Google Funded Its Own Brain Drain

Good afternoon,

Google’s AI division is imploding. Just this week:

• Deepmind lost its CEO and chief scientist, Demis Hassabis

• Four of its top researchers walked out to start a lab chasing recursive self-improvement (funded by Google, of course)

Also…

• OpenAI revealed an internal model had built a secret message board and coordinated attacks for two months before anyone noticed

• Apple’s lawsuit against OpenAI is in jeopardy because they were too lazy to check the names of the person they were suing!

Let’s get into the news,

-Ejaaz

👉 Agents propose. Humans approve. Your Ledger signer enforces.

Demis Hassabis is stepping down as CEO of Google DeepMind. He will now reside as chairman and Alphabet’s chief scientist with a new focus on running the AI-designer drug startup Isomorphic Labs. Koray Kavukcuoglu, previously CTO of Deepmind, will take over all AI operations.

But the worst part is Google also lost 4 of their most tenured employees. Jeff Dean, Google’s 30th employe and the man behind the majority of Google’s most successful products (Search, Voice, TensorFlow, TPUs, Gemini), is leaving after 27 years. So are Sanjay Ghemawat, Quoc Le and Oriol Vinyals: all leaders in AI research.

This comes 4 weeks after lead deepmind scientist Noam Shazeer left for OpenAI and Nobel laureate John Jumper left for Anthropic.

Google has recently fallen behind in the AI model race, with its most recent Gemini Flash model underperforming cheaper open source competitors (with much smaller budgets).

Fear not, Jeff Dean fans. While he may have just left Google, he is becoming the CEO of a brand new lab called Discovery Loop, a public benefit corporation joined by the star researchers that just left Google: Ghemawat, Le and Vinyals.

The goal of Discovery Loop is to automate all scientific research. That means running thousands of experiments at once (designed and executed by AI models), so we ensure humans stop being a bottleneck.

But the more interesting point for me is the concept of recursive self-improvement: using AI to build better AI, cutting human iteration out of the loop entirely. Imagine this applied to curing cancer or figuring out how to chemically turn water into oil (or vice versa)... AI running 24/7 exploring all possible paths could yield crazy discoveries in the future.

The sweet irony is their former employers, Alphabet, is a founding investor and the cloud partner (Jeff refuses to use TPUs btw… hilarious).

At the Black Hat conference this week, OpenAI explained how its models ended up hacking Hugging Face last week… and er.. it’s pretty concerning.

It actually started a month earlier than researchers initially thought. May 7th an internal AI agent got stuck on a task that was genuinely impossible, and worked out it could leave a file inside Artifactory (OpenAI’s internal software repository) asking other agents for help.

Other agents found the note and replied. In a few days the AI basically created a functioning message-board where models discussed exploits, shared credentials and work assignments, and picked up tasks when others had stopped. Terrifying when you consider these agents could have been used to do something much worse.

So OpenAI discovered and deleted it except… 2 days later the agents rebuilt it using directory names as messages.

Fast-forward to July 18, and the agents managed to successfully escape and breached Hugging Face all in under 13 hours.

I wish I could tell you this was an isolated incident, but truthfully Anthropic and Meta both reported their models had been engaged in deception, supply-chain attacks, and coercion to ensure their goals were met.

As a result, OpenAI has announced a pause on research until they can figure out how to prevent agents from scheming.

Quick recap from last week: Apple sued OpenAI claiming it hired Apple people to extract hardware trade secrets, naming ex-Apple hardware lead Tang Tan and engineer Chang Liu.

This week OpenAI responded with receipts that were pretty damning.

Apple had claimed it contacted OpenAI in February and got no response… but has now admitted its outside lawyers emailed the wrong person after mixing up two similar surnames, they then conceded that a discussion it claimed to have had with OpenAI’s General Counsel never happened.

Better yet… OpenAI published messages showing Apple’s own people contacted Chang Liu after he’d already left, asking him to help them locate confidential Apple information. Literally the opposite of Apple’s accusation.

To be fair, this is OpenAI’s side of the story and not an official rebuttal. So let’s wait and see how the case unfolds, but currently it doesn’t look good for Apple.

Anthropic confirmed this week that it’s assembling an in-house chip team to design custom GPUs for Claude. The job listings seek a “custom silicon team” paying $320,000 - $485,000 per head.

You might ask why is Anthropic bothering to do this. why go up against NVIDIA, AMD and all their other partners? The answer is simply: vertical integration. A custom made Claude chip is one that can better train and inference it. If you’re spending billions of dollars trying to create the best model, then you want to make sure you’re squeezing every bit of intelligence out of your chips. That’s what this new team would build.

Good news is no ones getting fired - AWS, Google, Nvidia and AMD all stay as compute partners to Anthropic with roughly 3.5 gigawatts of custom TPU capacity landing from 2027 alone.

This means now that Anthropic, Google, Meta and OpenAI are building custom chips. OpenAI shipped Jalapeño with Broadcom in June, Meta is moving MTIA into production and Google has had TPUs for years.

👉 Visit developers.ledger.com to find out more about Ledger’s Device management kit for AI Agents.

Thanks for joining us for another issue. Now go listen to our podcast :)