Investors in Europe woke up to a new kind of legal risk this week, and it was not coming from regulators or courts. It was coming from Anthropic. A single AI plug-in, pitched as a way to automate routine legal work, helped vaporize hundreds of billions in market value from software and data companies that had long sold themselves as indispensable.
What rattled traders was not just another chatbot, but the realization that Anthropic’s legal “co‑worker” might sit directly on top of the very data and workflow businesses that dominate European markets. In a single trading session, that fear translated into a brutal repricing of how much those data assets, and the software wrapped around them, are really worth.
The legal plug-in that spooked the market
The immediate trigger was Anthropic’s decision to launch new plug-ins for its Claude Cowork agent that promise to automate tasks across legal, sales, and marketing. According to one account, the AI developer Anthropic rolled out these tools on a Friday, positioning Claude Cowork as a kind of always-on assistant that drafts, reviews, and routes documents before a human ever opens the file, a shift that directly challenges billable-hour workflows and subscription research tools that lawyers rely on today, as described in detail in Anthropic. Another summary of the same rollout stressed that Anthropic’s new AI tools were framed as a way to “act first and ask questions later,” a phrase that captured why traders suddenly saw deflationary pressure bearing down on software and data analytics, a concern echoed in analysis of the selling pressure.
What made this plug-in feel like a “legal weapon” was its scope. Reporting on the launch describes a tool that can handle legal tasks such as reviewing contracts, flagging risks, and tracking compliance, effectively turning Claude into a paralegal that never sleeps, a capability highlighted in coverage of Anthropic. Another breakdown of the episode framed it as an “AI legal tool” that triggered a stock plunge across Europe, with traders pointing directly to Anthropic as the culprit behind the sudden repricing of legal-tech and data-service names, a link made explicit in the Key Points summary.
How $300 billion vanished from software and data stocks
The market reaction was swift and brutal. A pair of S&P indexes tied to software and data services lost around $300 billion in combined market value as investors dumped shares in companies whose core business is selling access to structured information and workflow tools. One recap of the rout noted that legal software firms and other data service companies were “ditched” on fears that AI will gut the industry, with a newsletter warning that sentiment around software had turned sharply negative after the debut of a new automation tool, a mood captured in the phrase Software Stocks Ditched.
European names were hit particularly hard. One of the catalysts for Tuesday’s selloff in European software was explicitly identified as Anthropic’s legal plug-in for its AI chatbot, with traders and analysts tying the move to concerns that clients would replace expensive subscriptions with a single AI layer, a connection spelled out in coverage of European markets. Another report on data service stocks noted that Data service stocks in Europe and the U.S. plummeted as Anthropic’s new legal tool triggered a significant impact, with the selloff spilling into Stocks and ETF products tied to AI-sensitive sectors, as summarized in the analysis of Data.
European data champions in the crosshairs
The damage was not abstract. One summary of the selloff highlighted that Companies in media and information services saw some of the steepest declines, with Thomson Reuters on track for a record one-day loss as investors questioned how much of its revenue base could be replicated by AI systems that ingest public filings and case law, a concern detailed in reporting on affected Companies. Another breakdown of the turmoil pointed out that Tuesday’s big drop for LegalZoom, Thomson Reuters and RELX ( RELX PLC ) was framed as part of a broader pattern for software investors, who have already endured multiple AI-driven resets of expectations, a pattern underscored in commentary on Tuesday.
European software specialists were not spared either. One account of the rout noted that Its shares were down 1.9% on Tuesday and down 40% from last year’s high, a stark illustration of how quickly AI fears can compress valuations in a sector that once traded at premium multiples, with broader European software names falling between 4.2% and 8% in the same session, as captured in the detailed breakdown of Its performance. Another market wrap described how Shares of legal software firms and other data service companies were “gutted” as investors reassessed whether AI tools could replace a good chunk of their revenues, a sentiment captured in the phrase Shares of.
From copyright minefield to “orphaned data” risk
Behind the trading screens, a deeper structural debate is unfolding about who really owns the value in legal and financial data. One legal analysis framed the current moment as a $1.5 billion reckoning in which AI no longer operates in a legal grey zone, arguing in an Editor’s Note that enforcement is accelerating in Europe and India and that every dataset used to train or power AI now carries a price tag, a shift spelled out in the Editor commentary. The same piece delves into The Courts and the Operational Reality of “Orphaned Data,” warning that unresolved rights around legacy datasets can create liabilities for any foundation model that quietly ingested them, a risk that now looms over AI deployments in the United States and beyond, as detailed in the section on Courts and the.
For European data champions, that legal minefield cuts both ways. On one hand, incumbents argue that their curated, rights-cleared databases should command a premium in an era when regulators in Europe and India are scrutinizing how AI models were trained, a stance that aligns with the view that Europe and India are moving to enforce that data carries a price tag, as emphasized in the Note. On the other, tools like Anthropic’s legal plug-in threaten to commoditize the interface to that data, turning what used to be a differentiated research platform into a back-end feed for an AI that clients experience as the real product, a shift that helps explain why investors see a structural debate over the value of software-powered technologies and data assets, as flagged in commentary on the deepening structural debate.
Why this panic feels different for AI and legal-tech
Market panics around AI are not new, but this one feels different because it is anchored in a concrete product that investors can model against existing revenue streams. One recap of the day’s trading noted that a new AI automation tool from Anthropic PBC sparked a rout in stocks across the software, financial services, and legal sectors before indexes trimmed losses to 1.6%, a chain reaction summarized in the Takeaways summary. Another market note described how worries about AI’s impact on software led to a downturn framed as “Software and Legal Services Get Crushed. AI Panic Hits the Market,” with Worries about long-term profitability driving indiscriminate selling, as captured in the phrase Software and Legal.
At the same time, some investors see opportunity in the chaos. One analysis of the European selloff argued that Anthropic’s new AI tools deepen selloff in data analytics and software stocks, but also framed the move as a rational repricing that separates companies with proprietary, defensible data from those that simply sit between clients and information, a distinction highlighted in commentary from Chibuike Oguh, Samuel Indyk and Dani on Anthropic’s impact. Another recap of the day’s events urged readers to “Get caught up” on how Wall Street sentiment around software had shifted, noting that Legalzoom.com declined 19% as investors reassessed the durability of its model in a world where AI can draft and review basic contracts, a shift captured in the phrase Get.
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