THE ALGORITHM DAILY“Your Daily Dose Of AI News.” Top Story: Meta Partners With Midjourney to Boost AI Image and Video ToolsMeta has struck a licensing deal with Midjourney to use the startup’s AI image and video generation technology in future products. Meta Chief AI Officer Alexandr Wang said the move is part of an “all-of-the-above” strategy that combines top talent, massive compute, and partnerships with leading players. The collaboration could help Meta compete with rivals like OpenAI’s Sora, Google’s Veo, and Black Forest Lab’s Flux. Meta already offers its own AI tools, including Imagine for images and Movie Gen for videos.
The deal is Meta’s latest push to stay ahead in the AI race, following big hires, a $14 billion investment in Scale AI, and the acquisition of voice startup Play AI. While financial terms remain undisclosed, Midjourney confirmed it remains independent and subscription-funded, with tiers from $10 to $120 a month. The startup, founded in 2022, is already a leader in AI imagery and recently launched its first video model. The partnership comes as both Meta and Midjourney face lawsuits over alleged copyright misuse in training data. Sam Altman Sounds the Alarm But Stays OptimisticOpenAI CEO Sam Altman has openly acknowledged that the artificial intelligence space is currently experiencing a speculative “bubble,” drawing a clear comparison to the excesses of the dot-com boom. He warned that while some investors are likely to lose “a phenomenal amount of money,” others will reap huge rewards from AI’s momentum. The frenzy, he noted, is driven by “smart people getting overexcited about a kernel of truth” yet he remains confident that AI will deliver a “huge net win for the economy.” Altman’s realism comes amid dramatic market reactions: tech stocks with strong AI exposure, including Nvidia, Palantir, and Arm, have seen sharp drops, with the Nasdaq dipping 1.4% in a single day. A recent MIT study showed a sobering statistic: 95% of corporate AI initiatives are failing to drive measurable financial returns. Yet Altman balances caution with ambition, forecasting that OpenAI will need to invest trillions in AI infrastructure over the coming years.
Elon Musk Open Sources Grok 2.5 AI Model
Elon Musk announced that xAI has open-sourced Grok 2.5, last year’s version of its AI model, making the model weights available on Hugging Face. Musk said Grok 3 will also be released in about six months, continuing his push to make xAI’s technology more accessible. However, engineers noted that the licensing terms include custom restrictions that could limit how competitors use the model. Grok has been a controversial chatbot since its launch, with past versions sparking outrage after promoting conspiracy theories and offensive content. Musk has since described Grok 4 as a “maximally truth-seeking AI,” though reports suggest the model sometimes draws directly from Musk’s own posts when responding to sensitive questions. The open-sourcing of Grok 2.5 adds transparency but may also invite fresh scrutiny. OpenAI Warns Investors Against Risky SPV DealsOpenAI has issued a warning to investors about “unauthorised opportunities” to buy exposure to its equity through special purpose vehicles (SPVs) and other indirect means. The company said such offers may attempt to bypass its transfer restrictions and will not be recognised, meaning buyers could end up with investments that carry “no economic value.” While not every offer is illegitimate, OpenAI urged investors to be cautious if contacted by firms claiming access to its shares.
The warning comes as interest in AI startups has fueled demand for creative investment structures, such as SPVs, which pool money for one-off deals. Some venture capitalists have criticised SPVs as a trap for inexperienced investors, or “tourist chumps.” Business Insider reports that OpenAI is not alone in cracking down on the practice, with Anthropic also restricting the use of SPVs in upcoming fundraising rounds. AI Tool of the DayFotor AI
What it does: Fotor AI is a design and photo-editing platform powered by artificial intelligence. It can generate images from text prompts, retouch portraits, remove backgrounds, enhance photo quality, and even create AI avatars or product mockups in seconds. Best for: Content creators, marketers, e-commerce sellers, and casual users who need quick, professional-looking images without advanced design skills. Pricing: Fotor AI offers a Free plan with basic tools. The Fotor Pro starts at around US $3.33/month, and the Fotor Pro+ costs about US $7.49/month annually, unlocking advanced features such as higher-resolution generations, premium effects, and unlimited editing.
AI Word of the DayClusteringDefinition: Clustering is a machine learning technique that groups similar data points based on shared features, without needing labels. It helps discover hidden patterns or natural groupings in data. Why it matters: Clustering is widely used in AI for tasks like customer segmentation, image recognition, anomaly detection, and organising large datasets. It helps models identify structure in data that isn’t immediately apparent. Example: An e-commerce site might use clustering to group shoppers by browsing behaviour, such as “bargain hunters,” “loyal buyers,” or “casual visitors”, so it can personalise recommendations. Stay tuned as we keep making sense of AI clear, simple, and straight to the point. Catch you in the next edition. Staff Writer, The Algorithm Daily |
Meta Partners With Midjourney
Meta has struck a licensing deal with Midjourney to use the startup’s AI image and video generation technology in future products.
