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Strong software engineers who combine their foundational skills with fluency in rapidly emerging AI tools are more valuable than ever. And while AI boosts overall productivity by 34% on average, its widening the gap between top engineers and those considered weaker.
Those are among the findings from Karat, the Seattle-based technical talent evaluation startup, which released its new “AI Workforce Transformation” report on Wednesday, detailing how artificial intelligence tools are changing the way software is developed and what types of workers are most impacted by the technology.
The findings come from Karat’s survey of 400 engineering leaders across the U.S., India, and China. And the report coincides with the release of Karat NextGen, an AI-enabled talent evaluation solution designed to evaluate software engineers in an era of increased human and AI collaboration.
Among the report highlights:
Tech companies and workers are still adjusting to the shifting landscape of an AI-fueled industry that has traditionally relied on coders to help build and maintain the backbone of digital platforms.
When Amazon laid off 14,000 corporate employees from its global workforce in October, among the 2,303 impacted Washington state workers, mostly in Seattle and Bellevue, more than 600 were software development engineers.
That trend mirrored layoffs at Microsoft earlier this year, as companies reassess their engineering needs amid the rise of AI-driven coding tools.
At Amazon’s re:Invent event last week in Las Vegas, AWS executive Colleen Aubrey went beyond discussing how human employees will leverage AI tools, and said instead that it’s time to consider agentic teammates “as essential as the people sitting right next to you.”
According to Karat’s report, beyond foundational skills such as problem-solving, communication, and product sense, engineers need to be assessed for new AI-native abilities, including familiarity with agentic AI; using AI for coding; integrating 3rd-party AI APIs; prompt engineering; and evaluating and mitigating AI-related risks.
Karat’s report found that nearly 70% of engineering leaders plan to strengthen their AI capabilities through strategic hiring. Yet, almost two-thirds of companies still prohibit AI use in interviews, and less than 30% are updating assessments and training interviewers to identify AI-ready talent.
The startup’s NextGen talent evaluation platform features a human + AI interview format where candidates tackle complex, multi-file projects with an integrated AI assistant while collaborating live with Karat’s expert interview engineers, who probe reasoning, trade-offs, and judgment in real time to reveal genuine engineering ability.
Sagnik Nandy, CTO at DocuSign, a Karat customer, said in a news release that while AI is transforming engineering, “the real breakthroughs happen when human judgment and AI capabilities work together” and a way to measure that combination reliably is what’s been missing.
“A human-led, AI-native interview is exactly the kind of solution organizations need to understand who can truly excel in this new model of development,” Nandy said.
Founded in 2014 by Mo Bhende and Jeff Spector, Karat became one of Seattle’s highest-valued startups after it raised $110 million in a Series C round in 2021, which brought its total valuation at the time to $1.1 billion.
Karat currently ranks No. 15 on the GeekWire 200, our list of the top startups in the Pacific Northwest.
Ivan Mehta / TechCrunch:
Google launches a cheaper AI Plus plan in India, costing ~$2.21 per month for the first six months and ~$4.44 thereafter, to compete with ChatGPT Go — Google on Wednesday launched its more affordable AI Plus plan in India as it seeks to compete on pricing with other low-cost AI offerings, like OpenAI's ChatGPT Go subscription.
Reece Rogers / Wired:
Instagram launches Your Algorithm, which shows users an AI analysis of their activity to let them customize the topics shaping their Reels recommendations — In the battle for your attention, Instagram is betting that more control over the algorithm could keep you scrolling on Reels.
Heather Somerville / Wall Street Journal:
How US startups like Oakland-based Brimstone are racing to develop sources of raw materials that the US needs for tech, an industry China has long dominated — Startups and venture capital are joining the nationwide push to develop new sources of metals the U.S. desperately needs
Jess Weatherbed / The Verge:
Adobe launches free ChatGPT-integrated apps for Photoshop, Acrobat, and Express on desktop, the web, and iOS, after OpenAI added app integrations in October — Just describe your edits to ChatGPT, and the Photoshop, Acrobat, and Express apps will do it for you or surface the tool you need.
New York Times:
Sources: Lip-Bu Tan's dual roles as Intel CEO and tech investor cause consternation in the industry and at Intel; four ex-Intel execs say it caused them to exit — Lip-Bu Tan, who was appointed chief executive of Intel in March, is also a longtime venture capitalist. His dual roles have caused some consternation.
Justina Lee / Bloomberg:
Betting exchange Matchbook plans to launch a prediction market platform in the UK in January 2026 as a “road test” before a planned US launch as early as March — Matchbook, a sports betting exchange, is launching a prediction market platform in the UK as it prepares to compete with rivals Kalshi and Polymarket in the US.
This is today’s edition of The Download, our weekday newsletter that provides a daily dose of what’s going on in the world of technology.
How one controversial startup hopes to cool the planet
Stardust Solutions believes that it can solve climate change—for a price.
The Israel-based geoengineering startup has said it expects nations will soon pay it more than a billion dollars a year to launch specially equipped aircraft into the stratosphere. Once they’ve reached the necessary altitude, those planes will disperse particles engineered to reflect away enough sunlight to cool down the planet, purportedly without causing environmental side effects.
But numerous solar geoengineering researchers are skeptical that Stardust will line up the customers it needs to carry out a global deployment in the next decade. They’re also highly critical of the idea of a private company setting the global temperature for us. Read the full story.
—James Temple
MIT Technology Review Narrated: Is this the electric grid of the future?
In Nebraska, a publicly owned utility company is tackling the challenges of delivering on reliability, affordability, and sustainability. It aims to reach net zero by 2040—here’s how it plans to get there.
This is our latest story to be turned into a MIT Technology Review Narrated podcast, which we’re publishing each week on Spotify and Apple Podcasts. Just navigate to MIT Technology Review Narrated on either platform, and follow us to get all our new content as it’s released.
The must-reads
I’ve combed the internet to find you today’s most fun/important/scary/fascinating stories about technology.
1 Australia’s social media ban for teens has just come into force
The whole world will be watching to see what happens next. (The Guardian)
+ Opinions about the law are sharply divided among Australians. (BBC)
+ Plenty of teens hate it, naturally. (WP $)
+ A third of US teens are on their phones “almost constantly.” (NYT $)
2 This has been the second-hottest year since records began
Mean temperatures approached 1.5°C above the preindustrial average. (New Scientist $)
+ Meanwhile world leaders at this year’s UN climate talks couldn’t even agree to use the phrase ‘fossil fuels’ in the final draft. (MIT Technology Review)
3 OpenAI is in trouble
It’s rapidly losing its technological edge to competitors like Google and Anthropic. (The Atlantic $)
+ Silicon Valley is working harder than ever to sell AI to us. (Wired $)
+ There’s a new industry-wide push to agree shared standards for AI agents. (TechCrunch)
+ No one can explain how AI really works—not even the experts attending AI’s biggest research gathering. (NBC)
4 MAGA influencers want Trump to kill the Netflix/Warner Bros deal
They argue Netflix is simply too woke (after all, it employs the Obamas.) (WP $)
5 AI slop videos have taken over social media
It’s now almost impossible to tell if what you’re seeing is real or not. (NYT $)
6 Trump’s system to weed out noncitizen voters is flagging US citizens
Once alerted, people have 30 days to provide proof of citizenship before they lose their ability to vote. (NPR)
+ The US is planning to ask visitors to disclose five years of social media history. (WP $)
+ How open source voting machines could boost trust in US elections. (MIT Technology Review)
7 Virtual power plants are having a moment
Here’s why they’re poised to play a significant role in meeting energy demand over the next decade. (IEEE Spectrum)
+ How virtual power plants are shaping tomorrow’s energy system. (MIT Technology Review)
8 New devices are about to get (even) more expensive
You can thank AI for pushing up the price of RAM for the rest of us. (The Verge)
9 People hated the McDonald’s AI ad so much the company pulled it
How are giant corporations still falling into this exact trap every holiday season? (Forbes)
10 Why is ice slippery? There’s a new hypothesis ![]()
You might think you know. But it’s still fiercely debated among ice researchers! (Quanta $)
Quote of the day
“We’re pleased to be the first, we’re proud to be the first, and we stand ready to help any other jurisdiction who seeks to do these things.”
—Australia’s communications minister Anika Wells tells the BBC how she feels about her government’s decision to ban social media for under-16s.
One more thing

The entrepreneur dreaming of a factory of unlimited organs
At any given time, the US transplant waiting list is about 100,000 people long. Thousands die waiting, and many more never make the list to begin with. Entrepreneur Martine Rothblatt wants to address this by growing organs compatible with human bodies in genetically modified pigs.
In recent years, US doctors have attempted seven pig-to-human transplants, the most dramatic of which was a case where a 57-year-old man with heart failure lived two months with a pig heart supplied by Rothblatt’s company.
The experiment demonstrated the first life-sustaining pig-to-human organ transplant—and paved the way towards an organized clinical trial to prove they save lives consistently. Read the full story.
—Antonio Regalado
We can still have nice things
A place for comfort, fun and distraction to brighten up your day. (Got any ideas? Drop me a line or skeet ’em at me.)
+ I want to eat all of these things, starting with the hot chocolate cookies.
+ Even one minute is enough time to enjoy some of the benefits of mindfulness.
+ The Geminid meteor shower will reach its peak this weekend. Here’s how to see it.
+ I really enjoy Leah Gardner’s still life paintings.