TheChek News Flow

The brand's CEO talks about the importance of the U.S. market, working with Jonathan Anderson, and how the duo plans to build on Dior's "cultural revolution."

Delphine Arnault sits in the garden of the Polo Bar at the iconic Beverly Hills Hotel talking about her whirlwind trip, which began in the Far East — with stops in Macau, Hong Kong, Beijing, Seoul and Tokyo — and now has brought her to Los Angeles for Jonathan Anderson’s first cruise show as creative director of Christian Dior.

“I have had three Wednesdays,” the chairman and chief executive officer of Dior said, smiling. “Wednesday in China, then on the plane and now here in L.A.”

And her travels were to continue after the show that evening, since she was then off to New York for more meetings before heading back to Paris a few days later.

The Asia trip was important, but more so are her stops in L.A. and New York, for America is the “It” market for Dior at the moment, as it is for most luxury brands given other once fast-growing regions, like China and the Middle East, are dealing with economic resets or, in the case of the latter, the disruptions of war.

The brand had been planning the L.A. show for about a year and accelerated the process once it opened its House of Dior on Rodeo Drive last September.

“The American market is essential for us and we invested a lot in this market with the House of Dior in New York and the House of Dior on Rodeo.

“We discussed a lot with Jonathan where to do the cruise show and we decided together that L.A. is an amazing place and that the LACMA is an extraordinary place, especially the new building,” said Arnault, who praised the museum’s collection and pointed to Francis Bacon’s triptych “Three Studies of Lucien Freud” and Henri Matisse’s ceramic wall piece “La Gerbe” as among her favorite works.

So the show Wednesday was an important one — further indicated by the fact that Bernard Arnault, chairman and CEO of LVMH Moët Hennessy Louis Vuitton, also was in town for it.

The event was the first time in two years that Dior held a show in America, the last one being in April 2024 for pre-fall under then-artistic director Maria Grazia Chiuri. The L.A. show was meant to further underpin the brand’s growth in the U.S. but also reinforce Dior’s historically strong links to America stretching back to the early days of the founder himself. As Arnault said, Dior early on recognized the importance of the U.S. market and also the growing power of Hollywood and its stars, including Ava Gardner, Marilyn Monroe and, of course, Marlene Dietrich.

“Mr. Dior — did you ever read the book ‘Christian Dior and I?’ It’s a short little book but so nice,” Arnault said. “So he came to the U.S. — the New Look was created in 1947 and he came to the U.S. his first year, the same year, in 1947. It was a very important market for him; he saw the importance of this market.”

She picks up her cell phone, which has a pink — a few shades brighter than Dior pink — case and searches it. “He says, ‘American clients played an essential role in the international success of his house. They buy fast, they buy a lot and they understood immediately the Dior style.”

Dior himself quickly took to L.A. and Hollywood, praising its “modern glamour with the sun, the cinema, the villas, the pool, the bathing suits and the stars. He was fascinated by the energy of California.”

Tapping into that energy — and the state’s clientele — is all part of Arnault’s and Anderson’s strategy to propel Dior to the next level of growth. Anderson pointed out that the day after the show would mark his one-year anniversary at the brand and while he has already shaken it up, he also admitted he is still learning.

He also somewhat shrugged off what at times has been harsh criticism of his designs — often set up in the guise of some kind of designer-style cage fight between him and Matthieu Blazy of Chanel. He admitted his Dior might not be for everyone but stressed it is a process and that while not everything he is doing now might be an immediate hit, “The money will come, and it is coming.”

As he told a group of fashion journalists at a preview of his new collection: “Working with Delphine, we are trying to reconfirm what Dior can be in the next 10 years.” In fact, sources said he has prepared a detailed strategic plan covering the next decade and has presented it to not only Arnault, but other top Dior executives as well as LVMH senior management.

“I am a very impatient person but I am learning to be patient. It is like taking a chateau you have bought and restoring it. And there are then moments that you ask, ‘Why did I buy this chateau?’”

Arnault also said Anderson is impatient — and “very competitive. I know a lot of competitive people and he’s one,” she said, smiling.

But she is equally confident that what Anderson is doing is the right path for Dior and insisted that sales of his collections have been extremely strong, especially in the U.S. “We launched his first collection Jan. 2 and it got a wonderful response from longtime customers and new customers too. There are a lot of products out of stock and we are working on replenishing them.”

The CEO, like Anderson, sees these days as early steps in the process of building the new Dior, one she has said is undergoing a “cultural revolution.” Asked what that means exactly, she said that Anderson being given purview over women’s ready-to-wear, accessories, haute couture and menswear is the first time in the house’s history that one designer is overseeing all categories.

“It is the first change of designer in 25 years so it is an evolution, a dynamic,” she said, adding that she had long talks with Anderson before choosing him and that part of the process is that “show after show [he is] taking the codes of the house and refining them, getting a little more precise.”

But she, like Anderson, also pointed out that Dior customers are often “loyal to the brand, to the designer of course, but to the brand. And we are very cautious. Nothing makes me more happy than coming here and seeing our customers wearing the styles” of both Anderson’s designs but also from the past.

As for how as CEO copes with the immense global uncertainty, from wars to the economic slowdowns and the struggles in luxury, Arnault said the main key is “you have to be agile. Both as CEO and as a brand, which has to be pretty consistent. You have to have a vision but also how you adapt to everything that is happening in the world. Also, it’s operational excellence — how you ensure you have the right product in the right place at the right time. And it’s operational excellence for the customer, making sure that whether she is buying a lipstick or haute couture, it is the same.”

Arnault has had a long relationship with Anderson, recognizing his talent as part of her other role scouting young designers for the group and years ago urging LVMH to recruit him for Loewe. Her duties as head of the LVMH Prize for Young Designers bring her in continual contact with new names, some of whom win one of the three prizes and some — such as Virgil Abloh and Demna — do not but nevertheless develop major careers.

Asked what attracts her to a young designer, she turned thoughtful before going on to list how challenging it is and how during the judging process for the prizes “it is a mix of product, talent and the person speaking about their brand in a very interesting way. The product must succeed of course.”

“There is so much competition. Being a designer is very entrepreneurial but it can also be very lonely,” since young creatives often don’t have anyone to lean on for advice.

She later points out that while Anderson has been around now for some time. “He’s 41. Very young and I am sure there is a lot of future that we can play together.”

Anthropic customers are already feeling pinched by the company’s AI price hikes, Aaron and I reported Wednesday. Making matters harder, Anthropic customers like PagerDuty and ServiceNow, which says it already blew through its full-year budget for Anthropic AI tools, can’t predict what they’ll pay this year.

One reason Anthropic costs are tough to predict, ServiceNow chief digital information officer Kellie Romack told me, is that Anthropic doesn’t automatically show customers the kind of granular data that allows them to see which of its users consume which tools; how much they use the tools, and how they’re using them. Software firms such as ServiceNow, SAP, Microsoft and Workday offer such “telemetry” data to their customers, she said.

Having that data from Anthropic would make it easier to cut off employees who are “tokenmaxxing” or using the tools inefficiently.

There are workarounds. Customers can monitor staffers’ usage of Anthropic’s tools to some extent by connecting their Claude accounts to an external analysis tool through standard application programming interfaces. But this requires customers to have access to such a tool to make sense of all that data.

ServiceNow uses this method to track employees’ daily use of Claude tools through AI Control Tower, an application ServiceNow also sells to its own customers to monitor AI usage across their workforces, she said. Romack has assigned a member of her team to monitor the data through that app.

Another Anthropic customer, insurer National Life Group, also faces a dearth of granular usage data about its employees’ Claude accounts. Nimesh Mehta, its chief information and strategy officer, said the issue makes Anthropic “great for consumer usage but not great for companies” that want to monitor individuals’ usage.

Anthropic also doesn’t offer so-called service-level agreements with customers that define how well the product will perform and customer-service response times that the customers should expect, Romack and Mehta said. Such agreements are standard in the software industry.

Romack said that while she wasn’t frustrated with Anthropic and understands that its technology and business are nascent, “I want more transparency.” (An Anthropic spokesperson did not have a comment.)

More and more companies feel pressured to use Anthropic’s costly state-of-the-art tools and are clearly going to keep using them because their leaders think they can eventually make the numbers work. Such spending is also driven by the fear that rivals will figure out the economics before they do.

On the bright side, customers can theoretically turn off such spending at the drop of a hat if they absolutely need to, or if cost-efficient alternatives materialize. That’s a far less painful lever to pull than laying off staff.

Google Follows Palantir’s Playbook

AI was supposed to make consultants obsolete. That’s not happening anytime soon.

Google is the latest AI application maker to follow Palantir’s playbook by hiring specialist consultants who help large customers use the AI products.

Google Cloud plans to hire hundreds of such specialists, known as forward deployed engineers, to help customers use Gemini AI tools, my colleague Erin reported. Google may end up moving existing employees to the new team.

The news comes after OpenAI and Anthropic said they were setting up new entities with private equity firms to help companies “deploy” AI, and after software firms that also sell AI, including ServiceNow and Salesforce, said they were hiring FDEs.

These are reminders of the excruciating challenge of getting corporations to make the most of today’s AI capabilities, which are improving seemingly every week.

Palantir has long charged customers fees for FDEs to help them develop custom AI applications using data they store with Palantir. But the company’s pricing model of charging customers based on the value or cost savings they get from Palantir software is also appealing, said Max de Groen, a partner at Bain Capital who is working with OpenAI on the AI deployment joint venture.

“The type of talent that we're hiring for DeployCo is gonna be some of the top-tier talent and some of the Palantir alums, people who have left Palantir, and others…so we are looking for that level of talent,” he told me.

OpenAI acquired a small consulting firm to bolster OpenAI Deployment Company, giving it 150 FDEs as a starting point.

Call it the SpaceXAI exodus.

More than 50 researchers and engineers working on xAI’s Grok models have left the AI lab since SpaceX acquired it in February, through layoffs, firings and voluntary departures, according to several people with knowledge of the moves. These departures come on top of the exits of all of xAI’s co-founders besides Elon Musk.

The most recent turnover has coincided with big changes at the AI group that also include the installation of new leadership from SpaceX, an unconventional deal to potentially buy coding startup Cursor and Anthropic taking on all the compute capacity at one of xAI’s two gigantic data centers.

Just this month, the leaders of teams working on coding, world models and Grok voice mode have left xAI—which Musk renamed SpaceXAI earlier this month, according to people with knowledge of the moves. Each leader had been with the company for less than a year.

More than 200 researchers worked at xAI as of late last year, according to a person with knowledge of the figure, but that number has decreased this year.

As of early May, SpaceXAI’s pretraining team was down to a handful of people, following exits including that of pretraining lead Juntang Zhuang, according to the people with knowledge of the moves. Pretraining is the critical first step in creating a new AI model. The changes this year have led some people in and around SpaceXAI to question whether it’s still committed to developing leading models, though Musk has said it’s still doing so.

Certainly, turnover among highly sought-after researchers is common at top AI labs—last year, xAI sued OpenAI for poaching its employees in a lawsuit that a federal judge tossed out in February. But people who have worked at SpaceXAI say the pace of departures has heightened this year, contributing to low morale that has made hiring more difficult.

In March, Musk said xAI hadn’t been “built right” and was “being rebuilt,” just weeks after SpaceX acquired it at a valuation of $250 billion. In May, he said xAI would be “dissolved as a separate company” and renamed it SpaceXAI. Staff from Cursor and SpaceX have been spending time at xAI’s offices speaking with employees about their work in recent weeks.

One factor that has likely contributed to turnover at the AI lab is a culture of extreme overwork under Musk, according to people who have worked at SpaceXAI. During some periods of time when he has been especially focused on the AI lab, he would require teams to meet with him seven days per week in the lab’s Palo Alto, Calif., offices, two of the people said. Musk also set deadlines for training models that some staff considered unrealistic, leading teams to cut corners that could hurt the performance of Grok models, one of the people said.

Musk’s harsh leadership style has been a point of contention in his ongoing legal case against OpenAI, which he funded for years before founding xAI in 2023. During testimony on Tuesday, OpenAI CEO Sam Altman accused Musk of doing “huge damage” to OpenAI by requiring leaders to stack rank researchers and “take a chainsaw through a bunch” of them.

Many of the recent job moves have not been previously reported, though some have been announced on social media. SpaceX did not respond to requests for comment.

Dozens of former xAI staff are on the job market, but many have landed at either Meta Platforms or Thinking Machines Lab.

Meta has hired at least 11 researchers and engineers from xAI since February, according to people with knowledge of the moves. Thinking Machines has hired at least seven people over the same period, the people said, bringing the Mira Murati–led startup’s total headcount to over 150.

Two other former SpaceXAI researchers have joined MiroMind, an AI startup founded by Chinese billionaire entrepreneur Chen Tianqiao. One of the hires, Beibin Li, briefly led SpaceXAI’s coding team before leaving the company in recent weeks.

Anthropic has also hired at least two former xAI employees this year, including xAI co-founder Ross Nordeen, who worked on its infrastructure efforts. Nordeen announced he would join Anthropic on the same day Anthropic announced its deal with SpaceXAI. He was the only member of its founding team besides Musk left at the company.

Outside of researchers and AI engineers, other notable xAI departures since February include Chief Financial Officer Anthony Armstrong and several leaders on its data center and AI tutor teams.

Apple’s Security Has Been Tough to Crack. Mythos Helped Find a Way In.

During tests in April, researchers found software issues in MacOS, one of the world’s toughest targets for hackers

Security researchers say they have discovered a new way of circumventing Apple’s AAPL 0.05%increase; green up pointing triangle state-of-the art security technology, using techniques they discovered while testing an early version of Anthropic’s Mythos AI software in April.

The researchers with Calif, a Palo Alto-based security research company, say the software they wrote links together two bugs and a handful of techniques to corrupt the Mac’s memory and then gain access to parts of the device that should be inaccessible.

It is what’s known as a privilege escalation exploit, and if it were chained together with other attacks it could be used by a hacker to seize control of the computer.

The technique is noteworthy because Apple has put so much effort into locking down MacOS, said Michał Zalewski, a security researcher who formerly worked at Google and who reviewed the Calif research but wasn’t involved in the testing.

Apple, which is deploying and testing frontier AI models to test and patch vulnerabilities, is reviewing the Calif report to validate its findings. “Security is our top priority, and we take reports of potential vulnerabilities very seriously,” a company spokeswoman said.

The bug-finding capabilities of the latest AI models from companies such as Anthropic and OpenAI have improved enough in recent months that many cybersecurity experts are now warning of a Bugmageddon, an unprecedented rash of security vulnerability discoveries that could cause headaches for the technology staffers who must patch them, and also represent an unprecedented cybersecurity risk.

Earlier this year, Anthropic’s AI found over 100 high-severity vulnerabilities in the Firefox browser over a two-week period. That is how many the rest of the world typically finds in two months.

Last September, Apple said it leveraged its hardware and operating system expertise into a technology called Memory Integrity Enforcement (MIE), which it described as “the culmination of an unprecedented design and engineering effort, spanning half a decade.”

With Claude, building the code that exploited the two MacOS bugs took five days, Calif says.

The attack couldn’t have been pulled off by Mythos alone and leveraged the very human cybersecurity expertise of some of Calif’s hackers, said Thai Duong, the company’s chief executive. That is because Mythos excels at reproducing previously documented attacks. “We haven’t seen cases where it comes up with new attack techniques,” he said. “This is kind of a new thing.”

While some of the hype around Mythos is “overblown,” Zalewski said it is possible to use the latest tools for “meaningful vulnerability research and code auditing.”

Researchers with the company were so excited about their discovery, they drove down from Palo Alto in person Tuesday to Apple’s Cupertino headquarters to present their 55-page report describing the bugs it exploited.

They plan to release details of their attack once Apple has patched the underlying issues. The bugs will likely be fixed pretty quickly, Duong said.

The White House initially opposed Anthropic’s efforts to gradually expand access to Mythos, and concerns about the power of newer AI models have upended the administration’s AI strategy, causing a reassessment of its laissez-faire approach to AI development. Federal officials are now contemplating an executive order that would grant the government oversight of the most-advanced models.

ChatGPT maker believes tech giant has failed to invest sufficiently in their partnership

OpenAI is exploring legal action against Apple over their deal to integrate ChatGPT into the iPhone, underlining the bitter competition between leading AI groups to access the iPhone-maker’s massive consumer base. 

The start-up was considering its legal options over what it sees as a lack of progress by Apple over enacting its 2024 agreement, according to people familiar with the matter.

OpenAI was concerned about a “pattern of behaviour from Apple . . . showing no interest in investing required resources to deliver on the promise of the partnership”, one of the people said.

“They are focused solely on extracting a tax for their market position,” they added. Bloomberg first reported OpenAI’s legal threat.

Apple has stayed on the sidelines as its Big Tech peers pour hundreds of billions of dollars into bets on AI models and infrastructure, instead striking deals to serve up third-party models to more than 1bn iPhone users.

The tension between Apple and OpenAI comes after the hardware giant earlier this year partnered with Google to use its Gemini AI models to power “Apple Intelligence”, its suite of AI features.

The announcement was widely viewed as a rebuke of OpenAI, which was the first AI company to partner with Apple.

The OpenAI partnership allowed Apple users to access results from ChatGPT when submitting queries to Siri and integrated the AI chatbot into Apple’s writing tools.

OpenAI is frustrated that Apple has not done more to integrate and promote its AI tools for iPhone users.

Apple is expected to announce updates with its new operating system later this year that will allow users to plug into a variety of third-party AI models. OpenAI has meanwhile poached talent from Apple’s AI team.

The AI start-up also hired Apple’s former design chief Jony Ive to work on a new device, which could become a competitor to the iPhone.

The threat comes as the ChatGPT maker faces a jury verdict as soon as this week in a case brought by Elon Musk over its transformation into a for-profit company.

OpenAI and Apple declined to comment.