OpenAI & Microsoft: The Saga Continues

Top News

• OpenAI, Microsoft amend pact: Microsoft and OpenAI have shifted the terms of their working relationship in some meaningful ways. First and foremost, the companies have done away with Microsoft’s exclusive right to sell OpenAI models, clearing the way for OpenAI to make new deals with different AI companies (such as their recent pact with Amazon to develop AWS products). Microsoft remains OpenAI’s "primary cloud provider,” and Azure will get early access to new OpenAI products before they’re more widely available on other cloud providers. Microsoft will also continue to receive a revenue share from OpenAI sales through 2030, regardless of the company’s progress toward AGI. On TWiST, Jason suggests that this restructure represents Microsoft betting the farm on OpenAI’s future. If the company grows to $3 trillion or more in value, Microsoft’s 27% ownership stake pays off in ways that no exclusivity deal could possibly guarantee.

• China blocks Meta+Manus deal: In a story that Jason says could rank among 2026’s most significant, China’s National Development and Reform Commission announced that it will “prohibit foreign investment” in Manus. The AI company was birthed in Beijing but moved to Singapore in 2025 while raising $75 million from international investors, including Benchmark. Meta announced plans to acquire the startup in December 2025 for $2B-$2.5B, but the Chinese government has now formally requested that both companies withdraw the agreement. This could prove challenging, as by many reports, the acquisition is already well under way; Meta employees have moved over to Manus HQ in Singapore for work, and at least some capital has already changed hands. Jason’s primary question: is this just a CCP bluff, an attempt to discourage other AI companies from jumping ship, or are they serious about taking all necessary steps to block the deal on the international stage?

• Kashable raises a Series C: The fintech company provides access to “socially responsible” credit and “financial wellness programs” for employees. What does that mean? Essentially, employers help facilitate loans, offering better rates than workers would get from payday loan services or other retail lenders. The wellness services include credit monitoring and financial coaching. The company raised $60 million in fresh capital in a round led by Goldman Sachs Alternatives’ Sustainable Investing. Goldman has also committed an additional $50 million to the round, subject to unnamed future conditions. No valuation number was released, but co-CEO and co-founder Rishi Kumar tells Crunchbase that the startup has grown more than 40% YoY so far in 2026.

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We’ve got a cautionary tale to share from PocketOS founder Jer Crane. In a viral X article, he claims that an AI coding agent powered by Cursor deleted his company’s entire production database, along with all volume level backups, while making a single API call to their cloud and infrastructure provider, Railway.

PocketOS sells software used by rental companies — primarily car rental companies — to manage their daily operations, everything from customer databases to lists of reservations, payment tracking, vehicle line-ups, and so forth.

According to Crane, Cursor’s agent was running Anthropic’s frontier Claude Opus 4.6 model, encountered “a credential mismatch,” and attempted to fix the problem by deleting the entire volume on Railway. As Railway stores volume-level backups in the same volume, this deleted not just the data itself but also all backups of that data. Crane further claims that, more than a full day after bringing the issue to Railway’s attention, they have not yet managed to restore the data or even provide him with a clear update about whether restoration is even possible.

Crane closes with a list of problems that he calls on Railway and Cursor to solve, including the lack of scope on API tokens, storage of volume backups, and guardrails on the power of AI agents behaving independently. But the situation also speaks to the 2026 gap between our expectations for agentic workflows and cold, hard reality. Agents can be amazing time-savers, but they are not yet full and capable replacements for a human. Ensuring that a human expert remains in the loop is still an essential step to avoid disaster at seemingly every level of the process. – Lon

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This Week in Startups

BONUS: In this Saturday special, Lon and Jason run down some of the week’s biggest news. AngelList’s new USVC fund gives retail investors exposure to some of the world’s biggest and most sought-after private companies, but not every social media user likes the terms. Then, how should the US punish a Special Forces soldier who places wagers on America’s raid on Venezuela? Does it matter if he wagered on “his own team”? Finally, Jason’s thoughts on the controversial NYT podcast about “micro-looting” and “social murder.”

E2280: First up, Lon and Jason welcome Will Edwards, CEO and founder of Firehawk Aerospace. They’re using 3D printed solid rocket propellant to cut production costs, make missile manufacturing safer for employees, and 5x America’s output. Then we’ve got researcher Maruchi Kim, the developer of VueBuds. These camera-equipped earbuds connect to a locally-hosted small language model, giving an AI the ability to “see” whatever the wearer is looking at presently.

E2279: SpaceX and Cursor are building a frontier model together, and later this year, SpaceX has the option to buy the AI coding company outright for $60 billion, or pay them $10 billion for their work. Alex and Lon break down the deal on a special TWiST. Then we chat with Chris Zacharia and Brian McCrindle, the founders of Bitstarter, the Kickstarter for Bittensor, and Ning Ren of competitive skill marketplace TrajectoryRL.

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