OpenAI’s New Structure, Apple Replacing Google With AI?, Cheating With ChatGPT

Ranjan Roy from Margins is back for our weekly discussion of the latest tech news. We cover: 1) OpenAI has another new top executive structure 2) What is Sam Altman's role now? 3) Who is Fidji Simo, OpenAI's new CEO of Applications 4) OpenAI abandons total for-profit conversion 5) Microsoft's demands on OpenAI 6) Could Apple replace Google as the default search with AI? 7) Is it an either or decision? 8) Could Apple make AI companies bid for the default search position? 9) Everyone is cheating using ChatGPT in college 10) Do people need to change or does the education system need to change? --- Enjoying Big Technology Podcast? Please rate us five stars ⭐⭐⭐⭐⭐ in your podcast app of choice. Want a discount for Big Technology on Substack? Here’s 25% off for the first year: https://www.bigtechnology.com/subscribe?coupon=0843016b Questions? Feedback? Write to: [email protected] Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Alex Kantrowitz?

  OpenAI shakes it up again with a new structure and a new top executive. Apple's Eddie Q says the company may replace Google with AI. And everyone in college is cheating with ChatGPT. That's coming up on a Big Technology Podcast Friday edition, right after this. This episode is brought to you by Genesis. What does it actually take to put a Gentic AI to work across an entire enterprise? I recently spoke with Genesis chairman and CEO Tony Bates about why orchestration is emerging as a competitive advantage in customer experience and what companies need to get right in the AI era. Then I sat down with Adam Mitchell, head of enterprise business solutions at Voya Financial, to go inside a large scale agentic CX transformation,

• 0:44Alex Kantrowitz?

  including the business decisions, trade offs and lessons along the way. You can watch both conversations now on my YouTube channel today. It's never been more challenging to get frontier compute. How do you know where to look, who to trust, or how much to pay? Akash is an open cloud that provides easy access, flexibility and peace of mind. That's how companies like Razor were able to cut their inference cost by 15 times. Visit akash.network/alex for a free consultation. That's akash.network/alex for a free consultation. Welcome to Big Technology Podcast Friday edition, where we break down the news in our traditional cool headed and nuanced format. We have a great show for you today. We're going to talk about this new

• 1:29Alex Kantrowitz?

  structure at OpenAI and what it says about the company moving forward. Of course, you know, or maybe you don't, but this is new news coming out this week that OpenAI has abandoned its quest to become a for profit, or at least have the for profit make all the decisions and the nonprofit will control the company moving forward. We'll talk about the implications of that. We also have this pretty fascinating statement from Apple's Eddie Q saying the company might substitute Google with AI, even though the company makes a lot of money from Google. And everyone, of course, is cheating with ChatGPT in college. Joining us as always on Friday is Ron John Roy of margins. Ron John, great to see you. Welcome to the show.

• 2:10Speaker 01

  Everyone's cheating in college. It's just not worth that 120K anymore, Alex, or is it even 120K now?

• 2:18Alex Kantrowitz?

  That's probably more.

• 2:19Speaker 01

  Yeah.

• 2:20Alex Kantrowitz?

  But of course, we should start with the big news that white smoke flowed from OpenAI headquarters this week as they named a new CEO of applications. I guess, I'm not introducing the segment very well, but it is pretty cool that there is an American Pope.

• 2:36Speaker 01

  Bobby Prevost from The Shy. He's really made it.

• 2:40Alex Kantrowitz?

  He has. Did you see the Chicago Tribune headline?

• 2:43Speaker 01

  No, what was it?

• 2:44Alex Kantrowitz?

  It was just the Pope, like the Bears.

• 2:48Speaker 01

  Have you seen Conclave?

• 2:50Alex Kantrowitz?

  Not yet, but his brother was saying, we play Wordle, we play Words with Friends, and I recommended that he watch the movie Conclave. So he's watched it. You've seen it?

• 3:01Speaker 01

  I, I watched it over a Christmas break with my family and my parents and sister said it was really boring and I was able to hold that over them this week as the, as the Conclave began. And suddenly I was the most informed about how these things work. It was pretty good and it was slow, but it was very Oscar-y.

• 3:24Alex Kantrowitz?

  Okay, so anyway, I was personally excited about that news and I had to find my way to shoehorn it into this show. But let's talk about Fiji Simo, the Instacart CEO. She is joining OpenAI as the CEO of Applications. And I think this is interesting from an OpenAI standpoint because it is not just Fiji Simo joining as the CEO of Applications, which is very interesting because as we've spoken about in the past, this company is nothing but applications. I mean, of course, the models work, but their, their moat are their applications. But Sam Altman recently made Brad Lightcap into the head of day-to-day operations.

• 4:05Alex Kantrowitz?

  And as he named Fiji the CEO of Applications, he writes this message. In this new configuration, I will be able to increase my focus on research, compute and safety. These are critical as we reach superintelligence. He also has to, had to note that he will remain CEO of OpenAI. Kind of, we talk about how this company is very interesting, but also just filled with weird stuff. And this was definitely weird to me to see that Sam is going to remain CEO, but. He's starting to delegate a lot of his responsibilities to others and like core company responsibilities.

• 4:46Alex Kantrowitz?

  And he's also made Simo the person who is now the boss of Sarah Fryer, who was the OpenAI, who was the Nextdoor CEO and is now the OpenAI CFO. So Fryer comes over to OpenAI from Nextdoor to become the CFO and now she's reporting not even to the CEO of OpenAI. It's weird.

• 5:13Speaker 01

  This is now an org chart podcast in addition to a Pope podcast because we're trying to unpack this. It was interesting and also to note from the blog post that OpenAI put out, Sam Altman will increase his focus on research, compute and safety systems. So that's the, that's like his main area now. Brad's going to be heading day-to-day operations and then Fuji is the head of, CEO of application. So in, in some world, I actually see that as a good division of power and labor and like skill set. So I think that actually does make sense.

• 5:54Speaker 01

  I think the most interesting part of this to me is actually on our recurring, is it the product or the model? This is kind of like cementing that they want to really focus more on the product side of things. Again, masters at building great UIs and great product experiences, but actually building a business out of it. Remember their revenue forecasts are always just things of just incredulity. Like, I mean, on the current one, SoftBank is going to be a large, like massive part of their enterprise business. A year ago, or maybe it was only six months ago, they were going to be much more heavily into consumer revenue as opposed to enterprise revenue.

• 6:39Speaker 01

  So my read on this is they have not been able to kind of tell a clear business story. And now hopefully Fiji Simo will try to wrap her head around that and actually come up with one.

• 6:54Alex Kantrowitz?

  Yeah, but it's interesting because Sam, you would think that he'd want to be on the core as the CEO. But instead, he's going to be on, if you're saying that this is, that they're going to focus on applications. He's saying, I'm going to focus on the non-core if you go with your logic. So you have, it's a very interesting moment where you have a CEO of one of the most promising tech companies in decades. Saying that my core focus is not going to be on the core competency of the company, which is applications. What do you make of that?

• 7:23Speaker 01

  Yeah, but that's, I mean, it's logical, it's accurate, that's him, that's her. Like, that's what they both have done separately their entire careers. Again, she is a masterful operator that's like helped build out Facebook's ad business. Was at Instacart, actually built out Instacart's advertising business very well. Like, that's what she does well. And maybe now, does that mean ads are coming to OpenAI's and ChatGPT sooner than we thought? We should, we can definitely discuss that. But I, I think overall, it's clear that's the part of the business that needs help. And to their credit, they found someone with a strong track record.

• 8:06Alex Kantrowitz?

  I'm curious what you mean by needing help. Because like Sam has said, in testimony this week, OpenAI's ChatGPT has 500 million weekly active users. Those are the most public numbers. I feel like the numbers are more, at least he's indicated that the numbers are higher. To me, I think what Sam is saying is that, you know, you could sort of delegate this type of work. And his focus on research is saying the models matter more. And notice how he says, these are critical as we approach superintelligence and not AGI, right? So he's already, he's now leveling this up.

• 8:41Speaker 01

  AGI is gone.

• 8:42Alex Kantrowitz?

  From AGI to superintelligence.

• 8:44Speaker 01

  Okay, I agree that the idea of like, he does believe there will be one model to rule them all. It will be the all-powerful model and he wants to drive building that. But I think recognizing again, like when you, when 500 million users is great. Revenue is going to be what matters at a certain point. Like net income will start to matter. The, I, maybe this is a sign of maturity that he's starting to recognize these kind of things. Like, if you think about. On one hand, they've had incredible product rollouts. But from a pricing standpoint, it's all over the place. Like, again, 200 bucks is deep research part of it. Now, deep research is part of the 20 bucks.

• 9:29Speaker 01

  And I get this stuff is all fluid and everyone like Gemini and Workspace was $20 a seat. Now it comes with it. Like, this stuff is fluid at many levels, but this is the kind of area they're going to have to get their house in order if they're going to actually become the business they say they are. So I don't think this is like a recognition by him that this is kind of like a throwaway role and still it's going to be a one business, one model to rule them all that's going to bring us to ASI and that's going to be the end all be all. I think he does it probably, I agree, I don't think he wants to do that stuff, but I also think he found someone who can do that stuff.

• 10:11Alex Kantrowitz?

  What do you think about the fact that the CFO is going to report into Fiji Simo? That seems more than just a CEO of applications.

• 10:18Speaker 01

  In terms of stuff he probably doesn't want to deal with, I think the operational financing, the line by line financing, like, come on, do you think that's what Sam wakes up and wants to do?

• 10:31Alex Kantrowitz?

  Well, no, I don't think so. So I think I should take a moment to talk about Fiji because I've gotten the chance to interact with her a few times when she was at Facebook. So she's going to come in, she's going to be the CEO of applications. This is, of course, we talked about how OpenAI is a consumer business. This is going to be her tripling down on OpenAI's consumer business. You need someone that understands consumer applications if you're, if you have a lead and you really want to build on it. And she is that person. In my conversations with Fiji, I found a few things to be true. Number one, she's a pretty clear communicator and a very clear thinker about the role of product. We talked about on the Blue App on Facebook, even though it's had its ups and downs, the role of groups there.

• 11:16Alex Kantrowitz?

  And I believe that groups has really reanimated the Facebook product in a way that a few tweaks have in a long history since it's languished after the friend sharing moment. So I would say credit to her for that. The other thing that I have known about Fiji is that She is not like a Game of Thrones style corporate operator. She won't make a run for the CEO job. She will be very loyal and supportive of Altman. She's been on the board for a while, just as she was an incredibly loyal executive for Zuckerberg. And obviously that parlayed, she was able to parlay that into the CEO of Instacart.

• 11:59Alex Kantrowitz?

  And she, of course, ran the Facebook app for a while. The one thing I'll say is that Sam at OpenAI has really struggled to keep a number two. We know that Ilya left. We know Murat Murat left. We know that Greg Brockman had to take time off. So everyone, there's that meme of the picture of these are the founders of OpenAI and they all disappear. And Sam Altman is left and he really needs stability in his lieutenants. And of course, he's been able to keep Lightcap for a while and Friar and now Simo. And I think this is actually quite a positive sign that he's decided to bring Fiji in. Because if anyone seems like they can ride the chaos of that company out, it's her.

• 12:44Speaker 01

  Yeah, I agree. I mean, I think it shows a level of stability. It shows again, Sarah Friar, very senior executive at some pretty large companies. But I mean, Fiji Simo has been a very powerful executive at the largest consumer companies in the world. So I think it, I agree on that. It's going to be very interesting to watch how plays out, how she even communicates her own role. Cause again, like the announcement came out in a kind of amazing way that she sent an email, I believe internally at Instacart, because it was going to be leaked into the press and published. So she wanted to get ahead of the story, but she still didn't give a lot of clarity.

• 13:25Speaker 01

  We have Sam Altman's blog post on the OpenAI blog that starts to explain this a bit. But it will be very interesting, kind of how she talks about her role for with OpenAI publicly.

• 13:39Alex Kantrowitz?

  Right. And so I gave all the spiritual reasons why Fiji might make sense for this job. But Ranjan, I'm actually curious to hear your perspective as, you know, thinking about someone who was the Instacart CEO, or who still is, who will be the Instacart CEO for a moment. Is it interesting? And of course, she was on the board. But is it interesting that somebody coming from a partner that OpenAI would have to integrate if it was going to be like the catch-all app for all computing? She's going to run applications. Like, it almost seems like Fiji will say to the DoorDash's of the world and any other company that ChatGPT might gobble up. Look, I was on the other side. As the Instacart CEO, I worried about traffic to my app and

• 14:24Alex Kantrowitz?

  all this other stuff. But here's how I would think about it as someone in your shoes. You know, if this, this to me is one of the biggest signs ever that OpenAI wants to be effectively the everything app with ChatGPT or even the new internet. I mean, Altman, again, was in Washington this week testifying that he thinks AI could be bigger than the internet, which I guess is something you would say if you're doing full-time marketing, you know, now that you don't have to have the CFO reporting to you. But it just seems to me like that is another signal as to where this is going. And I'm curious what you read into it.

• 14:58Speaker 01

  See, I disagree. I don't think this is WeChat-style everything app. My call on what this means for me, and it's the same thing. When she went over to Instacart, the big conversation was around. Instacart had started to build out their advertising business. DoorDash had, Uber had, basically all these consumer apps with thousands, or I mean, sorry, hundreds of millions of users that had commercial intent within them realized, we can start to inject advertising. So they started to build out these businesses. Do you know how much Instacart's ad revenue is right now?

• 15:37Alex Kantrowitz?

  I don't have it right here. Do you?

• 15:38Speaker 01

  Yeah, nine billion dollars. Like, they got up to $1 billion. So like, she built that out from over the last few years. It had started growing. The foundation was there. She scaled it. So my call on this, ads are coming to ChatGPT in some way. And in reality, like, I do believe there is going to be some kind of advertising model that is that enters this whole world. Perplexity has, I think, started to launch some ads, but they certainly talked about it and they have like, they've been pushing an advertising model. Sam has said he like, doesn't want ads like Larry and Sergey once did. Like, uh, it's coming.

• 16:24Speaker 01

  I think, and, and if someone can, again, figure out a creative way to do it, I think she could be the one to crack, what does advertising look like in an AI chat?

• 16:35Alex Kantrowitz?

  Well, if this is the case, this has made me tremendously depressed because I don't know if you caught my conversation with Gary Marcus this week, but towards the end on Wednesday, we talked about how these things, people are opening up to them in a way they never did to Facebook. And what, like, you're going to now start telling it all your intimate secrets? And all of a sudden, this AI that every night, we're going to talk about Mark Zuckerberg talking about how AI could be your friend or your therapist. Like, if you use it for these purposes, you're going to share more with ChatGPT than you would with any service on the internet? And that data is going to be used for ads? I mean, it's, it's like, maybe I'm naive in being upset about this because this was obvious. We have a headline

• 17:18Alex Kantrowitz?

  from the Financial Times in December 2024, saying that OpenAI is exploring ad revenue. But it just feels like ad revenue from a chatbot that many people are going to view as a friend, a companion, a therapist, uh, is a, an extremely tricky, uh, road to go down because of the amount of data and intimate thoughts people are sharing, uh, with these bots. So I'm curious, what do you think about this? Am I right to be depressed?

• 17:45Speaker 01

  I, you're right to be depressed on it, but I'll also go with the naive to be depressed because come on, like, come on, in terms of the, the idea that OpenAI would not go down that road. Given the sensitivity of a lot of the chat, I think, I mean, they almost cannot do that given their valuation, but I'm not sure ethically they would actually be against it anyways. But I think overall, it is going to be interesting to me that people are more personal because they're not ads. So then you get into a, would they become less personal if they're worried

• 18:26Speaker 01

  about ads? Like, I think maybe that does start to degrade the overall intimacy of the product a bit. But to me, I guess first, it feels like, I mean, that is inevitable, or the ethical boundaries will never have stopped that and has never stopped advertising. And then also, even though we're not, like, Google search has a more intimate knowledge of you than Facebook posts. But in the end, maybe I'm too cynical, but I feel the ad ecosystem knows everything and anything about all of us.

• 19:05Alex Kantrowitz?

  But even still, a lot of the ads that we get don't feel so tailored to us, don't feel personal. And wouldn't you agree that if they do this the wrong way, that this is a potentially catastrophic hit to their brand?

• 19:16Speaker 01

  Of course. I mean, definitely. Like, and first of all, like, I feel meta to their credit, even after iOS 14.5 and like, identity tracking was supposed to be more difficult. It's like ungodly how good their ad algorithm is. Twitter and X, worst ad algorithm imaginable. So like, people are able to do it and figure it out. But I do agree that it could be a risk where, okay, let's say they start to get too weird and sensitive in terms of the ads that they show you, given the type of data that they'll have on you. In a way, they have to be extra careful because one, that can affect their overall like

• 19:58Speaker 01

  the utilization of the product. But two, in terms of overall privacy concerns, remember at the enterprise level, like it's always the starting point that people worry OpenAI is going to train on your data or doesn't respect privacy, that their branding on that, and we've talked about this a lot, is not great. So I think they could blow any goodwill they have up if they go down the wrong path with this.

• 20:23Alex Kantrowitz?

  And I also think it's worth pointing out that there are various degrees of targeting that you can do, with each degree higher becoming more lucrative for you. So let's just talk this out. The bottom level here is just, you know, sort of broad targeting the type that you do in TV. So that could be like, you know, targeting for basically location, maybe age, gender, but really audience and frequency, right? The reach and the frequency, that's the basic level of targeting. And ChatGPT can definitely do that with 500 to, let's say, 800 million users that it has now. The second level is intent-based targeting, right? And this is similar to Google. So that would be OpenAI potentially using the

• 21:08Alex Kantrowitz?

  chats that you are engaged in at the moment to surface things to you. For instance, like, let's say you say, I need some help researching a car that I'm interested in buying. Well, in the moment, OpenAI could say, all right, well, here's like Hyundai and Toyota, but you might also be interested in Nissan, which is a partner of ours, but I found a good deal for you. Okay, so that wouldn't be too different from Google. And I don't, I think it could get away with it. But there's this third type of targeting that's the most lucrative, that is also, I think, the most dangerous to OpenAI. And maybe I'll even say our society, if they end up going this route. And that is building, and it's totally possible to

• 21:52Alex Kantrowitz?

  do this, and advertisers will want you to do this, building a psychological or some sort of persona profile of the individuals based off of the entire history. Of chats that they have with you. Now, of course, that's tough to scale, but there are shortcuts you can take. And algorithmic groupings you can do to put people in cohorts. But if you start to advertise to someone based off of the entirety of the personality and the and the the history of the chats that they've shared with you. That to me is the red line, even though you can make a lot of money from doing that, OpenAI. I just want to say right now to you. Please don't do that. That is definitely not the move. Intent, fine, building these like psychological profiles of your users.

• 22:37Alex Kantrowitz?

  It's tempting. We know other companies have done it. If you do that, it's going to be a disaster. So please don't do it.

• 22:45Speaker 01

  I like, listeners cannot see Alex is it currently in Paris? He has a big bookshelf behind him and I feel you're getting very existentialist today in the conversation.

• 22:57Alex Kantrowitz?

  Well, what's not true about that, though?

• 22:58Speaker 01

  I agree, but well, on one hand, Meta can actually, I mean, extract what is in the image that you post and understand your emotional well being based on what the captions you're posting are, what kind of messages you're sending. And all that data is already there and can advertise or certainly target based on that kind of like psychographic data and well being. So, so I I agree that almost by default, people's public posts are always going to be slightly more censored, hopefully than what they're really entering to ChatGPT, but

• 23:39Speaker 01

  I don't know, between what people search on Google, between what people actually post publicly. And that advertisers already have access to. I don't know, maybe I'm too cynical on this one, but.

• 23:50Alex Kantrowitz?

  I think, yeah, I think you are. I think there this is a degree deeper that you can go with chatbots. You know, if someone's telling ChatGPT, I'm depressed, I don't have plans this weekend. They know that you live in a certain area. They know what you typically search and you say, hey, I'm feeling sad because we know again that therapy is one of the top uses. And it says, well, here's an ad for a movie or a restaurant that you can go to. And uses that data to sort of exploit your current state. I feel like that's that is dangerous territory to get into.

• 24:29Speaker 01

  It's like your therapist, you're talking to them and suddenly they're like, well, let me hold up this product. I think this can help you right now.

• 24:38Alex Kantrowitz?

  You know what real self-care is? Hims.

• 24:42Alex Kantrowitz?

  It's because you're bald. Hims. Hims.

• 24:46Speaker 01

  I've gotten to the

• 24:47Alex Kantrowitz?

  Hims doesn't sponsor the show, by the way.

• 24:50Speaker 01

  Affiliate model therapy. That's what the world needs right now.

• 24:55Alex Kantrowitz?

  No, but I totally hear you that the companies already know a lot about us to begin with, but anyway, I'm kind of getting creeped out just thinking through these possibilities because it could get really dark. And now we know that OpenAI is going to move to a more traditional company structure, or maybe not. This is from Bloomberg. OpenAI walks back its for-profit plan and the nonprofit is going to keep control. So OpenAI is backtracking on its plans to become a more conventional for-profit company after facing mounting pressure from former employees, academics and rivals, including the billionaire Elon Musk. The chat GPT maker said Monday that it's moving forward with an effort to restructure its for-profit division

• 25:37Alex Kantrowitz?

  as a public benefit corporation, but the overall business will instead remain under the control of its nonprofit. A major shift in its plans that will effectively maintain the contours of how OpenAI is currently set up. So the nonprofit continues to control the company. This is from Brett Taylor. We made the decision for the nonprofit to retain control of OpenAI after hearing from civic leaders and engaging in constructive dialogue with the offices of the Attorney General of Delaware and the Attorney General of California. The one good thing I think is that the company structure is going to resemble a much more normal structure so that there's no more of this capped profit sharing deal. It's just going to be like you have normal shares in the company, but the nonprofit will continue

• 26:22Alex Kantrowitz?

  to control it. What's your view on this, Ron John? Good?

• 26:26Speaker 01

  I, this one makes my head spin, not quite as in a dire way as chat GPT, creating an advertising profile based on your deepest darkest secrets, but I mean, it just gets more and more convoluted again. Like Matt Levine had a good, he's like, note, the nonprofit will continue to control the public benefit corporation and will be become a big shareholder. It suggests that the nonprofit will be a minority shareholder. The nonprofit might own, say, 30% of the economic value of the for-profit company, but will have super voting stock, giving it control of the board. Like, basically, it's just nonprofit-y enough to be a nonprofit legally,

• 27:09Speaker 01

  but it's not really a nonprofit, but it's also not quite a for-profit. I think, to me, all of these decisions, the only thing I think I try to think about, because otherwise, again, I get a headache, is what does it mean for their funding? And what does it mean for potential exits and outcomes? Because to me, they don't really operate by normal rules anyways. And, and remember, SoftBank, in that $40 billion funding round, they committed 30, but supposedly it can be reduced to 20 if they don't become a for, truly for-profit corporation. So I don't know, but it still wasn't even clear.

• 27:50Speaker 01

  Did this new structure mean that SoftBank can renege on $10 billion?

• 27:55Alex Kantrowitz?

  Well, this was definitely the week of great Sam Altman quotes. So first of all, here is the first thing he says about the structure. By the way, remember, he talks as if somebody else tried to make this structured transition. He says, "I won't pretend that it wouldn't maybe be easier if we were a fully normal company, but the mission comes first. We believe this is well over the bar of what we need to be able to fundraise." So, you know, the mission comes first, but we were trying to go fully for-profit. But the mission comes first. This is bizarre.

• 28:26Speaker 01

  I mean, I actually, I love it. I think it capped that quote should be on a poster, and that captures everything about OpenAI better than anything either of us could have said. So, thank you, Sam, for, for clarifying everything, at least.

• 28:43Speaker 01

  Emotionally, even if not logically.

• 28:46Alex Kantrowitz?

  Sure.

• 28:47Speaker 01

  Sure. I mean, I'm telling you, he like, the mission comes first, but this helps us in our fundraising. That's it. That's OpenAI in a nutshell.

• 28:57Alex Kantrowitz?

  I guess so. So, speaking of the SoftBank stuff, he also said that SoftBank will not freeze the rest of its funding with the new structure. And then OpenAI, like we said before, announced it will remove a cap on the financial returns its investors can earn, a move likely to appeal to current and future backers. So, yes, the fundraising will continue. Now, let me say the however part. However, what is going to happen with Microsoft? This is from Newcomer. "Microsoft wants to retain its rights to have access and ownership rights to OpenAI's model. Whereas OpenAI is trying to claw that back, the topic has cropped up numerous times, numerous times between the companies.

• 29:38Alex Kantrowitz?

  So this is still not settled, even though the announcement has been made." Finally, Newcomer continues to write. "Microsoft wants to amend an AGI provision that gives OpenAI an out once it develops artificial intelligence, general intelligence."

• 29:56Alex Kantrowitz?

  "These issues were an obstacle to Altman's planned for-profit conversion, and they remain an obstacle in the new plan to make the business a public benefit corporation that's still controlled by the nonprofit parent. No restructuring process can move forward until this is figured out." So what Newcomer is saying is this ain't over.

• 30:21Speaker 01

  It never is. It never is.

• 30:24Alex Kantrowitz?

  He says, "The fact is that Microsoft has OpenAI in a tight spot and knows it. At a high level, relations are still strong. Altman welcomed Microsoft CEO Satya Nadella to their offices the other week. Beneath the surface, though, the competition is rising. Microsoft is no longer just a major investor in the company, but increasingly a competitor, especially in enterprise software. A source close to the matter said the changing dynamic is influencing the proceedings. Some at OpenAI worry that Microsoft is setting up such a high bar... Barriers to a deal as to make one impossible. So this is the only place I've heard of this.

• 31:03Alex Kantrowitz?

  But assuming that this is correct, is it possible that Elon Musk wasn't the biggest barrier to this OpenAI restructuring? It's Satya Nadella and Microsoft, who realize that they have a big say into what the future of OpenAI looks like, and they will hold it back from being able to move forward, which means basically, holding it back from being able to do anything else because, of course, the SoftBank money will be diminished unless its terms are met. What do you think?

• 31:34Speaker 01

  That's actually, I like this because the idea that Masa is coming in 30 billion strong and like one would assume in any normal company that would give a very clear decision making capacity and very clear ownership. And in reality, because everything is so murky and muddled, that Microsoft is still able to legally pull the strings in weird ways to benefit themselves. And I think that gets even more fascinating and interesting as Microsoft becomes a much more direct competitor to OpenAI. So I think like Satya is still in the background right now, that that becomes clear from that.

• 32:16Speaker 01

  I am like interested of what his visit to their offices must have been like, like, how does that work? What does that look like? What do they talk about?

• 32:25Alex Kantrowitz?

  Yeah, and I should note that this is coming from the newcomer Substack, and newcomer has Tom Dotan writing for him. And Tom Dotan was writing about Microsoft for the Wall Street Journal, not just writing, but reporting on the company, deep inside the company. He's been on the show before. Tom knows his stuff. And, you know, it's not a surprise to me that he came out with this report because he's been close to Microsoft and he figures, he has a good, good read on, on what this company is up to. So, uh, something that bears watching. And I know we've done a lot of inside baseball, so to speak, on the first half of this show. But this is gonna determine the future of where AI is moving. I think that OpenAI has the best set of models right now. I don't care what the leaderboard says.

• 33:09Alex Kantrowitz?

  Uh, using O3 is, is pretty amazing. And, uh, yet, every time we say something positive about OpenAI, it seems in the next breath, we talk about its weird structure. And that's certainly the case today.

• 33:22Speaker 01

  Great company, terrible structure.

• 33:25Alex Kantrowitz?

  Exactly. Maybe a little bit less complicated now?

• 33:29Speaker 01

  No, this actually just made everything more complicated to me. We don't have to talk about profit capping any longer, but still, what is happening? Who gets what ownership? All these kinds of things have not been clarified to me in any way.

• 33:45Alex Kantrowitz?

  Great company, weird structure, but the mission comes first. That is the inspirational poster that Ranjan would make with Sam Altman, like with a bunch of rays of light, like standing on a cloud or something like that.

• 33:57Speaker 01

  That's it.

• 33:59Alex Kantrowitz?

  All right. So in other news, we have a major hit Alphabet stock after Apple talks about potentially replacing the Google search engine on the iPhone. We're going to talk about that when we come back from the break, right after this. This episode is brought to you by App Point. Everyone's racing to roll out AI right now. Co-pilots, chatbots, agents doing real work. But here's the part nobody loves talking about. All that AI runs on your data, and most teams have no single way to see it, secure it, and prove it's under control. That's exactly what App Point does. For 25 years, they've been the trusted layer beneath the world's most demanding data, now extended across your entire

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• 35:17Alex Kantrowitz?

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• 36:02Alex Kantrowitz?

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• 36:17Alex Kantrowitz?

  And we're back here on Big Technology Podcast Friday Edition, talking about all the week's tech news. Ron, fascinating story this week from within Apple executive ranks, where Eddie Q, he was testifying in a federal court in Washington, and he told the court, "There is a chance that AI search engines will eventually replace standard search engines, such as Google." And he said he expects to add artificial intelligence services from OpenAI, Perplexity, and Anthropic as search options in Apple's Safari browser in the future. As we know, Google pays Apple $20 billion a year to be the default on search.

• 37:02Alex Kantrowitz?

  So with Apple's services revenue becoming the most important part of that company's financial makeup, what do you think is happening here? What's going on?

• 37:11Speaker 01

  This one, I think this actually might be my most interesting news story this week because what it means for Apple, what it means for Google, I think it's huge ramifications for both. I mean, you figure it's clear that he is trying to make the case that like, Google paying Apple for that placement in the search bar is not a monopolistic action on Apple's part.

• 37:38Speaker 01

  I mean, in a way, maybe they just assume that at a certain point, OpenAI and Perplexity and Anthropic will also pay them in the way Google did and that that the revit, maybe it goes up because there's actually competitive bidding as opposed to just like one bid to rule them all. So at from Apple's side, I get why the stock was only down 3% after the news while Alphabet was down 7% after the news. It's funny to me because like on one hand, yes, it's breaking news. On the other, this stuff shouldn't be a surprise to anybody. Like, there is no way traditional Google search will be in the search bar in

• 38:18Speaker 01

  five years. Like, I, I, I just, I don't know. Do you think it will be? Or do you think it'll be some other kind of form of search?

• 38:28Alex Kantrowitz?

  I actually think the search bar is the most natural place for Google search to be, because that's typically you're talking into the search bar on your phone when you need an answer quick. And you go into chatbots when you need something that thinks a little bit more or gives you a much more detailed answer. So I actually think the search bar on the phone makes a lot of sense for Google. But do I think it's going to look exactly the way that it looks now? No, like, it might end up being a default thing where you can, not a default thing, a, a, something that switches where you put like a search keyword in and it gives you a search answer. And when you put like a question in and it gives you a chatbot answer. Like, I think that's kind of where we're going with all this. I just don't see how Apple could ever replace Google's 20 billion a year. I mean, maybe

• 39:13Alex Kantrowitz?

  it can, but I mean, we're talking about the numbers that OpenAI is raising. And again, they just raised 10 billion and that was by far the largest private market raise in the world ever. So 20 billion a year, double that to Apple is crazy. And again, like, if everybody bids on it, yeah, it's not going to happen. I don't think, I mean, maybe this is a way for them to try to get more money from Google.

• 39:37Speaker 01

  Yeah, I think the, the, the equally important part is the reaction showed, I mean, Google's search business, it's gonna be in trouble. But to me, it's still amazing. We talked about Google earnings, I think, two weeks ago or a week ago where They're still cranking. Search revenue was up. Like, they don't disclose the query of search and search volume, though after this statement, they put out their own public response saying that search, overall search query volume is up. But then they kind of hedged it by saying now all types of search extend into maps and AI searches. And like, they basically didn't directly say that people typing into a search bar is up.

• 40:21Speaker 01

  Overall querying things from Google properties is up. And they even made the point of saying these other things, but I mean, I don't know. I think we got into this maybe like a year ago when Gartner said 25% of searches are going to be AI in a year or two. I am more convinced of that than ever. Like, it's, it's just such a better way to access information. And Google, to their detriment, maybe killed off traditional search themselves by making it unusable and stuffing ads from top to bottom.

• 40:58Alex Kantrowitz?

  Yeah, I, I am also with you that this is the future of search. And I'm also less open to this argument that Google killed the web itself. I think maybe than I've ever been. And that's only because I'm not saying the web is good right now. We've talked about it a thousand times. Trying to get a recipe from the internet. I mean, it's a fool's errand. But the detail you can get when you do AI search right is insane. It is so much better than anything traditional search could have ever hoped to have been. So I think it would be inevitable that people would have moved there anyway. And I think Q is totally right that eventually you'll have to have some form of AI as the default.

• 41:42Alex Kantrowitz?

  And when I dismissed it out of hand, now I'm thinking about it a little bit more. And I'm like, yeah, it's going to be a toggle. Toggle was the word I was looking for. It will be a toggle between traditional search and AI. I just want to give one quick example. I mean, you mentioned it. I'm in Paris, one of your favorite cities, I think. This is my first time here. And what I've done, and I want to talk about this next week on a Show with two AI critics, Professor Emily Bender and Alex Hanna, who have this book out called The AI Con. I'm a little bit more bullish on AI than they are, I would say. And although I have my own critiques, and we talk about those at the beginning of the episodes, that's coming up Wednesday. But one of the things I mentioned is that like

• 42:22Alex Kantrowitz?

  every day here, I've uploaded two documents from Friends of Things to Do in Paris to ChatGPT. And then I say, what's going on in Paris today? Take these documents into account. And I click the search button on ChatGPT, and it goes out and searches the web, and it proposes this great agenda with all these different options. And it's scanned so many sites, it's telling me about things that I had no idea existed. And it's of course, translating lots of French into English, and then presenting me the answer in English. Web search just could never do that. And so this is a step forward that no matter what Google did to the Internet, this is an improvement. And you know, the more you use it, the more

• 43:06Alex Kantrowitz?

  I've used it, at least I'll say, the more I'm just like, this will just take over everything.

• 43:11Speaker 01

  The one thing that needs to be figured out, and there's going to have to be some kind of economic system around it, is that still, that's like a generative AI layer of web search, right? It's like a still searching the web, it's just presenting the information and using some other context in a really smart way. But there's still that someone, some like timeout Paris, or whatever website posted some events, right? So will people be incentivized to do that? And why would they be? That monetary system was owned by Google and helped Google created that essentially and spurred it. So will people keep doing

• 43:52Speaker 01

  that? And then after a while, real time information, does that just go away? Or who's gonna, who's gonna do that? I think that's the more interesting question.

• 44:01Alex Kantrowitz?

  I don't, I don't even think, so it goes a level deeper here. You need Time Out because the writers for Time Out would go to all these event, like Ticketmasters and all of these event ticketing pages and sort of pick it out when they're going to go to your city and then write it up based off of like where the band's been and sort of their latest albums and stuff like that. What I saw ChatGPT doing is skipping the middleman and just going to the ticketing sites and explaining the venue and saying this is the page. So they've, it's unfortunate because I think it's terrible for the content business,

• 44:41Alex Kantrowitz?

  but they have replaced that middleman and you don't need Time Out because you have ChatGPT writing that up for you.

• 44:48Speaker 01

  No, no, you're right. Actually, because if you think about it, there was this idea that Time Out, we're getting, and this is now a Time Out podcast and his legacy media. Yeah, I, and for those unfamiliar, if you're not like New York, Paris, it's a magazine publication focused on tourism in a lot of big cities. They, the idea was that they curated all the noise and experiences and foundings for you. But in reality, how much, how much value was that curation element? And the authors and the brand versus it actually was the easiest way to find stuff to do.

• 45:31Speaker 01

  It's not like they really were doing this incredible legwork of finding this stuff or in the know. And yeah, I think that's a good point. And especially with context, with, as you said, you uploaded recommendations. Imagine you plug in your Spotify listen history or something like that.

• 45:48Alex Kantrowitz?

  And I told where I was and when I had to get back home and all these things.

• 45:52Speaker 01

  Yeah.

• 45:52Alex Kantrowitz?

  And it's always personalized for me.

• 45:54Speaker 01

  Exactly. It's your own personal Time Out magazine, so.

• 45:58Alex Kantrowitz?

  And that's why Fiji Simo is going to OpenAI. It's not to do advertising, it's to ingest everything.

• 46:04Speaker 01

  To ingest and create, it's a media company now.

• 46:06Alex Kantrowitz?

  Yeah, yes, and, yes, and it's a media company and it's the thing that lets you eventually take the actions. That's where these services become agentic because they go from taking that content to making that software. They take the text, they, and then within the text, they make it software. So instead of being the timeout that sends you to Ticketmaster, you ask it what to do in Paris, it does the legwork that timeout would have done, and then it lets you make the purchase right there in the chat window. And that's what the future is.

• 46:37Speaker 01

  I agree. Okay, now you've made, at least for that whole universe of content, you're right, you, that doesn't go away. Ticketmaster is still gonna have a ticketing website or some way to buy tickets or that information, so. So I think that, I think that's a reasonable way of thinking about it.

• 46:57Alex Kantrowitz?

  Okay, well, I will take that. That's a win for me today. Thank you, Ron, John.

• 47:02Alex Kantrowitz?

  All right. So before we go, I want to talk about this great New York Magazine article. The title is, "Everyone is Cheating Their Way Through College: ChatGPT Has Unraveled the Entire Academic Project." I don't know if you saw this, but it's basically confessions from students who have basically said that they no longer basically try to do any of the work and they're just able, I mean, we know this is going on, to cheat their way through school and that, here, this is, um, this is a quote from one of the students. "College is just how well I can use ChatGPT at this point. A student in Utah recently captured, captioned a video of herself copy, copy and pasting

• 47:43Alex Kantrowitz?

  a chapter from her genocide and mass atrocity textbook into ChatGPT." So, um, this is another quote. "I spend so much time on TikTok, hours and hours, until my eyes start hurting, which makes it hard to plan and do my schoolwork with ChatGPT. I can write an essay in two hours that normally takes 12. There are professors who are..."

• 48:08Alex Kantrowitz?

  Unable, professors are basically unable to stop this. Here's a quote from professor. Every time I talk to a colleague about this, the same thing comes up. Retirement. When can I retire? When can I get out of this? That's what we're all thinking now. This is not what I signed up for. Here's another one. The students kind of recognize the system is broken and there's not really a point in doing this. Maybe the original meaning of these assignments has been lost or is not being communicated to them well. So, Raja, let me just put this to you. I mean, we've talked about whether AI is something that's assistive or is something that basically takes over for the brain. And if it does, like, what is gonna happen to our society?

• 48:49Alex Kantrowitz?

  And so I'm curious if, you know, through that lens, if you read this story as a blaring alarm that we're outsourcing all critical thinking and sort of thinking in general that we would have done in university to these bots and just gonna make ourselves a population of much dumber people than we would have been previously? Or is there a way to say, like Sam Altman might say, this is just a pretty good calculator and we still do most of the processing or the higher level thinking in our own brains?

• 49:18Speaker 01

  I think for me, the story, the most important part of it is it's a reminder that like, how university educations work has not really changed in many years. And my hope is this like dramatically changes it because, come on, like, writing essays, was that the most valuable way to teach a concept? I, as a writer, do find the most value in writing, that writing is thinking for me. I think, I forget who said that, but like, it a hundred percent, that's how I structure my thoughts. So I'm not gonna stop writing. If it's something I'm not actually interested in or is, I don't find truly valuable to learn, then I'm not going to write and I would happily use ChatGPT to write that essay.

• 50:03Speaker 01

  So I think, uh, people, like I saw one post somewhere where it was like, You know, what if it is use chat GPT to create your paper? And then give a verbal defense of your argument like off the top of your head. Stand up and debate this, talk through it, explain why this was included. Why the why this piece of AI content was included? I think that's interesting. I think that's like a better way to approach it than how most people, including myself for a lot of papers in college, actually approach writing. I think it they have to rethink what those like day to day tasks and assignments are.

• 50:46Speaker 01

  And if they're not, then that's on the institution. These are very expensive institutions that are supposed to cater to like, if you're a business, you're a customer, the current moment, the current demand, the current needs, and they should adapt.

• 51:02Alex Kantrowitz?

  But don't you think there's a chance that this is like a once in a generation or once in a world tool? That can sort of outsource a lot of the thinking for people and the universities really cannot adapt? Because again, like, I'm going to go back to the writing thing. Writing really is thinking like the pain that comes with writing does help you crystallize your thoughts. And if you're trying to come to conclusions about a tremendous amount of coursework you took in, then actually going ahead and writing that stuff. Uh, is the thing that, I don't know, helps you think it through better than almost any tool.

• 51:39Alex Kantrowitz?

  Now, maybe there's a way around this where you just do um all the writing in a class in blue books in lecture halls as opposed to typed on the computer. Um, and that you can maybe adapt, maybe you could go forward by going backward. Uh, but I'm curious if you think that there's a chance, because again, like this is able to do a lot of knowledge work. Uh, is there a chance that this is just different? And there is no like, you know, use it as a calculator type of application here?

• 52:07Speaker 01

  No, I but but to me, the issue is if universities or educational institutions don't come up with new ways to force people to think and teach them to think. Then yeah, like I do worry a lot. If like you keep the exact same test structure and assignment structure, then of course the average college student is going to just wing it and cheat. I don't even call it cheating. We'll just use whatever tools are available to do it. And then

• 52:35Alex Kantrowitz?

  Yeah, they're smart in that way.

• 52:36Speaker 01

  Yeah, no. And then the it's the university failing to teach this. Their job is not to have them write an essay. The job is to teach them critical thinking. So with the given technology today, like there's a time I remember like typing, even still, I know some people who like handwrite because it they feel it makes them think. There's that whole remarkable notepad that that's the whole pitch, that it's like kind of digital handwriting, like that that's better than typing that I think more when I write by hand. Like, there's been some more minor technological shifts over time and we adapt to them. So I think, uh, to me, it's on the universities. Come on Harvard. Figure out how to teach your students better.

• 53:21Alex Kantrowitz?

  Let me end with this. I mean, last week we talked a little bit and this got a lot of play in our Discord, uh, and a very good discussion about how new grads were not getting hired and whether that was chat GPT's fault or not. And I'll just say that, like, if you are doing what chat GPT can do in school, like if you're just learning how to use chat GPT, and you realize that chat GPT could do your work for you as a student, then maybe it's not so surprising that when you come out of school, uh, that entry level job is being done by chat GPT.

• 53:52Speaker 01

  Yeah, I mean, that's it. That's gonna happen. Figure it out, Harvard.

• 53:57Alex Kantrowitz?

  Yeah, figure it out. I think go backward, go forward by going backwards, or maybe you have some ultra sophisticated way to make this technology a bicycle for the mind as opposed to the mind itself. But until we see it, I'm just saying, break out the blue books.

• 54:16Speaker 01

  Alex spends a couple of days in Paris and now waxing philosophical, advocating for handwriting into blue books. Alex, I want a cigarette in your hand as you as you podcast, glass of wine.

• 54:29Alex Kantrowitz?

  I think I've I've spent a way too much time this week looking at paintings and thinking about the deeper meaning of things, but maybe it's given me a window into the human condition.

• 54:40Speaker 01

  I got nothing on that. I got nothing.

• 54:44Alex Kantrowitz?

  Well, everyone, thank you so much for listening. Ron, John, thanks again for coming as always. Great to see you.

• 54:49Speaker 01

  All right, see you next week.

• 54:51Alex Kantrowitz?

  All right, everybody, thank you for listening. Next Wednesday, we'll have Emily Bender and Alex Hanna. Thanks again, and we'll see you next time on Big Technology Podcast.

• 55:04Speaker 02

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