What's up: Anthropic valuation hits $183 billion; more Apple AI researchers leave for Meta; American companies are exceeding profit expectations by cutting costs, adopting new tech.

Good morning. Google emerged intact from its antitrust battle with the U.S. government. Apple was a big winner in that case as well. The biggest winner in the decision last night from U.S. District Judge Amit P. Mehta, however, is AI itself.

In rejecting the harshest penalties that the Justice Department sought to impose in its case against Google, the court acknowledged the extent to which generative AI has transformed the search market. Mehta declined to order a spinoff of the Chrome browser. You can read the WSJ’s full report on the decision here.

Highlights from the story: 

Mehta … said Google can’t pay to be the exclusive search engine on devices and browsers, but he allowed the company to continue making payments for distribution of its products, saying a prohibition on those agreements would harm recipients such as Apple.

Increasingly, people turn to OpenAI’s ChatGPT, Anthropic’s Claude, Perplexity and others to find answers to many questions that would have been a job for search just a few years, if not months, ago. The markets are evolving so fast under pressure from AI that antitrust law and enforcement can’t keep up.

The judge ruled in the government's favor that Google had violated antitrust law. When it came to remedies, the Justice Department asked for too much, pressing for a breakup of the company. For its part, perhaps, the court offered too little. 

While the decision could have gone further to address Google’s dominance of the search market, doing so could have been a huge distraction slowing down its focus on AI, a far more important battle for the company and the U.S.

In theory, consumers may be deprived of more innovation in the search market, but I doubt too many of them outside the world of policy experts care all that much because they are way more focused on AI. 

The takeaway for the enterprise is that we’re in a more permissive era when it comes to antitrust. 

Anthropic raised $13 billion in a Series F round at a $183 billion post-money valuation. New investor Iconiq co-led the financing together with returning backers Fidelity Management & Research and Lightspeed Venture Partners.

Investors can’t get enough. WSJ Pro VC reports that the round indicates a fever pitch of investor demand for top private developers of generative artificial intelligence models, as well as a need for capital at these companies as they face high computing infrastructure costs.

Anthropic is now fourth among private companies by value globally, behind rival OpenAI, SpaceX and ByteDance, according to research firm CB Insights.

OpenAI acquired Statsig for $1.1 billion, naming the company's CEO its CTO of applications, the Information reported. Statsig helps businesses including OpenAI test new features. 

More Apple AI researchers are leaving for Meta Platforms, Bloomberg reports. Jian Zhang who led research in AI robotics for the iPhone maker, is one of four to recently jump ship.  

Salesforce Chief Executive Marc Benioff on a podcast last week said that the company reduced support staff to 5,000 from 9,000 because AI has been able to automate some tasks, the Los Angeles Times reports. But “Humans are not going away,” Benioff said on “The Logan Bartlett Show,” podcast. “We are working in partnership with these agents, and that’s how I look at it.”

American companies are once again beating profit expectations, but this time around they aren’t banking on blockbuster consumer spending, WSJ reports. Instead, the latest batch of quarterly earnings are getting a lift from managers who are squeezing out costs, boosting productivity and turning to new technologies like AI.

Upshot. The gains aren’t softening the unease consumers and employees feel—and might be obscuring signals that ordinary Americans are putting their anxiety into action.

Taiwan Semiconductor Manufacturing said the U.S. is revoking its authorization to freely ship key equipment to its main Chinese chip-making site in Nanjing, a move that will make it harder for the company to operate in China, WSJ reports.

Microsoft is planning to offer the federal government deep discounts on its products, following in the footsteps of Amazon, Google, Salesforce and Oracle. CNBC reports that the company will provide the General Services Administration $3.1 billion in potential savings on cloud services used at federal agencies.

The bond selloff continues, with concerns over governments' debt outlooks pushing up benchmark borrowing costs in many countries. Uncertainty around the Federal Reserve's future independence, and what this means for the interest-rate path, is adding extra jitters for U.S. markets. (WSJ)

A federal judge on Tuesday ruled that the Trump administration’s deployment of troops to Los Angeles in response to protests over immigration policies violated a 19th-century law prohibiting the use of federal forces for domestic law enforcement. (WSJ)

The U.S. military carried out a strike against a drug-carrying boat from Venezuela, President Trump said Tuesday, escalating tensions with that country’s authoritarian government. (WSJ)

A House committee released more than 30,000 pages of documents related to Jeffrey Epstein on Tuesday as Republican lawmakers returned to Capitol Hill facing pressure to make public more details on the convicted sex offender. (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.