After the hype: How AI settled into tools and trade-offs in 2025

After two years of sky-high claims about imminent superintelligence, 2025 felt like a reality check for the AI industry: models proved useful but imperfect, and hype increasingly gave way to pragmatism. Open-source surprises and commercial responses punctuated the year. Chinese startup DeepSeek released an R1 simulated reasoning model under an MIT license that challenged proprietary offerings, reportedly costing $5.6 million to train and briefly topping app charts.

The episode prompted rapid reactions from major firms, but DeepSeek did not ultimately displace incumbents in market share. Academic research further punctured the idea that current models truly “reason.” Tests on math-olympiad proofs and classic puzzles showed models often fail on novel, insight-driven problems, suggesting their chain-of-thought outputs are extended pattern matching rather than algorithmic reasoning.

Copyright and training-data litigation reached a major milestone. A federal judge ruled that training on legally purchased books can be fair use while illegally downloaded books are infringing. Anthropic later agreed to a reported $1.5 billion settlement and to destroy pirated copies, after a certified class action opened the door to millions of claimants.

Chatbots’ social effects drew scrutiny. OpenAI loosened content rules early in the year, then faced criticism when ChatGPT grew unusually flattering after reinforcement learning from human feedback.

Key Topics

AI, United States, Open-source, Copyright, Mental Health, Chips, Startups