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Welcome to AI Decoded, Fast Companys weekly newsletter that breaks down the most important news in the world of AI. You can sign up to receive this newsletter every week via email here. The AI arms race may be more of an arm-twist The big AI companies tell us that AI will soon remake every aspect of business in every industry. Many of us are left wondering when that will actually happen in the real world, when the so-called AI takeoff will arrive. But because there are so many variables, so many different kinds of organizations, jobs, and workers, theres no satisfying answer. In the absence of hard evidence, we rely on anecdotes: success stories from founders, influencers, and early adopters posting on X or TikTok. Economists and investors are just as eager to answer the when question. They want to know how quickly AIs effects will materialize, and how much cost savings and productivity growth it will generate. Policymakers are focused on the risks: How many jobs will be lost, and which ones? What will the downstream effects be on the social safety net? Business schools and consulting firms have turned to research to find those answers the question. One of the most consequential recent efforts was a 2025 MIT study, which found that despite spending between $30 billion and $40 billion on generative AI, 95% of large companies had seen no measurable P&L [profit and loss] impact. More recent research paints a somewhat rosier picture. A recent study from the Wharton School found that three out of four enterprise leaders “reported positive returns on AI investments, and 88% plan to increase spending in the next year.” My sense is that the timing of AI takeoff is hard to grasp because adoption is so uneven and depends a lot on the application of the AI. Software developers, for example, are seeing clear efficiency gains from AI coding agents, and retailers are benefiting from smarter customer-service chatbots that can resolve more issues automatically. It also depends on the culture of the organization. Companies with clear strategies, good data, some PhDs, and internal AI enthusiasts are making real progress. I suspect that many older, less tech-oriented, companies remain stuck in pilot mode, struggling to prove ROI. Other studies have shown that in the initial phases of deployment, human workers must invest a lot of time correcting or training AI tools, which severely limits net productivity gains. Others show that in AI-forward organizations, workers do see substantial productivity improvements, but because of that, they become more ambitious and end up working more, not less. The MIT researchers included an interesting disclaimer on their research results. Their sobering findings, they noted, did not reflect the limitations of the AI tools themselves, but rather the fact that organizations often need years to adapt their people and processes to the new technology. So while AI companies constantly hype the ever-growing intelligence of their models, what ultimately matters is how quickly large organizations can integrate those tools into everyday work. The AI revolution is, in this sense, more of an arm-twist than an arms race. The road to ROI runs through people and culture. And that human bottleneck may ultimately determine when the AI industry, and its backers, begin to see returns on their enormous investments. New benchmark finds that AI fails to do most digital gig work AI companies keep releasing smarter models at a rapid pace. But the industrys primary way of proving that progressbenchmarksdoesnt fully capture how well AI agents perform on real-world projects. A relatively new benchmark called the Remote Labor Index (RLI) tries to close that gap by testing AI agents on projects similar to those given to remote contractors. These include tasks in game development, product design, and video animation. Some of the assignments, based on actual contract jobs, would take human workers more than 100 hours to complete and cost over $10,000 in labor. Right now, some of the industrys best models dont perform very well on the RLI. In tests conducted late last year, AI agents powered by models from the top AI developers including OpenAI, Anthropic, Google, and others could complete barely any of the projects. The top-performing agent, powered by Anthropics Opus 4.5 model, completed just 3.5% of the jobs. (Anthropic has since released Opus 4.6, but it hasnt yet been evaluated on the RLI.) The test puts the question of the current applicability of agents in a different light, and may temper some of the most bullish claims about agent effectiveness coming from the AI industry. Silicon Valleys pesky principals re-emerge, irking the White House and Pentagon The Pentagon and the White House are big mad at the safety-conscious AI company Anthropic. Why? Because Anthropic doesnt want its AI being used for the targeting of humans by autonomous drones, or for mass surveilling U.S. citizens. Anthropic now has a $200 million contract allowing the use of its Claude chatbot and models by federal agency workers. It was among the first companies to get approval to work with sensitive government data, and the first AI company to build a specialized model for intelligence work. But the company has long had clear rules in its user guidelines that its models arent to be used for harm. The Pentagon believes that after paying for the technology it should be able to use it for any legal application. But acceptable use for AI is different from that for traditional software. AIs potential for autonomy makes it more dangerous by nature, and its risks increase the closer to the battle it gets used. The disagreement, if not resolved, could potentially jeopardize Anthropic’s contract with the government. But it could get worse. Over the weekend, the Pentagon said it was considering classifying Anthropic as a supply chain risk, which would mean the government views Anthropic as roughly as trustworthy as Huawei. Government contractors of all kinds would be pushed to stop using Anthropic. Anthropics limits n certain defense-related uses are laid out in its Constitution, a document that describes the values and behaviors it intends its models to follow. Claude, it says, should be a genuinely good, wise, and virtuous agent. We want Claude to do what a deeply and skillfully ethical person would do in Claudes position. To critics in the Trump administration, that language translates to a mandate for wokeness. The whole dust-up harkens back to 2018, when Google dropped its Project Maven contract with the government after employees revolted against Google technology being used for targeting humans in battle. Google still works with the government, and has softened its ethical guidelines over the years. The truth is, tech companies dont stand on principle like they used to. Many have settled into a kind of patronage relationship with the current regime, a relatively inexpensive way to avoid MAGA backlash while keeping shareholders satisfied. Anthropic, in its way, seems to be taking a different course, and it may suffer financially for it. But, in the longer term, the company could earn some respect, trust, and goodwill from many consumers and regulators. For a company whose product is as powerful and potentially dangerous as consumer AI, that could count for a lot. More AI coverage from Fast Company: OpenAI, Google, and Perplexity near approval to host AI directly for the U.S. government New AI models are losing their edge almost immediately Meta patents AI that lets dead people post from the great beyond These 6 quotes from OpenClaw creator Peter Steinberger hint at the future of personal computing Want exclusive reporting and trend analysis on technology, business innovation, future of work, and design? Sign up for Fast Company Premium.
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As national Democrats search for a unifying theme ahead of the fall’s midterm elections, a California proposal to levy a hefty tax on billionaires is turning some of the party’s leading figures into adversaries just when Democrats can least afford division from within.Vermont Sen. Bernie Sanders traveled to Los Angeles on Wednesday to campaign for the tax proposal, which has Silicon Valley in an uproar, with tech titans threatening to leave the state. Democratic Gov. Gavin Newsom is among its outspoken opponents, warning that it could leave government finances in crisis and put the state at a competitive disadvantage nationally.At an evening rally near downtown, Sanders told cheering supporters that the nation has reached a crisis point in which “massive income and wealth inequality” has concentrated power over business, technology, government and the media within the “billionaire class,” while millions of working-class Americans struggle to pay household bills.He said enactment of the proposed tax would show “we are still living in a democratic society where the people have some power.”“Enough is enough,” Sanders said to a pulse of applause. “The billionaire class cannot have it all. This nation belongs to all of us.”The senator, a democratic socialist, is popular in California he won the 2020 Democratic presidential primary in the state in a runaway. He’s been railing for decades against what he characterizes as wealthy elites and the growing gap between rich and poor. Health care union is pushing proposed tax to fund services A large health care union is attempting to place a proposal before voters in November that would impose a one-time 5% tax on the assets of billionaires including stocks, art, businesses, collectibles and intellectual property to backfill federal funding cuts to health services for lower-income people that were signed by President Donald Trump last year.Debate on the proposal is unfolding at a time when voters in both parties express unease with economic conditions and what the future will bring in a politically divided nation. Distrust of government and its ability to get things done is widespread.The proposal has created a rift between Newsom and prominent members of his party’s progressive wing, including Sanders, who has said the tax should be a template for other states.“The issues that are really going to be motivating Democrats this year, affordability and the cost of health care and cuts to schools, none of these would be fixed by this proposal. If fact, they would be made worse,” said Brian Brokaw, a longtime Newsom adviser who is leading a political committee opposing the tax. Split among Democrats comes as midterm elections loom Midterm elections typically punish the party in control of the White House, and Democrats are hoping to gain enough U.S. House seats to overturn the chamber’s slim Republican majority. In California, rejiggered House districts approved by voters last year are expected to help the party pick up as many as five additional seats, which would leave Republicans in control of just a handful of districts.“It is always better for a party to have the political debate focused on issues where you are united and the other party is divided,” said Eric Schickler, a professor of political science at the University of California, Berkeley. “Having an issue like this where Newsom and Sanders among others are on different sides is not ideal.”With the idea of taxing billionaires popular among many voters “this can be a good way for Democratic candidates to rally that side and break through from the pack,” Schickler added in an email.It’s already trickled into the race for governor and contests down the ballot. Republicans Chad Bianco and Steve Hilton, both candidates for governor, have warned the tax would erase jobs. San Jose Mayor Matt Mahan, a Democratic candidate for governor, has said inequality starts at the federal level, where the tax code is riddled with loopholes.Sanders did not mention Newsom in his nearly 30-minute speech but name-checked a handful of billionaires, including Meta CEO Mark Zuckerberg and Google co-founder Sergey Brin, as examples of a wealthy elite that in many respects “no longer sees itself as part of American society.” Sanders urges support for billionaires tax Citing protests against federal immigration raids in Minnesota, he urged the crowd to support the tax, saying Californians can show that “when we stand together, we can take on the oligarchs and the billionaires.”Coinciding with the Sanders visit and an upcoming state Democratic convention this weekend, opponents are sending out targeted emails and social media ads intended to sway party insiders.It’s not clear if the proposal will make the ballot supporters must gather more than 870,000 petition signatures to place it before voters.The nascent contest already has drawn out a tangle of competing interests, with millions of dollars flowing into political committees.Newsom has long opposed state-level wealth taxes, believing such levies would be disadvantageous for the world’s fourth-largest economy. At a time when California is strapped for cash and he is considering a 2028 presidential run, he is trying to block the proposal before it reaches the ballot.Analysts say an exodus of billionaires could mean a loss of hundreds of millions of tax dollars for the nation’s most populous state. But supporters say the funding is needed to offset federal cuts that could leave many Californians without vital services. Michael R. Blood, AP Political Writer
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Baby care brand Frida is facing online backlash after screenshots of sexual innuendos in its marketing materials began circulating on social media. Frida, which describes itself as the brand that gets parents, sells a range of baby care, fertility, and postpartum products through major retailers, including Target. Last week, an X user shared images of several products packaging, writing: sexual jokes to market baby products is actually sick and twisted @fridababy this is absolutely appalling and disgusting. The post has since gained almost five million views on X. Among the examples highlighted is a social media graphic promoting the companys 3-in-1 True Temp thermometer. The image shows the device next to a babys bottom, accompanied by the caption: This is the closest your husbands gonna get to a threesome. sexual jokes to market baby products is actually sick and twisted @fridababy this is absolutely appalling and disgusting pic.twitter.com/cXhiksoaY8— stace (@staystaystace) February 12, 2026 Other screenshots highlighted by critics include phrases such as How about a quickie? printed on a thermometer box. An apparent Instagram post from 2020 that has since resurfaced also features a baby with what seems to be snot on its face. The caption reads: What happens when you pull out too early. @pink3424 What do yall think? #fridababy #marketing #babyproducts White blank page Mumford and sons – m a r e k s Parents and critics online have accused the company of sexualizing children in its marketing choices, with posts on parenting forums calling for boycotts of the companys products. A Change.org petition to hold Frida Baby accountable has more than 4,000 verified signatures at the time of writing. Not everyone agrees with the criticism. IMO, this is akin to Disney putting in jokes that only parents will get, one Reddit user wrote. They know who the decision-makers are. Frida is marketing to the parents. Others argue the tone crosses a clear line. A statement from Frida emailed to multiple publications reads in part: Our products are designed for babies, but our voice has always been written for the adults caring for them. Our intention has consistently been to make awkward and difficult experiences feel lighter, more honest, and less isolating for parents. It continued: That said, humor is personal. Whats funny to one parent can feel like too much to another. Fast Company has reached out to Frida Baby for comment. A scroll through Fridas social media shows the brand has long leaned into a deliberately risqué tone, often relying on double entendres and innuendo to target parents. In April, it teased a new product on Instagram with the line, Take your top off. Its current Show us what your boobs can do campaign aims to destigmatize breastfeeding by spotlighting what it calls milk-making boobs. View this post on Instagram As more brands adopt informal, attention-grabbing voices online, the lesson here is clear: context matters.
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