OpenAI’s User Growth Miss, Musk vs. Altman In Court, Prediction Market Ban

Channel: Alex Kantrowitz

Published at: 2026-05-04

YouTube video id: A6y0lDVSVW0

Source: https://www.youtube.com/watch?v=A6y0lDVSVW0

Open AI is growing slower than
anticipated. What does that say about
the broader AI story? Elon Musk and Sam
Alman meet in court and anthropics
valuation is approaching $1 trillion.
That and more is coming up on a Big
Technology Podcast Friday edition right
after this. Welcome to Big Technology
Podcast Friday edition where we break
down the news in our traditional
coolheaded and nuance format. We have a
great show for you today. So much news
to break down, including OpenAI's user
and potentially revenue miss. Uh we'll
talk about the internal numbers, the
company's response, and what it means
for the rest of the AI story. We also
have Musk and Sam Alman in court.
Anthropic is raising at a $900 billion
valuation, and of course, a big week for
big tech earnings. So, we'll have so
much to discuss in just a short amount
of time. And joining us as always on
Friday is Ranjan Roy of Margins. Ranjan,
great to see you. Welcome back.
>> Good to see you, Alex. A lot to cover
this week.
>> A lot to cover. And it's weeks like this
where we see some data that comes in and
in the data you can start to see some
broader stories and really where the AI
uh trend is moving. I guess trend is
selling it short, but you get what I'm
saying. All right, let's go to our first
story here. OpenAI misses key revenue
user targets in a high stakes sprint
towards its IPO. From the Wall Street
Journal, OpenAI recently missed its own
target for new users and revenue
stumbles that have raised concern among
some company leaders about whether it
will be able to support its massive
spending on data centers. Chief
financial officer Sarah Frier has told
uh company leaders that she is worried
the company might not be able to pay for
future computing contracts if revenue
doesn't grow fast enough. Board
directors have also more closely
examined the company's data center deals
in recent months and questioned uh chief
executive Sam Alman's efforts to secure
even more computing power despite the
business slowdown. OpenAI is of course
uh pushing back on this story. Uh to me
honestly like the revenue numbers is one
thing like obviously this is a new
category you are building you're going
to have revenue misses right it sort of
comes with the territory. Uh but to me
the bigger part of this story is that
OpenAI
had a goal to hit a billion chat GPT
users by the end of the year in 2025. It
missed it. It's still not even announced
that number. So the latest that we have
is 900 million active users of Chat GPT.
Um that came in February 2026 and the
billion is yet to be found. Now of
course it's still a big product uh but
we saw toward growth last year and some
big moments with the Studio Ghibli
stuff. voice of course was important.
Now that consumer story is tailing off
and it makes me wonder about the future
of consumer products in generative AI.
So what do you think?
>> Well, are they an enterprise company or
a consumer company? I think like the new
focus mantra, the new pivot to
enterprise, this is I've been saying
this for months now that they have to
have some kind of general focus and
decision and strategic direction or is
it codeex and actually the developer
community is where they're going to see
growth? But I think going from 900 to a
billion, it is kind of amazing cuz GPT
Image 2 went mildly viral. Certainly as
much as the Studio Ghibli stuff, when
was that? 6 months ago, 8 months ago,
whatever it was. It's uh it all time is
a flat circle years, right? It's like
>> could have been last week for all I
know.
But but but this is exactly where like
maybe you don't need to get to a billion
users and that's okay. And it seems like
the strategic direction they're going. I
saw one thing that showed they went from
three million users in codecs to four
million and that was impressive and that
is impressive but but trying to do
everything all at once and actually
pushing back when you're these the this
reporting is coming out rather than
Sarah Frier saying you know what we're
okay not hitting a billion users and
that's fine because the way we are
building our business is not purely
going to be on chat GPT consumer
consumer growth, but they're trying to
have it every way. And I think that is
potentially setting them up for issues
as like more official numbers come out
as they try to push to IPO.
>> Okay. So, I definitely let's put a pin
in the enterprise side of things and and
opening eyes response to the story. By
the way, I have it on uh from a
spokesperson. This is ridiculous. We are
totally aligned on buying as much
compute as we can and are working hard
on it together every day. So, OpenAI is
vigorously disputing the fact that they
are wondering about whether they should
buy more compute and you could even say
that that's going to be their strategic
advantage um over Anthropic as these as
this battle heats up and we'll talk
about Anthropic's forthcoming
fundraising uh pretty soon. But I I I
think that we'll get to enterprise.
We've been talking a lot about
enterprise, but I am curious to hear
your perspective on the fact that this
has sort of hit a wall with consumers.
Let's take all the data points together.
Chat GPT should have been at a billion.
It's not uh consumer sentiment or
sentiment overall about AI extremely
negative. In fact, had somebody come
into the comments uh on Spotify and be
like, I heard an ad for your podcast. Uh
f you and F AI. Like that's how
negative. I'm like, what? I'm not even
the industry. I'm I'm being critical
here, you know, but that that but I just
the very fact that I'm talking about AI
got me a double double fu this morning.
U and then the last thing and I think
this is important. This is new data that
I got from Apptopia. So this is
exclusive to uh the podcast here. Daily
active user growth across all AI AI
apps. So that includes uh Perplexity and
Claude and the Geminis of the world. uh
chat GPT growth is not just tailing off
it's down. So you can see that you know
while like the space is growing overall
uh the growth is is uh has completely
flatlined and it's been down I think
from according to four of the past 5
months. So this is like this is a real
slowdown. So what's happening? Well,
does the Apptopia data
actually I mean their name is Apptopia
include like app usage or is it mobile
web and web usage?
>> Uh it includes app usage. So that's
interesting because we we also and I'm
going to get to this in a moment but I
maybe it's worth uh bringing up now if
you are a user of this app of these apps
your usage is actually up but the gross
addition of users is slowing down. Okay.
Gross. I mean, you know, sort of the
number, not like as this is a nasty
condition.
>> We're a gross in that. Come on. Our
listeners know gross. Our listeners know
gross. I
>> sure do.
>> Well, well, hold on. Hold on. To clarify
the It's actually a declining aggregate
gross number of users in these apps is
what the data is showing. Or it's the
additional
>> slowed down.
>> Yeah. Yeah. I mean at the this kind of
base so that doesn't surprise me the
there I do believe that there is like
everyone who is interested has
downloaded a chatbt a Gemini claude
whatever else has started to use it. I
think even out of my personal
experiences, friends, family, everything
like everyone already has it on their
phone. 900 million I mean I think like
in the US it's probably reach relative
saturation.
Um so I to me like the actual growth
side of it is not as much of a concern.
I do think like how do they find those
next 100 million users? Is it like that
you don't hear a lot of talk around
international growth and strategy from
these companies and this whole market
like I I I don't know like in India
obviously China is going to be its own
very very specific market like in Africa
like where is the next kind of vector of
growth because when you're at 900
million you've tapped out the US pretty
much I'm guessing as much as you're
going to and then as long as the average
person who is using it is using it more.
It's still still, you know, moving in
the right direction.
>> Well, let me let me push on this a
little bit further. U in enterprise,
we're seeing all these different use
cases, right? We're seeing, of course,
the agentic use cases that we talk about
all the time, but we're also seeing
purpose-built apps for finance, for
legal, for medicine, right? All over the
place. any industry you look there's a
purpose-built GPT app that's actually
proving valuable taking off building
users uh and having real like
significant valuations uh there's a new
one I hear about every week consumer it
hasn't happened that way you would think
that with a technology this powerful
there would be a breakout of consumer
apps and we're going to get into big
tech earnings in a bit meta is case in
point right they have had this
technology they're trying to build a
consumer app with it yes they're trying
to develop the foundational models but
they're also working on the application
It's just not taking off with consumers
is my point.
>> Do you think I'm wrong about this?
>> Yes, completely. And this is my going to
be my rant for the week or one of many
potentially, but it it's interesting
like the entire meta ecosystem
experience is now powered by AI. Like
the way everyone talks about AI does not
have to be like, yes, meta AI, the chat
experience. I don't know anyone that's
using it. I know they put out crazy
numbers and I'm sure people get kind of
looped into interacting with the chat
experience, but every time you scroll
your Instagram feed, the recommendation
engine that's powering the ad that is
being served to you, this was Meta's
like greatest. I mean, they broke out of
the Apple iOS 14.5 prison and kind of
showed that they can why everyone is
more addicted to Instagram than ever.
every ad that's being created probably
has com AI component to it. Like I think
actually Facebook is just one big AI
slopfest if you've logged in recently.
So like it it I think the end user
having a chatbot experience like chat
GPT is where everyone's head goes into.
But in reality
so much of consumerization Spotify the
number of AI generated songs for better
or for worse that are showing up on the
platform and getting plays is
increasing. So I think the big kind of
like disconnect here is everyone is
thinking consumer generative AI or
consumer AI overall is are people
downloading and asking questions to a
chatbot. Meanwhile, every existing
consumer experience, restaurants on Door
Dash are creating much more engaging
images using like it's happening
everywhere. So, I think to me that is
the real consumer AI application, not
how many people are using chat GPT
>> and apparently Amazon Amazon even has
like these little AI powered podcasts
about their about their products. And um
Katie the topos from Business Insider
was like playing one of the podcasts
about I think eczema cream and
>> no no diaper rash cream diaper rash
cream. You can write your own questions
and the host will address it and she
just writes like my butt hurts and
they're like that's a great question
Katie.
>> Okay. So so
okay go
>> ahead. No no no I'm not going to stop
you. No, no, no. I Amazon
like the growth in Rufus from what I've
been hearing is actually spectacular. I
have been using Rufus more myself.
>> Now what's Rufus?
>> Roffus is Amazon's
AI actually it is a chat experience for
the most part but it's basically so it's
like you can ask questions. You can
either ask questions directly in an
Amazon product page. Now my Amazon and
probably cuz I've been using it more.
The entire left rail when I log in is
actually Rufus. So it's they are pushing
people more towards it. Again, you ask
questions. It not only gives you
recommendations, you can ask questions
about a product. Does this have USBC
charging? When I was getting something
recently, but also they're actually
injecting their entire Amazon ads
business directly within Rufus as well.
So like when we've been talking about
mulchi pt have ads they're already
building out this entire AI advertising
ecosystem directly. So I think but it's
embedded in the product. It's not
someone going to chat GPT and chat GPT
shopping has not taken off in the way
everyone was expecting 6 to 8 months
ago. Meanwhile Amazon is figuring it
out. So, so I think there's so many
pockets and and I'm I know I work in the
AI industry and I'm want to be biased,
but you know, I can be very skeptical
about this, but I this one I have to
push back on. Consumers are engaging
with AI more than ever.
>> Okay, let me let me push back on this
one more time, then we can move on to
our other stories. U first of all, I
would say you and we've had this debate
before. I think you really have to take
the recommendation engines uh the AI
based recommendations
recommendation engines and put them in
one category and then the generative
experiences in another category. We've
had AI based recommendation for a long
time like feed sorting and ad serving.
Um but what I'm talking about
specifically is how does generative AI
uh translate into real consumer
experiences. And yes, you can you can
chat and with Amazon and you can um you
can listen to a podcast about about
diaper cream. You know, that's all
exciting. Uh but what I'm saying is
where are like the wave of consumer
applications that you know we might have
expected? You know, there's no a you
know, remember um character.ai like
there's no like AI character or AI
friend app that's that's taking off. Uh
there's no like explore history app
that's taking off. There's no like you
know AI stylist app that's taking off.
There's no AI prominent AI dietitionian
that's taking off etc etc. There are
definitely you know categories of
consumer products that just do not have
a consumer a generative AI application
uh taking off in a way that you thought
it would. And then again like you're
seeing this slowdown in chat GPT growth.
Not that it's nothing. I mean it's going
to hit a billion users. The question is
when. Uh but like even OpenAI and they
said they were stretch goals. Uh but
even OpenAI anticipated that it would
hit a billion and it just hasn't. So
what's your response there?
>> So
like actually this is actually a perfect
example. Are you I'm guessing this is as
far away from your everyday habits as
possible, but have you ever used a dress
up app?
>> No, this is not something I've used. Uh
but that was a very good prediction
ahead of time.
>> Well, no, this is another like working
very closely in the retail and consumer
world. This is something we had started
experenting in my uh previous experience
at Adore Me like like virtual dressup
apps and tryon apps like actually have
been exploding in popularity. Then you
have Google actually within Google
shopping virtual tryon is actually
gaining a lot of ground where you can
actually find a model exactly your size.
You can even upload your own picture and
then you can actually try on items
within the Google shopping experience.
Those are all generative experiences.
Those are all not going to show up in a
apptopia like chat GPT experience. But
but I do think again it's being
integrated into the things people are
doing every day. And also LLMs
are feeding into an Instagram like their
recommendation engines. It's no longer
just machine learning anymore. So it's
still embedded in there as well.
>> Okay. Look, I I I think the reason why
I'm bringing this up and the reason why
I wanted to start the show this way is
because well, we have of course these
this concrete data point from uh OpenAI.
Uh but obviously everybody is every
company is making this pivot into some
form of agentic uh type of um experience
like the Codeex and the Claude codes of
the world and the enterprise move. And
so my question really is are they making
this move from a position of strength
where like they have you know you would
like to have massive growth of chat GPT
but to see that there's potential uh in
in these this enterprise and agentic
application and say okay we're just
going to place our bets there or are
they moving out of a position of
weakness where like oh it's not growing
as much anymore and now we have to make
our move.
>> So so that's where I can turn and get
skeptical again. I think uh I think
they're moving like from it is a
strategic mistake. I think rather than
and my my kind of like hot take on this
is when you have com like a company
that's a developer first culture
everyone is going to get more excited
about codecs and why is everything like
moving to the command line? Most average
people are never going to do anything
from a command line interface. Yet so
many of these projects, so many of these
products are moving in that direction.
People get very excited and I even see
all this stuff around how like everyday
users are going to be actually like in
the command line using codecs. No,
they're not like so I I think it's a
bias within these organizations because
they are developer first cultures. And I
think uh I think it's a mistake. I think
there's like a lot of opportunity from
everything I was saying. And I think
actually again Amazon I think gets it.
You don't see Amazon they know this is
our product. This is our business. This
is our customer. So we are going to
embed generative experiences or AI first
experiences throughout and we're going
to move things in that direction. And
that's where I think like everyone is
rushing there. This is what I work in.
everyone and again you're seeing like
you're every like Anthropic had this
historic run and suddenly 4.7 you just
see all this negative sentiment come out
around cost and people instantly start
stepping back a little and then Codex
comes in in 5.5 and like it's I don't
think when everyone is rushing towards
the same thing that for a company like
OpenAI that has such a foothold in
consumer it's the right decision. So
your your advice to opening AI would
really be like stick with consumer.
Don't give up on the uh on the um Sora
type stuff and you know try to own the
consumer side of generative AI as
opposed to shifting to codeex.
>> Yeah. un unless they're almost accepting
Google will beat them at it unless and
which which is not unreasonable like
when you are Google and you're already
on the I don't know did did you see this
study around how like Google I mean in
an evil way like giving Chromebooks to
every student in America and now the
actual YouTube utiliz like YouTube usage
during school hours is up like
exponentially but better
Yeah, but for better.
>> Hopefully they're watching big
technology podcasts there.
>> Well, as long as as long as the first
graders of America are just actually my
son who's in first grade, he if I ever
play our podcast in the car when we're
driving, he gets so mad and he's like,
"This is the most boring thing ever."
So, I'm sorry. I don't think the first
graders that that demographic is is our
biggest fan.
>> These are the people that we're
angering. first graders and anti- AI
listeners. Yeah,
>> hate mail from both. These are the He's
leaving two star reviews without me even
knowing on my phone.
>> But Ron John, I mean I Okay, so this is
the thing that my other side of it is
even though these Let's just take this
stuff to be true. Even if it were true,
revenue, user miss, but deeper
engagement, I would say OpenAI is
heading in the right direction with
codeex. I mean, if you think about
Anthropic, right? Last July, I was in in
Anthropic speaking with Dario. He was
happy that they were making 4 billion
ARR. Now they're at 35 potentially.
There is a tremendous market opportunity
to go after um with this agent style use
case uh in the enterprise. And so u to
me like if OpenAI thinks that they can
pass anthropic because they're going to
have more capacity and potentially on
par or better models, go there. No, I
mean I I I work in that that at Writer
like that's I mean I see it firsthand.
It's very attractive and it's like when
it's working it works very fast and but
it's competitive. It's also like when it
for a company of OpenAI size again at
Writer that's we've been enterprise only
for our entire life. So like that's the
game. Open AAI it's not it hasn't been
the game and they have this asset of 900
million users they can be integrated
directly within everyone and and the
important thing here is you can grow
revenue fast and I I do think this is
all ahead of this the big IPO race and
battle here because you can grow revenue
a lot faster by getting a bunch of
developers using your tool them not
paying attention and token maxing and
like just blowing out tokens and you'll
increase consumption, you'll increase
revenue very quickly, but that's a
short-lived phenomenon versus you have
every person in the US, you own the verb
to search with AI is to chat GPT
something like that is a tremendous
asset and I think they're kind of
seeding it to Google right now.
>> Okay. Well, I think we'll we will we'll
just have to watch this play out. uh
there I don't think there's any any real
answer here. Um but but it'll be it'll
be a very interesting uh battle as it as
it continues to play out um on the you
know as opening eye does this of course
it has the uh thorn in its side of Elon
Musk and I'm curious how if you've been
watching the trial uh between OpenAI and
Musk this week and if you have any
thoughts on whether um this trial will
lead to anything of consequences of Of
course, Musk is suing OpenAI for taking
his money, going from a charity from a
for-profit from from a charity to a
for-profit, unjustly enriching
themselves, and betraying the charitable
trust value that cases taking place this
week. What's your read on it?
It's rare that listeners will hear me
agreeing with Elon Musk, but I think
this is one case like it feels like at a
very simple logical level.
This is they were a nonprofit and that
was the entire founding story for a long
time. I mean they are a nonprofit.
Hold on. What if at the current status
so much happens that I can't even
remember. Have they converted or not?
>> Yes, they've converted but they still
have the
>> the nonprofit arm that owns a certain
>> that owns a certain amount of Yeah.
Yeah. Like we've joked for a long time
around how
>> opaque the structure is. I think it put
Elon Musk in a pretty good just from a
very human logical like if you're trying
to convince a jury. Um I think it's a
pretty good argument. I think there's
been zero accountability
for any large technology company for so
many years that the idea that anything
would ever happen that would actually
derail the business because there's just
so much vested interest in it like I
don't know. I don't I the the cynic in
me just assumes nothing will actually
happen. Maybe there's a fine there. Musk
and Sam put on a good show, but do do
you think there will actually be any
consequence coming out of the trial?
>> Uh, no. I don't think so. I mean, maybe
there should maybe there will be a fine
to open AAI because they'll have to end
up paying that money to the nonprofit.
Uh, but I I agree with you. I think that
Elon has a leg to stand on here. I mean,
he gave $30 plus million dollars to
found this thing and he currently has
like no share in it at all. Uh, I don't
see how that's fair. And of course, the
open argument is like, well, Elon gave
this as a donation to a charity. He
can't look at it as an investment. And
I'm like, well, of course he gave it to
as a donation to a charity. You were a
charity. You set up that structure with
him in the beginning. If you began as a
for-profit, he would have looked at as
looked at it as an investment. Now, I
know Musk is trying to get uh Musk and
Sam Alman remove, sorry, he's trying to
get Sam Alman and Greg Brockman removed
from the top of Open AI. I don't think
that's going to happen. Uh but but I
wouldn't be stunned if the jury ended up
siding with Musk here. Um and of course,
it's advisory, so we'll see what the
judge does. I don't think the judge is
going to blow up OpenAI, but there could
be some consequences.
Like but what though couple
>> yeah billions billions going
>> you think billions
>> from the forprofit to the nonprofit I
wouldn't be stunned
>> I mean billions like a significant
amount of billions and by the way that
could hamper the whole you know build
out the uh can you imagine you're an
investor and you put all this money in
for them to you know have database
capacity to compete against anthropic
and then you have to then has to go
elsewhere I don't know
>> well okay so so The interesting part
here is one the fact that Grock is a
direct competitor XAI like um it just
makes the whole thing even just richer I
think in terms of uh
>> uh how they're approaching this. Did you
did you see that Elon was like promoting
the Ronin Pharaoh Sam article across
Twitter X? Yeah.
>> So talk about what happened there.
>> Yeah. So users were reporting it was
actually like a new UI experience almost
of like having an article pop pop up
both in the standard ad format Elon
retweeting it but also even like just
popping up at the bottom of your screen
the Ronin Pharaoh New York are article
about some Sam Altman having many faces
and which did you read it? It was for if
you've been following Sam Alman and
OpenAI for a long time, there wasn't
anything groundbreaking in it. But
>> surprises there.
>> Yeah.
>> Yeah. But it painted a pretty strong
picture, especially if you're not
following closely. But it's still funny
to me that like this bastion of free
speech and non-manipulated speech
supposedly of X, literally the owner
going to trial is able to kind of just
manipulate and control what people are
seeing. Do you think that OpenAI kind of
has a Zuckwinklevi argument to make here
which is like if you were uh if you were
so smart you would create a Facebook but
you didn't like they could point to the
fact that like most of the value has
been created by them and Elon has sunk
billions into building XAI which has had
mixed results.
>> That would be
Has that been said yet? Cuz if you're
listening, Sam, that's the argument.
Like I I feel this this whole thing is
for show. I mean, I think like they both
recognize and Elon's trying to kind of
like cut them at the knees ahead of
their IPO
boost XAI. Like obviously there's a
strong show element and that would be
the greatest. It's like how's XAI going,
bro? like you you already paid your 44
billion for X and for Twitter and you're
jamming that into everyone as much as
possible. But we built something people
love. We basically like invented this
entire industry right now.
How are you doing?
>> I will say though there there are I mean
there are Grock users out there. I was
flying back from Vegas to New York and
sat next to a guy that drives the subway
and I was like we were talking about AI
and he goes, "Yeah, I use Grock. I don't
have to badger it to give me an answer I
want. So there is appeal out there, but
clearly it's not it's not as far as like
the big businesses go, it's not holding
a candle to open AI or anthropic right
now.
>> Well, what is the what do you think the
Grock strategy is in this? Do you think
they're going to go pivot to enterprise
away from consumer? No, they should
speaking of the opening in consumer,
maybe they should lead into Bad Rudy and
>> that other uh AI girlfriend that Musk
made. That could be the potential, you
know, growth area there
>> just from a business standpoint.
>> Maybe if OpenAI is truly kind of moving
away from consumer, it does like open it
up. But but I guess like why has Meta AI
mean it's not a good product, but like
like the actual chatbot experience from
every time I've tried using it, but it
just like to me it still feels like if
you already have the consumer's
undivided attention, they don't have to
open up another app and experience like
someone should be killing it on this.
Whether it's Meta, whether it's Elon and
X, like, but it hasn't happened yet.
>> This is the point I was making at the
beginning of the show.
>> All right. All right. All right.
>> Thank you for seeing the light.
>> I guess that chatbot I guess Google
Google has shown
>> Google for real. I don't think so.
>> Yeah. No.
>> Do you think Google is this great uh hit
consumer AI chatbot? I mean, Gemini,
like funneling users from your core
experience to a standalone app,
>> Google has shown they are able to do
that far more successfully than Meta.
>> I mean, I think like based on Gemini's
numbers in the consumer market,
>> they've shown you can do that.
>> Okay. Before we go to break, because we
have a lot more to cover today, you
highlighted a uh section of dialogue in
this court case. Um, you want to share a
little bit about why that's important
and what it is?
>> There's a few interesting really
interesting parts that came out so far
in the trial, including Elon playing
like logical jiu-jitsu about like it's a
yes or no question that's like asking
me, do you beat your wife? which I don't
know like doing that in a courtroom is
just so ridiculous to me as though it's
like you're I did high school debate and
like that felt like the kind of thing
you would do when you were a freshman.
But more important relative to the
industry. Um Musk was asked do you know
what distillation is by OpenAI's lawyer
William Savit? He's it means to use one
AI model to train another model. And he
was asked XAI done that with OpenAI.
Musk replied, "Generally, all the
companies do that." So that's a yes,
partly. Musk continued, "Distillation is
a technique where a smaller AI model is
trained to mimic the behavior of a
larger, more capable model, making it
cheaper and faster to run while
preserving much of its performance." So
it's actually and he continued the sabot
has open AI technology been used in any
way to develop XAI Musk, it is standard
practice to use other AIs to validate
your AI. I think like this is
significant because I think the
distillation conversation
when it comes to Chinese models and
deepseek has been a pretty loaded one.
And if the fact that he's just admitting
this openly and saying it confidently
still like from a commercial
perspective, what does that mean is kind
of crazy to me. like you would think and
maybe there I guess there's probably not
a lot of law and regulation around not
doing this but it's still I don't know
again from a purely commercial
perspective I was shocked that he was
saying this were you? Yeah, definitely.
No, it's it's stunning and clearly it's
happening everywhere. And um and it goes
to sort of a question I asked Greg
Brockman last week, which is that like
is it going to be economically viable to
train these models if you just get
distilled? And um I don't know there's
coming there there may come a point
where you know right now we're seeing
real leaps in every every new model um
to a degree and it might come a point
where it sort of levels out and once
that does you know how far is the
distillation going to be behind the
proprietary stuff probably not that far
and so that sort of gets to the question
of well do we end up seeing sort of
intelligence at a certain point
commoditize and compute at a certain
certain point commoditize and we end up
in a price war because everything is
basically delivering uh the same and so
then you compete on price. I mean that's
sort of that was the logic behind this
kind of memorable quote that Mark Cuban
gave me in the uh episode we did on
Wednesday where he said open AI is
money away at scale because
that that's his belief is effectively
you kind of get to that place. What do
you think Ranjan? Well, are you saying
that the models will be commoditized and
it will be about product and price?
>> Yeah, that that could that could be the
case. Could be the case.
>> Just checking just checking. Um
>> I'm advancing this theory. I'm not I'm
not you know sort of throwing it out. I
think it's
>> actually on that. I don't know if you
saw like one of the more on the topic of
both distillation and price. There's a
lot of hype around DeepSeek V4 is
supposed to be again like top level
frontier model at a fraction of the cost
that almost certainly like proudly is
distillation at its core. Um and then
like I don't know you seen like Brian
Chesy who's I think been on the show a
few times uh was talking about Yeah.
Okay. So they're talking about using
Quen um from Alibaba from a cost
perspective that basically and I do
think moving to a world where let's say
you use Anthropic and OpenAI to actually
build but then start to cost optimize
towards cheaper models and maybe it's
within their ecosystems, maybe it's just
an open freefor-all in terms of any
model. I do think that's where things
will go. Um, but did did you see there's
apparently like uh and a House of
Representatives recommendation around
like banning the use of Chinese models
and like um actually calling out Airbnb
specifically?
>> Really? No, I haven't seen that. I mean
I I have seen I mean if you look at like
apps like perplexity for instance like
they'll allow you to use like the open
or anthropic models or Kimmy K2 which
they have of course like they've
downloaded the weights they've
postrained on their own they've sort of
given their own version of that model
but I just don't see the Chinese models
going away because ultimately if you ban
the Chinese models aren't you
effectively saying like you're banning
open source I mean there are the Nvidia
Nemo models which are open source, but
outside of that, it's mostly a China
thing.
>> Well, actually, so here, so two
Republican le House committees, they're
probing specifically Airbnb and Any
Sphere, which is the owner of Cursor,
over their use of Chinese models. So, I
found this really interesting
specifically because after like we
didn't talk about Meta and Manis last
week. I mean to me like first of all we
could definitely get into what's going
to potentially happen there but China
that's like quite the salvo you know
like like you cannot acquire our
technology even after that technology
has moved to Singapore and trying to get
out of get out of the uh CCP oversight
to actually say we are blocking that
transaction to me actually like the US
China tech cold war like heated up
significantly when that happened. And
then when I saw this that the Republican
House committees are actually pot like
throwing out this idea that you cannot
use Quen or other Chinese models. I
think it's going to get I mean that
whole Jensen Dwarkesh exchange
>> is going to become that far more
significant or a bigger story this year.
>> Okay, this week I'll just say one thing
then we really need to go to break. This
week I heard the probably the best
explanation of what Jensen's position
is, which is effectively if you if you
don't sell the American or Nvidia tech
into China, you will force the Chinese
model makers to build uh to optimize
basically algorithmically on Chinese
chips like chips from Huawei. in the
event that they are able to make those
optimizations and in some ways you know
out outpace the American models or
become a appealing alternative. Um
they could potentially build those on
Huawei chips alone and not make it
compatible on the Nvidia stack and then
do their own form of export controls on
the US or to the rest of the world uh
and basically have control over AI. So,
let's say they make state-of-the-art
models, models built on Huawei chips,
they could hold the US back from
actually using those and uh and
effectively restrict our ability to have
cutting edge AI. Um, and by putting that
constraint on them, you sort of put
yourself under the barrel in that way
where you could potentially not have
access uh to the AI that you want.
>> I think that's a circular but reasonable
argument. But but question though,
should large tech companies in the US be
allowed to use Chinese models?
>> Yes. I mean, you should be able to
download the weights, do the do your do
the work on your own and then um and
then run them. I think so.
>> Okay. But only the open source side of
it, not directly
connecting to the Alibaba quen
infrastructure the same way you would to
an anthropic. Yes or no?
>> It depends what you're doing.
>> It's a yes or no question.
Oh god. Yeah. I you know, Mr. Mr.
Senator, uh I I'm going to say I'm going
to say yes. I'll say yes. I don't have a
problem with it for now until we see
things. I would say
>> it's not going to lead to I don't think
it will lead to like a clear catastrophe
right away. like is air is the is the
fact that you can't say I mean I don't
know this is kind of a weird thing to go
a weird rabbit hole to go down but is
the fact that you like can't get
straight answers about Tianaan Square
going to impact which hotel or uh
apartment room you book on Airbnb that
would be weird
>> well maybe funue
I say this with the Taiwanese
mother-in-law could start injecting
itself into air successfully
>> maybe that much clearer understand
exactly so maybe this We're both arguing
for.
>> Okay. That form of soft power I'm I'm
I'm for. All right. Let's go to break.
We'll go to break and come back and talk
a little bit about big tech earnings and
pred prediction markets right after
this. And we're back here on Big
Technology Podcast Friday edition. Um
just to continue going on with my
conversation or my my point here about
um AI consumer. If you look at the
earnings that came in this week, if you
were a cloud company, you were very
happy. If you were building AI consumer
apps or you were building for consumers,
you were either not happy or you were
thrilled that you didn't invest a lot
into uh into AI. So let's just break it
down. Um this is from CNBC. Uh you look
at Google Cloud. Google Cloud grew 63%
23 billion 20 billion. Um this is by far
the strongest growth rate growth rate
for any period since Google started
breaking out cloud results in 2020.
That's massive. AWS by the way stuck in
the 17 18% growth rate range uh for the
past few years grew 28%.
Microsoft grew 40%. Azure
um if you are providing the AI
infrastructure for you know this
enterprise buildout you are doing really
well. What do you think about this Ron
John?
>> I mean the numbers are insane 63% at
that scale. I mean, and I guess it
reflects this is like a public company
earning breakout that kind of tells the
anthropic story as well that we keep
hearing about through fuzzy ARR numbers.
Here we have a clear 63% growth to 20
billion in a quarter for Google C cloud
is is nuts. Like I think yeah, it's I
feel the will there be demand or are we
overbuilding capacity? It seems like
that question has been answered. Do you
see any holes in that area?
>> Yeah. So, here's a tweet from Gary
Marcus. Sheer insanity. Amazon, Google,
Microsoft, and Meta collectively are
spending more money than the Manhattan
project every single month. More than
20x the Manhattan 12x the Manhattan
project every year. And what do they
have to show for it? None are making
major profits on AI. None has a
technical moat. A massive price war is
inevitable. A few of their customers are
seeing uh major returns on investment.
great greatest capital misallocation in
history. I mean, here's the question is
what these cloud services divisions are
seeing this big massive uh bump in
revenue um just downstream of the major
amounts of money that the anthropics and
the open AI are raising and sort of
>> okay
>> not you know not quite sustainable
without those big fundraising and by the
way big fundraising moments and by the
way a lot of that fundraising is coming
from them. What do you think? Okay, I
like your circular funding and again and
actually a lot of that funding is in the
form of cloud credits often that is
revenue. I'm not saying that's 100% sure
what's happening but maybe
>> Yeah. Yeah. Yeah. So, so on one side I
feel like again is if you listen
regularly you know I can be very
skeptical and I I will open AI or
anthropic have a successful IPO? I'm not
sure. I feel like Gary Marcus and Ed
Citron in them like I wish they just
said okay something positive or
impressive has happened like not
everything
>> Gary has to a degree you did say that
claude code is uh a combination of
neuros symbolic systems and machine
learning
>> yeah which is fair which is fair like
LLM on their own without a harness
without a product without like all of
this okay all right at least Gary's
recogniz izing it. I I do think the the
investment in the infrastructure side
it's it's interesting because maybe okay
maybe the one argument against this is
obvious that the demand is there and
they got to keep building is is maybe if
I take what he's saying and extrapolate
a bit is the idea that the economics of
how they're investing are flawed that
like the building out assuming constant
price at today's growth and today's like
revenue the fact that it will scale
linearly or exponentially like that I do
maybe it's true that as costs come down
the way the that the amount they've
invested if deepseek v4 and quen and
others and people are using open source
and the actual cost goes down
dramatically
um then it could be pretty bad capital
allocation
>> right I mean I think we can't even
though the use cases are there which
they are Right. And even though this
won't go to zero, um, we cannot discount
the fact that there could be a collapse
here because of the very factors that
Marcus is pointing out.
>> Okay. I I'll I'll say and it's true. No
one understands the economics of any of
these businesses right now. like the
what the act what is a true margin
>> will again we we've seen it with
anthropic that just that insane
spectacular growth the push back on
price and understand after 47 came out
and recognizing that a lot of it is
subsidized anyways so what are the
expenses to anthropic will eventually
have a more clear picture of like and
then how all that relates to the
infrastructure side I guess It's fair.
No one What is an average margin for an
AI business? No one knows yet.
>> Exactly. So, that is something that I I
don't know. I I think we need to keep
coming back to on this show. Um, you
know, at first it was like, is this
technology going to work? The technology
is working. And the question is like
these business decisions that are being
made are
there's no other way to really describe
them than YOLO decisions, right? Nobody
knows what's going to happen here. The
demand is coming in, but it's a brand
new category. There's bumps in the road
and we could end up seeing a a price
collapse.
I also actually when you say yolo, it
kind of makes me think like
like the executives, the CEOs of these
companies are all in the same circle,
which makes this interesting too. So
like when everyone around you that you
have known, respected, hated, just like
that is your basically social circle or
like professional circle, your your
closest LinkedIn connections is saying
the same thing. It's going to exacerbate
how you think like yeah it is
interesting to me that and it's a very
the the Musk Altman trial reminds us
this is a very very small group of
people that have known each other
competed against each other
uh I mean you know had spats with each
other like remember when Zuckerberg was
in Musk the cage match like all types of
interactions
>> like and they're all speaking to They're
all thinking the same exact thing. Maybe
that's another reason everyone could be
wrong.
>> Well, that's sort of what makes what
Apple has done uh even though Apple did
try to make this happen. Um which has
made what Apple's done quite impressive
that they decide, hey, we don't want to
spend on foundational models. I'm kind
of going 180 on Apple. Honestly, they
>> they let me just say they they had uh
iPhone sales grow 21.7%.
They don't have AI on the iPhone. Siri
sucks. This is just the counterpoint to
what we've been saying. They had
quarterly sales of 100 111 billion. I
think I foreshadowed it earlier by
saying, you know, in consumer, you're
probably unhappy if you spent a lot uh
or you're happy if you didn't spend
anything. And when I said that second
part, I was referencing Apple. I mean,
if if their ineptitude
and incompetence and god, do I hate
Siri, but if that ends up helping them
in the long run because by sheer virtue
of incompetence, they did not go all in
on building their own models and
investing in AI infrastructure. And that
ends up being the right decision. God
bless John Turnis and his reign because
I mean
>> could happen. I mean conventional wisdom
now is like oh Apple you you did a good
thing and now you're selling your Mac
minis. U by the way in the earnings call
they talked about how Mac Mini has
become an important part of the uh AI
agent infrastructure and they've also
talked about how the new Siri is coming
this year. So you might end up getting
the best of both worlds.
>> I believe I'll believe it when I see it.
I'll believe
>> honestly. If they do this, I I will take
back of many of the negative things I've
said about Tim Cook.
>> Actually, I'm gonna say something
positive about Siri today. Do you know
Alexa Plus cannot translate uh into
Chinese? My wife was asking and we
actually have an Alexa plus and Siri
both kind of like next to each other and
uh then she turned around and asked Siri
and Siri was able to translate something
into Chinese. So Siri's got something. I
guess it's Alexa plus not the other
leading ones, but say I Siri won one
battle.
>> Okay. Well, that is probably more than
it's won in any time in recent history.
So, we got to give one to Siri, man.
Apple again. Don't doubt Apple. I think
that's something I'm learning. All
right. Uh let's end today talking a
little bit. We have some prediction
market news. This is a a recurring theme
that comes up on the show about the
prediction markets and we have a story
Rajan you can take us away about
senators banning themselves from
prediction market trading.
>> Yeah. The US Senate unanimously how
rarely do we see something along
bipartisan lines barring senators from
trading on prediction markets and
obviously Kashi and Poly market. Uh I
mean we apparently on it was a few weeks
ago Keli said it suspended one US Senate
candidate and two candidates for the
House of Representatives for political
insider trading on their own campaigns.
There was this crazy story where a US
Army special forces master sergeant
actually was uh charged with using
classified information around the Maduro
capture that he was part of that mission
to bet on, which is just like insane
still to me. like the most dystopian
thing imaginable, but it's it's nice to
see the US Senate actually restricting
themselves from doing something absurd.
>> Yeah. No, I I think that there there is
a growing recognition that some of the
um prediction market activity is can be
very cancerous uh to a society, can be
unfair to voters to sorry to gamblers,
which is like I guess they should know
better. Um
>> yeah, voters no one cares about. Yeah,
but well I mean on the other hand you
could say well they're actually like
more accurate now. So what do you think
about that?
>> Where where do you stand on that? So
I've seen that argument and kind of like
the the companies themselves almost use
that argument that if a small number of
people are kind of driving the market in
the actual accurate direction using
insider information that makes the
market more accurate
>> which is true but it doesn't make me
like this any better and it also rigs it
against everybody else and I think it is
I think if you look at it on a whole
there is a serious you know this stuff
has only recently been legalized and
it's kind of taken as uh normal today.
Uh and I say this as someone who likes
to put like a couple dollars on the game
when I'm watching uh anything on uh and
put put it on um like the FanDuel odds.
Uh but but you know there there is
without a doubt a lot of healthy
activity here, but also a lot of
extremely cancerous activity here. And
it's almost like you're seeing a society
that can't help itself. So let me tell
you one story before we leave. There's
this quarterback in college football at
Texas Tech. His name is Brendan Sorsby.
He just entered a gambling addiction
program for sports betting um that could
end his college career. This is
according to Matt Schik from ESPN. And
then Shik posts a article from CBS
Sports about the fact that he could miss
the season.
This is the second paragraph of that
article and this really annoys me. Texas
Tech was an overwhelming favorite to
repeat as Big 12 champions after
acquiring Sorsby this off seasonason,
but now has moved to an even money at
plus 100 via FanDuel sports book after
Monday's news. The Red Raiders projected
win total has also decreased, going from
11.5 at opening to 10.5 victories. And
Sorsby is no longer on FanDuel's Heisman
odds list after opening at plus 2500,
just outside of the top 10. CBS, allow
me to address you for a moment. You are
writing an article about a quarterback
with a serious gambling addiction
problem that may cost him a season in
the NCAA and potentially send him right
to the pros where his life, you know,
may be destroyed because his draft
standing will not be anywhere close to
where it was before. Maybe destroyed is
too strong, but it won't be at what it
was before. You have no less than three
mentions of the odds movement from said
person's life destroying activity
>> with hyperlinks directly out to those
exact bets to those bets.
>> Now, I don't say this lightly. Get a
grip. CBS Sports, don't do this.
This is just a you know, it it is a it
propels people into the situations that
Sorsby finds himself. And I don't
understand how we have a society who is
looking at this and saying we have no
problem here.
>> I this is disgusting. This is crazy.
Like actually the this is a good call
out for this is the most kind of like
weird
example of like obviously like how much
sports sites have been incorporating
odds into even just like TV broadcasting
into every like their websites, apps,
everything. But yeah, that is quite do
do you think
someone even do you think this is just
AI generated and the logic around all
these like incorporating bets is already
built into the CMS and like or do you
think they someone actually sat down and
was like I'm going to do this or do you
think someone had to do it and actually
felt sick to their stomach? Which of
those three?
>> Oh god. I mean, I don't know if it what
which one would be better uh to be
honest. Someone's got to get on the
phone with Barry Weiss and say, you
know, don't do this, please.
>> I mean, out of all their problems, this
is a pretty bad one, though. Put this
>> I'm writing a letter to the editor.
>> I'm going to do it. I'm doing it.
>> I'm Dear Barry,
>> first time caller, longtime listener.
Listen, we got to talk about CBS Sports.
I You got Hold on. Go in and check. Alex
has a screenshot in our prep dock here.
I want to confirm. Do those click out
directly to the bet? Cuz that is that's
the single most horrifying thing I can
imagine.
>> Yes. I'm going to find out for you right
now. Oh, I don't have I don't have it.
Well, I guess we will end on on that uh
uplifting note, Ronan. I mean, Lord
almighty. Uh I didn't think we could get
more depressing than uh OpenAI's missed
billion user number, but I think we
found it here. So, we'll land on the
doom and gloom.
>> Generative AI is showing up in consumer
experiences. There we go.
>> Now, excuse me while I put a poly market
bet on when OpenAI will announce that
number.
>> Yeah,
>> just kidding. I don't do that. All
right, everybody. Thank you for
listening, Rajan. Thanks for being here
again. Great to see you as always. Have
a good week. See you next week.
>> All right, everybody. See you next week
and we will be back next time on Big
Technology Podcast.