While OpenAI and Anthropic battle over data privacy, more companies look to open models and ‘sovereign AI’

Data privacy has emerged as a key consideration for companies when choosing an AI vendor, amid fears that frontier AI companies, such as OpenAI and Anthropic, may be quietly using their customers’ intellectual property to improve their models.Some executives worry that using AI models from these companies will eventually result in their “secret sauce” leaking to competitors—or worse, that OpenAI and Anthropic will build products that directly compete with them.

The biggest controversy came in June, when Anthropic began mandating a 30-day retention policy for all chats with its most powerful AI models, Fable and Mythos. Many companies had an “almost allergic reaction” to this, says a source who advises clients on becoming AI-native, speaking under the condition of anonymity because his company works closely with Anthropic. “The industry at large totally rejected it, and was pretty angry about it.”

A month later, both Microsoft CEO Satya Nadella and Palantir CEO Alex Karp warned companies against relying on AI models from frontier AI companies, saying that they risked having the IP siphoned off. “You essentially pay for intelligence twice, once with money, and again with something even more valuable: the proprietary knowledge you must reveal to make that intelligence useful,” Nadella said. OpenAI and Anthropic have stated they do not train their models on enterprise data.

Still, many data security experts say the AI companies may have subtler ways to glean insights about how their customers’ operate that can be used to improve future AI models, without having to train directly on the data the models’ are processing. “From a business standpoint, the risk of any of that data being trained on an AI model is unacceptable,” Rob Gregory, Vice President and Chief Information Security Officer at Optiv, a B2B cybersecurity advisory company, tells Fortune. “We’re at a very interesting........

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