Are LLMs Hitting A Wall, Microsoft & Alphabet Save The Market, TikTok 'Ban'

Channel: Alex Kantrowitz

Published at: 2024-04-27

YouTube video id: NzZ6dF2nTUk

Source: https://www.youtube.com/watch?v=NzZ6dF2nTUk

our llms hitting a wall Microsoft and
alphabet might have just saved the
market and the Tik Tock ban is on we'll
talk about all that and more on a
special Friday edition of big technology
podcast coming up right after this
welcome to Big technology podcast Friday
edition where we break down the news in
our traditional cool-headed and Nuance
format we have a special guest for you
here today to help talk through the big
Tech earnings along with the latest AI
news and of course the Tik Tock band
dear josa is here uh from CNBC one of my
favorite people to watch on CNBC and to
speak with it's great to have you here
Diora thanks so much for coming well
what a coincidence this is one of my
favorite podcast to listen to so I'm so
glad we could collaborate I'm very
excited to be on and what a week there
was so much to get to I know it's crazy
I mean it's so funny because like you
kind of think you know the story going
into a big earnings week and then
everything gets flipped on its head
companies Miss and their stock goes up
companies beat and their stock goes down
and then you end up having you know real
check-ins with companies like alets and
Microsoft in terms of like where this
Market is going and you know some
narrative reversal there as well and for
us sort of the whole markets hinge on a
few of these companies right because
they just make up more and more of the
broader market so whenever it comes
along we like to say at CNBC that it's
our Super Bowl but we have a Super Bowl
every quarter exactly I know just series
of Super Bowls and that's kind of what
makes this news fun to watch and one of
the things that I've been watching
watching over the past week is just the
amount of resources that these large
language models consume and I'm curious
what you think about this so last week
and I was speaking with the head of
generative AI at metaed alala uh he said
that they use 10 times the amount of
data and 100 times the amount of compute
to go from llama 2 to llama 3 right and
effectively there's there was a story in
the New York Times talking about how
they needed to buy Simon and Schuster or
something on that magnitude to get
enough data to be able to keep pace
which GPT then you have Mark Zuckerberg
on the dwares Patel podcast talking
about effectively like the biggest
constraint is going to be energy and you
might need a nuclear level plant in
order to keep running these models and
so the idea with these things have
always been you throw more data you
throw more uh energy and you throw more
compute at them and they'll continue to
improve and I'm curious from like the
people that you're speak with in your
view of the of the industry whether you
think that you know we might be close to
hitting a wall or do you think that this
is something to be worth paying
attention to because the principles are
speaking out loud about it yeah and so
there's compute power on one hand which
requires enormous amounts of power and
that requires enormous amounts of
capital um on CNBC this week we had
Dario amadea from anthropic and he was
saying that he was talking about the
idea that these large language models
would be commoditized and he said the
costs are only going up to your point um
by the end of this year to create a
large or to build a large language model
it's going to cost something like a
billion dollars but he said by next year
2025 2026 it could cost up to 5 to 10
billion dollars and that's really going
to narrow the field I thought it was
interesting because the same day that he
said that there was this um article out
from the Nic in Japan saying that
SoftBank masaan was looking to develop a
Japanese large language model and they
had earmarked up to you know nearly a
billion dollars and you just think
that's not going to be enough and even
if they do get that money together they
need the compute power they need the
energy to be able to do so but Alex
isn't there another camp that says that
the chips everything about this is going
to become more efficient so the cost
will actually go down yeah definitely
and that's I wrote about that in big
technology this week basically saying
that if we keep going with the way that
we're going we're going to hit a wall or
the tech industry really will hit a wall
with llms like they're basically if you
think about it at a data almost out of
compute and out of uh and running out of
energy here and so it is going to take
the optimizations in terms of models and
chips uh and even potentially more
energy efficient solutions to make it
work and they're going to do that all
the while they're trying to get more and
more of the natural um of the
ingredients here right so we're thinking
about like you know there's going to be
synthetic data that they're going to add
so they'll have more data and then you
know maybe someone does go build that
nuclear power plant like seriously like
Zuckerberg's like it's just a matter of
time till it happens which is crazy to
think about and then you have Sam Altman
running around and saying let's get7
trillion for chips and so you know what
you might end up having right now is
this kind of Dual Action where you have
effectively companies that are finding
ways to build these things more
efficiently we think that's happening
already off across the board there I was
speaking with an Amazon executive
yesterday who said that there's some
researchers in Stanford who are learning
to train these things faster with the
same amount of data and 10 times less uh
cost for inference and it's like all
right so that's happening and then on
the other hand the other side of it is
we these Executives see how important it
is to have these ingredients and they're
doing whatever they can to expand and
you're seeing that show up a lot in like
the cloud infrastructure numbers and
capex numbers from Big Tech we saw this
week is they're just spending so much
more in this race um one of the best
ways I heard this described is that um
like a typical or traditional Google
search um takes a certain amount of
compute power and then for a chatbot
search a chat GPT or gemini or whatever
search takes 10 times the amount of
uh compute power even though it may just
be a simple question like 2 plus 2
equals 4 they're still running the whole
Gambit to get to that if you're asking
it through a chatbot versus a
traditional Google search so like that
efficiency it seems crazy to me that
that's not going to be figured out soon
exactly and I mean you know we can get
right into the earnings now because it
sort of was a theme for everybody but
especially for meta and with meta it was
like they they are doing like they
increased their ad their ad Revenue like
tremendously and you think about these
companies going off like the bases right
like you're you're in the3 billion a
quarter range and you're still growing
at like you know 15 20
25% um that is unbelievable but what
happens in this earnings call is Mark
Zuckerberg goes ahead and says listen
we're in this era where we're going to
have to spend a lot on AI it's not going
to get more efficient anytime soon and
this has happened to us in a number of
areas like real and stories and the move
to mobile and you're going to want to
hang along with us for the ride um but
it's not going to happen overnight and
then all of a sudden the stock goes down
like 18% after hours and everyone's just
like all right meta is done and I guess
I don't understand why why investors
sort of bail on a company like this like
it seems like very sensible is it just a
moment that we're living in right now
that's just like there's so much
pressure because of the higher interest
rates or is there something else going
on there we talked about this earlier
this week in the context of a piece that
we're doing over at CNBC which is like
the roller coaster ride that is mar
Zuckerberg and Facebook and meta and
coming off the year of efficiency which
he really pioneered for the rest of big
Tech he made it okay to do lots of
layoffs to get fit kind of coming on the
call and saying okay that year of
efficiency was great and we're going to
keep that kind of discipline in terms of
our Workforce and certain costs but when
it comes to generative AI we are all in
and we're going to be spending tens of
billions of dollars I kind of thought he
was just more candid than the other CEOs
I say others I mean Google and Microsoft
they didn't give numbers and they try to
say listen we're monetizing generative
AI but look through it we don't actually
know sure maybe they're monetizing it
around the edges but they're not
breaking it out they're not telling us
exactly how much we're just sort of
trying to look through the cloud numbers
and say okay maybe this is coming from
generative AI where Zuckerberg was a lot
more I think upfront and transparent
saying listen the payoff for this is
some years out and yes it's a different
model right he's basically giving it
away for free right now he doesn't have
the cloud platforms that Microsoft and
Google have he's his company is not a
hyperscaler so yes it's further out um
but I don't actually think the story is
all that much different than what we
heard from Amazon and Microsoft which
had huge reactions part of it though I
will say is that Facebook has a lot
smaller Revenue base right so as a
percentage of their revenue and
percentage of earnings they are spending
like kind of an unbelievable amount and
he's also spending on the metaverse
exactly got to keep those headsets going
and yeah I mean the revenue is
incredible so I'm pulling up the actual
numbers it was that jumped
27% uh to 36 billion on the quarter up
from 28 billion the year before and this
is amazing because you know analysts
have talked to me about hey look like
there's only so much more room to grow
in digital because you're you're just
taking all the money from you know these
other formats and you're going to
eventually just hit a wall because
they'll still remain relevant you don't
have that much more time spent and for
them to increase 27% is crazy I mean
maybe it's taking money from the rest of
the open web but um but you're right you
pair that money with sort of
Zuckerberg's message of it's the year of
less efficiency right saying uh by
building the the leading AI we will also
uh will also be a larger undertaking
than the other experiences we've added
to our apps and it's going to take
several years for this to play out so it
is it is very interesting it's I'm
curious like from from an investor
standpoint do you just kind of like run
away from from the stock when you see
that there's going to be increased
spending or is is there a case like you
know I was seeing in my feed basically
right after the market punish meta so
bad that everyone's like all right this
is the buying opportunity I mean I know
you're usually the one asking those
questions but I'm curious what you think
it's a great question um because the
morning after meta
reported was also I believe the morning
we got GDP so if you were watching CNBC
you would hear on our era all morning
fears of stagflation GDP came in lower
than expected stagflation is obviously
an Investor's you know worst case
scenario um we haven't seen it in
decades and it's very scary for the
market so there's this idea that you do
Flee for safety you don't flee to a
company or you get out of a company
whose earnings are way out in the future
right right and and I make the argument
often on air that the mega caps are
safety they've got pristine balance
sheets huge Moes no like very little
debt um but when you just heard
Zuckerberg say we're investing billions
and billions of dollars and the payoff
isn't till many many years in the future
you just look at your discounted cash
flow model if you're an investor and you
say I'm not going to buy this right now
I'm gonna go to something that gives me
earnings right now especially when
interest rates are where they are and
having cash in the hand is actually you
know a pretty good proposition right now
or something like gold which has been
rising and Rising this year so I love
that you asked that question you always
have to put Tech even the biggest tech
companies in the context of what's going
on in the macro environment but I
wouldn't be surprised if you see um what
happened last year when interest rates
were rising and when they were higher
than they've historically been over the
last decade investors come back into
Tech because of the reasons that I first
listed they're actually kind of like
these giant um consumer staple comp
companies because of their cash flows
and their cash piles um and on that
point too it was so interesting because
it was last quarter that Zuckerberg said
meta was going to issue its first ever
dividend and the stock like went crazy
went to the races so it's almost like we
forgot that spending billions and
millions of dollars but has so much cash
flow that it can still return cash to
investors which is very you know not
typical from a techy Growth Company and
of course that could lead us into
alphabets big announcement yesterday
yeah yeah so I mean alphabet announced
this this dividend um before we get into
it just let's just touch on this point
that we spoke about earlier in the week
that just like it is really a roller
coaster for meta I mean like last week
you had Zuckerberg and the fur coats
like releasing these AI models on top of
the world and this week he's like we're
gonna spend on that Ai and everyone's
like what
the out of this and you you brought up
this point he's one of the last of a
Founder gener founder CEO generation
he's one of the last guys standing along
with Jensen Hong who I don't know has
the boldness or the confidence to or I I
don't know what it is just this founder
quality to have a lot of conviction in
what he's doing and not necessarily do
everything for Wall Street like you have
some of these operators who have who are
more I don't I don't know what the word
is like zuck's done a really good job in
speaking to Wall Street like better than
some of the other operator CEOs that we
have um but he also this just proves
that he's not afraid to you know upset
them too if he thinks something requires
a lot of capital and um a lot of risk
yeah and I definitely want to get to
Google but I I kind of think let's I'm
dying to talk about Microsoft because
it's kind of the other side of this uh
you know whether AI is going to sort of
prove itself out so we have this no
business model kind of uh I mean maybe
not no but unproven business model give
everything away from for free although I
guess they are going to license llama
out through the cloud services but that
doesn't seem like it's going to be
meaningful revenue for meta and then you
have Microsoft which is just like yep
shipping it out longest partnership with
open Ai and it's currently in market and
so like we're starting to see like how
valuable this stuff is actually and I
don't I can't tell whether the numbers
that Microsoft announced yesterday are
big or small and would love to get your
perspective on it so first of all they
they beat on earnings and revenue and
their stock is up so they between them
and alphabet they seem to be saving the
stock market but um this is from uh from
the report they that Azure Rose 31%
during the quarter and Microsoft said 7
percentage points of the Azure growth
came from its AI Services up from six
percentage points the previous quarter
and you know if you're telling me AI is
a revolution not you but them you know
they're telling us that AI is a
revolution like all right single digit
percentage point on cloud growth is nice
am I just being impatient or is there
some real concern that this is not going
to translate I think the story with
Microsoft has always been um that
they're well-placed right and I think
that Sacha Adella has done such a good
job just saying like listen we're out
front in this we're going to make Google
dance we're going to do all of these
things right so stick with us we're the
play but I completely agree with you
that Revenue contribution is so unclear
still I think maybe investors realize
and accept that but 7% of azure growth I
don't even know what that means that
could be like we need to know what
exactly that looks like right that could
just be um like some services that they
renamed AI or some existing services and
then when it came to co-pilot like no
details either just kind of like some
mushy talk around how important it is
and no hard numbers on how well it's
selling so I agree with you I mean they
have all the right Partnerships they're
saying all the right things just don't
look too hard at the numbers yeah right
and this is one of those interesting
things about this AI moment is that it's
it's progressing so fast like the
Innovations like the fact that I can
like live type and meta Ai and see an
image appear before my eyes is
staggering or upload documents like meet
many meetings to Claude and ask it to
synthesize them is is incredible but we
also just like don't really know exactly
what the revenue uh picture is going to
look like oh you were going to say
something about Claud well because I I
was kind of like pointing at you because
I saw your Tweet which made me so
curious you said you were happy to pay
for Claude $20 a month it's the only one
that I don't use and I switch a lot
between Gemini chat gbt 4 and perplexity
I haven't used Claude and your Tweet
made me really curious to try it so now
I'm gonna vow Claude head I used to be a
bing boy um you know oh okay you just
undermined your whole argument I know
Ronan uh who's usually with us uh on
Fridays he's a Gemini guy so we'll let
him defend himself next week but he
actually is the one that uh turn turned
me on to Claude and I think one of the
cool things about Claude is just just uh
uploading documents uh and one of the
things that I've been doing recently is
um uploading full podcast transcripts
and of course like initially I was like
I'm just going to speak with Claude
about like what happened in the show and
like which questions I missed and I'm
also I love saying rate this
conversation on a variety of metrics and
it really does it does on chemistry and
depth and Bre and breadth of the
conversation has it ever offended you uh
no it's actually been pretty good on
that front um and there's even been
points where I've been like uh you need
to rate one aspect of the conversation
one of 10 this is not an option and it's
like well yeah actually the weakest part
of the conversation was was this but
I've been using it for recently is
actually I go in and I say listen I have
to make some uh video clips from my show
um give me some timestamps of things
that you think might be compelling and
it does an incredible job this used to
be something that I wouldn't do because
it would just be so time intensive that
there was no justification for like sit
in the video and finding the perfect
time stamps and CLA is actually I'm like
all right those are good suggestions
let's clip those that's really
fascinating I tried to do that yesterday
actually we do this um Tech check weekly
piece which is sort of a deeper dive on
the week's biggest topic and I put it
into chat GPT 4 and I said give me you
know like a condensed Tik Tok version of
this and it was so bad I just was like I
quit right here and now but I think
that's an interesting way of doing it
look at the time codes they can't do it
all for you they can never do everything
for you at this point but um I'll have
to try it out yeah I mean so they have
this like uh paid version that's gets
you their most powerful model which is
cloud Opus and I used to like basically
the reason why I sent that tweet was um
I kept like logging in signing up and
then immediately canceling the auto
renew because I'm like yeah I'm only
going to need this I'm trying it out and
this was the week where I was just like
I'm not even canceling the auto renew I
need this so it's like now definitely
part of the mix and is it going to cost
me $240 a year or maybe a little B more
with the fees yes is it worth it
multiples wow that's amazing so that's
like oh sorry go ahead on a slightly
different note I was telling um my
producer Laura Bachelor yesterday how
and this maybe gets us into Google
earnings um sorry if I'm jumping the gun
here but my method of working now is to
have and I guess my I'm a gp4 person
you're Claude and Ronan is Gemini is
that right yeah I think uh yeah we'll
put you squarely in second place
here sure I'll take
it um but I was telling her how I always
have that window open now and I truly
truly use a traditional Google search I
use Google News a lot too in the past
but I use it way less than I ever have
and it truly is kind of my co-pilot to
use that word that is so you know Buzzy
and hot right now right but I use it you
know I'm I'm going to it you know every
few minutes just for like idea
generation to check something that I'm
thinking to get better wording on
something that I'm thinking um and that
is really like the worst case scenario
for a Google and we are journalists and
we cover Tech so it's not surprising
that we're sort of early adopters to
using this I don't know how that rolls
out to the mainstream but that was sort
of one of the biggest fears going into
the Google quarter is that search
queries would be hurt or you would see
any kind of softness as people use chat
Bots more and that hasn't happened at
all I mean they also they beat like
crazy earnings per share $189 versus 151
expected and then they beat on Revenue
as well and I think every every category
beat um so yeah I'm Cur I'm curious why
you think Google's I mean the market
reacted so positively to Google I think
it's up 10% today you know between
Google and Microsoft I was getting texts
like from people being like thank God
they saved the market so yeah it's true
it goes back to that point I made at the
very top if these companies performed
really badly it would take the whole
Market with them um and apple will be
another important test Nvidia of course
coming up um but when we look at when we
look at alphabet excuse me it was that
dividend I think that was so important
that investors have been looking for and
in the leadup to earnings I was saying
well there's a small chance but they
absolutely can do a dividend I don't
know what they're waiting for or I asked
Ruth por at that every single quarter
when I got on the phone with her like
what's your Capital allocation plan how
are you thinking about it will that
change and you know them announcing the
dividend is just such an important thing
for investors it was 20 cents a share
it's very small but this idea that
they've reached a new phase that they're
shareholder friendly that they're
returning Capital to investors is a sign
of maturity at the big tech companies
that I think um investors have been
looking for for a long time and just I
think indicates that they're thinking
about the shareholder more and they're
balancing growth and value a little bit
more which shouldn't be all that
surprising but um them doing it is like
a big indication that maybe they've
entered a new phase in terms of
generative AI not killing or materially
hurting search anytime soon maybe I'll
highlight a few comments from the
earnings call last night uh CER Pai the
CEO said that they're seeing an increase
in search usage among people who use
their new Ai overviews and Philip
Schindler a top exact there said that
advertising is actually finding a place
in their gen products and he said that
he was really confident that the
opportunity will expand so it's not like
either or they're finding opportunity
and I think the key people who aren't
like us that have embraced these chat
Bots early on that are still going to
Google search they're discovering
generative AI queries through Google and
that is like so much more important than
us you know debating Claude or gemini or
GPT right it's just the the distribution
I think is is what matters right and
that's like what you saw with metas
they're able to ship their AI model and
all of a sudden you know it's in
billions of people's hands where open AI
was celebrating getting in a 100 I mean
reasonably so getting in 100 million
people's hands in a month now meta has
that scale advantage and it's like it's
Mark versus Sam and Mark tends to win
these battles especially if you look at
you know the other victims in the in the
way you know and Spiegel and Tick Tock
and all that so yeah but Sam Alman that
guy's a killer I feel like this is going
to be a good battle I love it I think it
you know well you know we never got to
see Zuck versus Elon I doubt we're going
to see MMA between Zuck and Sam but this
business battle itself is going to be
fascinating to watch because it is like
you know people like we framing a Sam
versus Sundar or Sam versus I don't know
Dario but him versus Zuck I think is
going to be very very interesting to
watch that's a cage match I would pay 20
bucks a month for definitely I would to
one last one last word on Pai it's so
interesting that like he doesn't enter
that conversation right it's musk versus
Sam Alman musk versus Elon Musk or maybe
Dario and Senator Pai he's just sort of
never been seen as this wartime CEO
right and I always question that um
because I think he shown flashes of it
last week when you had the Sid in right
and they immediately you know fired the
28 employees and he came out with a memo
the next day that said this is a
business in no uncertain terms um it's
interesting he takes a much more quiet
route and even you ask me why investors
were so stoked on the quarter of last
night they're spending a ton in capex
also like the same if not more as meta
but then he also you know talks about
engineering durable growth I hate that
phrase so much it just means that
they're going to continue to be
efficient like Zuckerberg knows how to
talk to Street maybe he goes a year of
efficiency is a lot more catchy than
engineer durable growth but Senator Pai
and his team are keeping an eye on
efficiency while investing huge amounts
of money into generative AI while
issuing a dividend so he kind of like
hit everything last night it's like a
investor dream totally it's a great
point to pull out it does seem like
Sundar is like taking a very intentional
uh path right now to sort of revamp like
what he's seen as and I think that like
maybe he ired I think it ended up being
50 people to sort of um because you
can't really take over your Cloud CEO's
office in the middle of a workday and
expect to keep your job especially when
you're not being paid to take over your
Cloud CEO's office um but it also sort
of I think pretty intentional that you
know in the past he let a lot of this go
there protests over military technology
in the past at Google and he sort of you
know said all right like we're going to
give you what you want in some ways and
talked about AI principles and stuff and
now he's like all right we're done with
that and I think he needs to show that
um especially given how like the
narrative on Google shifted you know as
they were seen as like a company was
slow people were asking if Sundar was
the right person I kind of think that
that eventually reached him and and some
people advising him were like all right
you got to change the way that this
company is operating more urgency less
and away away you go and to to
combine that and he even wrote about it
with this like new mission statement
which Alex keath and I spoke about last
week but you combine that and and you
combine you combine that with better
earnings growth and cloud and maybe the
fact that you know gem like you're right
these Gemini and even though I'm you
know I can sing cludge praises all day
long it's not replacing Google search
and then you get a good quarter out of
Google and all a sudden everything
shifts real quickly for them here's an
idea maybe the year of Zach is ending
and the year of sunder pachai is
beginning wouldn't that be interesting
we've seen I mean that would we've seen
comeback stories like that in Tech uh
and so who knows like you know maybe
we're going to see that with Google one
one person pointed out to me that if
Sundar serves like maybe another year or
two he's going to be the longest tenured
Google CEO ever um and we'll we'll see
if he actually I mean there have been
some questions about him lasting much
longer it seems like he's pretty
solidified though in that position and
these recent moves have have definitely
helped him I think so too and plus the
people calling for him have been like
kind of the loud people on X or Twitter
you know I tend to try I even asked um
that activist investor TCI that wrote
that letter a few years ago on something
different but just how Google needs to
get fit quicker more efficient quicker
and I never got through to them they
never responded but the fact that
they're quiet at this time I think says
something and I I wonder if they're
they're happy now with the dividend and
some of the cuts they've been making
right and they they they hit all-time
highs recently stocks up 10% today uh
they they did you know more cost cutting
so you know if you're an activist
investor you're happy let's not ignore
this point I almost forgot to mention it
on the call yesterday he said YouTube
and Cloud will exit the year with a
combined annual run rate of over a
hundred billion dollar like to me that
was Center Pai saying look we're not a
one-trick pony we're not just search
advertisement and that is really
incredible like just the amount of
growth and success that YouTube and
Cloud have had and this may be his
moment for cloud I know there very
distant number three in terms of the
hyperscalers behind Amazon and Microsoft
but if the next phase of the cloud Wars
is over generative AI tools Google could
be interesting yeah like it had a very
impressive Cloud event but I think you
brought up this point that to serve a
generative query costs I think 10 times
more yeah and to run a cloud business is
more expensive than serving search and
YouTube is definitely more expensive
than search because you have to host all
those videos and run them so then you
you you know just I'm thinking about
this so you you end up looking at a
Google where you're you're issuing a
dividend your margins aren't as big as
they once were your growth might be a
little less and so I don't think they're
fully out of the woods if you think
about like the complete picture I don't
know what do you think I like that take
I I it's not one that I've considered
too much because um they have been able
to find efficiencies in some places but
I think you're absolutely right those
businesses even that they're bragging
about are very expensive
to run I don't know maybe and then I do
think about um the Google and Microsoft
position over meta why does meta have to
spend more because they're catching up
they don't have the cloud infrastructure
that they have they don't have the scale
to be able to get gpus I think at the
same scale as Microsoft and alphabet so
maybe they're catching up and there's
efficiencies that you have by already
being a giant Cloud platform or in the
background Zuck is building that nuclear
facility yeah that would be interesting
yeah so it's going to take some bold
bets I'm curious I mean some people
basically Zuckerberg is like someone's
going to build that plant so if that
happens you know or if Sam gets the
money for his chips we we might be
looking at a very interesting you know
new ch right and that could be the new
that could be the new kind of like Cloud
platform in a way everyone needs the
power so you're renting out energy space
absolutely all right why don't we take a
quick break and then talk about the ban
quote unquote ban whatever it is the
investment that might turn into Tik Tok
just not being able to operate in the US
so let's do that right after this and
we're back here on big technology
podcast Friday edition with dearra Bosa
from CNBC de great to see you thanks for
being here what did you think when the
Tik Tock you know devest or ban bill
went through Congress over the weekend I
was like oh this thing's not moving next
thing you know Congress attaches it to a
defense bill Senate votes it in Biden
signs it it happened way faster than I
ever expected especially with all this
talk um what what was your reaction when
that happened the exact same I was like
wow that was fast on the US side but
then my broad thought has remains
completely unchanged is that this lies
with Beijing and if you ultimately want
to sell Tik Tok and make it quote
unquote American by having American
ownership there's no way that Beijing is
going to allow a technology transfer of
the most important thing about Tik Tok
the algorithm it source code and I lived
in China for many years um I my first
job was with CCTV the Chinese
broadcasting National broadcaster and so
I kind of got a view of the inner
workings and I know how nationalistic um
it is and I think that Tik Tok being the
first you know major Chinese company to
have real success in the US they're not
going to just hand that over easily or
at all right no yeah I mean that's
that's the sense I get from people
who've been close to that company is you
know Texs have come in saying there's no
way they sell they're going to fight
this like to the end and if they win
then they'll stay and if they lose
they're done so there was this idea
brought up um by the former treasury
secretary Steve minan who was on CNBC
maybe like a month ago or something and
he was saying right yeah I'm gonna get a
Consortium together to buy Tik Tok and I
was like okay well what if Beijing
doesn't give you the source code and he
said um well we'll just rebuild it here
and a few of the people I spoke to just
thought that was like a laughable idea
and one person said to me you know you
think Zach hasn't tried to do this going
back to Zach being well that's why he
said he
bought exactly do the reals thing close
to Tik Tok and he still can't do it and
he still hasn't caught up to Tik Tok in
terms of engagement right so the idea
yeah that man billion gpus and see what
you can do sorry exactly a billion gpus
and you know the best data scientists in
the world so I I'm so interested to see
you know how this is such a bipartisan
issue and how the US is able to the US
lawmakers are able to move so fast on it
but I think at the end of the day um I I
I don't know I I think it's going to be
slow goinging from here the challenges
here onward are a lot greater than you
know getting it through Congress and
getting it on President Biden's desk
right do you think there's a chance that
Tic Tac can win in the courts I don't
even know like can you just sue a law I
mean you go to the Supreme Court but
what they do on First Amendment grounds
try to get this thing pulled I guess
that might be the plan I guess and it's
not um I don't think that that's crazy
that the legal system would rule in
favor of Tik Tok um based on the First
Amendment but that's the difference
between the US and China China flicks a
switch and Instagram WhatsApp Twitter
Gmail goes dark and there's no legal
process and that's why we're you know
the US is so great because there's legal
process and it's not that easy to just
ban something the National Security
concerns though I don't want to be glib
about this they are real right super
real and you've seen um sort of the
negative effects and consequences of Tik
Tok as well on groups of minorities and
yeah and it kind of goes to show you
that like all right they're like we're
not going to sell uh so this is not a
business for you then I I don't
understand if you had to sell you
wouldn't take the money it's kind of
weird and there's like interesting
things that might happen in the
intervening time which is that uh this
is mg seagler wrote about this in spy
glass uh he goes Banner not this is the
end of ticktock as we know it and he
says by passing this bill Congress has
draped the service in a Scarlet Letter
and D it to be bogged down in
bureaucracy for its remaining days and
the points basically come down to this
it's going to be uh in the courts it's
going to take a lot of energy from it
advertisers are potentially not going to
want to participate in an app that's
going away uh or you know maybe not to
the same volume as an app that has been
you know had The Scarlet Letter placed
onto it by Congress and then most
importantly and I think this thing has
been overlooked as influencers and the
people filling Tik Tok with content are
going to look elsewhere if they think
it's going to be band because that what
use is it building an audience of a
million people on Tik Tok if it's just
going to go poof one
day I am skeptical of all of those
points I think that a Scarlet Letter for
us in the media for lawmakers I think
that there is a generation and millions
and millions of users who love Tik Tok
so much and think that if they continue
to use it and continue to sort of be
loud in their appreciation for the app
that it will somehow survive I think you
just can't mess with how much people and
users love an app and I think that could
carry it at the end of the day it could
go poof I'm not saying that's not a
possibility but I think that um its
users will use it until that moment when
Tik Tock was facing this ban and then
they basically put this notification
that got all their users calling members
of Congress do you think that that
helped the case because even afterwards
Congress still went through with it yeah
that's a good point um no it probably
didn't make an impact right because it
went through Congress very easily um but
again I just think that um folks will
continue to use it I think a Scarlet
Letter is very much for us not to them
it actually may have the opposite effect
on youth that use the app it galvanizes
them to support it more one of the
funniest things of this whole chapter is
uh so Biden signs this into law and then
they ask the Biden you know he made this
whole big deal of going on t to during
the Super Bowl and they asked the Biden
campaign are you still going to have a
presence on Tik Tok and they're like
yeah of course we are it's like and
that's the thing like why would
advertisers go away when the president
who signed this bill is using it himself
and will continue to use it so I'm so
skeptical of that idea that anyone's
gonna back off just because of the
threat of a ban as we've talked about is
no it's it's a good point yeah no no I
agree with you I think now that we think
about it this way Biden's on it after I
mean the inconsist encies in this
government is nuts like there was this
great moment um I think it was uh Kayla
T she was a former CNBC correspondent
she was asking the White House like why
they invited Bezos and Tim Cook to the
um State dinner with Japan if they're
trying to you know take those their
companies on and the justice department
is saying all these things about like
how terrible they are and the White
House didn't really have a good answer
and it's like goodness there's very
little ideological consistency here
people and that's why we were so
surprised at how quickly this Tik Tok
Bill move but at the end of the day we
question whether it actually means
anything it was kind of like good job
government you got it together to pass
something but the next part's going to
be a lot harder are you a Tik
tocker do I post Tik toks actually okay
I'll reveal a secret yes they're all
private not like like like not just I
don't know I play around with the
different um things I watch it sometimes
I truly cannot open the app I have to
it's on my phone but I had to delete it
from my home screen because once I'm on
it's like an hour it's gone oh yeah me
too I get into real Tik Tock holes I'm
just insanely addictive yeah so so you
you are are you a um like normal user
like do you use it several times a week
oh yeah definitely yeah I'm I'm daily
daily okay see I I can't I just it's too
much of a Time suck for me I
can't it's been weird and that it's like
been something I've started to used to
follow news where like you end up having
like primary sources like post a lot and
oh I need your algorithm then an excuse
to actually use it I just get like the
dumb stuff yeah it was super helpful
actually for me like I went up uh with
my dad a couple weeks ago to see the
eclipse and to like we I followed like
all the weather reports and there were
like these meteorolog olist that were
like reporting like where the best place
to go was and that was super helpful and
I like I opened my feed and I knew I was
going to see the same guy if you know
every day with his like daily update
first there is this idea even on X I was
talking to someone about this how if you
can train your algorithm to serve you
what you want and like this wide range
um it can be really really useful but
that takes a lot of work and I think I
have yet to do that with with Tik to I I
have enjoyed some of the finance talk
videos that I think are really really
informative but then you get garbage
thrown in too and that's that's hard
especially if you're like not in the
finance world yeah well that's that's
the whole that's the whole game right
they throw in the garbage to see which
garbage you might like and then next
thing you know you're living in in um a
trash pile that tiktock is I will say I
don't touch reals I do not touch reals I
find it to be terrible what what what do
you like about reels my early usage of
reels served me up some really like
jarring terrible stuff and I I won't
even say what just really terrible like
kid stuff um and I just said I I I was
so kind of like freaked out by what it
was serving they said never again and
even on Instagram I turn off the
suggested feed suggested posts in the
feed but you have to snooze it every 30
days which I find very frustrating
because again it'll just be a time sack
for me and I I want to be able to
control a little more what I see yeah
well we've touched on L the llms hitting
a wall potentially meta Google Microsoft
and this Tik Tok ban or not ban I and
our Tik Tok reals usage yes and then the
reals Lord Almighty I see it's a
beautiful day in California so I won't
keep you any longer dearra thanks so
much for joining great to have you on
such a pleasure thanks for having me
Alex all right everybody thank you so
much for listening we'll be back on
Wednesday with a show with Alan Cohen
who's the CEO of a very interesting
company it's called yum aai where they
basically take llms translate it to
voice and can gaug emotion and respond
to you in like really weird and
humanlike ways it's a very interesting
company so stay tuned for our
conversation for that and then Ronan
will be back next Friday and we'll be
breaking down the news then thanks again
for listening and we'll see you next
time on big technology podcast