When using max effort, I run into context compaction quite a lot. I haven't seen any increase in context window size at all over the past half year (stuck at 1M).

Are the frontier labs even working on this problem?

Why would you use max? It's usually unnecessary and even prone to overthinking. In my experience, since Opus 5 the medium/high is usually enough (until 4.8 I used xhigh, but never max). Even low is quite usable these days..