Dangerous Acts, $13 billion, & the Mega POD.

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THEWHITEBOX

TLDR;

Welcome back! This week, we take a look at research from two sides: a new learning mechanism that might change how AIs learn, and the crude reality of AI safety: models can be really dangerous.

Moreover, we discuss Anthropic’s latest monstrous round, OpenAI’s acquisition of StatFigs, Google’s court win, how AI is saving the day for investment bankers, and AMD’s Mega POD plan to dethrone NVIDIA.

Enjoy!

M&A

Software is Saving M&A

US software firms are driving a surge in mergers and acquisitions, particularly via the acquisition of AI startups, resulting in this year’s strongest activity since 2021.

To date in 2025, US software companies have completed around 150 AI-related acquisitions, with total spending reaching approximately $33.8 billion, surpassing the combined volume of previous comparable periods.

But is this enough to save these companies?

→ ORIGINAL ARTICLE

TheWhiteBox’s takeaway:

If you’re a regular reader of this newsletter, this is not a surprising trend; we’ve been talking about AI’s effect on the software industry for months, basically giving our reasons to believe it’s a SaaS killer.

And while acquiring AI startups to boost offerings is a logical next step, it doesn’t solve the real issue: commoditization of their businesses.

My thesis regarding AI is very consistent:

AI eliminates barriers to entry in most software markets, which in turn incentivizes competition.

With more competitors comes less differentiation; your features are now replicable.

AI features also increase your costs of goods sold (COGS) considerably, a break from the traditional model where most costs were operational (salaries, cloud costs, etc).

AIs are pay-to-use; you’re getting charged by OpenAI every time a consumer uses your AI features. This makes licenses much less profitable and adds pressure for you to go into a usage-based pricing model.

Worse, with operational costs the same unless you execute mass layoffs, gross margins (revenue minus COGS) are much lower, so SaaS companies are seeing margins getting squeezed out.

In summary, higher costs, lower pricing power, and pressure to modify your entire pricing model, all while your offering becomes increasingly commoditized.

So, while making M&A can help you get to new products faster and more attuned to the changing times, you are still dealing with the real elephant in the room: you are now probably way oversized and need to cut costs extremely aggressively.

That takes balls, and I don’t think most SaaS companies have what it takes.

ANTITRUST

Google Always Wins in the End

Judge Amit Mehta ruled that Google cannot enter exclusive search distribution deals and must share some search data with rivals, but rejected the DOJ’s push to force divestitures of Chrome or Android.

Google can still pay companies like Apple (e.g., the $20 B Safari deal) as long as payments aren’t exclusive, since banning them outright could harm partners like Mozilla.

Interestingly, the judge said generative AI has changed the competitive landscape, with examples like ChatGPT or Perplexity, so remedies aim to prevent Google’s search dominance from carrying over into AI.

The…

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