TheChek News Flow

Moscow seeks to use economic ties to lure US under Trump as businesses take early steps towards returning

Not long after the US and Russia sat down for their first high-level talks since Moscow’s full-scale invasion of Ukraine, one of the US’s biggest multinationals received a call.

The Russian government was planning a meeting to discuss the path for western companies to re-enter the country. Would this particular multinational, the Russian government official on the phone asked, be interested in bringing back some of its brands? 

As Moscow and Washington re-engage politically at warp speed — discussing a possible end to the Ukraine conflict and an in-person meeting between presidents Vladimir Putin and Donald Trump — the US-Russian economic relationship has become a key proxy for restoring ties.

On Monday, Trump wrote on Truth Social that he was in “serious discussions” with Putin about “major Economic Development transactions which will take place between the United States and Russia”.

The same day, Putin said Russia was ready to co-operate with the US extracting minerals from Russian-occupied areas of Ukraine, and that American companies could make “good money” from aluminium extraction in Russia.

The public comments mirror what market participants are witnessing behind the scenes: since Trump’s election, Moscow has been planting the seeds for a return of foreign businesses, even as some Kremlin-friendly voices lambast such companies for leaving and claim there may be no space left for them in the market.

David Lorello, a partner at Covington & Burling, said the Kremlin was “pitching to the United States the economic opportunities of a resolution to the war”.

Any returning companies would face formidable obstacles including emboldened local competition and an uncertain legal environment in a country that remains at war and targeted by comprehensive sanctions.

Yet few western multinationals are looking to rule out a return; many want to hold on to buyback options for their Russian businesses.

“These guys are commercial beings,” said a western veteran of the Russian market. “As Lenin [reportedly] said, the capitalist will sell you the rope by which you will hang him.”

According to the Kyiv School of Economics, 475 foreign companies have quit the Russian market since the invasion of Ukraine, while another 1,360 companies have scaled back their business there.

Kirill Dmitriev, Russia’s newly appointed special envoy for foreign economic co-operation, has claimed that US companies lost $324bn as a result of pulling out — a number disputed by the KSE — and has said US companies that left could start returning within months.

According to KSE estimates seen by the Financial Times, foreign companies have suffered at least $167bn in direct losses over three years of the full-scale war, including write-offs and court rulings that resulted in partial seizures.

More than $4bn of assets of American companies were seized, including those of ExxonMobil, JPMorgan and Universal Beverages, with US groups accounting for about a third of western companies’ overall losses.

Western executives and their advisers on Russia said it was premature to expect a surge of big-name foreign brands returning. Many endured a painful, costly process of leaving, as Moscow imposed escalating fees, regulations and pressure to sell to certain powerful buyers. At one point, two major multinationals trying to leave — Carlsberg and Danone — had their Russian businesses seized by the state.

At the same time, the Russian market has shifted since the full-scale invasion of Ukraine, with newly powerful businessmen — backed by government figures — benefiting from the spoils left behind by foreign brands.

Such players have also gained from an emboldened prosecutor-general’s office that has seized a string of Russian companies, citing the foreign passports of their owners or what they said were illegal privatisations as grounds to seize and sell them to friendly bidders.

Despite this backdrop, people working with companies that left Russia said that since Washington and Moscow held talks in Saudi Arabia this month, they had seen increasing interest in returning — particularly from the US.

“I wouldn’t say there is an avalanche, but there are a lot of companies dipping their toe in the water to see what the temperature is,” said one western executive in Moscow.

Over the past two weeks, Kremlin-friendly media outlets and Telegram channels have claimed that big-name brands ranging from fashion chains Zara and Uniqlo to Coca-Cola, Visa and Mastercard were actively examining a return.

None of the cited multinationals have publicly confirmed such plans, and people close to the companies said there were no concrete plans to immediately re-enter.

The US multinational contacted by the Russian government, which did not want to be identified, said it told the government it was too early to discuss the return of its household-name brands.

However, a representative said: “It’s quite obvious that many companies are looking for these opportunities.”

In Moscow, foreign market participants said they had seen small signs of interest. An adviser to western companies, who did not want to be named, said he had been contacted by a multinational hoping to safeguard the option it secured to buy back its Russian business.

Other people working on behalf of western businesses in Moscow said there had been tentative inquiries in the Russian real estate and advertising markets, or outreach to legal counsel about steps involved in a return.

A source familiar with Uniqlo’s Russia business said it had been in a “sleeping state” since the company suspended operations at about 50 stores. The person said reopenings were not yet being actively considered, but could be carried out quickly if the Russian economy opens up again.

“Some [foreign] companies really have started testing the waters,” said Ilia Rachkov, partner at the Moscow-based NSP law office. “There is a gentle feeling and sniffing around.”

Executives and advisers said companies producing fast-moving consumer goods or running restaurants could move rapidly.

“If you’re a Netflix or Coca-Cola or McDonald’s with a non-technology-sensitive industry with an easy-to-engage business model, then you probably come back more quickly,” said the western executive in Moscow.

Rachkov, the lawyer, said companies face a ticking timeline unrelated to the Trump-Putin talks: some received buyback options for their Russian businesses that will soon expire. 

“Many are now negotiating, bargaining. I’ve heard this about food producers, the consumer sector,” Rachkov said. “The new management demands that they remain minority shareholders in exchange for an option extension, or provide a golden parachute after the option is exercised.”

In Moscow, Putin has ordered his cabinet to prepare for the return of western companies, albeit with conditions favouring local players. The finance ministry has suggested that returning companies from so-called unfriendly countries would need approval from the government’s commission on foreign investment.

Denis Manturov, Russia’s first deputy prime minister, suggested that any retail chains planning to return would need to also open in Russian-occupied Ukraine. He indicated that conditions could be imposed on particular companies and sectors, such as a bar on foreign automakers returning to their previous market positions.

“It will no longer be possible to get [the asset] and return the way they got it and left,” Manturov said in a TV interview.

Western market participants in contact with Russian officials said they expected companies that “left and gave the middle finger” — as one of US executive put it — would have a harder time coming back than those that left quietly.

They said the road to return was likely to be easier for US companies as their government pursues rapprochement with Russia. One European executive in Moscow expressed concern about the “danger and risk for a level playing field”, while other market participants seized on comments by Dmitriev suggesting that US companies could replace European players in Russia’s market economy.

Experts and former officials said the rapprochement was unlikely to bridge the structural gap between the two economies. The US and Russia’s trade volume in 2021, the last full year before the war, was $36bn, a fraction of the EU’s $270bn trade with Moscow.

“We’re competitors on the global stage. Anything that the Russians export and in major volumes are things that the United States would also want to export in large volumes,” said Thomas Graham, a former senior director for Russia at the US National Security Council.

But that may not be immediately apparent to Trump and his entourage, said a former major US investor in Russia. “Putin thinks that Trump’s soft spot is trade and money,” they said. “If he could make an announcement about American energy companies coming back, Trump would view that as a victory.”

Ben Whitmore starts building new fund, but will they come?

Veteran fund manager Ben Whitmore launched the debut fund at his new shop, Brickwood Asset Management, yesterday.

But demand for actively managed UK equities is weak, and unease around the merits of investing in boutiques means Whitmore may face greater challenges than simply taking a ‘build it and they will come’ approach.

The investment management space is littered with the graves of boutique fund houses who had relatively short lifespans such as Sanditon, Crux and Tellworth.

Ben Yearsley, investment director at Fairview Consulting, said: “I am certainly not against investing in boutiques, but the hurdle is higher than for investing in other funds. There are more questions to ask around governance, who is the fund manager’s boss, for example? But we do own some.

“With regard to Whitmore, we owned the funds he ran at Jupiter, but see no reason to switch out of them now, because in Adrian Gosden and Alex Savvides, they have found excellent replacements. There is also a question around whether the manager will have the same level of resource at their new firm as they did previously, though the counter to that is, they may have more time to focus on the stocks at a boutique with less bureaucracy.”

Darius McDermott, investment adviser to the VT Chelsea range of multi-manager funds said he owned Whitmore’s UK fund when the manager was at Jupiter, “and was on the point of buying the global fund.”

But he said: “There are definitely more questions to ask of a boutique, mostly around governance. We are reassured that Ben Whitmore has Kevin and Dermot Murphy with him, so he isn’t a one-man band.”

Peter Dalgleish, chief investment officer at Parmenion, said: “Capital allocation doesn’t tend to vary between boutique and non-boutique. The more critical element determining capital allocation is based on the risks associated with a particular asset class/sub asset class or investment style that the fund is aiming to deliver, to ensure consistency of attractive risk adjusted returns for clients over time.”

But perhaps the most crucial fact to know about Whitmore’s new boutique relates to his old fund: since his departure the Jupiter UK Dynamic Equity fund (the new name for Jupiter Special Situations) has shrunk from more than £2bn in size to less than £1bn.

Key man (or woman) risk is real and allocators are attuned to it, particularly after the past year.

The biggest challenge Whitmore faces may be to convince fund buyers that his new fund shop isn’t a solar system where he is the sun and everything orbits around him.

Some consumers will pay almost 50% more from April as confusion mounts over price rises

Thames Water customers have expressed shock at higher than expected annual increases to April’s bills as the struggling water group “front-loads” the impact of permitted regulatory increases.

The utility, which supplies about a quarter of the UK population, was allowed by water regulator Ofwat to raise bills by 35 per cent by 2030. However, some customers have been flummoxed to receive bills that are 47 per cent higher than a year ago, as demands for payment landed on doormats and in email inboxes this week.

Thames Water says the discrepancy arises because Ofwat’s stated increases apply to the total sum billed over the five-year period, and have been front-loaded this year to fund vital infrastructure improvements. Percentage increases should be flatter in the years to 2030, though water companies are permitted to adjust Ofwat’s figures in line with inflation.

“It’s beyond scandalous for Thames Water to implement such huge financial increases,” said Ruth Hawkins, who was not prepared for the annual bill for her two-bed flat in Hackney to increase by 47 per cent from £432 to £639 this year.

Difficulties fitting water meters in blocks of flats means Thames Water estimates her water consumption using the “assessed household charge”. This year, it has increased estimates of the volumes of water used by unmetered customers on this tariff. In addition, fixed annual standing charges for all water customers have increased to £191.71, making up a bigger proportion of bills for customers in smaller properties.

Customers with water meters have also been surprised by the size of increases, although they have the option of cutting their consumption to reduce bills. Michael Martin, a financial adviser, said the annual bill for his home in Wimbledon had increased by 45 per cent this year to £1,186.

“Since 2018, the total increase in my water bill is not far off the performance of the S&P 500 index,” he said.

Rival bidders are currently circling the UK’s largest water utility as it struggles with a debt mountain of nearly £20bn and attempts to head off the threat of temporary renationalisation.

Ofwat’s permitted 35 per cent increase to bills was much lower than the 53 per cent increase Thames Water had asked for. This month, it lodged an appeal with the UK competition regulator, meaning customer bills could yet surge even higher, though a decision is not expected until later this year.

“For us to continue to deliver billions of litres of clean water and take wastewater away from millions of homes, it’s vital that we invest in our network and infrastructure over the next five years,” Thames Water said.

“We’re already helping around 450,000 customers pay their bills, and by 2030, one in 10 households could be in receipt of support.”

Thames offers a 50 per cent discount on bills for customers on low incomes who can prove their bill is more than 5 per cent of their net annual income.

It also offers a single occupier tariff for customers without water meters who can prove they live alone, which could reduce annual bills by about 10-20 per cent depending on the number of bedrooms. However, this discount is not extended to single parents.

“We would encourage any customer that is concerned about their ability to pay to reach out to us so we can assess the right package of support for their circumstances,” Thames Water added.

Almost half of households in England and Wales struggled to pay for their water over the past 12 months, while more than 8 per cent of households — or 2.5mn people — were in payment arrears, according to research published by Ofwat in January.

Ofwat said: “It is essential that all companies clearly communicate changes to bills so that customers fully understand how much they are expected to pay, and why this is the case.”

Half of all pancreatic cancer patients live less than a year after diagnosis. But researchers say there is potential for change.

Pranathi Perati was running out of time to treat her stage-four pancreatic cancer when she found out she would get another shot: a clinical trial testing a new experimental drug.

Perati’s odds were slim—only 3% of late-stage pancreatic cancer patients are still alive after five years. And half of all pancreatic cancer patients live for less than a year after their diagnosis. For Perati, the drug, daraxonrasib from Revolution Medicines, has helped keep her alive for 17 months and counting.

“Someone told me once that I hit the clinical-trial lottery, and I definitely feel that way,” said Perati, 54 years old, a molecular biologist who lives in Cupertino, Calif., and is fighting pancreatic cancer a second time. “I see a lot of hope.”

Pancreatic cancer is one of the toughest cancers to treat. Often caught late, it kills nearly 52,000 people in the U.S. each year, making it the country’s third leading cause of cancer death, behind lung and colorectal. Case rates have gradually increased, particularly among younger women, in part because of rising obesity rates.

Researchers estimate by 2030 that deaths will overtake those for colorectal cancer, as other cancers have become more treatable and are caught earlier.

But doctors in the field have a newfound sense of optimism, thanks to a wave of newer therapies that are in development. Many, including Revolution Medicines’ drug, target a gene called KRAS, which helps control cell growth. Some 90% of pancreatic cancer cases have KRAS mutations, making their tumors potentially vulnerable. Companies including Pfizer and Eli Lilly now also have KRAS-blocking drugs in early-stage human trials.

“That is the main foot-on-the-gas pedal for pancreas cancer,” said Dr. Sunil Hingorani, director of the Pancreatic Cancer Center of Excellence at the University of Nebraska Medical Center. “And we haven’t been able to find drugs until the last couple of years that actually hit it.”

Targeted drugs and immunotherapies that have revolutionized the outlook for other cancers have yet to make a significant dent for pancreatic cancer. The organ itself is hard to reach, and a bulky microenvironment of fibrous tissue and cells creates a fortress around the cancer.

Some 480 early-phase and 85 late-phase clinical trials for advanced pancreatic cancer have resulted in five new drug approvals since 2000, according to the American Cancer Society.

“Pancreatic cancer has been the graveyard for drug discovery,” said Dr. Benjamin Weinberg, a gastrointestinal medical oncologist at the Lombardi Comprehensive Cancer Center at Georgetown University.

Researchers believe that could change with newer therapies, particularly those that target KRAS. The gene acts as a switch for cellular growth, and KRAS mutations can cause cells to proliferate uncontrollably and become cancerous. Researchers considered KRAS “undruggable” for decades, until a breakthrough in the 2010s cracked open the field.

Two therapies have since been approved for lung and colorectal cancer patients with some KRAS mutations. The drugs, called inhibitors, turn off that growth switch.

At California-based Revolution Medicines, patients are now enrolling in the company’s late-stage trial for pancreatic cancers with mutations including KRAS. In an earlier-stage trial, 27% of pancreatic cancer patients had a partial or full response, according to the data released so far. Patients were able to fend off the disease for a median of 8.5 months before it progressed. More than a third of patients harboring KRAS mutations in a category called G12 responded.

“The hope really in the field is that these drugs will have some effectiveness and give us a foothold,” said Dr. Brian Wolpin, director of the Gastrointestinal Cancer Center at Dana-Farber Cancer Institute in Boston, one of the cancer centers working with Revolution Medicines. “If that works, it gives us something to build on.”

Perati was first diagnosed with pancreatic cancer in 2016, at stage two, and surgery and chemotherapy put it into remission. When Perati’s cancer re-emerged in the summer of 2020 in her lung, the mother of three worried she wouldn’t live to see Christmas. Her youngest had been a fourth-grader when she was first diagnosed, and he was now entering the eighth grade. Perati had wanted to see him graduate high school.

“I couldn’t sleep at night. I couldn’t do very much,” she said. “What if I’m not around?”

Perati underwent more surgeries. Knowing she had a KRAS G12 mutation, Perati reached out to cancer centers across the U.S., hunting for clinical trials. One that tested a combination of immunotherapy and chemotherapy failed to stop her disease and came with side effects including severe neuropathy and hair loss. In 2023, Perati got a spot on the Revolution Medicines trial. Twenty-five other patients treated by Perati’s doctor were waiting for the same chance.

Perati flew back and forth across the country for eight months, sometimes weekly, until an arm of the trial opened closer to home in California. The pill has given her some fatigue and mouth ulcers, but she feels better than she did with chemo. A lesion in her lung started progressing this past winter and was radiated, but her disease has been stable otherwise.

“Seventeen months is a lot of good time to buy,” she said. Still, Perati worries that her time on the drug might soon run out. She has started looking for more options. Her son is set to graduate high school this summer.

Eli Lilly is enrolling pancreatic cancer patients in initial studies for two KRAS inhibitors, and Pfizer’s trial started last year. Companies Bristol-Myers Squibb, Verastem Oncology and Jacobio Pharmaceuticals have reported positive preliminary results in their own early studies. Side effects have included rashes, fatigue and gastrointestinal problems.

Others are seeing promise with different therapies: Researchers last week said that a small number of pancreatic cancer patients who received a personalized vaccine after surgery still had an immune response years later. The Food and Drug Administration approved a drug called Bizengri in late 2024 that targets a rare gene fusion called NRG1.

Still, people like Perati remain outliers. Many pancreatic tumors don’t respond to KRAS drugs or grow resistant within months. Bristol-Myers Squibb discontinued a study of one of its KRAS inhibitors because of disappointing data. Some researchers are testing whether adding chemotherapy or other treatments could help the drug class work better.

“We know they are not going to come in and work on every single patient forever,” said Gregory Lesinski, associate director for basic research at Emory University’s Winship Cancer Institute. “But moving the needle even a little bit will have a tremendous impact.”

A new Switch console and a ‘Grand Theft Auto’ sequel spell a big year ahead for games, but there might be only a few winners

Surefire hits are rare in the videogame industry. Even rarer is to have two coming in the same year.

That creates high stakes for the industry this year after a tough 2024. The new Nintendo Switch console and a sequel to the blockbuster “Grand Theft Auto” franchise are both expected to be massive hits when they launch later this year.

But the halo effect for other game makers will be limited. And if either release date slips—or the products themselves disappoint—the videogame industry could be in for another growth slump. Total U.S. videogame revenue fell 1% last year to $58.7 billion, according to market-research firm Circana. That follows a gain of only 1% in 2023—and a 5% decline the year before that.

Anticipation is still high. The first Nintendo 7974 -2.11%decrease; red down pointing triangle Switch has now sold just over 150 million units to become the company’s bestselling console of all time, outselling the Wii by 48%. Nintendo also has gone eight years without a new console, a company record dating at least to the days of its NES system from the mid-1980s.

Take-Two TTWO -0.43%decrease; red down pointing triangle, meanwhile, has gone nearly 12 years since the last GTA game hit the streets. That game has sold more than 210 million units since its 2013 release, which is widely ranked as among the top five selling games of all time.

The console and game are widely regarded as surefire hits in an industry that offers precious few of those. Indeed, even long-established and successful game franchises are no longer immune to costly stumbles.

Electronic Arts warned investors in mid-January of a surprising shortfall in its soccer videogame business now anchored by “EA Sports FC.” The franchise once known as “FIFA” has been releasing annual titles since 1993 and is the company’s most valuable property. It produces more than half of EA’s net bookings each fiscal year, according to Visible Alpha estimates.

EA said in its Feb. 4 earnings call that player engagement is largely back on track. But analysts still expect its overall soccer revenue to fall 6% in the fiscal year ending in March, after at least six straight years of steady gains, according to Visible Alpha data.

“I think FC’s misfortunes highlight the challenges in keeping gamers engaged given so many distractions and competition for leisure time,” said Colin Sebastian of Baird.

The new Switch console and “Grand Theft Auto VI” will have to contend with the same dynamics. Even if they both manage to live up to sky-high expectations, the crossover effect will be limited.

The unknown release date for GTA 6 complicates planning for publishers of competing action games who want to avoid going directly against such a blockbuster. EA plans to launch its first “Battlefield” sequel since 2021 in the current fiscal year ending in March, but that could shift with GTA’s release.

Nintendo is expected to give more details about its own release plans during a virtual event scheduled for April 2. While the launch of a console typically drives sales of new games, the prime beneficiary of Nintendo’s new machine will most likely be Nintendo itself.

Other game publishers have long struggled to get traction on the company’s platforms. This is because those consoles are generally the only place to play popular Nintendo franchises such as Mario Bros. and Zelda.

Nintendo-owned titles made up 16 of the top 20 selling games for the Switch in the U.S. last year, according to Circana data. Sony, by contrast, owns only four of the top 20 games sold for its PlayStation platform over the same period.

There’s also the not-zero risk that the Switch 2 falls flat. Nintendo has been down this road before: Its Wii U console, launched in 2012, badly misfired, selling just 13.6 million units versus 101.6 million sold by the Wii. Its GameCube console in 2001 also undersold its immediate predecessor.

The first Switch console got a notable sales boost from Covid-era lockdowns, which will make comparisons even harder to live up to.

Few, if any, are expecting an outright flop, though.

Nintendo’s stock has jumped 34% over the past three months, outperforming all but two S&P 500 stocks in that time. “Very simply, the market is paying more and more attention to the quirky Kyoto company that, in the full light of day, is very clearly one of the great global media brands,” Clay Griffin of MoffettNathanson wrote in a Feb. 6 report.

Take-Two, meanwhile, has surged 41% over the past year as its two main rival game publishers, EA and Ubisoft, have notched declines in that time. The new GTA is expected to make the company the largest stand-alone videogame publisher by annual revenue, surpassing EA for the first time ever.

Much remains unknown about the new “Grand Theft Auto,” but investors aren’t waiting around to rack up their bonus points.

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Billionaire’s xAI start-up creates model with fewer ‘guardrails’ on adult content, seeking to differentiate itself from OpenAI

Elon Musk’s xAI is pushing its artificial intelligence model towards giving users more risqué answers than its risk-averse competitors, in an effort to attract users with adult content.

The start-up released its latest model, Grok 3, this month boasting comparable performance to competitors from OpenAI, Google and Anthropic. xAI’s model underpins its Grok chatbot, which has fewer “guardrails” than rivals, in an effort to align with Musk’s mission of being a “maximally truth-seeking AI”.

Over the weekend, xAI launched the ability to converse over voice with the chatbot, including preset personalities such as “romantic”, “sexy” and “unhinged” — the latter two labelled as “18+”. By contrast, OpenAI’s voice mode, which was released last year, offers a range of different voices and personalities without specific adult-centred experiences.

Musk’s move aims to drive engagement by offering a unique selling point over its competitors, according to people close to the company. They said that towards the end of training Grok 3, there was a pivot to allowing adult content and explicit responses.

“I have no doubt that Musk was seeing dollar signs and wanted to differentiate from OpenAI’s offering,” said one of the people.

They added: “It was meant to be a helpful assistant, maybe even a therapist, but . . . this is not going to encourage human relationships.”

Musk’s xAI has joined a global battle to release large language models that can be adopted by consumers and businesses. Grok is available as a standalone app as well as for users of X, the social media platform Musk bought for $44bn in 2022.

The Grok app has been downloaded about 4mn times since its launch, according to estimates from market intelligence group Sensor Tower. Its analysis shows that the week the latest model launched, daily active usage was up 330 per cent in the US.

Data from X is used to train the Grok model, while more sophisticated features are offered to paying premium subscribers of X.

According to two investors, the crossover between Musk’s X and xAI is part of the appeal to those who have backed the companies, suggesting the introduction of the chatbot has boosted engagement on the social media site.

X, formerly Twitter, has long allowed nudity and consensual pornography on the platform, in a divergence from rivals such as Facebook parent Meta. About 13 per cent of content on Twitter was not suitable for work, according to a Reuters report from 2022.

Shortly after Musk took over the platform, he explored introducing a feature to allow users to offer videos of adult content behind a paywall similar to those posted on subscription site OnlyFans, according to people familiar with the matter. However, the move was halted over fears about hosting child exploitation on the platform.

Grok’s recent changes have also raised concerns over child safety. The app has a 12+ age rating on app stores, and the chatbot is available through X. However, multiple people close to the company have raised concerns that users can access the 18+ presets without checks on age.

xAI’s terms of service state the product is “not directed at children or minors under the age of 13” but that “Grok could produce output that is not appropriate for all ages”. It added that parents of teenagers between 13 and 17 must agree to the terms and monitor usage. “The service may have content such as some suggestive dialogue, coarse language, crude humour, sexual situations, or violence,” it added.

Sexual or romantic encounters are becoming an increasingly common use case for generative AI chatbots, throwing up legal and ethical issues. Research from the University of Sydney business school found that half of respondents used AI for friendship, a third for sex or romance and nearly 20 per cent for counselling.

“AI companions offer a powerful business advantage by fostering deep emotional connections that drive high user engagement, loyalty and repeat visits,” said Raffaele Ciriello, a lecturer in business information systems at the University of Sydney. “This emotional bond boosts customer retention while enabling companies to collect sensitive personal data on user preferences.”

He added that AI companions could be “highly addictive” and lead to unhealthy dependence, calling for “cautious implementation and robust regulation, especially as AI chatbots like Grok 3 increasingly cater to human companionship and intimacy”.

Grok 3 also came under fire this week when it emerged the system had been instructed to “ignore all sources that mention Elon Musk/Donald Trump spread misinformation”.

Igor Babuschkin, xAI’s co-founder, said in a post on X that the change was made by “an ex-OpenAI employee that hasn’t fully absorbed xAI’s culture yet” and had been corrected.