Welcome back to Daily Zaps, your regularly-scheduled dose of AI news ⚡️ 

Here’s what we got for ya today:

• 🎖️ OpenAI's $200 million defense contract

• 🤺 Microsoft and OpenAI tension

• ⏰ Can AI fix “infinite workday” dilemma?

• 🤖 AI will shrink Amazon’s workforce

Let’s get right into it!

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GOVERNMENT

OpenAI's $200 million US defense contract

OpenAI has secured a $200 million Pentagon contract to develop advanced AI prototypes for both administrative tasks and frontline military operations, with an initial $2 million already obligated and the project expected to conclude by July 2026. Managed by the Defense Department’s Chief Digital & AI Officer (CDAO), this contract aims to build on existing AI capabilities by creating semi-autonomous AI agents to handle routine work.

The award marks a key step in OpenAI’s expanded focus on government applications through its “OpenAI For Government” initiative, which coordinates AI efforts across federal and state agencies. Despite excitement about AI’s potential to streamline complex government workflows, skepticism remains within the Defense Department due to concerns over AI reliability and accuracy, prompting cautious adoption with strict safeguards.

BIG TECH

Microsoft and OpenAI tension

OpenAI is proposing that Microsoft receive about a 33% equity stake in the restructured entity in exchange for giving up future profit rights. OpenAI also seeks to modify their existing exclusive cloud hosting contract, aiming to allow other cloud providers like Oracle, Amazon, and Google to host OpenAI models, which currently only Microsoft can do.

Microsoft is resisting these changes and wants additional concessions, such as extending its rights to use OpenAI’s intellectual property beyond current terms. There is also tension over OpenAI’s planned acquisition of Windsurf, a competitor to Microsoft’s GitHub Copilot, which Microsoft wants carefully managed.

The companies disagree on the definition and timing of artificial general intelligence (AGI), which affects Microsoft’s rights to revenue and intellectual property. OpenAI believes AGI is approaching sooner, while Microsoft expects it to be years away.

OpenAI is also seeking to reduce the revenue share paid to Microsoft in future years, potentially impacting Microsoft’s financial returns. The restructuring is critical as OpenAI faces a year-end deadline to complete it, or risk losing up to $20 billion in potential investment.

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BIG TECH

Can AI fix “infinite workday” dilemma?

This Microsoft 2025 Work Trend Index report highlights how modern work is increasingly overwhelmed by constant interruptions, endless messages, meetings, and fragmented focus, creating an “infinite workday” that blurs boundaries between work and personal time. The study reveals that workers are interrupted every two minutes on average, with meeting loads concentrated during natural productivity peaks and after-hours communication steadily rising.

AI is presented as a critical solution to this growing chaos, enabling organizations—termed “Frontier Firms”—to redesign work by automating routine tasks, reorganizing teams around outcomes instead of rigid functions, and empowering “agent bosses” who collaborate with AI agents to boost productivity. The report stresses that adopting AI alone isn’t enough; companies must fundamentally rethink how work is structured and time is managed to escape the current overload and unlock the full potential of AI-enhanced workflows.

CAREERS

AI will shrink Amazon’s workforce

Amazon CEO Andy Jassy announced that the company expects its corporate workforce to shrink over the next few years due to increased adoption of generative AI tools, which will automate some jobs while creating demand for others. Employees are encouraged to learn and experiment with AI to improve efficiency within smaller teams.

This shift follows significant layoffs since 2022 and reflects a broader industry trend of leveraging AI to transform operations. Amazon is deploying AI across its fulfillment network and other internal processes, viewing generative AI as a transformative technology rapidly reshaping industries and helping companies reduce costs.