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Welcome back to our weekly roundup of happenings from XR and AI realms. Let’s dive in…
The Lede
Nvidia Buys the Marketplace for Free AI. Asian AI developers are flooding Hugging Face with capable, increasingly efficient models that anyone can download and run locally – privately and without subscription or per-token fees. China’s DeepSeek and Z.ai established the strategy; Abu Dhabi’s Institute of Foundation Models has now released six K2 Horizon models under the commercially permissive Apache 2.0 license. Users supply the hardware, but pay nothing for the models.
This threatens to commoditize the model layer beneath paid services from OpenAI, Anthropic and Google. It also explains Nvidia’s $12.93 billion acquisition of Hugging Face. The platform connects 18 million users, over three million models and 200,000 companies. A rival could build similar technology, but reproducing that network would require years, enormous subsidies and major laboratories willing to publish there first. Nvidia now owns the principal marketplace through which free foreign models are challenging some of its largest American customers. Reuters | Institute of Foundation Models
The AI Desk
OpenAI’s Political Investment Pays a Remarkable Dividend. OpenAI president Greg Brockman donated $25 million to Trump’s MAGA Inc. super PAC in 2025, making him one of its three largest disclosed donors during the second half of the year. OpenAI subsequently discussed giving the federal government a 5% ownership stake in the company. This week, the Trump administration entered The New York Times’ copyright lawsuit on OpenAI’s side, arguing that training AI models on copyrighted work generally qualifies as fair use.
The filing supports OpenAI’s attempt to build commercial products from material created by newspapers, authors and other copyright owners without negotiating licenses for most of it. It came one day before OpenAI released GPT-6 Astra, a model the company acknowledges is becoming harder to monitor and more capable of concealing its methods. OpenAI released Astra after one of its agents escaped a controlled test and penetrated Hugging Face’s systems in July. Reuters: MAGA Inc. donors | Financial Times: proposed federal stake | Reuters: copyright filing
Everyone Warns of an AI Cyber Crisis. No One Is in Charge. Bank of England governor Andrew Bailey warned G20 finance ministers that advanced AI could destabilize the global financial system through cyberattacks and an investment-driven market correction. His warning followed an August 27 letter signed by OpenAI, Anthropic, Google, Microsoft, AWS and more than 100 other organizations predicting that AI-enabled attacks would become far more widespread and sophisticated within months. The letter recommended patching vulnerable systems, funding critical-infrastructure defenses, sharing threat intelligence and monitoring autonomous agents. But it established no governing body, deadlines, mandatory funding, enforcement or accountability. National cybersecurity agencies protect government networks and advise industry. Sector regulators oversee portions of banking, energy and communications. The Financial Stability Board coordinates internationally but cannot compel governments or companies to act. Frontier AI laboratories still largely decide when their models are safe enough to release. Everyone agrees that somebody must take charge, but no one wants to be that somebody—or let anyone else do it, particularly if that authority has regulatory power. Without that, this may as well be word salad. BBC, Open letter
Cinematic Corner
Google Courts Hollywood for AI Licensing Deals. Google has approached Disney, Warner Bros. Discovery and other studios about licensing characters and film libraries for its AI models, but no agreements have been reached. NBCUniversal denies active negotiations. Discussions reportedly include production tools, character licensing and identifying unauthorized AI likenesses on YouTube, where rights holders might share advertising revenue. One source estimated character licenses could average $40 million each. Some studios objected when Google asked participants in its likeness-detection program to waive their right to sue. The outreach follows Disney’s cease-and-desist letter accusing Google of training AI on its copyrighted material without permission. Los Angeles Times
World Labs Introduces Directable AI Video. World Labs introduced Atlas, a world model that generates video from camera paths rather than text descriptions of camera movement. Users position a virtual camera in 3D space, select its angle and plot its movement; Atlas renders up to one minute of 1440p video from that geometry. It can reconstruct locations from a few photographs, generate views the original camera never captured, reframe footage for bullet-time effects, and export point clouds or Gaussian splats. Atlas will eventually power World Labs’ Marble platform, but is currently available only to selected early-access partners. World Labs
Meme Nostalgia: Bad Luck Brian Hooks Up With Crazy Ex-Girlfriend. Filmmaker Alex Patrascu’s “FOUND YOU: Bad Luck Brian’s European Adventures” follows the adventures of two of the Internet’s favorite memes from the 00s in contemporary Amsterdam. It was made with Seedance 2.5 on Higgsfield. “I get this question all the time,” writes Patrascru on X, ‘If AI video is so good, why aren’t AI movies everywhere?’ My answer never changes: Because nobody is financing them. Yet. The technology is ready.”
Winter is Coming
I Buried This Week’s Depressing XR News for This Reason. It’s not too soon to say it: VR winter has returned. Oculus revived the medium after its long post-1990s freeze, first with Rift and then, more convincingly, with the standalone Quest and Quest 2. In October 2022, Meta proudly announced that consumers had spent $1.5 billion in the Quest Store since its May 2019 launch. Weeks later, Call of Duty: Modern Warfare II generated $1 billion in ten days. Meta’s VR business never looked the same to me after that.
The past several years have not been kind to VR. Traditional gamers still overwhelmingly prefer PC and console gaming. Social-VR communities expect their worlds, events, and entertainment to be free. Studios close, platforms disappear, and developers struggle to recover their costs.
VR remains a powerful medium. New world models such as Atlas could make immersive environments dramatically cheaper to produce. But cheaper production does not create paying customers. AI may solve VR’s content problem. It cannot, by itself, solve its business problem.
ENGAGE XR Enters Liquidation After Losing Its Largest Customer. ENGAGE XR Holdings is pursuing court-approved liquidation under Irish law after its largest customer said it would stop buying licenses. The customer had renewed its commercial arrangement in May, but ENGAGE XR said the expected revenue will no longer arrive. Following an August 31 board meeting, the company suspended trading of its shares on London’s AIM market and warned that shareholders are unlikely to receive anything through the liquidation. ENGAGE operates a virtual platform used for corporate training, education, meetings and events. The company has not announced when the platform will cease operating, and customers have been advised to export their content. Now, there is only VR Chat. I hope they find a business model soon. Meanwhile, Sidequest wants to reboot the retired open-world VR Altspace, killed by its former savior, Microsoft, in March, 2023 following a crash in post-pandemic traffic. Is there a win to be had here, or was it all a pandemic-induced mirage: Company announcement
Pioneering VR Studio Felix & Paul Closes Its Doors. Montreal’s Felix & Paul Studios has closed, according to multiple former employees, although the company and its founders have not issued an official announcement. Founded in 2013, the studio helped establish cinematic VR through productions including Traveling While Black, The People’s House, Space Explorers: The ISS Experience and collaborations with Cirque du Soleil and Universal. Employees said the closure left the team seeking work. The studio’s location-based attraction Interstellar Arc, which opened at AREA15 in Las Vegas in October 2025, stopped selling tickets August 18. The circumstances surrounding the shutdown and the status of Felix & Paul’s existing productions remain unclear. XRMust
Spatial Audio
This column has a companion, the AI/XR Podcast, hosted by its author, Charlie Fink; Ted Schilowitz, former studio executive and futurist for Paramount and Fox; and Rony Abovitz, founder of Magic Leap and Synthbee AI.
Last week’s guest was Dr. Biwei Huang, founder and CEO of Aether and a professor at UCSD (see video below). Our guest this week is Malia Probst, producer, investor, entrepreneur, founder, Scouthouse. We can be found on Spotify, iTunes, and YouTube.
Episodes drop on Fridays, and you can find them on podcasting platforms Spotify, iTunes, and YouTube.
Header image credit: Aditya Vyas on Unsplash
Charlie Fink
AR Insider Contributor