The State has entered the Model Loop - by Peter Idah
The Agentic Age
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The State has entered the Model Loop
Peter Idah<br>Jun 27, 2026
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Sam Altman is now approving access to GPT-5.6 customer by customer. The United States government asked him to do it. Altman has said he does not like the idea of the government picking customers. OpenAI is complying anyway.<br>That detail is more important than the model itself.<br>Thanks for reading The Agentic Age! Subscribe for free to receive new posts and support my work.
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For most of the short history of generative AI, the operating assumption was straightforward. Labs built models, released them to the market and then dealt with the consequences. Governments might regulate how the technology was used, but the decision to ship rested largely with the companies that built it.<br>Over the past few weeks, that assumption has started to change.<br>On 2 June, President Trump signed an executive order requiring federal review of frontier models before public release. The legal architecture was built before anyone noticed.<br>Ten days later, Anthropic said the U.S. government had issued an export-control directive that forced it to suspend access to two of its frontier models for foreign nationals, including some of its own employees. The legal mechanism was designed for physical weapons, not cloud-served software.<br>Then OpenAI restricted GPT-5.6 to a small group of trusted partners at the government's request. The request was framed as a national-security precaution, but the practical effect was the same: the government influenced who received access to the most advanced commercial AI system in the world.<br>Taken individually, each event can be explained away. One is a benchmarking framework. One is an export-control dispute. One is a delayed product launch.<br>Taken together, they reveal something larger.<br>The state has entered the model loop.<br>A few months ago, the working assumption was simple. Labs built models. Labs released models. Markets decided what happened next.<br>That assumption is weakening.<br>A different pattern is beginning to emerge. Governments are no longer content to regulate the use of frontier intelligence after it has been released. They increasingly want visibility before release, influence over distribution and a say in who gets access.<br>Frontier AI is beginning to look less like a software product and more like a strategic technology.<br>That matters because markets are still pricing many AI companies as though they are software companies.<br>Software companies are expected to scale rapidly and distribute products as widely as possible. Their valuations assume that customer acquisition, international expansion and distribution are commercial challenges rather than political ones.<br>Frontier AI is beginning to reveal a different risk profile.<br>If access to the best models can be slowed, reviewed, narrowed or shaped by government, then the economic asset investors are pricing is not quite the same asset regulators are beginning to see.<br>The market is still pricing software.<br>The government is beginning to regulate strategic capability.<br>That spread is one of the most important variables in the AI economy.<br>There is a historical precedent here.<br>In the 1990s, Phil Zimmermann found himself in a strange position. The U.S. government treated his encryption software, PGP, as something closer to a munition than a computer program. So Zimmermann published the source code as a book. Books enjoyed the protections of free speech in a way exported software did not.<br>The details are different. The argument is not.<br>The technology changes. The argument does not. Once a digital capability becomes strategically important, the question shifts from what it can do to who gets to decide who may access it.<br>If the pattern is repeating, the investment implications are substantial.<br>The question is no longer which company will build the best model. Investors also need to ask which companies can continue to distribute, monetise and expand access to frontier intelligence in an environment where governments increasingly view that intelligence as a strategic asset.<br>That shift favours a different set of capabilities. Political relationships. Compliance infrastructure. Trusted-partner programmes. Geopolitical positioning. All begin to matter more than they did before.<br>None of this means that progress in AI stops or that frontier models stop improving.<br>It means the economics are becoming more complicated than the market has been assuming.<br>The first phase of the AI boom was a race for capability. Investors wanted to know which model was strongest, which benchmarks had been beaten and which lab possessed the deepest compute cluster.<br>The next phase will be shaped by questions of permission and access. Who gets frontier intelligence, under what conditions, in which countries and with whose approval may prove to be every bit as important as which company builds the next state-of-the-art...