What's Up: It's "code red" at OpenAI; Apple announces AI leadership rehaul; millions of coders love Cursor, but will it last?

Good morning. It isn’t that difficult to find examples of AI working in expected ways, such as the service desk or coding. But there is something improbable about Estée Lauder’s use of AI to help online shoppers figure out what perfume to buy. Its success suggests that AI’s role in enterprise markets is extending its range.

The WSJ Leadership Institute’s Isabelle Bousquette has the story. (More on that below.)

In one instance, Isabelle reports, online customers who use AI Scent Advisor, built for the beauty company’s Jo Malone London fragrance brand, are making nearly twice as many purchases as those who don’t. It’s an interesting demonstration of how companies are in fact able to get value from their investments in AI. My intuition is that we will see more such demonstrations in the coming year, although that success won’t be easy, universal or evenly distributed.

AI competition is intensifying, just as more enterprise users are beginning to show a return on years of investment in data, platforms and talent. There is a market to fight over. Google is applying competitive pressure on both ends of the hardware stack and everywhere in between, from chips to models. OpenAI is feeling the pressure, with Sam Altman declaring a “code red” and demanding that teams focus on strengthening ChatGPT.

Competition should lead to a broader range of AI models and infrastructure at lower cost. That will likely drive usage even higher, creating returns that can be invested in the development of better technologies. That flywheel is beginning to spin, and enterprises that have invested in the right set of skills and capabilities stand to benefit, regardless of which tech company sells the most chips or has the best AI model.

A new AI bot seems to have bridged a digital chasm: getting people to buy perfume without smelling it first.

It appears to be working. Since its October soft launch on the website of its Jo Malone London fragrance brand, online shoppers who used the tool made purchases at almost double the rate of those who didn’t.

Says Brian Franz, chief technology, data and analytics officer at Estée Lauder: “If a year ago I would have said to people, ‘Can we use AI to help you with scents?’ they’d be like, ‘Well, you can’t smell your iPad’.” 

The release of a new version of Google's Gemini AI model last month has sent the ChatGPT maker scrambling.

OpenAI Chief Executive Sam Altman told employees Monday that the company was declaring a “code red” effort to improve the quality of ChatGPT, according to an internal memo viewed by The Wall Street Journal.

The Information earlier reported on some of the memo’s contents.

Altman said OpenAI would be pushing back work on other initiatives, such as advertising, AI agents for health and shopping, and a personal assistant called Pulse. On Monday evening, OpenAI’s head of ChatGPT, Nick Turley, said on X that the company was now focused on growing its chatbot while also making it feel “even more intuitive and personal.”

The company uses three different color codes—yellow, orange and red—to describe the varying levels of urgency. OpenAI earlier declared a “code orange” in its effort to improve ChatGPT, the memo said. 

Apple is overhauling its AI organization after announcing the departure of longtime AI chief John Giannandrea.

Giannandrea, an outsider who spent most of his career at Google before coming to Apple in 2018, emphasized a research-driven culture, but ultimately failed to produce competitive AI products, WSJ reports.

Siri, what's that matter? His legacy includes the current state of Siri. Today the personal assistant can still handle only basic, one-off queries 14 years after Apple launched it. Apple is now testing a version of Google's Gemini to power Siri's next version.

Reboot. His responsibilities will be divided among other senior leaders, while former Google Gemini executive Amar Subramanya, recently at Microsoft, joins as vice president of AI under Craig Federighi. 

AI companies are now trapped in a strange ouroboros, simultaneously selling, buying and powering each other’s systems. Just take a look at the recent news below.

The hottest startup right now is a San Francisco-based company called Cursor, whose AI-powered coding tool has taken Silicon Valley by storm, with everyone from Nvidia’s Jensen Huang to OpenAI’s Sam Altman praising its merits.

But even though the company’s valuation soared from $2.5 billion in January to $29.3 billion today, it loses money, according to people familiar with its finances. Why? Because Cursor’s programming magic relies heavily on the underlying AI models of companies such as OpenAI and Anthropic.

That has put the startup’s staying power in question and at the heart of a raging debate in Silicon Valley, the WSJ’s Angel Au-Yeung reports. Millions of users love it, but they aren’t sure it will last.

Nvidia has invested $2 billion in one of its customers, chip design software maker Synopsys, part of a tie-up to work on new chip designs and other applications using Nvidia’s suite of developer tools and code libraries, Reuters reports.

OpenAI is taking an ownership stake in Thrive Holdings, a holding company created by OpenAI stakeholder Thrive Capital to acquire and expand businesses with the help of AI, Bloomberg reports.
 

Meanwhile, AI startups in China are winning customers the old-fashioned way, by offering advanced products at a competitive price.

China’s DeepSeek says two new versions of an experimental artificial-intelligence model it first released in September matches the performance of OpenAI’s GPT-5 across multiple reasoning benchmarks and Google's Gemini-3 Pro in mathematical computations, Bloomberg reports.

AI startup founders tell NBC News that they increasingly are building their technology on Chinese AI systems that are cheaper and more customizable than American versions.

The U.S. will soon get its first mass-market smartphone that folds not just once, but twice. Samsung Electronics’ Galaxy Z TriFold is expected to hit the shelves in the U.S. as early as the first quarter of 2026. When fully open, the TriFold’s display measures 10 inches diagonally. 

The Trump administration plans to invest up to $150 million in xLight, a startup aiming to advance U.S. semiconductor manufacturing by improving lasers used in extreme ultraviolet lithography. In exchange, the government would take an equity stake likely making it xLight’s largest shareholder, WSJ reports. 

WSJ reports that a group that previously failed to block OpenAI’s restructuring has filed a California ballot initiative calling for the creation of an oversight board that could review and reverse nonprofit-to-for-profit conversions since 2024. In late October, OpenAI announced that it was converting its for-profit subsidiary to a public-benefit corporation. 

Shopify experienced an outage on Cyber Monday that interrupted transactions for some merchants on its e-commerce platform, WSJ reports. Shopify provides tools such as payment processing and inventory management for merchants to sell products online.

Costco became the latest and one of the biggest companies to sue the Trump administration over tariffs in an effort to secure a full refund should the Supreme Court rule the sweeping duties illegal. (WSJ)

Bitcoin tumbled more than 6% on Monday, its biggest one-day drop since March. The world’s largest digital currency traded at $85,468 as of 4 p.m. Eastern time in New York and is down more than 30% from a peak above $126,000 set in early October. (WSJ)

Chinese rare-earth magnet companies are finding workarounds to their government’s onerous export restrictions, as they seek to keep sales flowing to Western buyers without falling afoul of Chinese authorities. (WSJ)

The White House said Monday that the U.S. military conducted two strikes on an alleged drug boat in the Caribbean in September, deepening questions about Defense Secretary Pete Hegseth’s role in an operation that led to the killing of two survivors. (WSJ)

The WSJ CIO Journal Team is Steven Rosenbush, Isabelle Bousquette and Belle Lin.

The editor, Tom Loftus, can be reached at thomas.loftus@wsj.com.