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Welcome to The Prompt by Kuro House, your daily AI update. Today, we’re diving into five stories that show how AI is shaping products, markets, and even legal battles. Let’s get started.

First up, Google’s Gemini AI is showing off some impressive but tricky capabilities by recreating a kid’s favorite stuffed animal on demand. According to The Verge, a parent tested Gemini by feeding it photos of their child’s plush toy and asked it to find a replacement online. Gemini generated a detailed, almost humorous essay about what the toy might be, even debating if it was a puppy or a bunny. It also created convincing images and videos of the toy on adventures, like snowboarding and even on the moon, but with some quirks like sneaky antlers showing up. While the tech is impressive, the parent expressed discomfort with AI-generated videos addressing their child directly, highlighting ethical questions about AI in parenting.

Next, Hollywood’s 2025 romance with AI hasn’t exactly delivered the magic it promised. The Verge reports that despite big investments and partnerships, like Disney’s billion-dollar deal with OpenAI, AI-generated content remains mostly low-quality and unconvincing. Studios have used AI for post-production tasks, but attempts at AI-driven text-to-video content often fall flat, with Amazon’s AI-generated dubs and recaps serving as cautionary tales. Still, major players like Netflix and Disney are pushing forward, aiming to integrate AI more deeply into production and streaming, signaling a messy but persistent future for AI in entertainment. It seems Hollywood is settling into what some call the “slop era” of AI-generated content.

Turning to Europe, the startup scene is buzzing with energy but the numbers don’t fully back it up yet. TechCrunch highlights that while European venture capital investments reached about 43.7 billion euros through Q3 2025, this is on pace to just match previous years, not surpass them. Fundraising for venture firms is down sharply, hitting a decade low, though emerging managers are stepping up to fill some gaps. Interestingly, U.S. investors are returning to European deals, attracted by lower valuations, especially in AI startups like Sweden’s Lovable and France’s Mistral. And big exits like Klarna’s recent IPO are boosting confidence and ambition among European founders who now think globally, not just regionally.

On the regulatory front, Italy is pushing back against Meta’s policy banning rival AI chatbots on WhatsApp. TechCrunch reports that the Italian Competition Authority ordered Meta to suspend this policy, citing concerns about abuse of market dominance and harm to competition. The policy, set to take effect in January, would block AI chatbots like ChatGPT from using WhatsApp’s business API, while still allowing AI-powered customer service bots. Meta argues the business API isn’t meant for chatbot distribution and plans to appeal the decision, calling it fundamentally flawed. This case highlights the growing legal scrutiny around AI platform control and fair access.

Finally, a quick look back at the Gemini AI story reminds us that while AI can create delightful digital experiences, it also raises deep questions about authenticity and emotional impact. As AI tools become more capable of mimicking real life, balancing innovation with ethics will be crucial. That’s the kind of thoughtful conversation we want to keep having here on The Prompt.

Thanks for tuning in today. We’ll be back tomorrow with more AI news that matters to you. Until then, keep prompting and stay curious.