The New York Times details how the AI boom has created a new tech underclass in the City by the Bay: workers who don’t work at AI firms and are watching their very high cost of living get even higher as their flush neighbors vie for the city’s famously limited housing stock. (SF’s median home price in April? More than $1.7 million.) 

As it so happens, a similar dynamic is playing out 400 miles to the south, according to the Los Angeles Times, as the already pricey L.A. real estate market prepares to absorb new wealth from the record-breaking SpaceX IPO. (Median home price in so-called Silicon Beach: $1.65 million.)

No wonder all those return-to-office initiatives are failing in California’s tech hubs—no one can afford to live anywhere close to the office.

More tech news follows. —Andrew Nusca

P.S. Anthropic said late Tuesday that the White House lifted its export controls on Anthropic’s Mythos model. Here’s some good analysis by colleague Jeremy Kahn on the ongoing tensions between Anthropic and the White House.

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Microsoft reportedly preps for thousands more job cuts

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We already knew from Xbox CEO Asha Sharma’s latest memo that her Microsoft division would likely cut jobs as part of a broader business “reset.” 

According to a new report, Xbox may not be the only unit facing layoffs.

Business Insider reports that Microsoft is planning to announce job cuts next week—thousands of them, though less than 2.5% of the company’s 220,000 workforce—that would also touch its sales and consulting teams.

In April, Microsoft offered buyouts to about 7% of its U.S. workforce, or nearly 9,000 people; about a third took them. Last year, it eliminated 6,000 roles in May and another 9,000 in July.

The reason, much like its peers, is controlling costs as AI spending consumes an ever-greater share of its overall budget. Microsoft expects to invest about $190 billion in capital expenditures this calendar year, a 61% increase from last year.

The company “has also been under pressure from Wall Street over concerns that AI could replace software services,” the report adds—nevermind Microsoft’s own AI chief predicting that professional tasks would be all but automated by the end of summer 2027.

Microsoft shares are down 20% this year to date. Peers Apple and Google, meanwhile, are up so far this year. —AN

TikTok settles lawsuit over social media harm

TikTok has agreed to settle a lawsuit claiming that the platform damaged the mental health of a 15-year-old boy who used the service from the age of 8.

The boy, who brought the lawsuit against the ByteDance-owned video service as well as Google’s YouTube, Meta’s Instagram, and Snapchat, said he became addicted to the services in a way that led to depression and anxiety. (The companies deny the allegations, arguing that they make great efforts to protect young users.)

A settlement with TikTok has been reached in principle, according to Morgan & Morgan, which represents the plaintiff, but details have not been finalized. 

YouTube settled in June. A trial involving Meta and Snap is scheduled for July 27.

If and when it begins, the trial will be California’s second involving claims that social media platforms are designed to be addictive to children. The first, which ended in March, prompted TikTok and Snap to settle while Meta and Google continued on to trial. A jury found the companies negligent and ordered them to pay a total of $6 million.

More than 3,000 lawsuits involving addiction claims against social media companies are pending in California state court—plus many more in virtually every state in the U.S. —AN

Visa, Mastercard, and dozens of fintechs launch global stablecoin

A who’s who of today’s finance industry—big banks, payment processors, crypto companies, and Silicon Valley tech firms—announced on Tuesday that they were working together on “a new stablecoin for global money movement” called Open USD.

For the uninitiated, a stablecoin is a kind of cryptocurrency pegged to another asset—in this case (and many others), the U.S. dollar. It’s meant to be stable like traditional fiat currency but still borderless, cheap, and fast like crypto.

Open USD, the consortium says, is aimed at solving three persistent issues: ease “prohibitively expensive” fees to mint and redeem stablecoins at scale (OUSD is free); allow companies to benefit from the revenues earned on the underlying reserves (they’ll receive it all, less a management fee); and give developers some influence in the direction of the asset (OUSD will be governed by a board of the stablecoin’s partners).

And just who might those institutions be, you ask? Open Standard, the asset’s governing organization, counts more than 100 partners. Among them: Adyen, Affirm, American Express, BBVA, BlackRock, BNY, Bridge, Cloudflare, Coinbase, Discover, DoorDash, Google, Grab, IBM, Infosys, NYSE owner ICE, Klarna, Mastercard, MoneyGram, Rakuten, Ramp, Ripple, Samsung, Shopify, SoFi, Standard Chartered, Stripe, U.S. Bank, Visa, and Western Union. (Phew.)

So who’s missing? You surely won’t find stablecoin-providers Circle or Tether, whose USDC and USDT compete with OUSD. Ditto PayPal and Venmo, whose PYUSD serves as another alternative. And big banks like JPMorgan Chase, Bank of America, Citi, and Wells Fargo have said that they’re working on their own tokenized deposit network that keeps them at the center of it all. As always: Follow the money. —AN

More tech

—Anthropic launches Claude Sonnet 5, billed as its most agentic model yet.

—OpenAI engineers may or may not have figured out how to halve the cost of inference.

—Amazon launches a unit to embed its engineers in outside companies to deploy custom agents.

—The U.K.’s competition regulator proposes that Apple and Google relax developer payment “steering” rules.

—Arena, Meta’s forthcoming prediction markets app, may be the result of a failed takeover of Kalshi.

—Schneider Electric will buy Cognite for $3.1 billion. An all-cash deal for the industrial AI company, which complements Aveva, its industrial software arm.

—Trump officials reportedly asked SpaceX to donate shares to Trump Accounts, the new tax-advantaged savings accounts for children.

—Comcast and NBCUniversal will split into two public companies. (Watch out, Charter.)

—The Supreme Court will hear Apple's appeal of a 2025 contempt ruling in its Epic case.