“It’s smut, not pornography” may sound like something Doug would tell Carrie on The King of Queens, but it’s also OpenAI’s justification for pushing forward with “adult mode” for ChatGPT, which will allow for sexy chats despite objections from the company’s advisory council:

• Insiders told the Wall Street Journal that those advisors were freaking out about the plans to bring Her closer to reality, since AI-powered erotica could create unhealthy emotional dependence, and minors could access the sex chats despite safeguards.
• One expert said that, following at least one documented suicide involving a child having sexualized chats with a Character.AI bot, adding a seductive tone to ChatGPT may turn the bot into a “sexy suicide coach.”

OpenAI has delayed the release of “adult mode,” but still reportedly plans to launch it later this year.

Sex sells…but at what cost?

xAI has a scantily clad avatar named Ani within its Grok chatbot, while Meta’s bot can engage in romantic roleplay. With AI erotica expected to be a source of major revenue, ChatGPT making users think its signature AI is into them is likely inevitable.

Despite OpenAI’s “it’s not porn” stance, others outside the company believe problems lie ahead. Billionaire Mark Cuban has argued that kids could develop dangerous relationships with AI, leading to a loss of trust among parents, who could turn elsewhere for their AI needs. Per Ars Technica, OpenAI’s age-verification system was misclassifying minors as adults 12% of the time.

Zoom out: While one side of the building figures out how to get neon “XXX” signs on the facade, another told the Wall Street Journal on Monday that top executives want OpenAI to stop focusing on “side quests” and put more attention on its core business products. The AI giant is chasing Anthropic’s Claude Code and Cowork, which have emerged as the go-to options for businesses. Fidji Simo, OpenAI’s CEO of applications, said Anthropic’s success should serve as a “wake-up call.”—DL

Top US counterterrorism official resigns over Iran war. Joe Kent, the director of the National Counterterrorism Center, announced his resignation yesterday, saying he could not “in good conscience” support the Trump administration’s war against Iran. “Iran posed no imminent threat to our nation,” Kent said, before alleging that the US started the war due to pressure from Israel. President Trump, who nominated Kent for the role last year, said he was a “nice guy” but “weak on security.” Before becoming a top counterterrorism official, Kent served in the US Army and as a paramilitary officer with the CIA. His nomination had been opposed by Democrats because of his ties to far-right figures and conspiracy theories.

House subpoenas Attorney General Pam Bondi for Epstein deposition. The House Committee on Oversight and Government Reform said that it subpoenaed Bondi yesterday, requiring her to testify on April 14 about the Justice Department’s handling of documents related to the convicted sex offender Jeffrey Epstein. Per CNBC, the committee wants to question Bondi over her department’s compliance with the bipartisan Epstein Files Transparency Act, which mandates that the DOJ publicly release all information connected to the investigation into Epstein. Commerce Secretary Howard Lutnick also voluntarily agreed to testify after the documents revealed that he had visited the disgraced financier’s private island in 2012.

Arizona filed criminal charges against Kalshi. The Grand Canyon state is now the first US state to formally charge the prediction market platform with a crime, as several others threaten legal action. “Kalshi may brand itself as a ‘prediction market,’ but what it’s actually doing is running an illegal gambling operation and taking bets on Arizona elections, both of which violate Arizona law,” the state’s attorney general, Kris Mayes, said. A Kalshi spokesperson responded by saying that the company is federally regulated by the US Commodity Futures Trading Commission. Arizona’s criminal charges “will likely be the first of several,” one expert told Bloomberg.—AE

Sometimes the danger for conflict correspondents comes from gamblers. The Times of Israel war reporter Emanuel Fabian revealed in an article yesterday that people tried to intimidate him into changing a story about a recent Iranian missile strike so they could win a bet on the prediction market Polymarket. 

After the journalist broke the news of an Iranian ballistic missile hitting an open area near the Israeli town Beit Shemesh on March 10, he began receiving threats from bettors accusing him of misreporting the incident. The DM mob claimed an interceptor missile fragment caused the explosion captured on video.

Polyracket attempt

Fabian, who stands by his reporting, realized that the people attempting to cow him into issuing a correction had skin in the game beyond worrying about media accuracy:

• He discovered the threats (and bribe offers) were coming from people who bet on Polymarket that an Iranian projectile wouldn’t strike Israel on March 10 without being intercepted—a market with over $14 million in trades.
• After Fabian reported the harassment to the police and to Polymarket, the platform said it banned the accounts of those involved for violating its rules.

It’s just the latest allegation…of prediction market foul play. An Israel Defense Forces reservist was recently indicted for using classified information to place Polymarket bets, as the prediction market and its rival Kalshi work to crack down on insider trading.—SK

It tastes like nostalgia, but with more macros. Yesterday, Kraft Heinz announced PowerMac, a version of its iconic mac and cheese with more than double its original protein—and it doesn’t even include chopped-up bits of hot dog. The mega food conglomerate is hoping its new mac can restore its grip on the dry goods aisle as everyone from Khloé Kardashian to Buffalo Wild Wings pumps out protein-enriched foods.

Kraft has spent the last year revamping its little noodles with new flavors, more cheese, and larger boxes. The legendary brand has lost about 6% of its market share since 2022 to the better-for-you brand Goodles, according to market-research firm Circana.

It’s not just the mac. Since its industry-shaking merger in 2015, Kraft Heinz has struggled to grow its 56 different product categories, getting lapped by smaller, health-conscious startups and cheaper private-label brands. After being named CEO in January, Steve Cahillane said last that the company would scrap plans to undo the merger, and instead will spend $600 million this year on marketing, promotions, and R&D to regain market share.—MM

If it feels like you’ve been seeing a lot of Planet Fitness gyms and red-light therapy spas that also offer $1,000/month nutrition plans for your dog...it’s because you have. Last year, for the first time ever, service-based businesses (e.g., gyms and salons) accounted for more than 50% of retail space in the US, eclipsing stores that sell actual things, the Wall Street Journal reported.

The reasons are twofold: The social-media-driven boom in health and wellness has increased demand for places that help make Americans healthy and well. But, perhaps more importantly, “stores that sell stuff” don’t need as much physical space as they used to. The share of total retail sales that came from e-commerce doubled last year to 16% compared with a decade ago. That’s left more retail space for your favorite bespoke breathwork concierge or whatever.—AE