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Welcome to The AI Report — the #1 AI newsletter for business leaders.

We believe you don’t need to be technical. Just informed.

Inside: real-world use cases and Partner Perspectives you won’t find anywhere else:

• 1. 🦾 Turn your AI enthusiasm into marketable skills with Innovating with AI 
• 2. ⚠️ Pentagon takes first step toward blacklisting Anthropic
• 3. 💼 Your Business Briefing
• 4. 💻 Get rid of your personal data from Google with Incogni
• 5. ✍️ Today’s Policy Corner
• 6. 🗞️ The News Bulletin

Want to reach 400k+ AI-focused business leaders?

TOGETHER WITH THE AI CONSULTANCY PROJECT

Become an AI consultant and deliver ‘ROI with AI’ to your clients

AI is transforming every workplace – but executives are terrified of becoming one of the companies that gets “no ROI on AI.” That’s where you come in, and how you can build a 6-figure consultancy with Innovating with AI’s proven methods for delivering fast ROI on AI projects.

Latest in AI

Pentagon moves to blacklist Anthropic

🚨 Our Report

The Pentagon asked Boeing and Lockheed Martin on Wednesday to assess their reliance on Anthropic's AI model, Claude, as it prepares for a potential "supply chain risk" designation. That penalty is typically reserved for companies from adversarial nations, such as Chinese tech giant Huawei. Using it against an American AI company would be unprecedented.

🔓 Key Points

• The move follows Anthropic's refusal to allow Claude for "all lawful uses," blocking mass surveillance and autonomous weapons. Defense Secretary Pete Hegseth gave CEO Dario Amodei a Friday deadline to comply.

• Claude is the only frontier AI model in the Pentagon's classified systems and was used in the operation to capture Venezuela's Nicolás Maduro. Officials say clearing individual use cases with Anthropic is unworkable.

• If the designation proceeds, DOD contractors and subcontractors would likely be barred from using Claude. xAI recently signed a deal under the "all lawful use" standard Anthropic rejected.

🔐 Relevance

For enterprises, this standoff could force a choice between Claude, which many consider the top-performing AI for complex tasks, and eligibility for government contracts. The designation, if finalized, would set a precedent for how the government can pressure American AI companies over usage policies, and could reshape enterprise AI procurement strategies across defense and adjacent sectors.

The AI Report Podcast

Stanford Class Recording: How to Master AI Prompting for Creative Filmmaking (Upscaile)

THE BUSINESS BRIEFING: HR & TALENT

Kmart & Target (enterprise retail, 450+ stores, ~300,000 applications annually) were overwhelmed by high-volume, manual CV screening for entry-level roles. They replaced CVs with a 5-question AI chat interview integrated into SAP SuccessFactors, scoring candidates on defined competencies and soft skills instead of availability or prior experience.

Tool used: Sapia.ai Chat Interview™ — AI-powered structured chat interviews that assess candidate traits and automatically score against role criteria.

Result: 79.6% of interviews completed within 24 hours. Screening automated across 450+ stores in 6 weeks. Clear correlation between AI scores and on-the-job performance, with improved diversity outcomes versus community benchmarks.

The lesson: High-volume hiring improves when you standardize evaluation criteria first, then automate screening against those competencies.

Steal this: Identify one entry-level role this week and replace CV screening with a 5-question structured interview focused on soft skills. Define the top 3 competencies with hiring managers, score candidates against those traits, and shortlist based on fit instead of resume keywords.

TOGETHER WITH INCOGNI

Unknown number calling? It’s not random…

The BBC caught scam call center workers on hidden cameras as they laughed at the people they were tricking. One worker bragged about making $250k from victims.

The disturbing truth?

Scammers don’t pick phone numbers at random. They buy your data from brokers. Once your data is out there, it’s not just calls. It’s phishing, impersonation, and identity theft.

That’s why we recommend Incogni: They delete your info from the web, monitor and follow up automatically, and continue to erase data as new risks appear. 

Try Incogni here and get 55% off your subscription with code AIREPORT

THE POLICY CORNER

The EU Court of Justice ruled that processors can pseudonymize and train AI models on special-category data (health, race, biometric info) without a separate Article 9 legal basis -- if the data is non-identifying in their hands. This follows the Single Resolution Board case and applies globally to any processor serving EU clients. If your AI vendor can't realistically re-identify individuals from pseudonymized training data, they don't need independent GDPR justification. If they can still identify people, they must rely on legitimate interest with strict safeguards.

Deadline: In effect now. Applies to all EU-regulated AI training using employee, customer, or applicant data.

Your move: Audit your AI vendors this month. Ask two questions: Can you re-identify individuals from the pseudonymized data? If yes, document your legitimate interest assessment and key separation controls. Update DPAs to reflect this relational identifiability test.

AI News

• Read AI deploys largest digital twin rollout: Ada Aiken launches to 5M+ users, handling scheduling and queries via email while you're offline. FULL STORY

• OpenAI Codex and Figma launch code-to-design integration: New MCP Server enables roundtrip workflows between code and canvas, with Codex usage up 400% since January. FULL STORY

• Anthropic keeps Claude Opus 3 alive post-retirement: Model retains API access by request and gets its own essay blog, Claude's Corner, honoring preferences from retirement interviews. FULL STORY

• Google DeepMind ships Nano Banana 2: New image model combines Pro-level quality with Flash speed, rolling out across Gemini, Search, Ads, and Flow. FULL STORY

Trending AI Tools (sponsored by our tools database)

A curated look at the AI tools quietly transforming how teams work.

1. Meco is a distraction-free space for reading and discovering newsletters, separate from the inbox.

2. VenturusAI is an AI platform for analyzing and refining startup business ideas

3. DiscuroAI is a developer tool for building and testing AI workflows with OpenAI

The Money: Enterprise AI needs middleware

As foundation models commoditize, capital flows to companies translating AI into execution. Two rounds this week, both in infrastructure that sits between raw AI and real workflows signal where investors see margin: platforms that turn models into business systems employees can actually use.

Deals to know:

• Guidde (Series B, $50M) — AI-powered workflow documentation that turns employee actions into structured knowledge for automation. 4,500 customers, 90%+ retention, triple-digit growth three consecutive years. Investors: PSG Equity, Monday, Norwest Venture Partners, Entrée Capital, Qualcomm Ventures, Inkberry Ventures

• Letter AI (Series B, $40M) — Revenue enablement platform delivering real-time, deal-specific guidance by combining training content, CRM data, and customer interactions. Customers include Lenovo, Adobe, Novo Nordisk. Investors: Battery Ventures, Y Combinator, Lightbank, Northwestern Mutual Future Ventures, Stage 2 Capital

Signal: Model access is table stakes. Revenue premiums belong to companies solving the last-mile problem, connecting AI output to actual organizational behavior.

Refer a Friend

Latest episode: How to Master AI Prompting for Creative Filmmaking → Listen here
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Until next time, Martin, Arturo, and Liam.

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