0.6% decline and raising recession fears after consumers rushed purchases before Trump's tariffs took effect. The Commerce Department reported the sharpest monthly fall since December, with electronics and auto sales leading declines as Americans pulled back spending following 145% tariffs on Chinese goods. Dow Jones economists warned the drop signals weakening consumer confidence that could trigger broader economic decline. The Federal Reserve meets next week to consider rate cuts while Treasury officials pursue trade negotiations with China and the UK.

A volcano in eastern Indonesia erupted Tuesday night, prompting authorities to issue the country's highest disaster alert level. Mount Lewotobi Laki-Laki spewed ash more than 10 kilometers high, with Indonesia's disaster agency (BNPB) reporting ongoing seismic activity indicating continued volcanic movement. Several flights between Bali and Australia were cancelled, and authorities urged residents near the ash cloud to wear face masks. No injuries have been reported as monitoring continues.

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Immigration agents arrested New York City Comptroller and Democratic mayoral candidate Brad Lander after he linked arms with a person authorities were trying to detain on Tuesday.

The arrest at a Manhattan immigration court makes Lander the third Democratic politician arrested for allegedly interfering with federal immigration operations in the past month. It comes one week before New York Democrats vote in their mayoral primary. Here's what you need to know.

What happened?

Lander spent Tuesday morning observing immigration proceedings at 26 Federal Plaza in Manhattan. He told an AP reporter he was there to accompany migrants out of the court building.

As Lander exited with a group, federal agents moved to arrest a man walking beside him. When agents approached, Lander locked arms with the man and demanded to see a judicial warrant.

"I asked to see their paperwork and they couldn't produce it," Lander said after his release. "That's when they decided to arrest me too."

Agents separated the two men before handcuffing Lander. He was released three hours later without charges.

More arrests

The Department of Homeland Security said Lander was arrested for "assaulting law enforcement and impeding a federal officer."

This marks the latest confrontation between Democratic officials and federal immigration authorities as the Trump administration intensifies enforcement operations in sanctuary cities.

Two other Democratic politicians have been arrested in similar circumstances since December - part of what immigration advocates say is an unprecedented targeting of elected officials who oppose federal immigration policies.

The response

DHS officials maintain they're applying the law fairly to anyone who interferes with immigration enforcement.

"No one is above the law, including elected officials," a DHS spokesperson said.

Democrats counter that the arrests represent political targeting and rising authoritarianism.

"They're trying to silence dissent through intimidation," said New York Attorney General Letitia James.

Federal prosecutors will review evidence before deciding whether to charge Lander. His campaign said the arrest won't affect his mayoral race activities.

The incident adds new urgency to next Tuesday's Democratic primary, where Lander faces former Governor Andrew Cuomo and progressive challenger Zohran Mamdani.

Immigration enforcement has become a central issue in the race, with all three candidates pledging to maintain New York's sanctuary city policies despite federal pressure.

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Last week, Meta announced the acquisition of AI company Scale AI for $14 billion, in its second-largest deal ever. It gives the owners of Facebook, Instagram, and WhatsApp a 49% stake in the company that deals with human-powered data collection, which trains machine learning models. Founder Alexander Wang, thought to be one of the world leaders in AI, will lead Meta's new AI division.

Meanwhile, OpenAI CEO Sam Altman said competitor Meta is offering $100 million signing bonuses to lure away his company's employees, marking an unprecedented escalation in Silicon Valley's AI talent war.

‘Founder Mode’

Meta employees say Zuckerberg has shifted into "founder mode" - taking direct control of AI development after Meta's Llama AI models fell short of expectations.

"Zuckerberg is calling researchers directly, flying them to his house, whatever it takes," a Meta employee told Reuters on condition of anonymity.

The recruitment drive represents the latest salvo in an AI arms race between America's biggest tech companies. Since OpenAI's ChatGPT popularized generative AI in 2022, firms including Amazon, Google, Meta, and Nvidia have invested hundreds of billions in the technology.

Why AI costs billions

Major tech companies are spending unprecedented amounts on AI infrastructure. In 2025 alone, Google invested $75 billion, Microsoft $80 billion, and Meta $72 billion.

The costs break down into three main categories:

Data centers: AI requires massive computing power. Microsoft and OpenAI announced a $100 billion "Stargate" data center project for 2028. These facilities house thousands of specialized chips that process AI training data.

Energy consumption: Operating AI systems requires enormous amounts of electricity and water for cooling. Microsoft's water usage jumped 34% between 2021-2022 - equivalent to 2,500 Olympic swimming pools.

"AI could require the same amount of energy as the entire Netherlands by 2027," according to a VU Amsterdam study.

Cloud infrastructure: Companies must build systems to deliver AI services to users, creating connections between data centers and consumer devices.

The AI race

Tech leaders believe AI represents the next major technological revolution. Most companies are pursuing Artificial General Intelligence (AGI) - AI that matches human cognitive abilities.

Zuckerberg reportedly aims higher: Artificial Superintelligence (ASI), which would exceed human intelligence.

"This year is going to set the course for the future," Zuckerberg said in February. "AI is potentially one of the most important innovations in history."

Meta's aggressive moves follow disappointment with its Llama 4 release and delays in its "Behemoth" model, raising concerns the company is falling behind OpenAI and Google.

The talent war

AI expertise has become Silicon Valley's scarcest resource. Reports suggest Zuckerberg is offering nine-figure salaries for top researchers.

"The key to winning isn't just computing power - it's the people who know how to use it," Stanford AI researcher Margaret Chen said.

Tech giants are also acquiring AI startups to absorb their talent and technology. Microsoft invested $13 billion in OpenAI, while Google acquired DeepMind for $500 million.

What’s next?

The AI talent war shows no signs of slowing. Industry analysts expect compensation packages to continue rising as companies compete for a limited pool of experts.

"We're seeing signing bonuses that exceed what CEOs made a decade ago," tech recruiter James Morrison said. "And this is just the beginning."

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