
Anthropic is fighting the government in court. Microsoft is turning to Anthropic to get agentic in all its productivity products. A big new hyperscaler startup has raised a monster round. And could the war with Iran be something that could pop the AI bubble?
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Brian McCullough
Welcome to the Tech Brew Ride home for Monday, March 9, 2026. I'm Brian McCullough. Today, Anthropic is fighting the government in court.
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Microsoft is turning to Anthropic to get Agentic in all its productivity products.
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A big new hyperscaler startup is raising a monster round and could the war in Iran be something that could pop the AI bubble?
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Here's what you missed today in the world of tech.
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Anthropic has officially sued to block the Department of Defense from designating it a supply chain risk, saying the designation is
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unlawful and violates its free speech and due process rights. Quoting the Verge, the suit, filed in
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a California district court, accuses the Trump administration of illegally punishing the company for
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setting red lines on mass domestic surveillance and fully autonomous weapons.
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The federal government retaliated against a leading Frontier AI developer for adhering to its protected viewpoint on a subject of great
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public significance, AI safety and the limitations of its own AI models in violation
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of the Constitution and laws of the
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United States, the suit reads. Defendants are seeking to destroy the economic
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value created by one of the world's
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fastest growing private companies, which is a
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leader in responsibly developing an emergent technology
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of vital significance to our nation. End quote.
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The lawsuit follows a rollercoaster couple of weeks for Anthropic in which the company
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was faced with the threat of and then the official designation of being made
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a supply chain risk. The designation is typically not made public and often applies to foreign companies that could be a cybersecurity threat or other material risk to national security, rather than companies headquartered in the U.S. additionally, President Donald Trump ordered all government agencies to cease using Anthropic's tech within six months.
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Anthropic's blacklisting raised eyebrows and caused significant bipartisan controversy due to fears that disagreeing with a current presidential administration could significantly
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affect a company's bottom line and whether
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it was able to operate as a business altogether.
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Anthropic argues that the government's actions penalize it for speech protected under the first
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Amendment and violate its Fifth Amendment rights.
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Moreover, it says the demand for all government agencies to drop it falls outside
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the authority of the Executive branch. Anthropic has said since the original announcement that it would challenge the supply chain
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risk designation in court.
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In recent days, some of the company's biggest clients, like Microsoft, have made clear
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that they're continuing to work with Anthropic,
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but setting up processes so that their work with Anthropic has no involvement in any of their own work with the Pentagon.
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However, the suit notes that government agencies outside the Department of Defense have cut ties with Anthropic. The General Services Administration terminated its one Gov contract, quote ending the availability of Anthropic services to all three branches of
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the federal government and multiple other agencies, including the Department of the treasury and
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State Department, have publicly or reportedly privately
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said they plan to cease using it as well. End quote.
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As mentioned, you know who made a point of saying they weren't dropping Anthropic?
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Microsoft. And now we can see why. Among probably a bunch of other reasons,
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Microsoft this morning launched Copilot cowork, integrating Anthropic's Claude cowork tech into Microsoft 365 copilot and using WorkIQ to ground its
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actions in work data. Quoting VentureBeat if you thought Anthropic was about to run away with the enterprise
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AI business, you're not totally off the mark.
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Actually.
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This morning Microsoft announced Copilot Cowork, a new cloud based AI agentic automation tool within Microsoft's existing AI tool 365 Copilot, except now it can complete work on
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users behalf across many Microsoft apps instead of contained within each one. If it sounds suspiciously similar to Anthropic's own Claude Cowork applications for Mac and Windows, released in January and February of this year respectively, that's to be expected as Microsoft and Anthropic work together on this new feature.
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Like Claude Cowork, Copilot Cowork allows users to delegate complex, multi step tasks to an AI agent that plans, executes, and delivers finished work. In this case, the AI is able
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to move across and use all the tools and features of Microsoft's outlook Teams, Excel, PowerPoint, and other M365 applications.
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The announcement represents Microsoft's most significant step yet in transforming Copilot from a conversational assistant into what the company calls an execution layer, an AI that doesn't just
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answer questions, but actually completes work on a user's behalf. Microsoft's announcement blog post explicitly states that
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Copilot Cowork integrates the technology behind Claude
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Cowork, and both products share a core premise.
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AI should plan and execute multi step
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work, not just respond to prompts.
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But the two products diverge sharply in where they operate, what they can reach,
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and who they're built for.
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Claude Cowork is a desktop agent.
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It lives on your machine first Mac,
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now Windows and operates within folders you
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explicitly grant it access to.
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It can read, edit, and create local files, automate browser tasks, and connect to external services through Anthrapic's growing library of MCP connectors and plugins, spanning tools like Google Drive, Slack, DocuSign, and Salesforce.
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Its power comes from flexibility.
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Users can point it at essentially any local workflow, and Anthropic's open plugin architecture
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means its reach keeps expanding.
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But it is fundamentally a personal tool. The user manages what Claude can see, and the security model depends on folder level, sandboxing and individual judgment about what to share.
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Copilot Cowork operates in the cloud inside Microsoft 365's infrastructure and draws on something Claude Cowork simply cannot access the full
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graph of a user's enterprise work data. That means Outlook, email threads, teams, conversations, calendar history, SharePoint files, Excel workbooks, and
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the relationships between them.
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When Copilot Cowork reschedules a meeting or builds a briefing document, it is pulling from signals across all of those systems simultaneously, a capability that requires deep integration with M365 APIs and data layer rather
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than just local file access. Enterprise IT administrators retain control through existing identity permissions and compliance policies, and all actions are auditable by default.
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The practical upshot is that these products are likely to appeal to different buyers
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solving different problems, at least in the near term.
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Organizations that are deeply embedded in the
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Microsoft 365 ecosystem which is to say
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most large enterprises are the natural audience for Copilot coworkers.
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For a Fortune 500 company whose employees
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live in Outlook teams and SharePoint all day, the value proposition is compelling. An AI agent that already understands your organizational context, operates within your existing security and compliance framework, and doesn't require employees
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to adopt a new application or manage local file permissions.
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IT departments that have spent years configuring M365 governance policies will find Copilot Cowork
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far easier to greenlight than a standalone desktop agent that requires individual users to make security decisions about folder access.
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Claude Cowork, by contrast, is likely to
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attract organizations and individuals who need more flexibility than M365 can provide. Teams working across heterogeneous tool stacks, power
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users who want granular control over what
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the AI can touch, and companies already building on Anthropic's API and plugin ecosystem. End quote.
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Uk based data center developer N Scale raised a $2 billion Series C round led by Acre and 8090 Industries at a $14.6 billion valuation and added Sheryl Sandberg and Nick Clegg to its board. Quoting Bloomberg. Norwegian energy firm Acre ASA and investment
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firm 8090 Industries led the series C round, which values the startup at $14.6 billion, the AI HYP Scaler said in a statement on Monday.
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Several tech companies also participated in the round, including Nvidia, Lenovo and Nokia. Spun out of cryptocurrency mining operations in early 2024, n scale quickly became one of the most prominent data center newcomers, cashing in on the AI boom. As a so called neo cloud operator renting out computing resources to companies developing
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AI, NScale has tried to distinguish itself
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as a provider tailor made for Europe,
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pledging major projects in the uk, Norway and Portugal.
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Nscale's latest round places it among Europe's most valuable startups and the new board appointments add seasoned tech executives to a board that previously consisted of its management
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and investors without much experience in the sector. NScale has raised funds quickly, bringing in
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$1.5 billion in a short span in
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2025 and lining up around the same
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amount in loans earlier this year, Bloomberg
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previously reported the company was planning to raise a $2 billion round. Last year, N Scale and Acre announced
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plans to develop a data center project near the Arctic Circle as a joint venture with OpenAI as the anchor customer.
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On Monday, N Scale said it was folding its Norway operations into one entity, end quote.
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Brian McCullough
the information says that the U S led war in Iran is complicating plans by Gulf nations to spend more than $300 billion on AI investments, putting at risk a potential source of funding for AI tech startups. Quote Countries such as the UAE and Saudi Arabia have become big destinations for data centers. Local firms are developing the projects along with us, such as Xai, OpenAI, Microsoft, Amazon, Oracle and Google, which are drawn to the region for its cheap energy. Drone strikes on three Amazon data centers in the region suddenly made those projects appear riskier. A prolonged war could also reduce overseas investment into the region from firms such as Brookfield, which is working with multiple
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Gulf nations on their AI investments.
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OpenAI and XAI have raised money from Gulf nations and made plans to build
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data centers in the region, leaving them
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more exposed to the risks of the conflict than rival Anthropic, which has raised money in the Gulf, has been reluctant
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to build large scale computing facilities there.
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Gulf nations won't rush to divert resources away from AI investments because of their economic and strategic importance, said analysts who cover the region. But they might have little choice if the conflict stretches on for a long time.
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If that turns into months or even
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longer, there could certainly be a disruptive
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pause to some of that investment, said
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Stefan Minton, an analyst at technology research firm idc.
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Minton said he expects the Gulf's spending
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to continue in the near term after the tech giants themselves. Gulf countries have been among the biggest funders of AI spending. Plans by Kuwait, Qatar, Saudi Arabia and the United Arab Emirates cover everything from
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land and power for data centers to
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efforts to build powerful AI models in local dialects.
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The priciest items are Nvidia GPUs, which the countries have fought hard to import due to national security concerns on the
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part of the US Government. Saudi Crown Prince Mohammed bin Salman recently said the country planned to spend $50 billion on semiconductors in the short term, and the UAE could spend upwards of
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$30 billion purchasing its allotment of Nvidia chips through next year, according to current market prices.
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Those chips won't be usable if regional
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leaders can't find a way to continue funding and protecting their data centers.
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Saudi Arabian officials have said they plan to build Data centers consuming 6.6 gigawatts of energy by 2034.
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Elon Musk's XAI is working with Humane, the company overseeing the plans to develop a data center in the country that
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could consume 500 megawatts of energy.
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Before the AI boom, data centers used to be between 10 and 50 megawatts. A 1 gigawatt data center costs between 50 and 60 billion dollars to build, end quote.
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Finally today, another one of these A study of 1488 US workers, has found that AI use can reduce burnout but also cause AI brain fry, a mental fatigue from using AI tools beyond one's cognitive capacity. Quoting Harvard Business Review, Firms are incentivizing employees to build and oversee complex teams of agents, for example, by measuring and rewarding token consumption as a proxy for performance.
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Meta for one includes the number of
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lines of code generated by AI as
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a performance metric for engineers.
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As enterprises use more multi agent systems, employees find themselves toggling between more tools. Contrary to the promise of having more
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time to focus on meaningful work.
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Juggling and multitasking can become the definitive
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features of working with AI.
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Unsurprisingly, workers are finding themselves up against the limits of their cognitive abilities when working this way. In recent weeks, online AI users have described increased cognitive load, saturated attention and mental fatigue in social media posts. Engineer Francesco Bonacci, founder of KUA AI, wrote a popular X post titled Vibe coding Paralysis when infinite productivity breaks your brain, in which he lamented, quote I
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end each day exhausted not from the
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work itself, but from the managing of the work. Six work trees open for half written features, two quick fixes that spawned rabbit holes, and a growing sense that I'm
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losing the plot entirely. End quote.
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As A research group that studies emergent workforce and AI trends. These signals caught our attention. The literature is filled with mixed signals on the relationship between AI and worker burnout.
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Burnout is a state of chronic workplace stress consisting of exhaustion, negative feelings about work and decreased effectiveness on the job. Some studies suggest that using AI to
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replace tiring tasks alleviates exhaustion. Other studies, sometimes on the same pop, show AI use worsening burnout outcomes. The emergence of acute overwhelming mental fatigue
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with intensive AI oversight as distinct from burnout adds new complexity to the picture.
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To understand what was going on, we conducted a study of 1,488 full time
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US based workers, 48% male versus 51%
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female, 58% independent contributors versus 41% leaders
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at large companies across industries, roles and levels.
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We asked them about patterns and quality of AI use, work experiences and cognition and emotions. We found that the phenomenon described in
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these posts, cognitive exhaustion from intensive oversight
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of AI agents is both real and significant. We call it AI brain fry, which
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we define as mental fatigue from excessive use or oversight of AI tools beyond one's cognitive capacity.
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Participants described a buzzing feeling or a mental fog with difficulty focusing, slower decision making and headaches.
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This AI associated mental strain carries significant costs in the form of increased employee
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errors, decision fatigue and intention to quit. There's some nuance here, however, we also found when AI is used to replace routine or repetitive tasks, burnout scores but
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not mental fatigue scores are lower. This highlights the subtle but important distinction
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between the types of stress that AI
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can alleviate and those that it may worsen.
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First, we found that the most mentally taxing form of AI engagement was oversight or the extent to which the AI
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tools required the workers direct monitoring. The workers in our study who reported
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that their AI worked required high rather than low degrees of oversight, expended more mental effort on the job. A high degree of AI oversight also predicted 12% more mental fatigue for participants. Finally, more intensive AI oversight also predicted 19% greater information overload, the experience of
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feeling overwhelmed by the amount of information one must process at work.
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A second important AI related predictor of both cognitive load and mental fatigue was the extent to which an employee reported that the presence of AI tools has increased their workload.
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Those two factors together AI oversight and an increase in workload and increase an employee's sphere of accountability requiring them to
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pay attention to more outcomes for more tools in the same amount of time.
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It makes sense that cognitive load increased
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and with it their mental exhaustion. We also found a fascinating relationship between the number of AI tools used simultaneously
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and perceived productivity increases as employees go
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from using one AI tool to two simultaneously, they experience a significant increase in productivity.
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As they incorporate a third tool, productivity
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again increases, but at a lower rate. After three tools, though, productivity scores dipped. Multitasking is notoriously unproductive, and yet we
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fall for its allure time and again.
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Our findings are both a guide and a warning. Used thoughtfully, this data can help design
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AI driven workflows to diminish burnout.
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They also point to specific manager, team, and organizational practices to avoid mental fatigue
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even as AI work intensifies. End quote. Nothing more for you today. Talk to you tomorrow.
On this episode of Tech Brew Ride Home, host Brian McCullough delivers a brisk rundown of the latest developments in tech, centering on Anthropic’s legal battle against the U.S. government, Microsoft’s deepening partnership with Anthropic to roll out agentic AI in its Office suite, a record-breaking funding round for UK data center startup N Scale, and the ways the ongoing war in Iran is threatening the global AI infrastructure boom. The episode wraps up with research on how AI impacts workplace burnout—sometimes alleviating it, sometimes making it worse.
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On government retaliation and speech:
On new AI-powered automation layers:
On worker experience with AI:
This episode distills a moment where the intersection of AI innovation, geopolitics, and workforce transformation feels particularly volatile. Between Anthropic’s government showdown, the deepening reliance on agentic AI, shifting global capital flows, and the psychological toll of an AI-saturated workplace, today’s tech news is about much more than product launches—it's a lens on power, economics, and the evolving reality of digital labor.