Good morning, AI enthusiasts. The AI world’s biggest partnership feels ready to explode — with a new report saying OpenAI is potentially ready to drop the “nuclear option” of antitrust complaints against Microsoft.

With tensions between the two sides reportedly reaching a “boiling point,” it seems like the alliance that defined the AI boom might end with lawyers instead of AGI.

Reminder: Our next live workshop is today at 4 PM EST with Retool — join and learn how to supercharge and automate your prospect follow-ups with AI agents. RSVP here.

In today’s AI rundown:

• OpenAI, Microsoft partnership hits ‘boiling point’

• MiniMax’s open reasoner with 1M token context

• Add image generation and editing to projects

• McKinsey details AI investment ‘paradox’

• 4 new AI tools & 4 job opportunities

LATEST DEVELOPMENTS

OPENAI & MICROSOFT

😡 OpenAI, Microsoft partnership hits ‘boiling point’

Image source: OpenAI

The Rundown: The WSJ just declared that the massive partnership between OpenAI and Microsoft is at a “boiling point,” with the AI leader considering filing antitrust complaints after disputes over compute access, IP rights, and company restructuring.

The details:

• The latest argument comes over OpenAI’s $3B acquisition of Windsurf, with the company wanting to withhold the IP due to Microsoft’s rival GitHub Copilot.

• OpenAI is reportedly considering the “nuclear option” of accusing Microsoft of anticompetitive behavior and pushing for a federal review of the partnership.

• Microsoft was also a key holdout in OpenAI’s PBC restructuring, with the two sides reportedly meeting to renegotiate their partnership last month.

• OpenAI has been seeking to reduce its dependency on Microsoft, partnering with rival Google on cloud compute last week.

Why it matters: AI’s defining partnership has been absolutely frigid for a while now, but OpenAI's resort to a legal “nuclear option” would be a shocking move against its largest investor. The AI leader is desperate to break free and control its own destiny before AGI arrives, and its initial collaboration is quickly turning into competition.

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MINIMAX

🧠 MiniMax’s open reasoner with 1M token context

Image source: MiniMax

The Rundown: Chinese AI startup MiniMax released M1, an open-source reasoning model with a massive 1M token context window that achieves comparable performance to leading open models at a fraction of the training cost.

The details:

• MiniMax claims M1 has the “world’s largest context window,” handling 1M input tokens while supporting an 80k token “thinking budget” for outputs.

• While competitive across the board, M1 excels in software engineering and agentic tool use, also massively outperforming in long-context benchmarks.

• The company also introduced CISPO, a new reinforcement learning algorithm that achieved 2x faster training compared to existing methods.

• The startup said CISPO helped the model’s full training run cost just $535k and took just three weeks, dramatically undercutting the budgets of rival systems.

Why it matters: Chinese labs continue to push forward with new open-source powerhouses, with M1 pushing the boundaries for context capabilities. MiniMax’s training efficiency also shows that innovative AI architecture continues to challenge assumptions about cost being a key factor in scaling intelligence.

AI TRAINING

🎨 Add image generation and editing to projects

The Rundown: In this tutorial, you will learn how to use Flux.1 Kontext API to add professional image generation and editing capabilities to any application with simple API calls.

Step-by-step:

1. Visit Black Forest Labs playground, create a free account, and copy your API key for authentication

2. Use the Google Colab notebook provided here, replace “BFL_API_KEY” with your key, and modify the prompt

3. For editing, upload your image to Colab, update the filename, and add editing prompts

4. Copy the working code to Cursor/Windsurf and prompt: “Create a web app for image generation with this API structure”

Pro tip: Use the Pro model for development speed, then switch to Max for production quality.

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AI ENTERPRISE RESEARCH

💸 McKinsey details AI investment ‘paradox’

Image source: McKinsey

The Rundown: McKinsey released a report analyzing why many companies aren't seeing returns on their AI investments, arguing that agents are the key to unlocking its impact by reimagining business processes rather than just automating tasks.

The details:

• The firm identifies a “genAI paradox,” noting that nearly 80% of companies use the tech, but a similar number report almost no material impact on earnings.

• McKinsey says companies largely use general-purpose AI tools, which make improvements that are hard to measure and don’t show up in financial results.

• The company argues that success requires enterprises to rebuild processes around agents rather than inserting them into already existing workflows.

• The report concludes the shift is a leadership challenge, calling to end broad “experimentation phases” and drive more strategic, top-down transformations.

Why it matters: Almost every company is trying to implement AI, but few are likely willing to redesign operations completely for a new AI-driven world. While some firms may spend millions on copilots, they might find themselves leapfrogged by competitors who are willing to take the organizational leap and embrace agent-based systems.

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💼 AI Job Opportunities

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📰 Everything else in AI today

Moonshot AI launched Kimi-Dev-72B, an open-source coding model that achieves SOTA results on software tasks, surpassing rivals like DeepSeek R1, V3, and Devstral.

OpenAI added support for Anthropic’s open Model Context Protocol inside ChatGPT, allowing users to connect external tools to the platform.

TikTok released new updates to its Symphony AI suite, including image-to-video, text-to-video, and AI avatar marketing for advertising content.

Reddit debuted Reddit Insights and Conversation Summary Add-Ons for real-time analytics and auto-curated social listening for brands on the platform.

Google is reportedly planning to end its relationship with Scale AI following Meta’s investment, with Microsoft, xAI, and OpenAI also looking to shift away from the startup.

“Godfather of AI” Geoffrey Hinton said “mundane intellectual labor” is most at risk of AI displacement, with “physical manipulation” jobs being safer in the near term.

Google DeepMind partnered with creative studio Primordial Soup on “ANCESTRA,” a short premiering at the Tribeca Festival that uses Veo alongside live-action scenes.

COMMUNITY

🎥 Join our next live workshop

Join our next workshop today at 3 PM EST with Keanan Koppenaver, Technical PMM at Retool. By the end of the workshop, you’ll know how to supercharge and automate your prospect follow ups with ai agents.

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See you soon,

Rowan, Joey, Zach, Alvaro, and Jason—The Rundown’s editorial team