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A visit to Tuscany reveals the tussle between history and innovation

A long history and an unparalleled reputation are not necessarily assets for new owners. In 2017, when it became clear that the private French group EPI had acquired Il Greppo, Montalcino’s most revered estate, the close-knit Italian wine establishment held its breath.

Along with Barolo, Brunello di Montalcino is Italy’s most famous wine. Ferruccio Biondi Santi of Il Greppo is seen as its late-19th-century founder. His descendants continued the tradition of making grapes from his carefully selected Sangiovese vines. What would the French group, owner of Piper-Heidsieck and Charles Heidsieck champagnes, do with this Tuscan treasure?

When Giampaolo Bertolini was made CEO of the estate by EPI in 2019, he was fully aware that the spotlight was on him. He has continued to insist that any changes have been minuscule and entirely focused on quality, although the purchase of a new six-hectare vineyard in 2019 (albeit with the same soil type and elevation as Il Greppo) raised eyebrows.

When I visited Il Greppo in June, it was not the vines but the winery that caught my attention. I had just spent the morning at a brand-new Montalcino estate, Giodo, owned by Carlo Ferrini and his daughter Bianca, and I couldn’t help contrasting the ease with which they could operate with the constraints at Il Greppo.

For a start, the Biondi-Santi winery is undeniably cramped. Applications to extend it have been thwarted because it is on the site of a chapel and burial ground. The new team has had to buy a separate building to store the older vintages for which the producer is so famous.

The hand of history is evident everywhere, not least in the corner of the old winery where the desk of Ferruccio’s grandson Franco remains untouched, along with his jacket and deerstalker. Franco, in charge from 1971 until his death in 2012, famously resisted the 1990s fashion for beefing up Brunello with French grapes and more ripeness. He continued to make Brunellos that need years in the bottle and then hours, perhaps days, in the glass to reveal themselves as delicate, exceptionally long-lived expressions of the Tuscan Sangiovese grape.

The winery is basically a back extension of the Biondi Santi family’s 16th-century villa, untouched in case Franco’s 94-year-old widow wants to use it. An ancient, dusty Citroën SM sits in the garage, sinking into the weed-strewn gravel as its tyres deflate.

Compare and contrast that with the Ferrinis’ spanking new, custom-built premises on the Giodo estate east of Sant’Angelo in Colle. (They managed to buy in 2000, just before land prices in the Brunello di Montalcino zone soared.)

The spacious, beautiful and sustainably designed modern winery is carved into the hillside. It is gravity-fed, rather than using mechanised pumps to move the wine around and decorated in indigo, the colours of Florence’s football team Fiorentina. It is surrounded by freshly landscaped gardens designed to attract bees to its local flora. The flat roof, with its views of the nearby countryside, is covered with solidified lava imported from Etna, where the Ferrinis also make wine. (Maybe hauling this from Sicily to Tuscany wasn’t all that sustainable?)

Ferrini is feted as one of Italy’s most famous oenology consultants. During the course of his 45 vintages, he had time to work out the ideal design for a new winery and, as a result, says that winemaking in these premises, ready for the 2020 vintage, is “banalissimo”, meaning extremely straightforward. He has been reducing his consultancy client roster to a mere 30 in order to concentrate on this personal venture.

The Ferrinis make two wines here, Giodo Brunello and La Quinta (their “baby Brunello”), another 100 per cent Sangiovese but from their younger vines. They have six hectares of vines, all of which they planted, whose age currently varies between five and 20 years old. (One of Ferrini’s first jobs, when he was working for the Chianti Classico professional association, was to identify the best clones of Sangiovese.) The Ferrinis are free to make La Quinta as they please because it is sold simply as a Tuscan red, so they age it half in wood and half in the fashionable clay pots that the wine world now rather inaccurately calls amphora. It is delicious.

Production of a wine as historic as Brunello di Montalcino, on the other hand, is tightly circumscribed. The minimum cask-ageing period has successively been reduced but is still quite a long 24 months. I wondered whether this requirement was appropriate for the relatively delicate Sangiovese grape in lighter vintages. “We don’t question it,” Ferrini replied, shrugging. “We have three goals: elegance, elegance and elegance.” Giodo Brunello sells in Italy for about €130, while La Quinta seems to me a relative bargain at not much more than €30.

Biondi-Santi’s straight Brunello Annata (non-Riserva) sells for more than Giodo’s, and the famous Riserva bottlings can cost thousands for old vintages. History is expensive.

Bertolini and his team are engaged on a parcel-by-parcel analysis of the Il Greppo estate, aided by the ubiquitous Chilean terroir expert Pedro Parra, with a view to refining vine-growing and winemaking still further. Like so many wine estates, especially those growing Sangiovese, they are plagued by the vine trunk disease esca and are adopting Marco Simonit’s pruning techniques in an effort to minimise its predations.

This year’s exceptionally wet spring and early summer in Tuscany have exacerbated problems in the vineyard with almost jungle-like growth and inconvenient mud underfoot. Ferrini has adopted the technique of folding new shoots on to wires rather than trimming them, which he claims involves less “trauma” and discourages the vine from growing yet more shoots. Both establishments are suffering from the current shortage of vineyard labour, an especially acute problem in Montalcino, which is far from any big city.

We toured Il Greppo’s vines under umbrellas and saw the vine nursery that the new regime has been developing on what was Franco Biondi Santi’s son Jacopo’s tennis court. Bertolini’s research suggests that the famous clone of Sangiovese isolated by Ferruccio and now known as BBS 11 (Brunello Biondi-Santi from row 11 in the vineyard) is well suited only to certain parcels of the estate’s 33 hectares of vines, of which 26 are old enough to produce wine.

I was given a tasting of wine from six different parcels over the past three vintages, which certainly demonstrated huge differences between them. But the new regime says it has no intention of following the current fashion in Montalcino to release single-vineyard bottlings. It probably would be crazy to do such an anti-Ferruccio thing.

Higher insurance prices make EVs less attractive to consumers

Tesla owners must be choking on their kale smoothies. Auto insurers have rapidly boosted prices for electric vehicle cover in the past year, much more than for fossil fuel cars. Indeed, John Lewis has suspended sales of its EV policies by request of French underwriter Covéa as it reassesses the cost of repairs.

Average electric car insurance costs rose 72 per cent in the year to September, compared with 29 per cent for petrol and diesel models, according to Confused.com. The price comparison site notes that premiums for Tesla Model 3s, the most quoted EV on the site, rose more than two-thirds in the past two years. In fact, Aviva withdrew insurance policies for some Tesla models earlier this year before reinstating cover a few months later.

EV claims are typically 25 per cent higher than combustion equivalents and take 14 per cent longer for repairs, according to research from Thatcham.

Blame high replacement costs. Spare parts are difficult to source, as are specialised technicians. It does not help that EVs are relatively new propositions, so insurers have insufficient data history on their maintenance.

Batteries cause problems of their own. These are expensive pieces of kit, worth a significant part of the overall vehicle cost, about half. That can be more for models with longer ranges and greater power. They are also susceptible to minor damage.

That can cause safety concerns as even small dings to battery packs can destabilise cells, potentially causing fires and even explosions. A combination of high costs and volatile outcomes means many EVs are simply being written off for damage that traditional vehicles would survive.

EVs are on the cusp of breaking even with traditional internal combustion engines, as cheaper running costs offset the higher upfront cost of the vehicle. As higher insurance makes EVs less attractive, adoption rates will adjust accordingly.

Toyota needed software expertise, but making a startup mentality mesh with an 86-year-old giant proved challenging. Now it’s trying a new way.

TOKYO—Toyota TM 0.70%increase; green up pointing triangle sells more cars each year than any other company, and it had similarly big dreams when it created its own in-house technology startup in 2021. It picked an American tech whiz to run it and envisioned building software for its cars that would become a standard for the whole industry.

So great were the startup’s ambitions that one of its projects was building an entire new city in the foothills of Mount Fuji where it could test self-driving cars, robots and hydrogen for power production.

Then-Chief Executive Akio Toyoda said the new unit would help Toyota navigate a “once-in-a-century period of profound change” in which cars become electric, internet-connected, autonomous and heavily reliant on software.

Toyoda said the company would be called Woven Planet, using the English words, a reference to Toyota’s origin as a manufacturer of automatic looms in the 1920s. He took a 5% stake in the venture, personally investing $34 million to show his commitment.

Now, the dreams of Woven Planet have been curtailed. While the company maintains that its ultimate vision remains in place, Toyota’s full release of software that would enable drivers to upgrade their cars wirelessly has been pushed back and the new city has yet to open. After three years of slower-than-expected progress and software that proved too ambitious to deliver on time, the American tech whiz has left, joking about the hair he has lost along the way.

The software unit’s early missteps, described by current and former executives, offer a cautionary tale for leaders of traditional companies who know they need a new kind of tech expertise but struggle to meld it with old aptitudes and habits. The Woven unit started with far-reaching ambitions that ultimately didn’t match Toyota’s desire for concrete software features ready to be put in cars fairly quickly. Woven struggled to connect with the changing goals of its parent, which is trying to reinvent itself while building 10 million vehicles a year.

The result was deadlines that kept getting moved forward and back—at one point, as far out as 2027 for the full rollout of the software. Today, Toyota has installed veterans of its auto-making group and brought Woven closer to the rest of the company. With its new regime and structure, Toyota and Woven say the unit’s plans are now back on track, with an early version of the software promised by 2025.

Toyota is a cornerstone of the economy in Japan, where it directly and indirectly employs millions of workers. For more than a half-century, it has set the standard for global carmakers with manufacturing principles that emphasize efficiency, waste reduction and continual improvement.

The company’s culture, built around methodical production timelines and tight control over budgets, shuns flair. Most of the top executives, including current CEO Koji Sato, are Japanese men who have spent their entire adult lives at Toyota building a career and avoiding mistakes. The company uniform isn’t a statement like a hoodie or black turtleneck but an actual uniform: a Toyota factory jacket that Sato is known to wear at internal meetings.

Toyota isn’t the only carmaker to stumble over software. General Motors halted its self-driving car operations this week due to safety concerns from regulators, after saying it was betting the company on such technologies.

Volkswagen, the world’s second-biggest automaker, spent billions and recruited an army of engineers for its own software project but ultimately got bogged down. The stumble led to model delays and contributed to the ouster of former CEO Herbert Diess.

VW and Toyota have lost ground to industry newcomers in building vehicles that resemble computers on wheels. Tesla, China’s BYD and others use software extensively to control vehicle functions, meaning that everything from battery range to autonomous-driving features can be improved via over-the-air updates, like apps on a phone.

At an internal meeting in 2020, Toyoda encouraged employees of the soon-to-start unit to dream big. He said he had struggled to encourage innovation within Toyota because it was a large organization in which decisions were often made based on precedent.

“In this uncharted era, not everything can be considered using such logical mechanisms,” Toyoda said, according to a transcript of the meeting. At the new company, he said, “I believe we can do great things. I believe we can change the world.”

Woven Planet began using high salaries to attract top foreign software engineers and acquired a string of startups, including the self-driving unit of U.S. ride-hailing company Lyft in April 2021.

For its Silicon Valley-style office, with Segway-like personal transporters and plants to promote relaxation, Toyota took space in a central Tokyo high-rise building. It was 180 miles from headquarters in Toyota City, where the company has been known to use less air conditioning and shut down elevators to cut costs.

To run Woven Planet, Toyoda picked James Kuffner, a jeans-and-T-shirt-clad roboticist who had been with the carmaker since 2016, after serving as part of the team that created Google’s self-driving car. Kuffner, now 52, managed Woven Planet’s more than 2,000 employees and was also given the informal side job of mentoring Toyoda’s son, Daisuke, 35, who took an executive role at the company. Kuffner made the equivalent of nearly $9 million in the year ended March 2023—some $2 million more than Toyoda, his boss.

Among the unit’s futuristic projects was a multibillion-dollar, hydrogen-powered city at the base of Mount Fuji, called Woven City, where thousands of people would live and test out self-driving cars and robot-equipped smart homes.

Another project was to create industry-leading software for Toyota’s cars.

Toyota named the concept Arene, a kind of operating system for cars that was envisioned as making it possible for drivers to wirelessly download a wide array of upgrades, just like Tesla. Arene-powered vehicles would connect to a cloud network, gathering and sharing data among millions of vehicles, smart homes and city infrastructure. Developers outside of Toyota would be able to use it to design their own applications and services for cars, and Arene would be open for use by other automakers as well, in the manner of Android, the mobile operating system that runs on many brands of smartphone.

Arene is named after a class of hydrocarbon molecules that are hexagonal, the same shape as Woven’s logo.

It was an immense vision, and difficult to pin to concrete car-launch schedules. The task of building software was also made more difficult because the company wanted it to work on many types of vehicles, including EVs as well as the hybrid, gasoline and hydrogen-powered cars Toyota remains committed to producing. Toyota said this week that EVs aren’t everything when it comes to reducing carbon emissions.

Even within Toyota and Woven Planet, many found the vision hard to understand.

Around six months ago, at an all-staff meeting at Woven, an employee’s three-word query—“What is Arene?”—was voted to the top of the list of questions posed to company management. There was a brief pause before the CEO, Kuffner, said he would answer.

Kuffner spoke at length about his original dream for Arene: saving lives with its automated safety functions and going beyond simply controlling the driving functions of a car. People who attended the meeting said they recall wondering why much of the answer was given in the past tense.

At the time, “What is Arene?” was the very question being debated by management at Woven Planet and Toyota. Development of the platform was taking longer than Toyota had expected. At one point, the goal was to put out a full-fledged version of the platform in 2025, but groups planning Toyota’s next-generation car lineup began to expect its delivery to be pushed back to 2027.

At a product-development meeting last year, then-CEO Toyoda erupted after hearing from Woven Planet management that many of the software updates Toyota was aiming to release in 2025 wouldn’t be completed in time, according to people who know about the meeting.

Over the past year, Woven Planet began to shift its focus toward developing software that could be delivered soon. That meant designing software specifically with Toyota vehicles in mind, and bringing in leaders with automotive experience. For its initial rollout, Arene was re-envisioned to focus more on the in-car experience, with features that let drivers modify their cars to make revving sounds like a sports car or even drive as if they had a manual transmission.

John Absmeier, the unit’s chief technology officer, who was brought in last year after years working in both the automotive and tech industries, said the ultimate vision for Arene, including making it an industry standard, remained the same. “What has changed over the past year is that it won’t be in one big bang,” he said. “It has to be step by step.”

Changes at Woven hastened in January, when Toyoda decided to hand the reins of the automaker to Sato, a longtime engineer. Sato’s job as Toyota’s new CEO was to speed up the automaker’s slow push into electric vehicles.

Days after assuming his new role, Sato pledged to release 10 new EV models by 2026. He wanted Arene’s full rollout to be moved up to coincide with the release of those models.

Sato pushed Woven Planet to shift its focus toward making software that could be delivered soon.

Woven Planet was renamed “Woven by Toyota” to incorporate the Toyota brand. Longtime Toyota executives such as former Chief Financial Officer Kenta Kon and Executive Fellow Koji Kobayashi joined the software unit’s board.

Bonuses for the year ended in March of 2023 were slashed due to missed targets and timelines, employees at Woven by Toyota say. Former CEO Toyoda transferred his stake in the company to Toyota, making Woven by Toyota a fully owned subsidiary. Toyota said it proposed to buy Toyoda’s shares of Woven for about $670,000 more than he originally paid for them, based on a third-party valuation.

In an internal publication, the company said Toyoda gave up his shares because of concern over conflict of interest if he was simultaneously chairman of Toyota and a shareholder in a firm that develops products for it. “My feelings toward Woven by Toyota, which I consider like my own child, have not changed,” it quoted Toyoda as saying.

In October, Kuffner gave up his job after 2½ years in the role to Hajime Kumabe, who came from Denso, Toyota’s top auto-parts supplier. Kon, the former Toyota CFO, has assumed the informal role as Daisuke Toyoda’s mentor, people inside Woven said.

Kuffner is now a senior fellow at Toyota, working on digital-skill development and education within the company in addition to software development.

Toyota says Arene will debut in some vehicles in 2025, with a full-scale rollout planned for 2026. The software will initially be designed for Toyota vehicles only.

At an auto show in Tokyo earlier this week, Toyota demonstrated features of Arene, including one that enables a driver to point a finger at surrounding locations while driving and receive information on them. That and other advanced features would be ready in 2026 or potentially later, people working on the technology at Woven said.

“Learning from failure, Toyota now has clearly defined what it needs to do—what it needs to prioritize—and it has a clear-cut product plan aimed at 2026,” said Takaki Nakanishi, an automotive-industry analyst and author of a recent book detailing the changes in Toyota’s EV and software strategies.

“The question is whether Toyota has found what will ultimately be a successful model in the long run,” Nakanishi said. “The age of Kuffner is over and what started out as a company with a California venture spirit now has a president from Denso—it’s like a pure Japanese company.”

At Woven by Toyota, some employees say they are having trouble adjusting to the new marching orders. Innovative software isn’t something that can be ordered and delivered on a strict deadline like a brake pad or a tailpipe, they say. Others say they have more confidence in their ability to get projects to market now that Toyota has stepped in.

Woven’s chief operating officer, Sinead Kaiya, a longtime software-industry executive and one of the few women in the executive ranks, recently left the company. A few months ago, employees at Woven started a union to respond to what some call unease about the company’s direction, among other issues.

Absmeier, Woven’s CTO, said he believes the unit maintains the right elements of startup culture, while now “being in lockstep and full alignment with Toyota.”

Toyota, like the industry in general, “has stumbled over time to try to change,” Absmeier said. He said the company has the foundation and road map for its software and “now it’s execution and bringing it to scale.”

Under Daisuke Toyoda’s supervision, construction of the first area of Toyota’s Woven City is due for completion next year, and Woven is currently recruiting potential residents.

In late September, Woven held a farewell party for Kuffner at its headquarters in Tokyo. Employees gathered near the company’s sprawling canteen area and executives including Absmeier, Kon and Daisuke Toyoda gave remarks thanking Kuffner for his work.

Woven’s new CEO, Kumabe, who had worked with Kuffner on software-development projects in the past, said his intention wasn’t to abandon the previous chief’s visions but to turn them into reality.

Kuffner looked tired, people at the event said. During his turn to speak he choked up, saying he was thankful for the experience and would miss his former colleagues in his new role. Another thing the American executive said he would miss: the amount of hair he used to have before taking the job.

China just pulled out some heavy artillery in the global tech cold war, though it hasn’t fired just yet.

If you thought lithium was the biggest component in a lithium-ion electric vehicle battery, you’d be wrong. That distinction goes to graphite. This humble element, better known to many from No. 2 pencils, is the basis of the anode, or negative pole, of EV batteries, accounting for up to half their weight. More than 90% of anode-ready graphite is produced in China.

Beijing called attention to this fact on Oct. 20, a few days after the U.S. ratcheted up controls on semiconductor exports to China. Graphite sales from China will require a license as of Dec. 1.

Xi Jinping’s government slapped similar restrictions this summer on two rare earth metals common in electronics manufacturing, gallium and germanium. Gallium prices have jumped by half since then, data provider Argus reports. A graphite squeeze could have a stronger impact still, says Ross Gregory, a partner at Korea-based consultant New Electric Partners. “Rare earths was a flesh wound,” he says. “Graphite would cause some internal bleeding.”

Graphite can either be mined or derived synthetically from petrochemicals. Synthetic production is more common and theoretically easier to replicate. But the pollution and carbon footprint involved can negate the underlying purpose of going green. “You’ll never see China’s huge blast furnaces in Western countries because of the environmental impact,” says Tom Kavanagh, the editor of Argus Battery Materials.

Graphite reserves are spread more evenly around the globe, with Brazil and Turkey among the leaders. China accounts for 80% of mine production, however. Virtually all the rest heads to China for processing. Competing projects are in the pilot stage. Australian-listed Syrah Resources (ticker: SYR.Australia), controls a large mining complex in Mozambique and is building a processing plant in Louisiana. (Its shares jumped 40% on China’s announcement.)

Vianode, a Norwegian outfit part-owned by Norsk Hydro (NHY.Norway) promises to make synthetic graphite while cutting CO2 content by 90%. That’s likely to cost a lot more than the Chinese model, Kavanagh predicts.

Graphite prices have actually fallen lately as China ramped up synthetic production while its economic troubles dampened domestic EV demand, says Kien Huynh, chief commercial officer at Alkemy Capital Investments, which focuses on energy transition metals. “My response to this news is the Chinese are trying to return some pricing power,” he says.

China needs to consider that past trade weaponizations have produced a response, eventually, says Marko Papic, chief strategist at the Clocktower Group. Beijing curtailed rare earth exports to Japan over a territorial dispute for a few months in 2010. Since then, its share of rare earths production has slumped from 90% to 70% as customers devised alternatives.

An all-out graphite squeeze would also affect a range of basic industries that use the element, with blowback for China’s already struggling economy. Instead, Beijing will look to “pick and choose who wins and loses” from access to its graphite, Papic thinks.

No prize for guessing who the intended losers could be. “This could severely affect U.S. auto makers as they shift from internal combustion to EVs” Gregory says.

That’s a less-than-ideal backdrop for Chinese foreign minister Wang Yi, who arrived Thursday in Washington.

“Neither side is interested in fundamentally changing their own behavior for a ‘tech peace,’” says Scott Kennedy, senior advisor in Chinese economics at the Center for Strategic and International Studies.

Frontier Communications

FYBR

-4.81%

stock has lost about a third of its value so far this year, but the communications company’s largest investor continues to buy up shares.

Frontier stock (ticker: FYBR) is off its lows so far in 2023, but it has struggled to build upward momentum. Frontier emerged from bankruptcy in 2021, focused on converting its legacy telecom network to modern fiberoptics. But the stock essentially traded sideways until this year, when a decisive slide set in. With shares in the red, Barron’s recommended buying Frontier stock in July. This script changed earlier this month, when activist investor Jana Partners disclosed that it had invested in Frontier, and planned to push for the sale of the company.

Ares Management

ARES

-0.74%

has been a steady buyer of Frontier stock since March. So far this year, It has paid more than $75 million for 3.7 million shares, an average price of $20.31 each. Ares’ latest purchase was on Oct. 18, when it paid $2.8 million for 150,000 shares, an average price of $18.93 each. According to a form it filed with the Securities and Exchange Commission, Ares now owns 38.9 million Frontier shares. It remains Frontier’s largest shareholder with a stake of nearly 16%, according to S&P Global Market Intelligence.

Ares didn’t immediately respond to a request for comment.

In response to Jana’s investment, Frontier has said that its board and management “are focused on driving long-term value for our shareholders, employees, and customers and continue to take actions that enable us to deliver on this objective.”

Google move follows Amazon investment as tech giants place bigger bets on startups racing to develop artificial intelligence

Google agreed to invest up to $2 billion in Anthropic, building on its earlier investment in the artificial-intelligence company and adding fuel to the race between startups trying to achieve the next big breakthrough in the emerging technology.

Google invested $500 million upfront into the OpenAI rival and agreed to add $1.5 billion more over time, people familiar with the matter said. The investment follows a separate commitment Amazon AMZN 6.83%increase; green up pointing triangle made last month to invest $4 billion in the company, which was founded by former OpenAI engineers in 2021 with the goal of developing rival generative AI models.

Google, owned by parent company Alphabet GOOG -0.03%decrease; red down pointing triangle, already invested $550 million in Anthropic earlier this year.

Google’s new deal, which hasn’t previously been reported, is the latest one that technology giants have struck with artificial intelligence businesses, which need billions of dollars to train more advanced versions of their AI systems. It reflects the excitement among tech giants to align themselves with promising startups trying to seize upon the overnight success of ChatGPT and develop their own AI-powered audio, text and image technology.

In January, Microsoft signed a landmark $10 billion investment in OpenAI, the maker of the breakout ChatGPT bot, adding to the $3 billion it had already invested and giving it a 49% stake in the company. The startup, led by Chief Executive Sam Altman, has committed to using Microsoft’s Azure cloud platform to train its AI models.

The three major providers of on-demand computing—Amazon, Google and Microsoft—have increasingly allied themselves with either Anthropic or OpenAI, the two startups with the grandest ambitions for future artificial intelligence models.

Anthropic’s founders, led by the siblings Dario and Daniela Amodei, left OpenAI two years ago after a dispute with Altman over how to safely develop artificial intelligence.

Since then, Anthropic has been in an intensifying battle with OpenAI to secure the training resources and deep-pocketed backers needed to become the technology’s leaders. Anthropic offers an AI assistant called Claude that competes with ChatGPT, as well as a similar tool it sells to businesses.

Anthropic’s two megadeals with Amazon and Google mean it has raised almost $7 billion in the past year alone. Anthropic has also struck large deals with Amazon and Google to train and run its models.

The AI company was largely bankrolled by Sam Bankman Fried’s FTX until the crypto exchange collapsed last year, pushing Anthropic to find other backers. It turned to the cloud giants as well as more traditional Silicon Valley investors like Spark Capital and Menlo Ventures. Earlier this year, it achieved a valuation of $4 billion.

Anthropic has told investors that the leaders of the AI race could be cemented as soon as next year and has painted a rosy picture of the future where AI tools could lead to virtual assistants, more intelligent search engines and more advanced content generation for things like movie scripts and videogames.

Google has bet big on AI as it tries to catch up to Amazon and Microsoft in the lucrative cloud-computing market, hoping the new software will encourage corporate customers to increase spending.

Shares in parent company Alphabet have fallen more than 10% since it announced lower-than-expected sales growth in Google Cloud during third-quarter earnings on Tuesday, dampening enthusiasm for the unit’s AI push. Google executives said during an analyst call that some customers had recently reduced spending, and the company would continue investing aggressively in cloud.

Besides Anthropic, Google has invested in the AI startups Runway, a maker of video production tools, and Hugging Face, an open-source software service. Google has also spent billions developing its own sophisticated AI systems, including an unreleased algorithm called Gemini that it hopes will compete directly with the technology powering ChatGPT.

Lawsuit claims Mike Jeffries ran trafficking operation and coerced men into sex; retailer has said it is investigating the allegations

Abercrombie & Fitch ANF 0.07%increase; green up pointing triangle was accused in a lawsuit of enabling former chief Mike Jeffries to run an alleged sex-trafficking operation for years.

Jeffries ran Abercrombie from 1992 until 2014 and built the brand into a global fashion giant around sexualized marketing. The CEO allegedly used promises of a job at Abercrombie to lure young men to locations around the world and coerced them to have sex with him and others, according to a lawsuit filed Friday in Manhattan federal court.

The lawsuit, which seeks class-action status, follows a recent BBC investigation where several men made similar claims against Jeffries.

A spokeswoman for Abercrombie declined to comment on the lawsuit, which seeks unspecified financial damages. Abercrombie said earlier this month that it had engaged an outside law firm to conduct an independent investigation into the allegations and that the company was “appalled and disgusted” by them.

The lawsuit was brought by David Bradberry, who alleged that Jeffries victimized men with the help of a network of co-conspirators that included Abercrombie. The suit estimated that “dozens and likely over a hundred young models” were victims.

Bradberry’s lawyers also represented Jeffrey Epstein’s accusers who sued JPMorgan Chase and Deutsche Bank earlier this year. Both banks, which were accused of facilitating Epstein’s sex trafficking, reached settlements totaling around $365 million without admitting wrongdoing.

“Abercrombie profited enormously from the oversexualized exploitation of young men,” said Brad Edwards, a lawyer for Bradberry and other potential class members, adding that the company had a “willingness to enable a sexually abusive and exploitative environment to drive profits.”

The suit against Abercrombie also named the 79-year-old Jeffries, the former CEO’s family office, and Jeffries’ partner Matthew Smith as co-defendants. The lawsuit said Jeffries relied on Abercrombie resources to carry out the scheme, and the company allowed him to pay “hush money” to victims using company funds. It also said Jeffries’ partner had deep and unusual connections to the company, with Smith attending private board meetings, having access to internal documents and making about 170 visits to stores over a more than two-year period.

“Mr. Jeffries will not comment in the press on this new lawsuit as he has likewise chosen not to regarding lawsuits in the past. The courtroom is where we will deal with this matter,” said Brian Bieber, a lawyer for Jeffries. Smith didn’t respond to requests for comment.

Executives at the company, which has about 760 stores across brands including Hollister, have worked for several years to reinvent the namesake Abercrombie brand since Jeffries’ departure. Since 2017, the CEO has been Fran Horowitz, who joined the company in 2014.

Jeffries took the helm in 1992, when Abercrombie & Fitch was part of Leslie Wexner’s retail empire, which included Victoria’s Secret. Wexner hired the retail veteran to revamp what was then a money-losing brand that he had purchased in 1988.

Under Jeffries’ leadership, Abercrombie created a “Look Book” of rules for stores and hired college students to staff them. The company used sexually themed ads and shirtless male greeters to create a cult following with teens, who clamored for its logo-emblazoned T-shirts and sweatshirts. Jeffries stepped down in December 2014 following a string of poor results.

The BBC recently published an investigation that found a highly organized network employed middlemen to track down young men for sex events around the world with Jeffries and Smith. Some of those young men, including Bradberry, accused Jeffries and other men of sexual assault, according to the BBC’s reporting.

Bradberry said in the lawsuit he was approached in 2010 by a man who presented himself as an agent allegedly for young stars. The agent arranged a meeting with a modeling scout who told him that unless he allowed the scout to perform oral sex on him, he wouldn’t get a meeting with Jeffries. After the sex act, the scout allegedly gave Bradberry cash. Bradberry later was invited to casting events where he was sexually assaulted by Jeffries and others, the lawsuit claims.

Ahead of a casting event around May 2010, Bradberry allegedly was provided with Abercrombie gift cards where he was instructed to pick up clothes for himself. He also alleged he received prepaid travel instructions and was told to sign a nondisclosure agreement.

At Jeffries’ home in the Hamptons, the lawsuit said, Jeffries and Smith undressed in a room where other men were having sex, and Jeffries forced Bradberry to take a drug that made him lightheaded. Bradberry alleged that he was raped by Jeffries and forced to have sex with other men, while security guards in Abercrombie attire observed the activity.

Bradberry received $2,500 in cash and was then taken to other casting events in locations including Nice, France, and London—events that he thought would lead to a contract from Abercrombie, according to the suit. Instead, he said he was assaulted again. Bradberry wasn’t hired to work for Abercrombie, his lawyer said.

The lawsuit comes after the company has paid other settlements stemming from Jeffries’ tenure. In 2004, Abercrombie agreed to pay $40 million to settle a class-action lawsuit that said it had discriminated against Black, Hispanic and Asian employees related to a specific look that Jeffries preferred for store workers. The company agreed to implement programs and initiatives aimed at achieving greater diversity throughout its stores. It didn’t admit guilt in the settlement.

In 2012, Abercrombie settled an age-discrimination suit brought by a former jet pilot in 2010. Documents from the suit revealed that Jeffries and Smith established aircraft standards, including a dress code calling for boxer briefs for men, jeans being worn at the hips and an Abercrombie cologne.