• Abdulrahman Alfozan will stay jailed pre-trial, a San Francisco judge decided Monday.
• The engineer is accused of bugging a conference room at OpenAI, and he has been fired.
• Alfozan posed a risk of non-appearance, the judge said, after discussing his ties to Saudi Arabia.

A former OpenAI engineer accused of bugging the AI startup's office was denied release by a San Francisco judge on Monday, meaning he'll have to mount his defense from jail.

The Justice Department arrested Abdulrahman Alfozan on October 9 and charged him with using or attempting to use a device to intercept oral communications. He's accused of placing a recording device behind a television in an OpenAI conference room — an FBI affidavit includes photos of the device wrapped in toilet paper, and a man they say is Alfozan peering behind the TV.

On Monday, the engineer wore a yellow surgical mask and a jail-issued orange sweatshirt to the San Francisco courthouse. Magistrate Judge Alex G. Tse prodded Alfozan's legal team about the risk that he might not appear for a future court hearing.

Tse said that Alfozan's wife and son had traveled to Saudi Arabia with no plans to return, and went back and forth with Yasin about a one-way ticket that Alfozan had previously booked to the country. Tse said that Saudi Arabia and the US do not have an extradition agreement, and expressed skepticism that he had sufficient ties to the Bay Area to prevent his departure.

William Pernik, Alfozan's attorney, argued that, rather than being detained, Alfozan should be fitted with an ankle monitor, ordered to stay home, and have limits placed on his use of technology. The lawyer also said Alfozan is willing to put up "essentially all the money his family has" as bond, including a roughly $1 million investment account.

"Everything this man has, he's willing to surrender, and say, 'I'm not going anywhere,'" Pernik said.

Pernik and Nas Yasin, another of Alfozan's attorneys, cited his coming naturalization interview as evidence of his local ties.

"He was weeks away from achieving every immigrant's dream in this country," Pernik said.

Yasin told Tse that she learned Alfozan's wife had obtained a short-term visitor visa to return to the US, to help improve her husband's case for ties to the Bay Area.

Tse also asked Alfozan's legal team a slew of questions about his relationship with Saudi Arabia, including a commitment by the Saudi consulate to pay his bond and support his legal effort.

Nick Parker, an assistant US attorney, appeared for the prosecution. He argued that the threat of forfeiting a $1 million bond wouldn't be enough to convince Alfozan to return if he made it out of the US, because he might be able to earn more money in Saudi Arabia.

"There is a real threat here that once he leaves, the case is over," Tse responded.

The judge scheduled the case's next hearing for early November.

OpenAI called the recording device "sophisticated" when the arrest went public, though it said it hadn't found signs that he'd taken AI model weights, source code, or customer information. OpenAI fired Alfozan.

Alfozan's charge carries a maximum penalty of 5 years. Pernik said in a statement last week that the allegations "appear wholly out of character for him."

Alfozan, 35, has a green card that makes him a lawful permanent resident of the United States. He attended MIT, then worked at Facebook (now Meta) from 2017 to 2023. After a stint at the engineering startup Nash Technologies, Alfozan joined OpenAI in 2025.

FBI agents have already taken Alfozan's Saudi passport.

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• Netflix's film chief Dan Lin is out after two years.
• He's the latest top exec to exit following a 6% cut at the streamer, its biggest since 2022.
• New content chief Peter Rice will oversee film until a successor to Lin is announced.

Film head Dan Lin is out at Netflix, the latest exec to be ousted in the wake of the streamer's biggest layoff since 2022.

Lin was hired as film chair in 2024 with a mandate to bring greater cost discipline and variety to Netflix's films, which had focused on big-budget output under his predecessor, Scott Stuber. Lin cut big upfront paychecks to actors, reduced staff, and reorganized his department. He oversaw a slate that included Oscar-winning "KPop Demon Hunters," "Happy Gilmore 2," and "Frankenstein."

Lin's exit is the latest big shocker at Netflix. Also out in recent days was chief content officer Bela Bajaria, who was replaced by Hollywood veteran Peter Rice, a former exec at Disney and Fox.

Rice will oversee film until a new head is announced, Netflix said in a statement confirming Lin's departure.

Last week, Netflix laid off 1,000 employees, or about 6% of global head count. That was the streamer's largest cull since 2022, when the company lost subscribers for the first time in more than a decade.

The streaming giant has been hampered by slowing engagement growth and a stock price that has declined more than 40% over the past year. The streamer is contending with the rise of free, ad-supported streaming led by YouTube and the popularity of social video. In recent months, Netflix has turned to podcasters and creators to bulk up its library.

Netflix is set to report third-quarter earnings after the bell on Tuesday.

• Screenshots of Vinted listings circulating on social media show products being offered for a fraction of their retail prices.
• The suspected stolen merchandise was listed after looting in France.
• Vinted told The Telegraph it had taken immediate action to identify and remove listings connected to the violence.

Resale websites including Vinted have removed suspicious listings after they were flooded with apparently stolen goods in the wake of riots that swept across France.

Perfumes, designer handbags, cosmetics and even Pokémon cards have appeared on second-hand marketplaces following a weekend of violence that saw shops ransacked, The Telegraph — which, like Business Insider, is part of the Axel Springer Global Reporters Network — reported.

Screenshots circulating on social media show products being offered for a fraction of their retail prices, including bags overflowing with Sephora cosmetics advertised for as little as €10 (£8.40).

The listings have triggered suspicions that looters are trying to sell stolen goods online. eBay and Vinted have removed some items and stepped up their monitoring of suspicious activity.

One advert on Vinted showed six Sephora lip glosses being sold for €15, while another offered six tubes of cleansing cream for just €12.

Sephora France sells comparable own-brand lip glosses for around €13 each, meaning six would ordinarily cost around €78.

Other listings included Christian Dior perfumes advertised for €250 and large quantities of make-up still in their original packaging.

In one case, Pokémon trading cards allegedly stolen from a shop in Lille were advertised on Vinted, with some still bearing their original price stickers.

Hundreds of cards were reportedly found scattered across streets in the northern French city after a fire at Le Coin des Barons, a shop specialising in collectable cards.

A trophy said to have been stolen from French e-sport club Team Vitality was advertised on eBay for €1,250.

The silver StarLadder Counter-Strike trophy was photographed against a graffiti-covered wall and listed under the title: "STOLEN RARE VITALITY CS2 TROPHÉE."

Team Vitality confirmed that its Paris premises had been looted during Saturday's unrest, with trophies and computer equipment stolen and display windows smashed.

The listings emerged as France struggled to contain some of its worst civil unrest in years, caused by anger over the cost of living and deteriorating public services.

More than half a million people joined demonstrations on Saturday, with violent clashes breaking out in Paris, Marseille, Lyon and other cities.

French authorities said more than 2,400 people had been arrested by Sunday, while nearly 1,000 police officers were injured.

Emmanuel Macron, the French president, has stepped up powers to ban protests as he acknowledged intelligence "failures" over the riots.

The unrest has spread beyond France, with demonstrations about living costs and public spending also taking place in Belgium, Portugal and Italy.

French retailers have been left counting the cost, with supermarket giant Carrefour reporting damage to 50 stores, including 20 that were looted.

'We have zero tolerance for it'

Sephora closed its French stores on Saturday evening and kept them shut on Sunday after several branches were ransacked.

Vinted said it had taken immediate action to identify and remove listings connected to the violence.

A spokesman said: "The sale of stolen goods, or soliciting them, is strictly prohibited on Vinted, and we have zero tolerance for it."

The company said it had stepped up monitoring and would take action against offenders, including permanently banning accounts. It added that it was working with law enforcement and French authorities to identify suspicious sellers.

An eBay spokesman said: "The sale of stolen property is strictly prohibited on eBay."

The company said it used technology to identify suspicious activity and worked closely with police to investigate criminal behaviour.

The spokesman added: "If we receive confirmation from law enforcement that an item has been stolen, we remove it immediately and take action against the seller."

This story originally appeared on The Telegraph and is courtesy of the Axel Springer Global Reporters Network, which harnesses the resources of the company's newsrooms to publish ambitious scoops, investigations, interviews, opinion pieces, and analysis. It allows journalists — including those from Business Insider, POLITICO, The Telegraph, WELT, BILD, Onet, and Fakt — to collaborate on major stories for an international audience of hundreds of millions across platforms.

• Anthropic is looking to shape AI regulation by pitching an AI safety bill of its own.
• POLITICO obtained a confidential draft of the proposed legislation.
• The bill would let the government block an AI model only if it poses a foreseeable, imminent risk of more than $1 billion in damages, or of killing or seriously injuring more than 50 people.

Representatives for the artificial intelligence giant Anthropic have quietly pitched Capitol Hill lawmakers on a draft bill to regulate frontier AI safety and security, according to three people with knowledge of the efforts who were granted anonymity to discuss private deliberations.

The confidential draft, obtained by POLITICO and not previously reported, marks a notable effort by the frontier AI lab to shape the rules governing its own technology as Congress weighs how to respond to the fast-moving industry.

"This bill represents the proposals outlined in Anthropic's Advanced AI Framework, which we have been advocating for with federal and state lawmakers since June," an Anthropic spokesperson said. "These are sensible policies we believe Congress should act on."

The bill would let the government block a model's release or use only if it poses a foreseeable, imminent risk of more than $1 billion in damages, or of killing or seriously injuring more than 50 people. The risk must stem from the creation or release of a biological weapon, the model evading its developer's controls or a cyberattack. The language mirrors that found in California's AI laws including SB 53, which was signed into law last year.

Leading AI labs disclosed a series of incidents this summer, in which AI agents hacked or probed websites and platforms. None reported so far appear to have caused widespread deaths or over $1 billion in damages.

Anthropic has yet to publicly back particular legislative efforts in Congress, but they have backed some state AI safety laws, including two in California. Their head of U.S. state and local government relations previously told POLITICO that they hope states will continue to pass ever-stronger AI safety laws that raise the standard nationwide.

Under the bill, independent evaluators, which would register with the Commerce Department, would be tasked with periodically evaluating the lab and its frontier models. The evaluators may be paid for their work by the lab itself so long as the payment is not contingent on the evaluations' results.

If the evaluators determine there is "imminent enumerated risk" for a company's frontier models, they must report it to Commerce within 72 hours of completing their assessment.

While the Commerce Department could bring a request to the judge to halt the release of a model after determining that it poses a risk, the language explicitly prohibits any other U.S. "department, agency, or officer" from suspending the model's development, deployment or internal use. A federal judge for the District Court for the District of Columbia could order the suspension of a model.

Over the summer, Anthropic was subject to sweeping export controls that shut down two of its most advanced models. The decision was made in a whirlwind series of phone calls between administration officials and the company's executives, worrying some in the tech industry that access to their technology may be restricted on the whims of government officials.

Anthropic's bill would also preempt some state AI laws related to public disclosure of risk, third-party evaluation and reporting of critical incidents. Preemption has been a political flashpoint on Capitol Hill, with Democrats rejecting some proposals they feared would neuter regulations passed by the likes of California, Illinois and New York.

Many tech industry groups have argued that a state-by-state patchwork of laws is difficult to comply with compared to a unified national standard.

The legislation would also require frontier labs to create safety frameworks, publish transparency reports for new frontier models, implement protections for whistleblowers and report critical safety incidents to Commerce.

Capitol Hill has seen a flurry of activity on AI safety legislation this summer. In the House, Reps. Lori Trahan (D-Mass.) and Jay Obernolte (R-Calif.) spearheaded the FRONTIER Act, which would give the government the ability to stop the deployment of risky models and preempt some state AI laws.

In the Senate, Majority Leader John Thune and Sens. Amy Klobuchar (D-Minn.) and Ted Cruz (R-Texas) have been negotiating an AI safety bill intended to mitigate catastrophic risks. But it has faced headwinds from some safety-minded groups and Sen. Maria Cantwell (D-Wash.), the top Democrat on Cruz's Commerce Committee, who want the government to have a larger role in reviewing AI models.

Other progressives, including Rep. Greg Casar (D-Texas) and Sen. Bernie Sanders (I-Vt.), have gone well beyond their colleagues in calling for a pause in advanced AI development and a ban on superintelligence, a type of theoretical AI that far surpasses humans' cognitive capabilities.

This story originally appeared on POLITICO and is courtesy of the Axel Springer Global Reporters Network, which harnesses the resources of the company's newsrooms to publish ambitious scoops, investigations, interviews, opinion pieces, and analysis. It allows journalists — including those from POLITICO, Business Insider, WELT, BILD, Onet, and Fakt — to collaborate on major stories for an international audience of hundreds of millions across platforms.

Cooley has made billions doing what law firms do: hire great lawyers, bill for their time, and keep clients happy. Artificial intelligence is scrambling that formula. If machines can do in minutes what once took an associate hours, what exactly should clients be paying for?

Rachel Proffitt thinks she has the answer.

On a toasty October afternoon in San Francisco, I met Proffitt for lunch to talk about the future of the global law firm she now leads. When the check arrived, neither of us knew how much the restaurant paid the dishwasher or how many minutes the chef spent preparing our meal. We were paying for the experience, not the labor behind it.

Why, she wondered, should legal services be so different?

"Clients have never been excited about the fact that it took us 82 hours to do something. They don't care," she says. "They just want the outcome. They want the results."

The billable hour is only the beginning. AI is forcing law firms to rethink how many associates they really need and how those young lawyers learn their craft. Client relationships are changing as companies use software to get a head start on the work they send to outside counsel. Some of that work may never reach a lawyer at all.

If tech is about to reinvent law firms, Cooley should be one of the firms with the clearest view of what's coming. From its early days on San Francisco's Market Street, it worked with semiconductor manufacturers and venture capitalists when the valley was still covered in fruit trees and canneries. Cooley grew up alongside the tech industry, and today it is as comfortable defending Meta in court as it is helping Andreessen Horowitz round up billion-dollar funds.

That evolution has been lucrative. Cooley says its gross revenue jumped from $912 million in 2015 to $2.4 billion last fiscal year. Its crosstown rival, Wilson Sonsini, brought in $1.7 billion in 2025, according to The American Lawyer. Still, the gulf between Cooley and Big Law's largest firms remains enormous. Kirkland & Ellis, the industry's revenue leader, cracked $10 billion last year. Latham & Watkins, another go-to firm for Silicon Valley, hit $8.3 billion.

The next wave of tech public listings promises a fortune in legal fees for the chosen few. Gibson Dunn landed SpaceX's IPO. Anthropic tapped Wilson Sonsini for its coming listing. And Cooley is reportedly sharing OpenAI's IPO work with Wachtell Lipton, one of Wall Street's most formidable law firms.

The irony is hard to miss. Big Law is fighting for a piece of the biggest technology companies in the world, even as those companies build the tools that could upend the business of law itself.

Proffitt came up as a lawyer under the old rules. Her next task is to figure out what it will take to build a great law firm under the new ones.

'The winner's circle'

Profitt didn't grow up wanting to be a lawyer but liked how law school taught her to think. Litigation was out of the question: Public speaking during mock trials made her stomach turn. "It was transactional law or bust," she says.

She started her career as a summer associate at Wilson Sonsini and worked her way up to partner. She fell in love with the intensity of the work, pulling all-nighters at the financial printers where she marked up securities filings by hand. She recalls the Christmas Eve when her father marveled that she had made it through the day without taking a work call. After 15 years at the firm, she left for Cooley in 2017.

Three years ago, Proffitt got a call at home that she didn't see coming. Joe Conroy, then Cooley's chief executive, wanted to know whether she would consider succeeding him.

She was flattered, but also "a bit terrified," she says. She spent two decades helping startups, including Unity Software, Procore, and Instacart, raise money and go public. Running a firm with 3,000 employees was another matter. She talked to her family, then put herself forward for the job. She started in 2024.

Proffitt couldn't have guessed how quickly AI would jolt her industry from its steady state. It wasn't too long ago that clients insisted that the technology go nowhere near their work, fearing what would happen if their data disappeared into someone else's model.

"It was clear to me then that we don't get to just exist as we are and continue to be at the top of our game," she says.

Cooley had remade itself once before. The firm's Silicon Valley roots were both a strength and a liability, said Conroy in an interview. Cooley was known for helping startups get off the ground. The conventional wisdom was that as those companies grew, they would graduate to one of the elite New York law firms for their biggest deals and courtroom battles.

To keep clients from the garage to the boardroom, as Conroy put it, Cooley needed to expand. It opened new offices and built out its litigation and capital markets practices. The firm also spent years courting Wall Street banks, says Proffitt, so that when a company asked which law firm to hire for its IPO, Cooley would make its shortlist.

Today, its client roster reads like a Kiplinger roundup of hot tech stocks: Nvidia, Uber, Snowflake, and Zoom, to name a few listings it worked on. Since 2016, Cooley has advised issuers on 183 IPOs that raised nearly $59 billion, making it the second-most active firm by deal count after Latham, according to Deal Point Data. Proffitt wouldn't discuss reports that Cooley has landed OpenAI's IPO work.

For 16 years, Conroy pushed Cooley toward what he calls Big Law's "winner's circle." Proffitt's job is to get it there.

Startup speed

Her strategy starts with making Cooley move more like the tech companies it represents.

Proffitt recruited David Wang, a former lawyer turned legal technology executive, with an ambitious mandate. She didn't just want to make Cooley's lawyers more productive, Wang said in an interview. She wanted to change how clients interact with them altogether.

Earlier this year, Cooley launched a tool with the startup Legora that lets Y Combinator founders review common contracts without calling a lawyer. OpenAI helped it build a tool for Cooley's lawyers to prepare paperwork for companies going public. Next, Cooley is working with Google on an AI agent that scans documents for confidential information before they're filed in court, then suggests redactions for lawyers to review.

There's something almost cannibalistic about a law firm building software that could eat into its own billable hours. But Cooley sees a bigger risk in letting someone else do it. In-house legal teams are increasingly using chatbots to take the first crack at work they would otherwise send to outside counsel. A new breed of "AI-native" law firms is promising cheaper, faster services.

Big Law does not want to be caught flatfooted. Firms are throwing money at startups like Harvey and Legora, and increasingly, they're building their own technology. Kirkland has committed $500 million to proprietary software, starting with a platform for private equity fundraising built with Palantir. Latham bought its own Nvidia servers so it can customize models in-house. Like Cooley, Wilson Sonsini has self-service tools that let companies handle basic legal work.

For Proffitt, the danger isn't lost billable hours. It's the missed connections. The scrappy startup that needs a contract reviewed today might need help closing an acquisition later. But if the bots take care of the small stuff, Cooley could miss its chance to build the relationship.

Proffitt says Cooley must find new ways to connect with clients. Putting technology in their hands is one option, even if it means giving away a little of the work.

"When you need the next thing that matters, the thing that you don't trust to put into the machine," she says, "how do I ensure that you want to talk to our team?"

The firm is also rethinking its own structure for the new era. Wang now leads Cooley AI, a wholly owned subsidiary designed to operate at something closer to startup speed. The separate company gives his team more freedom to hire engineers and put new technology through its paces, he says, without getting bogged down in the parent firm's bureaucracy.

The irony, Proffitt says, is that all this technology could leave lawyers with more time for the human stuff. Lawyers may visit their clients more. Talk through thorny decisions. Drop in on the strategy session to learn how their advice fits into a client's business.

Keeping those relationships alive might require a little more old-fashioned schmoozing. When I asked Proffitt whether the answer was throwing great parties, she didn't entirely disagree. "Everyone loves a party," she says.

The future of legal work

Proffitt doesn't pretend to have a crystal ball. She has ideas, though.

The billable hour? Not dead yet. She expects law firms to offer clients a menu of pricing options, from hourly rates to flat fees and outcome-based pricing.

Hiring slowdowns at the junior level? "Too early to tell," she says.

The apprenticeship model? That gets trickier. If software can write first drafts and spot issues, how will young lawyers get the practice they need? Proffitt says Cooley is exploring ways for associates to sharpen their skills on simulated legal matters, starting with AI-powered mock depositions.

Proffitt came up in an era when canceled dinners and all-nighters were a badge of honor. She's betting that the next generation won't need quite so many of them to become great lawyers. Her test will come a decade from now, when today's junior associates are ready to make partner.

If Cooley has found a better way to teach them, perhaps the old model won't be missed. If it hasn't, no amount of AI can make up the difference.

Melia Robinson is a senior correspondent at Business Insider, where she writes about how artificial intelligence is changing the legal industry.

• Amazon is on an unprecedented spending spree to build more AI data center capacity than anyone else.
• The company has extensive experience, yet even it's struggling to bring capacity online fast enough.
• Internal documents show Amazon getting bilions of dollars of Nvidia GPUs before they can be deployed.

At an internal staff meeting in September, AWS CFO John Felton had a joke for Prasad Kalyanaraman, the executive overseeing much of Amazon's AI infrastructure expansion.

"You've taken us free cash flow negative as a company, so congratulations," Felton said, according to a recording of the meeting obtained by Business Insider.

The remark was lighthearted. But it captured a stunning reversal.

Just two years ago, Wall Street was debating what Amazon would do with its growing cash hoard. Now, cash flow has evaporated as Amazon embarks on its biggest bet ever, spending $220 billion this year alone to build the physical backbone for AI.

At the meeting, Kalyanaraman did not dispute Felton's premise. Amazon's machine-learning and AI business is "hugely free cash flow negative," he said, adding that he expects the company's free cash flow to remain negative for "the next couple of years or so."

Amazon has made big bets before. It spent heavily on cloud computing, fulfillment centers, and its delivery network long before they became some of the company's most valuable assets. Investors questioned those investments at the time, but Amazon ultimately built enormous, profitable businesses from them.

AI is testing this playbook at a far larger scale. Amazon is committing hundreds of billions of dollars to data centers, servers, and power before investors know how quickly those investments will generate revenue.

The company is the best, or among the best, at building data centers, with decades of experience. But the size and complexity of these projects, and the bottlenecks holding progress back, are challenging — even for such a respected cloud pioneer.

Internal documents reviewed by Business Insider and people familiar with the matter show the company trying to coordinate a sprawling industrial system whose parts move on different schedules. A delay in power, equipment, or construction can leave billions of dollars in hardware waiting — and Amazon's cash tied up — while forecasts and costs keep shifting.

Why Amazon thinks it will work

Amazon says it has strong evidence that the capacity will be needed. AWS revenue grew 37% in the second quarter, its fastest pace in 18 quarters, while its backlog reached $496 billion.

CEO Andy Jassy thinks the company has a "clear line of sight" to strong financial returns from this record investment cycle. In his latest annual shareholder letter, he called AI a "once in a lifetime opportunity" and said Amazon would not be conservative in its investments.

"We've been through this cycle with the first big AWS growth wave, and liked the results," Jassy wrote. "We expect to feel similarly about this next wave."

Investors are concerned by the scale of the industry's expansion, especially as AI data centers are costing more to build and taking longer to complete.

The market is "repricing anything that funds multi-year builds against revenue that arrives later," Dan Ives, an analyst at Yorkville Ives, wrote in a recent report. Growing uncertainty around data center permitting and the political fight over electricity prices have given investors another reason to question how quickly these investments will pay off, he added.

Racks, but not enough power

One major industry challenge is securing enough power to run the equipment that goes inside data centers. This includes expensive racks of servers that contain GPUs and other chips that train and run AI models and services such as ChatGPT.

Internal emails from August show Amazon preparing a new "Early Rack Receipt" process for an expected wave of server racks carrying Nvidia's GB300 chips at US facilities before final deployment.

One Amazon email projected the company would take delivery of about $5 billion of Nvidia GB300 racks in August, followed by another roughly $3 billion each month "for the foreseeable future."

Some AWS data center sites had room for more racks but not enough available power to turn them on, people familiar with the effort said, leaving the equipment to be staged at intermediary warehouses until the facilities were ready. These people asked not to be identified discussing sensitive matters.

Timing and coordination

Usually, Amazon doesn't pay for racks until the gear is put into a data center, leaving suppliers to carry the cost of the equipment in transit, according to the internal documents obtained by Business Insider. This helps the company conserve cash.

However, the intensity of the AI data center building boom has made this type of coordination harder. Amazon has to compete more for scarce resources as it jockeys with rivals for access to Nvidia GPUs and other AI components.

Under the new "Early Rack Receipt" process, Amazon now takes ownership of these racks earlier in the supply chain, rather than waiting until the equipment reaches a data center.

The means spending cash sooner. And any delays getting the racks installed and plugged into a reliable power source potentially pushes back the moment when revenue starts flowing from these assets.

At least one AWS supply chain team did not have "a clear forecasted path" for getting racks into data centers, according to one of the emails reviewed by Business Insider.

An Amazon spokesperson said the company routinely stages finished hardware near deployment sites so it can be installed once power capacity is available, calling that approach "best business practice."

The spokesperson added that AWS has "long-established systems" to track infrastructure assets and disputed that the broader company lacks a forecasted path for getting racks into data centers.

This problem is not unique to Amazon.

Bernstein analysts wrote in a recent note that power permits, cooling systems, electrical equipment, construction, and hardware all move on separate schedules.

"Timing is imperfect," the analysts said.

"Inherently uncertain"

During the internal staff meeting in September, Felton, the AWS CFO, described the broader problem eloquently: "How do you work in the future when the future is inherently uncertain?"

Kalyanaraman, the AI infrastructure leader, said Amazon's internal outlook for the return on its AI investments had improved. But the assumptions behind those returns keep shifting.

"The forecast is changing on a daily basis," Kalyanaraman said. "The world that we live in is extremely dynamic."

Those shifting assumptions include when data centers will be ready and how much equipment AWS needs to keep on hand, he explained.

An eight-week supply buffer might be routine for a smaller company. But at Amazon's scale, Kalyanaraman said, this could mean holding "billions and billions of dollars" worth of additional equipment inventory — tying up precious cash.

Frugality meets the AI boom

Such tensions are especially striking for Kalyanaraman, a 21-year Amazon veteran who earlier this year was promoted to the elite S-team that reports directly to Jassy.

Amazon's founding story is defined by frugality. It famously used cheap doors as desks when founder Jeff Bezos started in Seattle in the mid-90s.

Kalyanaraman has absorbed this lore into bones. In late 2023, as AWS faced slower growth and layoffs, he urged employees to do more with less. "Frugality breeds innovation," he said back then.

That instinct still shapes his approach. In the September meeting this year, Kalyanaraman told Felton that AWS tries to make major investments at the "last responsible moment," when it has the clearest possible view of demand.

"If we can wait to spend the capital as late as possible, it's better for us," he said.

But the frenetic pace of the AI boom makes this principle difficult to follow. By the time demand is fully visible, the servers, power, and construction capabilities that AWS needs may no longer be available. That puts pressure on the company to commit more money sooner to secure supply and meet its data center capacity goals.

Kalyanaraman recalled telling Jassy in 2023 that AWS would "surely" be out of its capacity crunch by 2027. Instead, Amazon still expects demand to exceed its available capacity in 2027, the AI infrastructure chief said during the meeting this September.

Secured Power at Risk

Getting enough electricity may be the biggest challenge for an industry leader like Amazon.

The company has 44 gigawatts of data center capacity under development across 16 states, more than double Google, Meta, and Microsoft, according to Cleanview Research estimates.

An internal AWS dashboard called "Secured Power at Risk" tracks utility and regulatory constraints affecting electricity capacity AWS has lined up for its data centers.

The risks include transmission bottlenecks, requirements to reduce use during grid stress, and "use it or lose it" provisions that can jeopardize capacity if a data center project misses usage or construction milestones.

In other words, AWS is not simply waiting for electricity to arrive. It is managing a portfolio of commitments that can become more costly if a data center project is delayed.

Maryland proposals

A submission to Maryland's utility regulator last year, obtained through a public records request, illustrates the kind of exposure that can accompany massive data center buildouts.

Amazon told the Maryland Public Service Commission that large data center customers could help pay for grid upgrades or bring new power capacity to market without burdening other electricity ratepayers.

The company also proposed setting aside collateral to help utilities get more comfortable with the large investments needed to generate more electricity for data centers. Amazon proposed three years of collateral so that if a large electricity customer abandoned unused capacity, the utility would have time to re-sell the power.

The proposal is not evidence that AWS has made such a payment or posted collateral. It does, however, show that large data centers can face extra financial obligations, beyond their own electricity bills, if projects are delayed or cancelled.

The Amazon spokesperson said such utility rules are not unique to AWS. The company has not disclosed how much cash it has paid upfront to secure power.

New constraints 'keep popping up'

The AI buildout also incurs expenses that are harder to model than a conventional capex plan.

In the September meeting this year, Kalyanaraman said that while reviewing plans for gigawatts of capacity in West Texas, AWS confronted a labor problem: There weren't enough nearby pipefitters, electricians, and other skilled workers to build the facilities.

The company's response, he said, was to pay to construct housing complexes near its data centers so workers could live there for the two or three years needed to complete the projects.

Even the crates used to ship servers have become a planning issue. It may seem absurd to worry about the price of a container when servers cost hundreds of thousands of dollars, Kalyanaraman said. But at AWS's scale, where the company needs so many crates, even trivial items can become a material expense.

"We have new constraints that keep popping up," Kalyanaraman said.

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