Good morning.

Australia's competition watchdog isn't laughing off Amazon's (AMZN) ad rollout. The Australian Competition and Consumer Commission filed suit in Federal Court Monday, alleging Amazon relied on unfair contract terms to introduce ads to Prime Video in 2024 and then charge subscribers an extra A$2.99 a month to make them go away. The regulator says more than 850,000 members of a subscriber base topping one million were affected, with contract terms that let Amazon change the deal unilaterally and without refunds.

Amazon spent two decades training customers to expect the unexpected delivered to their door. Turns out the surprise nobody ordered was a mid-roll ad.

Semiconductors

Every runner in the AI race sprinted this quarter. The one everyone came to watch merely jogged.

The Philadelphia Stock Exchange Semiconductor Index (SOX) surged 81% in the second quarter, its best quarter on record, capping a run that has the gauge up 94% for the year, a pace that would make 2026 its best year since the 1999 dot-com boom. The broader market rode along: the Nasdaq Composite climbed 1.52% Tuesday to 26,213.72, the S&P 500 rose 0.79% to 7,499.36 and the Dow added 0.26% to a record 52,319.20, closing out a quarter in which the S&P gained roughly 14% and the Nasdaq nearly 20%.

The catch: the AI poster child isn't the one setting the pace. Memory and storage makers have lapped the field, while the chip everyone associates with the boom has barely kept up with the index it powers.

The field has reshuffled all year on one bottleneck: memory. With hyperscalers hoovering up DRAM and NAND supply for data centers, the S&P 500's leaderboard is stuffed with chipmakers nobody outside the industry could have named in January.

By the numbers: Sandisk (SNDK) leads the pack, up 764% this year; Micron (MU) is close behind at 301% in six months and past a $1 trillion market cap; Intel (INTC) has climbed 257% on foundry-turnaround optimism. Nvidia (NVDA), the largest company on earth, is up just 4.5% this year, the weakest stock in its own index, with Broadcom (AVGO) only slightly ahead at 7.6%, Bloomberg reported.

"The story of the past six months is the market going all-in on AI infrastructure, but now people are asking if this is sustainable and if we should be worried," CJ Muse, senior managing director and technology analyst at Cantor Fitzgerald, told Bloomberg.

Small caps caught the same draft: the Russell 2000 has surged nearly 22% this year, its best first half since 1991, with chip-related names filling 16 of the index's 50 best performers, per CNBC.

Second Wind: A rally this narrow at the top and this broad underneath says the market believes in AI spending more than it believes in any one company's grip on it. Nvidia trading at just 18 times forward earnings, the cheapest since 2018, suggests investors are pricing perfection out of the biggest name and into the suppliers behind it. If hyperscaler budgets hold past 2026, this is a marathon with a deep bench. If they don't, the whole pack slows down together.

Artificial Intelligence

The government spent 18 days worried about what Claude might teach a hacker. It spent one weekend deciding the risk had passed.

The Commerce Department's Bureau of Industry and Security lifted export controls on Anthropic's Claude Fable 5 and Mythos 5 models Tuesday, ending a standoff that began June 12 after Amazon researchers found a jailbreak that let Fable 5 generate exploit code. Unable to verify users' nationality in real time, Anthropic had pulled access for everyone worldwide rather than risk breaching the order.

Fable 5 reboots globally Wednesday. Mythos 5, a less-restricted variant of the same model, goes back only to a set of U.S. organizations that cleared a separate government review on June 26.

The about-face capped a fight in which Washington's own framing shifted almost as fast as the technology: from branding Anthropic's original deployment reckless to citing the same models, ten days later, as evidence of American AI leadership.

"A license is no longer required for the export, reexport, or in-country transfer, including deemed export or deemed reexport, of the Mythos or Fable models," Commerce Secretary Howard Lutnick wrote on X, adding that the reversal followed weeks of work "to analyze and approve Fable 5 to ensure alignment across the U.S. Government and strengthen America's leadership in AI." Anthropic, in its own statement, thanked "users for their patience, and everyone who worked with us on redeploying the models."

Not everyone is calling it a clean win. Alex Stamos, the cybersecurity expert and former Meta chief security officer who signed an open letter pressing for the reversal, wrote on X that "Anthropic verifies that none of the jailbreaks provided a capability beyond what many other models, including Chinese models, could do," arguing the 18-day freeze mostly nudged customers toward less-restricted rivals.

System Restored: The bigger story here is precedent, not the two models. Anthropic says it will now give the government early access to frontier models before public release, share threat intelligence and help draft a common jailbreak-severity standard with Amazon, Microsoft and Google. Call that responsible-AI coordination or a standing government seat on every lab's release calendar, depending on who's describing it. Either way, the next model this size ships with Washington already in the room.

Media & Entertainment

Getty Images spent 18 months trying to merge with its biggest rival. It only took a licensing deal with OpenAI to make the wedding feel optional.

Getty (GETY) scrapped its $3.7 billion merger with Shutterstock (SSTK) on Tuesday after the U.K.'s Competition and Markets Authority refused to clear the deal unless Shutterstock sold off its entire editorial photo business. Getty's board unanimously rejected that condition and voted to walk away by July 6 if no fix surfaces. Shutterstock shares sank roughly 30% to $9.81 in after-hours trading.

The regulator's logic was about protecting UK newsrooms, not slowing AI. But the timing could not be more pointed: Getty inked a multi-year display deal with OpenAI just eight days earlier, putting its licensed photos inside ChatGPT search results, and its stock jumped as much as 145% on the news.

The deal was pitched in January 2025 as a defensive merger of equals, pooling two of the industry's largest photo libraries to compete with AI generators that can conjure a "photo" for free. Losing that scale doesn't erase the threat.

Getty's answer, so far, is to license its way around the problem instead of buying its way around it: the OpenAI pact follows an earlier attribution deal with Perplexity, both keeping Getty's library out of AI training sets while feeding it into AI search results. Luke Stillman, managing director at Madison and Wall, was skeptical it fully solves the problem, telling Reuters that without the scale the merger promised, "the outlook for each looks even more difficult."

Developing Story: Getty is betting that being the trusted, licensed source inside AI products beats owning more of an industry AI is already hollowing out. It's a reasonable bet, and the OpenAI pop suggests investors like the framing. But Shutterstock now goes it alone against the same AI generators, without the partner or the scale it spent 18 months lining up, and its stock just told you what the market thinks of that plan.

Crypto & Payments

Circle spent years signing up banks and payment giants as customers. On Tuesday, those same names announced they'd rather be partners in a rival instead.

Open Standard, a new independent consortium, unveiled Open USD (OUSD) Tuesday, a stablecoin built to undercut Circle's (CRCL) USDC on the one thing that actually makes Circle money: reserve interest. Circle earns most of its revenue by keeping the yield on the Treasuries backing USDC; Open USD instead shares that reserve income with the more than 140 partners who mint and distribute it, fee-free, including founding backers Stripe, Coinbase, Mastercard, Visa and BlackRock alongside BNY, Standard Chartered, Shopify, Google and Ripple, per CoinDesk. The project is led by Zach Abrams, the Bridge co-founder whose stablecoin infrastructure startup Stripe acquired in 2024.

"Existing stablecoins have great strengths, but to use them at scale, businesses need something that's open, low-cost, high-throughput, broadly accessible, and aligned to their interests," Abrams said in announcing the launch.

Circle (CRCL) shares tumbled more than 17% Tuesday, closing below $63 — a fresh four-month low and down 55% from its mid-May peak.

Hadick added that Stripe's broad suite of financial products could let the consortium "uniquely undercut Circle's economics," though he cautioned that "consortiums are hard and they break easily." Not every analyst buys the panic: Owen Lau, managing director at Clear Street, called the roughly 16% single-day drop "an overreaction," pointing to Paxos' similarly structured USDG, which has grown to just $3 billion in supply since 2024 versus USDC's $73 billion, evidence, he argued, that assembling big-name backers is easier than actually winning users. Circle chief executive Jeremy Allaire downplayed the threat in his own X post, saying Circle would stay "laser-focused on building the best stablecoin infrastructure possible."

The pressure on crypto's institutional plumbing showed up elsewhere too: U.S. spot Bitcoin ETFs shed $4.5 billion in June, their worst month since launching in 2024, with BlackRock's IBIT alone accounting for $3.55 billion of the outflow as bitcoin itself slid toward its worst month since June 2022.

Float Fight: Both stories are really one story. Wall Street isn't backing away from crypto's plumbing — it's trying to own more of it, on its own terms, whether that means building a fee-free stablecoin instead of paying Circle for one, or yanking ETF money out the moment a bigger, shinier bet (a SpaceX IPO, a hawkish new Fed chair) shows up. The institutions did come for crypto. They just didn't come to be customers.

Spoon-Fed Debut: Bending Spoons, the Milan "buy-and-build" software roll-up behind Vimeo, Evernote and WeTransfer, priced its Nasdaq IPO at $29 a share — above its $26-$28 range — raising $1.68 billion at an $18.4 billion valuation, up from $11 billion eight months earlier. Shares began trading Wednesday under the ticker BSP.

Peacock Flies the Coop: Comcast (CMCSA) said it will split into two public companies, spinning off NBCUniversal (NBC, Peacock, Universal Pictures and its theme parks) and Sky from its connectivity and wireless business, a tax-free separation expected to close within a year.

Won for the Books: South Korea's exports surged 70.9% year over year to a record $102.25 billion in June, the country's first month above $100 billion, powered by record $44.82 billion in semiconductor shipments as SK Hynix and Samsung race to meet AI memory demand.

Tuesday closed the books on a quarter where everything with a chip in it went vertical, Washington and Anthropic patched up their differences, a merger died the moment a better offer showed up, and bitcoin's "digital gold" pitch got outbid by a rocket ship. Scale wasn't the moat anyone thought: Nvidia has it and is still the laggard, Getty and Shutterstock had it and split up anyway. Fast and cheap to run matters more this year. One more full session before markets close Friday for the Fourth of July weekend, so use it.

That's the tape. We'll see you at the open. — AllThingsWallSt