Shares in the foremost data, publishing, and legal software firms in Europe plummeted after Anthropic debuted a new tool targeting in-house counsel. This news rattled investors who had previously viewed the industry as a beneficiary of AI innovations.
In London, RELX saw a decline of nearly 11%, while Pearson dropped by about 4%. Both the London Stock Exchange Group and Experian faced reductions exceeding 7%. In other parts of Europe, Wolters Kluwer decreased by almost 9% in Amsterdam.
The downturn was sparked by Anthropic’s rollout of a legal productivity tool aimed at automating functions such as contract evaluations, non-disclosure agreement analyses, compliance verifications, and simple legal queries. The company highlighted that the software will not provide legal advice and that outputs need to be vetted by qualified professionals.
In spite of these reassurances, the market reacted quickly and decisively. Investors are apprehensive that as general-purpose AI continues to evolve, costly data subscriptions and legal software applications may become more replaceable and affordable.
From AI Triumphs to AI Challenges
Data and professional information companies have historically been viewed as relatively impervious to disruption due to their proprietary databases and reputable brands. Yet, this notion is now being tested. Anthropic’s action has intensified concerns that AI models, trained on vast public datasets, might duplicate tasks traditionally reserved for high-margin enterprises.
According to UBS data, a cohort of European stocks considered most susceptible to AI disruption fell to unprecedented lows this week. This sell-off is also indicative of a broader decline in global software equities. Wall Street has been trimming its exposure to software companies for months, but sentiment has deteriorated as new AI tools advance more swiftly than firms can prove their profitability.
In the US, legal and data organizations such as Thomson Reuters also encountered difficulties, while the overall North American software index suffered its most substantial monthly drop since the financial crisis. The sell-off coincides with overarching economic worries.
Research from Morgan Stanley reveals that the UK is already shedding more jobs than it is generating as AI adoption quickens, with the professional services sector particularly impacted. London Mayor Sadiq Khan cautioned that white-collar positions in law, finance, and marketing are “at the sharpest edge of change.”
Investor attitudes remain mixed, with some contending that the sell-off has been excessive, while others assert that uncertainty lingers in the AI competition.
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