Amazon.com Inc. CEO Andy Jassy reportedly raised security concerns about Anthropic's Fable 5 model, prompting a U.S. export control ban on its Mythos-class AI models and a subsequent global shutdown. The Wall Street Journal reported Saturday that Jassy informed Treasury Secretary Scott Bessent that Amazon researchers used the Fable 5 model to obtain information usable in cyberattacks. This warning led the government to direct Anthropic to bar foreign nationals from the systems on national security grounds, resulting in the company disabling access to Fable 5 and Mythos 5 on Friday.

Security concerns and regulatory action

The Information and Reuters similarly reported the concerns, attributing them to Amazon, a major Anthropic investor. David Sacks, former White House AI and Crypto Czar who currently co-chairs the President’s Council of Advisors on Science and Technology, stated on X that a “highly credible trusted partner” of both Anthropic and the U.S. government found a jailbreak while testing Fable. Sacks wrote that the administration asked Dario Amodei, Anthropic's CEO, to fix the jailbreak or de-deploy the model, but Amodei refused.

Anthropic's response and capabilities

In a blog post, Anthropic said the capabilities apparently causing government concern are already available in other publicly accessible AI models. The company has not yet responded to requests for comment regarding the specific allegations or the shutdown.

Strategic partnership and investments

The security incident occurs amid a deepening financial relationship between the two companies. In April, Anthropic committed to spending over $100 billion on Amazon Web Services infrastructure, including Trainium chip capacity. Amazon added $5 billion in fresh investment in the startup, building on its earlier $8 billion stake. Amazon became a major shareholder in the Dario Amodei-led AI startup in September 2023.

Anthropic has faced increased scrutiny recently, with the Pentagon designating its Claude models a supply chain risk earlier this year. The company is also expected to go public later this year.

Amazon.com Inc. has secured a $17.5 billion delayed-draw term loan to fund its artificial intelligence build-out, marking a shift from its historical reliance on cash flow. The loan facility was arranged by a syndicate of banks including Citibank, JPMorgan, Bank of America, HSBC, and Wells Fargo, according to a filing dated June 8. The delayed-draw structure allows Amazon to access the funds as needed, providing flexibility for its capital deployment strategy.

Capital Expenditure and Cash Flow Dynamics

Amazon's financial strategy is evolving in response to significant investment requirements. The company's 2026 capital spending is tracking toward roughly $200 billion. This surge in expenditure coincides with a sharp contraction in liquidity, as trailing twelve-month free cash flow has collapsed to about $1.2 billion, down from roughly $26 billion a year earlier.

Industry-Wide Shift to Leverage

Amazon is not alone in turning to debt markets to finance technology investments. Combined AI spending across the largest technology firms is expected to exceed $700 billion this year. Meta Platforms Inc. filed for its largest bond sale ever in October, seeking up to $30 billion, while Alphabet Inc. disclosed its first yen-denominated bond sale last month. This trend indicates a departure from the cash-rich playbook that characterized the cloud computing era, as major technology companies increasingly employ leverage to fund expansion.

Market Sentiment and Predictions

The increased borrowing and capital expenditure have introduced volatility into the market. Oracle Corp. recently experienced its worst week since 2002, with a 15% decline, following concerns regarding its own AI capital expenditure and negative free cash flow. Prediction markets offer a mixed outlook on the sustainability of this spending surge. Kalshi's "Recession this year?" market places the odds of a 2026 downturn at about 20%, while Polymarket's "AI bubble burst by…?" contract assigns a 22% probability to an industry downturn by Dec. 31, 2026. Despite these risks, traders continue to price in a bull market, suggesting confidence that the current build-out and borrowing cycle will persist.