The Token Apocalypse

Governments, productivity, leaders and efficiency are steering AI's adoption now.

Welcome back,

I took a few days off (still not quite at my usual cadence) not to annoy my American readers who have been celebrating Independence Day and spending more time with family. However there are some urgent developments worth mentioning briefly. A lot of American trends are demonstrating some issues with AI actually not boosting productivity.

In my opinion a major change has taken place in June, 2026. Let me try to explain. On June 12th, 2026 the U.S. government abruptly restricted Anthropic’s Mythos class of models. This among other related things has significantly broken down trust in closed-source models and companies like Anthropic and OpenAI. It’s a big shift.

If 2025 was the year where vibe coding failed to contribute meaningful products at scale, 2026 is the year when tokemaxing led to high Claude code bills and became token-minimization where AI agents failed to demonstrate as much value as it was hoped that they would at some of the biggest and most powerful companies. This has predictably led to more widespread adoption of open-weight models out of China. This is a marked change for the future of AI and illustrates how AI has rising elements of class struggle, geopolitics, AI policy impacted risk mitigation and a problematic declining public perception and negative sentiment towards AI.

I’ve never seen such division in the AI community over closed source vs. open-source models before as I have in the weeks near the end of June, 2026. A world where the U.S. government not only puts Anthropic on a supply-chain risk sanction list (back in February) but restricts their breakthrough Mythos class of models. Where Palantir, a company embedded within the Pentagon and U.S. administration is openly questioning the value proposition of Anthropic and closed-source model makers. This made me very uncomfortable because you have someone embedded in the National defense complex making an argument for open-weight models that China currently dominates.

2 Minutes 49 seconds Clip - Alex Karp CEO of Palantir

While Palantir has business reasons to make this argument¹ (since Anthropic is likely a direct Enterprise AI competitor), to watch the Pentagon and Palantir (who are supposed to be protecting American interests) hurt the AI leadership of America with brash arguments that favor China and Chinese AI products is very disconcerting and drankly disheartening.

This is leading to a big transfer from closed-source models to open-source models that will make some of China’s AI startups way more profitable. Many businesses can’t work with AI companies that are restricted or whose models can be shut down at any time, and who are as expensive as Mythos (Fable 5) models are relative to the competition. Businesses have had to pivot. The Trump Administration have significantly damaged America’s AI leadership in the past few weeks.

Meanwhile, the build out of AI infrastructure is not slowing down, it’s speeding up.

The Mega Neo Clouds are Arriving in 2026

In early July, not only has SpaceX but now Meta and Softbank (via SB Neo) have entered the Neo Cloud arena of selling compute and developing massive datacenters with an aggressive monetization plan.