RELX Plc and Wolters Kluwer NV, both providers of professional analytics, fell more than 10%. Other software companies dropped, credit-reporting firm Experian Plc slid 9.0% while financial data provider London Stock Exchange Group Plc. Thomson Reuters Corp., Legalzoom.com Inc. and FactSet Research Systems Inc. all slipped around 10% or more. The iShares Expanded Tech-Software Sector ETF fell as much as 4.4%, while a UBS Group AG basket of European stocks deemed at risk of AI disruption fell nearly 7%.

“Anthropic launched new capabilities for its Cowork to the legal space, heightening competition within the space,” wrote Morgan Stanley analysts include Toni Kaplan in a note on Thomson Reuters. “We view this as a sign of intensifying competition, and thus a potential negative.”

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Anthropic is part of a rash of AI startups developing tools for the legal industry. Long before Anthropic’s plugin, startups including Legora and Harvey AI, were flooding the legal AI space, offering tools that they’ve marketed as saving lawyers from grunt work. Investors have been pouring money into AI products for the legal industry for more than two years now, with Harvey AI being valued at $5 billion last year and Legora raised funds at a $1.8 billion valuation.

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Anthropic stands in contrast, however, in that it builds its own models that can be customized for an industry’s specific needs. Its position in the AI ecosystem as a major model developer gives it the unique advantage of disrupting both traditional legal news and data services as well as legal AI upstarts. Firms like Legora rely on the underlying models from developers like Anthropic.On its website of plugins, Anthropic included a legal tool that it says can automate work like contract reviewing and legal briefings. “All outputs should be reviewed by licensed attorneys,” according to the website.
Perceived risks to the software industry have been simmering for months, with the January release of the Claude Cowork tool from Anthropic supercharging disruption fears. Video-game stocks got caught up in the slide last week after Alphabet Inc. began to roll out Project Genie, which can create immersive worlds with text or image prompts.
Among US public companies, so far this earnings season just 71% of software companies in the S&P 500 have beaten revenue expectations, according to data compiled by Bloomberg. That compares with 85% for the overall tech sector.

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“This year is the defining year whether companies are AI winners or victims, and the key skill will be in avoiding the losers,” Stephen Yiu, CIO of Blue Whale Growth Fund.

“Until the dust settles, it’s a dangerous path to be standing in the way of AI,” said Yiu.