Wall Street typically doesn’t freak out about a product update. But on Tuesday, a single AI announcement was all it took to send tremors through the European software and information-services sector, obliterating billions of euros in market value in just a few hours.
The turbulence occurred after the company released new plug-ins for Anthropic’s Claude “Cowork” system to automate down-to-earth business work such as legal support, sales aid and assistance, marketing tasks and analytics.
That might sound like yet another incremental addition of the next best thing in AI, but investors reacted as if they were listening to a warning siren: Once AI agents can plug directly into workflows and begin delivering usable output immediately (or all along), an entire class of expensive enterprise subscriptions starts to look less than vital.
Nor was the fear theoretical: It was financial, immediate and brutal. Investors quickly dumped a host of software and data-related stocks as fears emerged that AI could undercut pricing power and upend time-honored business models, according Reuters.
Stocks in big players were slammed. Thomson Reuters tumbled, and other European giants – RELX and Wolters Kluwer, for example - also slid.
These are not the sorts of companies that tend to be thrown around by hype cycles – they’re seen as stable, defensive names with recurring revenue and huge customer reliance.
That’s precisely why the market response may have seemed so dramatic. That’s when investors start viewing “safe” stocks in the same light as risky ones, a sign that they believe the ground beneath an industry may be about to change.
A key reason the selloff felt different is that it wasn’t solely one company being punished. The anxiety rippled through a broad array of companies working in the fields of software, business intelligence, legal research and data services - including even advertising-related industries.
Markets’ message was clear: AI is here, it’s not merely a buzzword that inflates valuations. It’s increasingly viewed as an existential competitive force, one that could supplant or undercut products that once justified high fees.
Reuters also reported that software and similar types of companies were hit the hardest as investors reappraised which would be most vulnerable if AI ends up being a cheaper replacement for information and workflow tools, though the overall European market fared better.
What’s going on here is a growing disjunction between the story line. For the last year or two, AI has been treated as a kind of business “Ride of the Valkyries” – by which I mean it’s been easy for large conglomerates to leverage existing data, coo about AI, add what they call “AI features” and then put their prices up while marketing their machines.
But this week’s response indicates markets are beginning to think the opposite can also be true.
It’s not only that AI can improve existing products but in some cases it can remove value from entire product categories-why would a customer need to wade through databases, dissect reports by hand or pay for multiple specialized tools when one general purpose AI assistant could yield “good enough” output on the spot?
TechCrunch’s coverage of Claude Cowork’s new agentic plug-ins highlights that very pragmatic move - from AI as a chatbot to AI as an active worker inside actual enterprise systems.
That shift is important because it shifts the competition to “who has the best A.I. demo” to “who own the workflow.”
And here’s the portion that feels nearly strange to utter, but it’s likely motivating the strongest fear: AI doesn’t have to be perfect.
It just needs to be good enough for a CFO to ask: “Why are we paying for this?” It is that question alone that can break pricing power, even if the legacy tools still remain better in certain ways.
The timing is further complicated by the fact that authorities are clamping down on AI just as its use is escalating.
The AI Act logic is taking shape and moves increasingly towards more demanding transparency and compliance requirements – in particular for high-impact AI.
This is important because particularly for companies trying to pivot into AI-driven models rapidly, there may also be higher costs of regulation and legal friction as competition heats up.
At some deeper level, Tuesday’s selloff wasn’t so much about Europe, or any one company’s plug-ins. It was a story about a different kind of economic squeeze in the white-collar digital economy.
For years, legal research companies, analytics providers, marketing platforms and data aggregators have made money by helping professionals cut through complexity.
The promise of AI is to take that complexity off the user’s hands and tell you the answer straight up. If that works at scale, it isn’t just changing tools – it’s changing who gets paid for what.
The smartest firms in this sector will probably survive by embracing adaptation, not fighting it. Their proprietary databases, trusted brands, compliance infrastructure and relationships with enterprise customers who care about security and long-term reliability as much as scalability all remain valuable.
But investors are clearly indicating that those strengths no longer suffice on their own. The future will be dominated by the firms with unique data, AI baked into their core workflow and evidence that human operators still can’t manage without them now that AI assistants are everywhere.
Just how much the market overreacted is a matter of conjecture. But the signal behind the selloff seems impossible to miss: AI is no longer merely “innovation.”
It’s competition. And competition is often what turns calm markets into stampedes.