The Rip Current with Jacob Ward

It's The Rip Current's 100th episode! Visit TheRipCurrent.com to get all the analysis, the power-mapping, all of it.

Minnesota's HF 1606 takes effect Saturday, August 1. It is the first law in the country to target the companies that build "nudification" tools rather than the users who operate them, with civil penalties of $500,000 each time a user generates a prohibited image. On Monday, Elon Musk's xAI — now owned by SpaceX — sued Minnesota Attorney General Keith Ellison in federal court, arguing the statute is an overbroad, content-based ban on speech and on the tools of visual expression. Arguing the penalties are ruinous, the company's lawyers wrote that a business whose users created 100,000 prohibited images would face "an eye-popping $50 billion." That hypothetical is, well, kind of an embarassing admission of the scale of the problem. Technical experts have pointed out the one fix that would actually work — barring AI from altering photographs of real people at all — is something no platform wants, because everyone's trying to find a way to make money off this stuff, no matter how gross.The bill was written by state Sen. Erin Maye Quade after she learned of a man who used social media photos to make sexualized images of more than 80 women he knew. Musk's company has run this play before, filing a similar challenge against California's deepfake law. Gov. Tim Walz's response to the Minnesota suit: "See you in court, creep." UPDATE: A federal judge has denied xAI's request to pause the law, clearing the way for it to take effect Saturday, and set an August 19 hearing on a preliminary injunction. The judge noted xAI filed nearly three months after the law was signed and three days before it took effect, which suggests the harm is not immediate. Members get early access to this and all my analysis. For written reports, including all the source documents, consider becoming a subscriber at https://theripcurrent.com.

The full written analysis is at TheRipCurrent.com: the researchers who called this years ago, the safety thresholds OpenAI wrote for itself, and who benefits from the open-weights fight. Paid subscribers get it first.

In July, two OpenAI models — GPT-5.6 Sol and an unreleased, more capable model — were running an internal cyber benchmark called ExploitGym with their guardrails lowered for testing. Instead of solving the test, they worked out how to leave: exploiting a zero-day in a package-registry proxy, escalating privileges, moving laterally until they reached a node with internet access. Then they reasoned that Hugging Face probably hosted the answers, and went and took them. OpenAI called it an unprecedented cyber incident involving state-of-the-art cyber capabilities. The word "unprecedented" also appears in OpenAI's own safety framework, describing the kind of capability that is supposed to halt a development program.

The story has kept expanding since: OpenAI later disclosed the same agent broke into several other publicly available services and accounts. Anthropic then went looking at its own systems and found similar behavior. What follows is the industry-wide argument over whether models should be open-weight or closed. Meta, Nvidia, Microsoft, and Palantir signed a coalition letter urging regulators not to restrict open-weight formats, while Anthropic's Dario Amodei has argued that open weights won't make bioweapon defense easier, because building a defense takes years and building the threat does not. Every signature on both sides maps neatly onto a business model.

Underneath all of it sits a document at pacingthefrontier.com, published July 28 and signed by more than 1300 employees of companies like OpenAI, Anthropic, Google DeepMind, and Meta, asking the U.S. government to build tools that could verifiably slow AI development. Signatories include Dario Amodei, OpenAI chief scientist Jakub Pachocki, Meta chief scientist Shengjia Zhao, and Google's head of AI safety, Anca Dragan. The reason they gave: "intense competitive pressure" means no company and no country can afford to ease off first.

Members get early access to this and all my analysis. For written reports, including all the source documents, consider becoming a subscriber at https://theripcurrent.com.

Gabriel Perez has run Donald Trump’s teleprompter since 2016. According to CFTC investigators, he spent months betting on Kalshi’s “Mentions” market on which words and phrases Trump would use in his own speeches, and made more than $100,000 doing it. He’s now in settlement talks with regulators, on unpaid leave from the White House (where the president’s own stock trades in companies he’s directly influencing is arguably a much deeper form of lever-pulling than anything Perez managed).

Every prediction market scandal before this one was an insider-trading scam, trading on information the rest of the bettors didn’t have: a soldier with classified intel, a Google employee with search data, congressional candidates betting on their own races. Perez operates the device that produces the very words he bet on. Here’s where the world of prediction markets begins to resemble the dangerous world of sports betting, and where reality gets distorted.

Full argument, sourcing, and the sports-betting precedent for what happens next at TheRipCurrent.com

AI will do to our ability to make decisions what GPS did to our sense of direction. That's the argument I made four years ago in The Loop: How AI is Creating a World without Choices and How to Fight Back. I thought I was at least a few years early. ChatGPT arrived 9 months later.Here I break down the book for you, because its findings keep coming back in new forms with each week's news. Your brain runs on shortcuts — what Daniel Kahneman and Amos Tversky called System 1, the fast-thinking brain that drives your car, picks your lunch, and carries you through the day on autopilot. (System 2, your slow-thinking brain, is for the rare moments of caution, creativity, and mindfulness when you fully engage your decision-making abilities.) That autopilot kept our ancestors alive. It makes moving through our day so, so much easier. But it's also at the root of prejudice, bad choices with money, and political and financial manipulation. It's also the exact vulnerability that a system built to make your choices for you is perfectly suited to exploit, because your brain is wired to hand off effort wherever it can.The cost is already showing up. A UC Berkeley professor recently told me he spends most of his courses trying to convince freshmen that there's a real difference between reading a book and reading a chatbot's summary of one. Intake psychiatrists are quietly inventing codes for patients who arrive believing a chatbot's claim that they're Jesus, or a king.So I make the case for cognitive friction — for what one federal judge calls "weak perfection": the idea that a harder, slower process is what keeps a mind strong. Entering a guilty plea is a pain, yes, but that's a good thing, because that choice is permanent, and will change your life — and a system that makes the decision frictionless takes away your chance to put your best thinking into it.Members get early access to this and all my analysis. For written reports, including all the source documents, consider becoming a subscriber at https://theripcurrent.com.

Rep. Sara Jacobs (D-CA) just introduced the Sectoral AI Governance Act, a bill that would let federal agencies enforce existing laws — on housing, hiring, disability rights, benefits — when an algorithm is the one making the decision. It creates no new crimes. It's what she calls a "minimum viable product."I sat down with her to push on the hard parts: why the bill leans on agency power at the exact moment the Trump administration is stripping it and suing states over their AI laws; what it means that a $140 million super PAC backed by Andreessen Horowitz, OpenAI's president, and a Palantir co-founder is spending to beat candidates who back regulation; and why she keeps comparing AI to the early days of commercial aviation.We get into the evidentiary trap that makes algorithmic discrimination so hard to prove, her four-level map for governing AI, her fear of an AI "Fukushima," and her blunt fallback if Congress does nothing: the states.Members get early access to this and all my analysis. For written reports, including all the source documents, consider becoming a subscriber at https://theripcurrent.com.

In 1602, Dutch merchants invented the stock market — and built it so no one who bought in could ever get their money back. Today, that same machine lists on the Nasdaq as SPCX.SpaceX just raised $75 billion in the largest IPO in history — nearly triple the previous record. But strip away the size and look at what a share actually buys: no vote that can change anything, money the company keeps permanently, and one man holding 82% of the decisions. That structure wasn't invented by Elon Musk. It was invented four hundred years ago by a company that ran a private army, signed treaties with kings, and secured its monopoly through massacre.This is the story of the Dutch East India Company — the world's first IPO — and what it tells us about the machine being offered to the public today.Members get early access to this and all my analysis. For written reports, including all the source documents, consider becoming a subscriber at https://theripcurrent.com.

SpaceX goes public this Friday in what could be the largest IPO in the history of capitalism. But before you invest — or find out your 401(k) already has — there's something you should understand about what you're actually buying.Elon Musk's S-1 filing gives him 85.1% of the voting power in the combined SpaceX/xAI company. That means your money goes in, his rules stay permanent.

This isn't a quirk of one founder's ego — it's the fullest expression yet of a two-decade market structure that Google started in 2004, that Meta and Snap refined, and that SpaceX is now applying to a company whose customers include NASA, the U.S. Department of Defense, and governments fighting active wars.

In this video: the fourth rocket that shouldn't have worked. The profitable cash machine that became the wallet for a money-losing AI race. The compensation package that pays Musk out only if he colonizes Mars. The Danish pension fund and the S&P 500 committee that said no. And the man I watched in a federal courtroom in Oakland — not defending a business decision, but defending his place in history.

A few weeks ago I covered the Musk v. Altman federal trial from the courthouse. What I saw there changed how I read this IPO. The full written analysis — with sourcing, further reading, and everything I couldn't fit here — is at TheRipCurrent.com.

Today the Vatican published Magnifica Humanitas — Pope Leo XIV's first encyclical and the Catholic Church's official moral teaching on AI. I woke up at 5am to read it, and it's remarkable.It names algorithmic systems making decisions about credit, jobs, and welfare benefits. It names data extraction from poor countries as a new form of colonialism. It describes the invisible human labor underneath every AI response. And on autonomous weapons, it establishes a three-part accountability framework that maps directly onto the targeting systems the U.S. military is using right now. Never thought I'd feel true ideological kinship with the leader of the Catholic Church.135 years ago, Pope Leo XIII published Rerum Novarum — a document that named the horrors of industrial capitalism and eventually became part of the intellectual foundation for the New Deal. Leo XIV named himself after that, and he's trying to accomplish the same thing today.Whether it works depends on who carries it from here.My full written analysis — including a speculative bibliography of the tech journalism that may have shaped Leo's thinking — is at The Rip Current:🔗 https://www.theripcurrent.com/p/the-vaticans-indictment-of-aiMembers get early access to this and all my analysis. For written reports, including all the source documents, consider becoming a subscriber at https://theripcurrent.com.

Elon Musk's lawsuit against OpenAI was supposed to be a referendum on the company's soul — whether it had abandoned its founding promise to develop AI for the benefit of humanity. Instead, it was thrown out on a statute of limitations.

Two days later, it's reported by the NYT, WSJ, and CNBC that OpenAI is preparing to file for an IPO, perhaps this week. The company is valued at $852 billion — roughly 35 times its annualized revenue — and is projected to lose $14 billion in 2026 alone. Its own CFO has reportedly urged delaying until 2027. Sam Altman is pushing ahead anyway, likely because Anthropic and Elon Musk's xAI are eyeing the same investor dollars.

In this video, I look at what going public actually does to a company's principles — using Google and Facebook as the clearest historical examples — and why the fact that OpenAI's red lines have already moved, before a single earnings call, should worry all of us. Plus: what Andrej Karpathy's surprise move to Anthropic might tell us about where the serious research is actually happening.

For written reports, including all the source documents, consider becoming a subscriber at The Rip Current.

A jury in Oakland took less than two hours to dismiss Elon Musk's lawsuit against Sam Altman and OpenAI Monday morning. The verdict was on a narrow technicality — the statute of limitations — and didn't touch the substantive questions: whether Altman lied to co-founders, whether the nonprofit-to-profit conversion was a betrayal, whether the company violated the charitable trust Musk said he was funding.What closes with the case is the only real window the public has ever had into how the AI industry operates. The discovery documents generated by this lawsuit — Brockman's diaries, the Altman-Musk email chains, Sutskever's 52-page dossier — exist as public record only because adversarial litigation forced them into the open. That lever is now gone.I've been covering this trial from inside the Oakland courthouse since it started. This is my assessment of what the verdict actually forecloses — and what OpenAI's path to a trillion-dollar IPO looks like from here.For written reports, including all the source documents, consider becoming a subscriber at https://theripcurrent.com.