Good morning from OWITH.ai, the podcast that gives you only what's important to hear in the AI and tech world.As 2025 comes to a close, the focus for many in private markets is shifting towards 2026, especially regarding AI startups. The coming year is expected to present significant challenges due to high computing costs, compressed margins, soaring valuations, and high expectations. Consequently, an increase in acquisitions and acquihires is anticipated as tech giants aim to integrate AI capabilities swiftly rather than develop them internally. Several industry experts have identified key AI startups that could become acquisition targets. Companies like Wayve, Physical Intelligence, WorldLabs, Bedrock Robotics, The Bot Company, and GenesisAI are noted for their advancements in real-world AI applications such as robotics and autonomous vehicles. They are developing critical technologies that incumbents would find challenging to replicate.Further predictions suggest that large AI players might consider acquiring boutique investment banks to enhance their historical financial models requiring specialized domain expertise. Large foundation model companies may also aim to acquire application layer firms with established product-market fit, particularly in coding tools. Observability platforms like Datadog or Sentry may become targets as they provide critical context that can enhance AI's utility for developers. Acquiring enterprise AI solutions in customer support or enterprise search might benefit large companies looking to expand their capabilities. Despite the excitement around these potential acquisitions, any deals would require thorough scrutiny due to the significant capital already invested in many of these businesses. The expectation for 2026 is that the market will start sifting through the hype to determine which AI companies can succeed long-term.Transitioning now to international developments... In the final edition of the Fortune Tech Newsletter for 2025, the U.S. government announced a significant escalation in its tech defense measures against the European Union. Five prominent Europeans are now barred from entering the United States due to allegations of stifling American free speech. This marks an intensified objection to European regulatory efforts on social media platforms and AI, which have targeted major American tech firms like Google and Meta. These companies have faced investigations and fines under the EU's Digital Services Act. Recently, Elon Musk's X was fined $140 million for deceptive practices under this act.Additional tech industry updates include ServiceNow's acquisition of cybersecurity startup Armis for $7.75 billion and a DDoS attack disrupting French postal services. There's also news about Motive's filing for a U.S. IPO despite not being profitable, China's extensive chatbot testing fostering a support industry, Harman's acquisition of ZF's auto tech business for EUR1.5 billion, and more developments within major corporations such as Comcast and Snowflake.As we transition to global political affairs... The U.S. military is increasing its presence in the Caribbean, potentially preparing for an attack on Venezuela to pressure President Nicolás Maduro out of office. This marks one of the largest military operations in South America under President Trump's administration.In business news related to technology, Ariane Gorin from Expedia Group discusses how AI is transforming the travel industry with significant revenue increases attributed to partnerships with tech companies like Google and Bing. Meanwhile, financial markets are experiencing mixed reactions with U.S. stocks reaching new highs driven by inv
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